CityFibre Tout Anchor Tenant Model to Solve UK Fibre Broadband Woes

A new report from Oxera and CityFibre, which builds fibre optic (FTTH) networks for big towns and cities around the United Kingdom, has suggested that an “anchor tenant” (shared fibre) approach to the roll-out of new superfast broadband ISP platforms could offer an “alternative, yet complementary” approach to BT’s network.

In the retail world an “anchor tenant” is usually one of the biggest stores in a shopping mall, such as Debenhams, which is typically one that also comes with a certain level of recognition and can attract other tenants.

CityFibre believes that a similar model could provide a “viable way to access increased private investment to address current under-investment” in broadband and would thus help to turn both the UK and EU targets into a reality. Over time the operator believes that it would also extend the coverage of fibre optic broadband services and lower costs to be “comparable [with] LLU pricing“.

The operator envisages that it would build, own and operate the shared fibre networks “without the need for ownership participation by the incumbent” or ISPs. Instead, commitments to use the CityFibre network would be obtained through contractual arrangements between CityFibre and “anchor tenants” that would eventually help in “facilitating private investment“.

Greg Mesch, CEO of CityFibre, said:

“CityFibre is providing towns and cities with a real, future-proof, competitive alternative to an incumbent-led monopoly infrastructure. This report has emphasised the strength of our model, and the benefits it provides to all stakeholders. Importantly, cities will benefit from ubiquitous fibre infrastructure which puts the foundations in place for business growth and job creation, as indicated by other studies which estimate that a fibre-rich city can increase its annual GDP by up to 2%.

In order to understand the potential of the model, you need only look at the success of the Google Fiber project in Kansas City, and Gigler in Bournemouth. True gigabit level services are just around the corner, if service providers have the courage to see what’s inevitable.”

CityFibres FTTH network in Bournemouth, which is delivered through local ISP Gigler, has had a rocky history and it’s difficult to gauge the “success” of such an approach when we’re not even sure how many active subscribers it has or what profit is being made. On top of that both BT and Virgin Media have still been busy rolling out rival superfast broadband services in the same area.

Other projects, like the publicly funded and debt ridden Digital Region network in South Yorkshire, which acts as an alternative to BT but has also had difficulty attracting big ISPs and thus subscribers to its platform, have shown that taking on an incumbent, even when you might potentially have a better product (in some areas), is often fraught with difficulties.

Never the less CityFibre believes that its model might just be the “catalyst that could result in a longer-term reshaping of the industry“. Indeed the proposition does have some merit and could even gain greater acceptance if BT were to get on-board but achieving such a feat could prove impossible difficult.

The alternative is perhaps to hope for stiffer regulation and significant policy changes from the government, which is rarely a good bet, or to adopt a more community funded and or built approach like B4RN. In fact there are a lot of different approaches to delivering better broadband but turning models into reality is always the difficult part and usually doesn’t come cheap, especially for FTTH.