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Sky Broadband UK Seek Full Fibre ISP Alliance with Openreach Rivals UPDATE

Friday, Mar 15th, 2019 (7:55 am) - Score 13,772

The CEO of Sky UK (Sky Broadband), Stephen van Rooyen, has written a letter to the heads of several alternative “full fibre” (FTTP) network ISPs, seemingly in the hope of opening talks that could result in new wholesale or other agreements to help “increase investment” and “bring ultrafast broadband to more homes.”

At present it’s sometimes easy to forget that Sky Broadband is still the second biggest broadband provider in the United Kingdom with over 6 million subscribers, which is partly because most of their promotional activity tends to focus on Sky TV. However last year’s acquisition by Comcast opened the possibility of a change in direction but so far the new owner has been keen to keep their focus on TV services (here).

On top of this we should remind readers that Sky has already signed a wholesale agreement to deliver “ultrafast broadband” (FTTP and G.fast) products via Openreach’s rapidly growing national network (here). Some sources have tentatively indicated to us that we could see the first products from this surface during the latter part of this Spring. A new broadband router is also coming to help support that.

Despite this Sky, which has in recent years rejected the notion of building their own full fibre network, now appears to be seeking similar agreements with AltNet ISPs including Cityfibre, Gigaclear, Hyperoptic (currently they don’t offer any wholesale solutions) and TalkTalk (FibreNation). However The Telegraph caveats that these exploratory talks will not include discussion of joint investments in infrastructure (sounds more like they’re seeking favourable wholesale arrangements).

Such a move makes sense since a lot of those providers are currently targeting different areas for their deployments in order to minimise the competitive challenge of network overbuild. Sky would thus benefit (coverage) if they could harness several networks to reach as many people as possible.

The caveat here stems from several corners, not least of which is the complexity of trying to produce a simple set of consumers packages when working across several different networks (aggregation), each with different costs and service considerations.

On top of that Sky are arriving somewhat late to the party, not least with Cityfibre having already reached an agreement with ISP partner Vodefone to support their £2.5bn project to make its 1Gbps capable Fibre-to-the-Home (FTTH) broadband platform available to 5 million UK premises in 37 cities and towns by the end of 2024 (here). We assume this deal includes some degree of initial exclusivity.

Curiously the letter is also addressed to TalkTalk’s new FibreNation project, which is interesting because that ISP has already listed Sky Broadband as a wholesale partner for their new network (here). At present TalkTalk’s FTTP platform is only aiming to cover 100,000 UK premises over the next year or so, although they have plans to cover 3 million premises (finding an investment partner to help deliver on that has proven tricky).

Nevertheless Sky’s CEO correctly notes that having the country’s second largest ISP on-board would give any network a huge boost, not least by helping to stimulate consumer demand. Historically the lack of major ISP support has been a problem for some altnets, but the future market for “full fibre” services is gearing up to be much more fragmented than the old Openreach dominated one and thus Sky’s move makes a lot of sense.

Lest we forget that Sky has tentatively talked about moving their TV platform away from Satellite delivery in the future. So far this product (excluding their NOW TV sibling) hasn’t reached the UK, although it’s generally been focused more on catering for areas where a dish cannot be installed. However “full fibre” offers the possibility of completely shifting TV away from Satellite in a much more significant way.

UPDATE 18th March 2019

Some credible industry sources have indicated to us that Sky’s move may be more significant than what has so far been reported in the public domain and there seems to be a suggestion that they might eventually commit to exclusively support altnet footprints, including a possible path to migration.

At present this doesn’t change Sky’s current arrangement with Openreach but in theory it could eventually impact upon the incumbent in a very significant way (i.e. if one of their biggest customers jumped ship to use rival platforms in key UK urban markets). Openreach would be left with very few sizeable customers of their own (except in areas where no altnets are present), particularly if others like TalkTalk follow suit.

Granted it will take many years to build toward that kind of scale but Openreach may eventually have to adapt in order to counter such moves. Whether they do that through product changes or infrastructure build remains to be seen. Meanwhile Ofcom still needs to figure out how to adapt today’s existing copper centric market regulation to an increasingly full fibre world, a world where Openreach’s influence is just starting to wane.

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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18 Responses
  1. Avatar photo Leatk says:

    As a long time customer Sky broadband is a —-. You dont get internet access with them. You get a limited connection and “connected no internet”
    The customer service people are useless being unable to do anything other than read a script.

    1. Avatar photo Benzyme says:

      I have to say I have had completely the opposite experience.

      The service from Sky, for me, has been nothing short of excellent. Besides a slight drop in speed after 4 months (due to greater take-up of fibre in my area, and hence, crosstalk – which sky investigated thoroughly with an engineer sent out to my house at no charge) the customer service has been above and beyond what I expected when I became a customer, having heard all the horror stories of the past.

      Hopefully you manage to get your issues sorted. If your experience was a while ago, maybe try again. They definitely did used to be infamous for poor customer service, but they have really upped their game recently.

    2. Avatar photo alan says:

      Sky and Virgin are consistently the least complained about providers from the big market players. So i imagine the staff are more than capable of solving most issues for people.

    3. Avatar photo Mike says:

      Only fault on Sky is their Q router not having 4-ports.

  2. Avatar photo A_Builder says:

    It is interesting that someone is tying to form The Alt Net alliance to provide a counter point to the OR Gorilla and the VM 3.1 iceberg.

    Quite an odd situation is going to evolve with VM have a decent market penetration for Urban. But not much full fibre.

    The combined Alt Nets having a big chunk of real fibre (lets not get into the Hyper is 1G data cable fibre) for these purposes anything that can deliver symmetrical 1G is the real deal.

    And OR with a growing amount of FTTP.

    There are going to be some interesting commercial dynamics these three big units start to rub up against each other.

    Firstly VM are going to be forced to provide 3.1 with better backhaul at least in areas where there is Alt Net FTTP.

    Secondly OR are going to feel the pinch from the combined might of The Super Alt Net and VM 3.1 iceberg.

    Anyway Alt New 1G/1G activity is forcing OR and VM to up their game(s) which can only be good.

  3. Avatar photo Salek says:

    Sky should revisit the joint venture in York and expand the coverage, TalkTalk are already looking for investors

    1. Avatar photo New_Londoner says:

      The problem is that Sky isn’t looking to invest, just to expand its options with additional wholesale network providers. And TalkTalk doesn’t have a strong enough balance sheet to invest nie the expertise to build, so needs investors to provide funding and others to design and build the network.

  4. Avatar photo Meadmodj says:

    Possibly too late due to the exclusivity agreements. However going forward opening up Altnets to a range of ISPs can only be good for the consumer and may temper excessive overbuild. But I would prefer it to be a regulatory requirement rather than cosy agreements that still restrict choice.

    It should be in the interests of the network providers as the major ISPs can increase higher market share which in turn providers for better ROI which in turn should promote further expansion by that network provider and we get there quicker

    1. Mark-Jackson Mark Jackson says:

      Imposing a regulatory requirement like that on the fledging FTTP market might risk stifling investment. It’s expensive enough to build FTTP without being forced to wholesale the service out, particularly in rural areas.

      Ofcom can only really do that for those with Significant Market Power (SMP), like Openreach and KCOM. They haven’t even done it with Virgin Media yet, which gives you some idea of how big an operator would need to be before it’s even considered (also dependent upon the local market situation).

    2. Avatar photo Meadmodj says:

      I appreciate that but as you are aware I have been banging on about the possibility of significant geographical monopolies emerging in Ultra/Giga (FTTP rollouts and new build) and a supporter of a single infrastructure model (cheaper). Much depends on OR investment decisions but expecting them to replace the telephony network everywhere by 2040 isn’t a certain.

    3. Avatar photo Meadmodj says:

      Just to add a scenario:
      FTTP proves compelling benefit for consumer in Altnet area
      Altnet achieves significant market share in the area (70+%)
      OR business case for FTTP no longer commercial.
      Government wants 100% FTTP (met by Altnet)
      Government wants copper network withdrawn
      Broadband USO does not apply as FTTP available
      OR claims Telephony USO to replace copper network with Fibre
      Government has to either pay Telephony USO or change access rules or allow copper to continue.
      OR focus FTTP where they are first on the block and where there is USO subsidy
      Altnet/VM consumer only has restricted choice of ISPs and BT withdraws DSL products in area.

      Lots of ifs and buts. Not just OR reducing coverage but also impact on the smaller ISPs.

    4. Avatar photo Joe says:

      I agree with Mark here. I can’t see anything worse for the fttp market atm than regulatory interventions. The market looks to rapid change over the 2019-22 window with huge amounts of fttp coming on stream and 4/5G on top. The market will naturally consolodate in the altnets and it settles.

    5. Avatar photo alan says:

      “I have been banging on about the possibility of significant geographical monopolies emerging in Ultra/Giga (FTTP rollouts and new build)”

      Yes you have and nobody agrees with you.

      Its quite funny actually, looking at some of your other posts you think the USO to BT and costs of that to BT are unfair. You also believe LLU and its strangle hold on copper is wrong and preventing BT from going full fibre sooner. Well all this and more was imposed by regulations in the market. Regulations for whatever reason you do no agree with, yet here you are wanting more regulation imposed on others, when a lot of it you do not agree with in the first place. Quite bizarre, is it regulations you have an issue with or who they get applied to?

  5. Avatar photo TheJono says:

    Given Sky made the decision not to invest in it’s own fibre network some time ago, nor to go into partnership on an investment basis with anyone (and getting out of their JV in York to boot), is there not a case of stable door, horse and bolted here? Vodafone have put their money where their mouth is in Partnership with CityFibre. TalkTalk are progressing on their own; there was the article yesterday about how much Hyperoptic have achieved and are doing with their own funding. Another one today saying FullFibre are expanding with money. The lisy goes on.
    It’s almost like a letter to the headmaster asking if he can step in and tell the other children to let Little Jonnie play with them.
    Sky had it’s opportunity and could have led the market, but decided to fight BT vocally in public around the separation of Openreach instead. Perhaps the realisation is starting to hit home that they are standing at the port side all alone and with the boats fast disappearing into the distance.

  6. Avatar photo FibreBubble says:

    Sky stay out of the investment bubble but use their customer numbers to influence. Many players will be running out of cash to burn sooner or later and Openreach will not want to lose Sky. Pretty shrewd

    1. Avatar photo Kev says:

      I totally agree and whether you like them or not, if they can pull it off, it’s business and has saved them money during playing the game with their competitors.

  7. Avatar photo Robert Hawkes says:

    We live on a new housing estate in Scotland’s Central Belt and the only fibre we can get is full FTTP.

    Currently have TV Phone and landline Broadband with Sky and like their pricing and service, but need higher capacity Broadband. At the moment the only FTTP provider is BT Openreach but we dont really want to move away from Sky, BT charges are much higher.

    The sooner Sky roll out an FTTP service the better.

    1. Avatar photo Jay Ingram says:

      There are plenty of providers that will supply FTTP, they’re just not the well known ones. Also FTTH is an expensive product at the moment as there is a lot of cost involved with installing the infastructure.

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