Fibre Archives - Oliver Helm

A wholesale approach to 5G delivery

May 12, 2020

An actively adopted wholesale market, where providers have clear standards and methodologies to conform to, will deliver 5G networks faster, at a lower cost, and in ways that enable competition.

May 12, 2020

5G Networks are rolling out. They offer unparalleled opportunities to enhance the connectivity we already rely upon (more so in the wake of COVID-19 than ever before) and to open new avenues in healthcare, distance working, AgriTech and a myriad of as of yet unconsidered opportunities. Reports from 2017 suggest that just a 10% increase in mobile broadband penetration could increase UK GDP by 0.6% – 2.8% and a report from O2 suggest that 5G infrastructure will contribute £7 billion a year in direct measures alone. The upside potential for UK PLCS is vast, but there are significant barriers to the deployment of 5G networks outside the super urban areas that make the business case harder. Underlying these problems is the high frequency required for 5G throughput (at least in the mobile, not Fixed Wireless Access deployments most people understand 5G to be). These high-frequencies have short reach and poor penetration to man-made objects like buildings, and so the density of cell and micro-cell sites will be far greater than that we’ve seen before. They will be dependant on ‘deep’ fibre connectivity. To deliver on coverage promises and objectives the deployment of 5G has five primary hurdles it will have to overcome: Connectivity between the millions of new cell sites needed;Ultra-high-resolution mapping data and sophisticated planning tools;Gaining secured access to sites (wayleaves); Spectrum; andDeployment capital. All of the above are capital intensive. Outside of the super urban areas, where population and demand density (alongside spectrum challenges) skew the economics, the cost of every provider building it’s own 5G network will be unnecessarily high, and in the more rural areas prohibitively so. Not only will this delay delivery to areas that could benefit from the technology the most, but the extreme capital demands will eliminate the opportunity for further competition in the market space. Network sharing agreements among the current MNOs will help, but they will lack the agility needed to…

Broadband Market Commentary

Might more competition in the broadband market drive up the consumer’s bill?

March 10, 2020

Whilst it is a commonly accepted economic principle that in a competitive market prices will drift towards marginal cost, the propensity of the UK consumer not to switch has driven this cost down – and that will change.

March 10, 2020

The UK is not a ‘switching’ market. On average only around 15% of consumers will switch broadband provider year on year, and it is this security that allows both the service providers (ISPs) and the infrastructure builders to drive prices down. Service Providers rely on the fact that a customer will be likely be with them for a period significantly longer than the initial contract term and the acceptance that a customer will be lost within their contract term is mitigated by this low switch rate. So whilst it is a commonly accepted economic principle that in a competitive market prices will drift towards marginal cost, the propensity of the UK consumer not to switch has driven this cost down – and that will change. The price the consumer pays is made up of a basket of items: the cost of acquiring the customer, the tech needed to deliver the service (and increasingly more of that is needed at customer premises as ubiquitous WiFi coverage is expected), estimated support and operating costs for the customer’s lifetime and both the wholesale buy price and technology to integrate with it. All of these areas look likely to be hit. In particular, the more competitive the market place the higher the cost of acquisition will be as providers have to compete harder to stand out and differentiate themselves on something other than just price. On the infrastructure layer competition may have an even greater inflationary effect which will be reflected in wholesale prices. Whilst interest rates are low it is possible for companies and the investors bankrolling them to accept a slower return, and a lower IRR based on lower weighted costs of capital, but this only holds true when relatively safe, and high levels of take up can be expected over the medium term. If the government elect not to extend the fibre rates relief (or preferably remove fibre tax all together)…