ISPA’s annual full-day industry focused conference, the ISP Business Summit, welcomed over 150 representatives from across industry, government, academia, and civil society to listen in and participate in an essential event at a critical time for our industry.
Hosted at the offices of DLA Piper in London, the event included four in-depth panel discussions, several partner presentations and many insightful conversations throughout the day, creating a dynamic debate about the future of our sector.
While the discussions were diverse, covering a range of topics from network technology to government support, at the heart of these conversations were two key areas of focus; take-up and consolidation. Among the attendees, there was an air of positivity around both focal points, however there was also a general consensus that industry must tackle the current market challenges head-on to ensure the successful adoption of the critical infrastructure built (gigabit fibre) and develop a thriving and sustainable private sector.
Consolidation and Investment
Opening the day’s conversation, ISPA welcomed industry investors James Harraway of Infracapital and Jayne Longstaff of Macquarie, alongside Rajesh Sennik of KPMG, Jon Benger of Altnets and Dan Black of Viavi, to discuss the current state of play when it came to the investment and M&A activity in the UK fibre market. With our current challenging financial backdrop, questions were asked on what is the sector doing to cope? How will smaller ISPs survive in this climate and what will we be seeing in terms of market consolidation?
Providing an overview of the current financing of the market, James stated “Businesses (in the sector) are encountering difficulty in the form of a financing capacity… among the investment community the focus is transitioning to revenue and homes connected”.
Jayne affirmed James' point, commenting “Financing the market from a debt perspective is a lot more challenging… converting customers is key and now a proof of concept is needed to achieve the business plans and to secure investment”.
Rajesh from market consultancy KPMG painted a more positive picture of the investment market, suggesting that this is seen in many of the critical infrastructure markets when the space is dynamic - “industry will ebb and flow, but generally trend upward”.
When pondering the expected changes in the market, there was a consensus among the panel that consolidation will happen, James suggesting “in the short term, there will be more acquisitions rather than mergers”.
This panel stimulated a significant amount of debate and questions from the audience, who wanted to gain insights from the investors about their view of the market. To summarise the response, while investment is a challenge in the current macroeconomic environment it is not impossible to overcome and those who demonstrate revenue and take up will be able to secure it - consolidation will happen, in the short term this will likely come in the form of a buoyant acquisition period.
The government voice in the room, Deputy Director Rebecca Molyneux from the Department of Science, Innovation and Technology (DSIT) stated, “The government is neutral on market shape… what is important is making sure every property in the UK by 2030 is gigabit connected”.
The opening panel around consolidation and investment set the scene for what was the recurring theme throughout the day: driving take-up in the market. Industry has done fantastic work surpassing 50% FTTP coverage, but there is still work to be done in driving adoption of these services.
This was a consensus shared by all attendees, demonstrated when James Robinson of Assembly Research and moderator of the ‘Increasing awareness and driving take-up FTTP services’ panel asked the room, “Who does not agree with the phrase build it and the customers will come?”. The response was definitive, as most raised their hands in the air - expecting take-up as a natural progression FTTP deployment is not going to work, industry must adopt strategies that drive customers to the improved fibre provisions.
Helen Wylde of Wildanet emphasised this point, highlighting that it was now time for providers to look past their build strategies and “place the customer at the heart of what you do… revenue is customers and that’s your bottom line”. She went on to add “Speed is not what it's about, package is what it's about and customers want a package that works for them”.
The question then is how do ISPs tackle takeup? and what strategies can they implement to improve it?
Justin Leese of Ogi, when exploring the technology of a network, stipulated “in house experience is what is most important for the consumer and ISPs must have visibility of the network they provide”. He also raised the industry-wide debate of fibre advertising standards as a barrier to FTTP take-up, encouraging regulators to “change these standards and allow the real value of fibre networks to shine over those that are not fibre”.
Other areas of the discussion zeroed in on the messaging, brand and communication of an ISP, and its importance in driving take-up. Matthew Hare of Zzoomm stated from a challenger altnet perspective, “standing out for the customers is essential - something that is different from the corporates” - he went on to highlight Zzoomm’s yellow and pink brand colours, a differentiator from the market incumbents.
Michael Gonzales of Clarity, from a corporate communication strategy perspective, said ISPs’ needed to be “relentless” in their messaging. Coming from a background running communication campaigns for challengers in other critical infrastructure sectors he drew on the importance of having a “lean comms machine - be the first to get things out because you have the agility to do so”.
To round off the day’s discussions, an expert panel of industry leaders came together to discuss what the next 3 years will look like for the broadband industry in the UK, providing their insights into market consolidation and take-up.
The overwhelming view of the panel aligned with the consensus in the room when it came to the correlation between take-up and investment, Graeme Oxby of Community Fibre stating “investors want stable, predictable revenue”. Rob Hamlin of CityFibre also went on to say “bills and takeup are equally important to investors.. Cash is harder to get, but it's because nearly all altnets have missed their KPIs.”
Adam Dunlop of TalkTalk when commenting on industry take-up, stipulated “it is much more about customer pull rather than an industry push”, highlighting the need for industry to incentivise take-up, making the consumers realise the direct benefit of getting FTTP.
The points made on the closing panel and during the other conversations throughout the day highlighted the work that still has to be done to ensure the success of the sector as we deploy nationwide FTTP, including driving take-up and becoming more economically sustainable. However, one key positive made many speakers including our ISPA Chair Steve Leighton in his closing remarks - it was only two years ago that these events were dominated by the discussion of FTTP rollout, now we are predominantly talking about take-up and delivery, industry has come along way in a short space of time and will continue to trend upwards.