On the south-west coast of England, Jurassic Fibre is hoping to connect a million rural customers to symmetric full fibre with a speed of 1Gbps – in a region where many have had to be satisfied with 1Mbps on ADSL and precious little mobile coverage.
Further north, Gigaloch in Scotland is planning to connect a more modest 62,000 homes to full fibre in the next seven years or so.
Both of those projects – and dozens more across the UK – have two things in common: they are building fibre-to-the-home (FTTH) where none existed before; and they are largely financed from private equity.
B4RN (see picture), which stands for “broadband for the rural north” but is pronounced “barn”, is doing something different: it’s a community benefit organisation, not for profit. “When we make a profit, it has to go back for the betterment of the community, such as a swimming pool,” says B4RN volunteer Mark Gray, a local radio presenter in rural Lancashire, in north-west England.
But a profit is still a long way off. “We started 10 years ago round a kitchen table, and we were originally a mesh Wifi network. We set up because there are people 2km up the hill with 2Mbps download and no upload.”
One of B4RN’s customers is John Colton, in rural Cumbria in north-west England, but he is also CTO of Gigaloch in Scotland. “In my own home with B4RN I get one gig symmetric for £30 a month – that’s fantastic,” he tells me on a perfect Zoom call. Perfect except for my fibre-to-the-cabinet (FTTC) connection in inner south-east London, with 30-year-old copper for the last 300m; copper that often short-circuits when it rains but delivers 50Mbps down and 15Mbps up when it’s fine and dry.
All these – and dozens more – are in a race with BT’s wholesale last-mile fibre and copper subsidiary Openreach, which has an ambitious plan to put fibre into 25 million homes and businesses by the end of 2026, says James Tappenden, the unit’s director of fibre first. “We are now at 5.5 million, so we have 19.5 million to go.”
Openreach’s main competitors for this market are urban fibre companies such as CityFibre, backed by Goldman Sachs and others, G.Network, which raised £1 billion in equity and loans at the end of 2020, Hyperoptic, backed two years ago by KKR with a reported £500 million, and Community Fibre, funded by investors such as Warburg Pincus.
There’s also Virgin Media O2, the result of this year’s merger between Liberty Global’s UK cable network and Telefónica’s UK mobile network.
Community Fibre aims to pass – that is, have FTTH available to, if they want it – 400,000 homes in London by the end of 2021. “We had 200,000 [passed] at the end of 2020,” says Community Fibre’s CEO, Graeme Oxby.
Moving to the country
Community Fibre is also accelerating in a different way, by taking over a rural operator, Box Broadband, to the south-west of London. “Box Broadband has 7,000 homes passed,” says Oxby. “We expect to be at 200,000 by the end of 2024.”
Consolidation is in the air. If you want a historical comparison, look at the UK’s cable TV industry, which merged from dozens of government-licensed franchises in the 1990s, down to three operators – Cable & Wireless Communications, NTL and Telewest – and finally to one, Virgin Media, in 2006, before it merged with O2 this year.
FTTH isn’t a standard Virgin Media offers. It has extensive fibre in its network but uses copper coaxial cable for the last leg: a network that more than one rival pointed out to me is now decades old. Earlier this year it told Ofcom, the UK regulator, of plans to expand from 14.9 million households passed now to 17 million by 2026.
That 14.9 million figure has remained largely static for 20-25 years, when Virgin Media’s predecessor franchises completed their build-out, leaving many homes, even in dense urban areas, untouched.
Today’s FTTH operations do not need a franchise from national or local government in the UK, though they do need a licence from Ofcom. They can and do sometimes compete in the same area: something that is likely to hasten the arrival of consolidation.
Rural fibre operations can attract subsidy from the UK national government’s Department of Digital, Culture, Media and Sport (DCMS), which lists an extraordinary 186 eligible telcos – from a company called 1310, named after one of the wavelengths of laser light, in nanometres, via Abthorpe Broadband Association and Millennium Telecom to Zzoomm.
Many of the people in the rural fibre industry in the UK started their careers with BT or one of the early cable operators. Steve Garrood, CCO of Jurassic Fibre, was at Telewest 20 years ago, looking after major accounts. Jeremy Steventon-Barnes, now CTO of Lightspeed Broadband, an FTTH operator in the east of England, spent a decade at BT, including a long spell with Superfast Cornwall, a pioneering project to build rural fibre into England’s furthest west county, and one of its poorest – though many inhabitants of Cornwall would dispute that it’s part of England.
Steventon-Barnes describes himself on LinkedIn as an “FTTH pioneer, internet veteran [and] dotcom survivor”. Now, “we are focusing on underserved market towns,” he tells me. Starting in Lincolnshire in the East Midlands of England, Lightspeed is moving to Norfolk and Suffolk in East Anglia – that bulge that sticks out into the North Sea – followed by rural Essex, to the east of London.
There are no monopolies. “We are bumping into people [competitors, that is] here and there but it’s not a concern. It becomes a concern when Openreach catches up,” he says. “Openreach has us on its market towns list for the end of 2024. But being the first mover is good. The reality is that in a small market town it is not sustainable to have Openreach plus two competitors. Probably Openreach plus one.”
Nevertheless, Openreach infrastructure is an essential ingredient in many of these rural fibre operators’ plans, thanks to a ruling by Ofcom on physical infrastructure access (PIA). This gives competitors access to Openreach’s poles and ducts at a fair price.
“The beauty is that this leads to rapid deployment,” says Oxby at Community Fibre. I ask: why isn’t Openreach using its own ducts and fibres to speed up its FTTH deployment? “It’s about priorities, isn’t it, based on their own internal decisions?” he says. “We haven’t tried to second-guess them. And people need a choice.”
Sometimes ducts are full of existing cables and sometimes poles are unusable. Tappenden at Openreach admits: “We are using what we’ve got, ducts and poles – but there are bits that are full or broken.”
Rotten poles
Gigaloch’s Colton explains: “Often BT has poles that can’t be climbed.” For safety reasons, he means: the poles are rotten. In order to put fibre on such a pole “you need a cherry-picker, and that means you can block the track, so that locals have to drive 50 miles round”. Not a good way to win favour from your future customers who are stuck on narrow Scottish roads.
Gigaloch, still in its early stages, is “not doing any PIA yet, but we have not ruled it out”, he says. The alternative is to dig your own. The company is avoiding overhead cables altogether – “they get blown down”, he says. Scottish winters can be cold.
“We want a robust underground network.” And while you are digging, you might as well put as much in the trench as possible. “We use micro-ducts with 12mm core and 16mm outside, with 96 or 144 fibres, maybe 288 in some cases. Most of the cost is the plastics,” he notes, joking that “fibre is cheaper than noodles”.
Fortunately, if you’re a community organisation it can be easier to dig than if you’re a giant company. You talk to the landowners, says B4RN’s Gray: “We don’t spend on wayleaves. The landowners let us on to their land,” he says – perhaps for a deal on broadband internet access. B4RN uses contractors but also volunteers, building the network as a community project. “Highlight the volunteers,” he asks me. “They deserve a bit of limelight. They are remarkable people.”
Being part of the community is key, notes Colton at Gigaloch, admitting he can have difficulty in pronouncing some of the Scottish names. “Gigaloch” itself is one such challenge: non-Scots should note that the “ch” in “Gigaloch” is like the sound at the end of German “ich”.
Jurassic Fibre also regards itself as a community organisation, although it’s backed by Octopus Investments, part of the group that also owns UK electricity supplier Octopus Energy. “We are sitting there with a mandate to deliver gigabit Britain,” says Garrood. “We have jumped on giving people the access.”
It has grown in two years from five people to nearly 300 “all working in the south-west, rolling out fibre infrastructure, building very rapidly, using PIA. Jurassic is completely different – we are just community builders.”
Replacing the dinosaurs
Until mid-September, its home page featured a dinosaur – because the Jurassic coast of Dorset is where 19th-century palaeontologist Mary Anning discovered the first dinosaur fossils. Now, perhaps in tribute to the 2020 Kate Winslet movie about Anning, an ammonite has replaced the dinosaur.
Jurassic Fibre has moved on since its original brief of aiming to pass 350,000 households. “Now we are building out and due for phase three, looking at a million homes,” says Garrood. It started from three points of presence, “but there will be 22 by this year, including Weymouth, Dorchester, Glastonbury and Teignmouth. We have rolling contracts and free installation – no one else does this in the UK. Quality of service is important.”
Many places where the so-called altnets are building already have “reasonably good” FTTC, the hybrid system with VDSL over copper providing the last few hundred metres. “I have played my part in that,” says Steventon-Barnes, harking back to his old days in BT. “A lot of the towns we are building [at Lightspeed] were late to FTTC,” he adds.
There was “a lot of pressure” a decade ago in BT and Openreach “to get the machinery to build FTTH”, he recalls. “The reality is that a lot of the effort to build FTTC five to 10 years ago could have yielded FTTH with the same effort”, backed by a government subsidy – “but the machinery wasn’t there”.
Missed opportunity
Mind you, gather enough veteran BT and other UK telecoms people together and someone will start talking about the missed opportunity in the mid-1980s when, apparently, BT came up with a costed plan to build fibre direct to most of the country’s homes.
Margaret Thatcher’s Conservative government blocked BT’s proposals, the story goes, because she wanted to introduce competition – and, probably, because she disliked BT as a former state institution.
Liv Garfield, then a BT executive who was later CEO of Openreach, “got fibre investment rolling from 2008 onwards and right in the middle of the financial crisis”, recalls Steventon-Barnes.
“A lot of us believed that FTTC was an unnecessary interim step. One might as well say that, had that investment been made, [urban fibre competitors] CityFibre and Gigaclear would not have happened.”
Gigaclear, also with a rural focus, is owned by Infracapital, the infrastructure arm of investment group M&G.
Its CEO is Gareth Williams, CEO of Interoute until GTT bought it out for $2.3 billion in 2018. “We know now it’s really clear there is constant growth in demand for processing power, storage and speed,” says Steventon-Barnes at Lightspeed.
“What we are doing is identifying the underserved market about meeting that underserved need. It’s not about speed but the end-to-end experience of full fibre. It doesn’t go down when it’s raining.” Ah, yes, the rain, leaking into my 30-year-old copper. (I watched it being installed.)
Affordable competition
PIA has been crucial, he adds. “Ofcom has done a fantastic job with PIA. [The regulator] makes it usable at an affordable cost that enables competition.”
So what technology are these companies using? The bad news for Huawei, which has been embedded in broadband networks in the UK, is that it is being phased out. Investors are concerned that the government will extend its 2020 classification of the Chinese company as a “high-risk vendor” of 5G and add fibre. Huawei denies all suggestions that it poses a security risk.
“We have quite a lot of Huawei equipment, such as routers,” says Oxby at Community Fibre. “They have been a good provider. Huawei will continue to invest in the technology.” But, wanting to de-risk the investment, his company has moved to Adtran, while its Box Broadband acquisition uses Nokia.
Jurassic Fibre has also taken note of the vibes around Huawei. “We started with Huawei and we made a bold decision to move to Nokia a year and a half ago,” says Garrood.
Lightspeed is also a Nokia customer for its network, says Steventon-Barnes, who also mentions Adtran and Calix. “We are very happy with our Nokia relationship. Nokia was slow to embrace the altnet market, but it now has a very strong offer in terms of end-to-end services.”
Gigaloch has “stayed away from Huawei”, says Colton. It uses kit from a Danish supplier, DKT.
Openreach, the huge competitor looming over the horizon, has stopped installing Huawei kit, admits Tappenden. The company has switched to Nokia as its main supplier, followed by Adtran. He hopes that Huawei will plateau at a still significant level of “less than 35%”.
B4RN is different: “Our routers are from Zyxel Communications,” a Taiwanese company, says Gray.
Another key decision is which companies provide the internet connection. Steventon-Barnes lists euNetworks, Neos, Telia Carrier and Zayo. “It’s a question of going out to the market – you have to do all the tier one carrier has to do,” he adds.
