The challenge for the new kids on the block

Alternative network providers, otherwise known as “altnets”, are, as the name suggests, a viable alternative to traditional telecoms providers. The UK is a market that has seen a mass development of altnets in the past few years. This three-part blog series will explore the opportunities and challenges these companies face, and how they can be overcome.

In our previous blog, we delved into the dynamic world of alternative network providers, or altnets, and uncovered the opportunities they're seizing in the broadband market. Now, as the landscape continues to shift, we'll explore how these emerging players can navigate the challenges and carve out a lasting presence in an industry dominated by legacy providers.

In an era of unprecedented technological advancement and increasing digital demands, altnets find themselves at a critical juncture. While they've made significant strides by introducing innovative broadband solutions, the market's intensity has heightened. Legacy providers are digging in their heels and adapting to remain competitive. For altnets, survival depends on recalibrating their strategies to capture a larger slice of the broadband pie. This second blog will explore how altnets can attract more customers and encourage further investment to continue growing their subscriber base.

Moving away from cheap and cheerful – differentiating with tech and service

In the race to deploy fibre and hit targets for homes passed, some altnets have opted for cheaper offers to try and undercut incumbents. However, these can often incorporate lower-quality technology solutions that are not equipped to meet the ever-growing demands of their customers or compete with the incumbent providers’ tech. Long-term supply chain issues have plagued the tech and telecoms industry for several years – meaning huge price increases for components and longer waits for equipment from the major original equipment manufacturers (OEMs). Traditionally, these providers have prioritised their biggest customers (the major ISPs) and so smaller companies, like altnets, have been pushed to the back of the line.

However, the game is far from over and price should not, and frankly can’t, be the only differentiator anymore. Forward-thinking altnets recognise that true resilience lies in technological innovation. For example, CityFibre and Wessex Internet have been touting the fact that they’ve been deploying XGS-PON. This technology can enable ultra-fast broadband of up to 10Gbps symmetrical upload and download – meeting the demands of the next generation of high-bandwidth services.

The altnets must also look at how they can introduce software-driven and intelligent networks that offer higher efficiency and automation. The agility and efficiency offered by these networks can expedite deployment, optimize buildouts, and enhance customer experiences. Through multi-vendor technology and real-time issue resolution, altnets can demonstrate their commitment to superior service.

It’s this innovative approach towards building networks that will help the altnets secure further investment. The UK government is investing heavily into Project Gigabit, its ￡5 billion investment plan aiming to deliver next-generation gigabit broadband to over a million households and businesses across the UK, prioritising hard-to-reach areas. The government has already awarded funding to altnets, including CityFibre. But to hand out further investment to smaller altnets, it will be looking for guarantees that deployments can happen within a two-year timeframe, using next-generation, high-performance technology. If altnets can demonstrate this commitment and ability, they will be well-positioned for further government investment.

Exploring new channels of revenue

In the quest for financial viability, altnets must also explore alternative revenue streams. Offering broadband services to businesses could be a significant opportunity. To do this, the altnets need to communicate the benefits of their broadband services to local businesses. This includes highlighting advantages such as faster speeds, symmetrical upload/download speeds, low latency, and reliable connectivity. They need effective marketing campaigns to highlight how these benefits can improve business productivity, support cloud-based applications, enable remote work, enhance communication, and facilitate digital transformation.

Flexibility and customisation will be key selling points for businesses that require tailored connectivity solutions. This may involve providing dedicated connections, scalable bandwidth options, advanced network security features, or managed services tailored to an organisation's needs. Altnets should still offer competitive pricing packages and contract terms that are attractive to businesses. Pricing structures may include different tiers based on bandwidth requirements or offer bundled services that cater to specific business needs.

Another revenue channel that can be explored by altnets is through the wholesale capabilities of their networks. This is something that many altnets haven’t tested or prioritised as they’ve rolled out their networks, but something they must consider as they look to expand their services. By interconnecting with multiple partners, altnets expand their reach and provide connectivity options to a broader customer base.

Building a network, to build a network

As we look ahead, it's evident that altnets shouldn't traverse this challenging terrain alone. Establishing a network of industry partners is a strategic move that can significantly impact their future success. Collaborating with multiple stakeholders extends their reach and provides connectivity solutions to a wider customer base.

In our next blog, we'll delve deeper into the importance of building a collaborative ecosystem, exploring how partnerships can equip altnets to tackle the demands of tomorrow's bandwidth-intensive applications. Stay tuned as we unravel the intricacies of forging alliances that will shape the future of altnets in the ever-evolving world of broadband.