21923 - SCTE Broadband Aug2023 COMPLETE v1 (1)

24 Vol. 45 No. 3 - September 2023 Issue industry news The bubble bursts in the alt net market As we’ve witnessed in recent years, the UK alt net fibre broadband market has undergone a significant transformation, revolutionising the country’s digital landscape. The UK is well- known for it innovation, creativity and entrepreneurship an the alt-net industry is no different, striving to bridge the digital divide by providing high-speed, reliable internet connectivity to underserved areas. However, as the market matures, challenges have surfaced, leading to the unfortunate administration of some alt net companies. Shivani Saxena, market analyst of PMP Strategy explored this in our most recent Spring Lecture in some depth, which is available to view on our YouTube channel. As investment funds poured in during 2021-2022, few saw the issues that rising costs and competition in the marketplace would do, and Shivani was right; some were opportunistic and likely had no intention of staying the course. Consolidation is happening, with some lucky winners, but others are less fortunate. Broadway Partners is one such casualty. Based in south Wales and focusing on some of the most remote areas in the UK, it received £145m investment to assist in its fibre rollout of some 250,000 premises across the Powys, Pembrokeshire and Monmouthshire regions. What went wrong A multitude of things, it would appear. The cashflow set-up involved in the issuing vouchers to residents for altnets to then redeem from the government seemed fraught with challenges, with the altnets bearing the brunt of the headaches and the pressure. Another issue was the rising costs for supplies, energy and fuel, which must have been an unbearable burden, supply chain delays post Covid would not have helped either. Reece Simmons was a former employee at Broadway Partners and in an interview last year with Broadband Journal told us that “Our application goes to DCMS along with a business plan indicating our intention to connect every single property in the area. Once the funding’s approved the grant doesn’t get paid till all the connections are completed. So, all the money that’s put into the build, marketing, everything, all comes from the altnet that’s completing that project, who get paid at the very end. DCMS have even been known to sent out a representative to go and test the speeds before they issue the vouchers.” He also explained that the value of the vouchers sometimes fall short “by a few hundred pounds”. It isn’t hard to see that over the lifetime of a roll out, this could end up becoming a critical and overwhelming shortfall, potentially enough to force in administrators. It is also well known that regulatory hurdles and logistical complexities that impacted progress and damaged relationships with local residents. Access to crucial ducts and telegraph poles, often controlled by established players, created roadblocks for alt nets seeking to expand their networks. The technical expertise required to maintain and operate intricate fibre systems added another layer of complexity. One wonders against such challenging conditions how alt nets have survived, never mind thrived, at all. One has to feel for the frustrated residents in all this, waiting patiently for superfast broadband to be installed within an 18-24 month period. Securing buy-in from them at all was a challenge and took time. Having been on the receiving end of broken promises in the past, it took time to gain residents’ trust. What has happened now is a crushing disappointment, with no obvious solution on the horizon either. Roger Blakeway, our former CEO, is one such affected local. “With everything we know about the alt net landscape, I was always a bit skeptical to be honest, but I was hopeful. Now we are back where we started. It’s been a waste of two years.” What have we learned What’s happened to Broadway affects over a hundred jobs and many thousands of residents, but it does provide insight and a sage warning for other alt nets not yet facing administrators. Broadway Partners calls in administrators