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Zen Internet Talks Ending the Fibre Tax and Working with Altnet ISPs

Saturday, November 9th, 2019 (12:01 am) - Score 4,522

In a new interview the founder and chairman of UK ISP Zen Internet, Richard Tang, has called for the “fibre tax” to be scrapped in order to boost “full fibre” broadband and explains some of the problems of working with smaller altnet ISPs. On top of that he also warns about the difficulties of trying to regulate internet content.

There’s a story that Richard likes to tell about how Zen originally started life with a chat in the pub during the summer of 1995, back in the early days when internet access was still a tremendously slow (narrowband dialup) but fascinating new experience that less than 2% of the UK population were using.

I asked my brother Dan if he thought the Internet would take off, and he said “yes”. We set up a tiny network in a shared office in Rochdale – six modems, a couple of Linux boxes, and a 64kbps leased line to the Internet – and then in October 1995 we opened our doors for business,” said Richard.

Since then a lot has changed and today Zen Internet is arguably not only one of the most established, but also one of the best rated consumer and business broadband ISPs in the UK market. The provider is currently home to over 500 staff, around 126,000 broadband customers and last year delivered an annual turnover of £71 million. Richard attributes much of this success to the provider’s “people-first” approach.

An Ever Changing Landscape

Naturally this also makes Richard an ideal person to ask about the current broadband market and its many challenges, not least since his “long-term dream goal” is for Zen to eventually become one of the market’s five largest providers. Obviously they still have quite a way to go on that front but they’re moving in the right direction.

In particular we were keen to know whether, given the rising choice of alternative networks (e.g. Cityfibre and the possibility of Virgin Media going wholesale), Zen would ever diversify and start working with other platforms instead of just the underlying one provided by Openreach (BT). Richard clearly welcomes the extra competition for Openreachas a good thing” but he also has a warning.

When it comes to the delivery of fibre networks, there is a lot more to it than simply putting the fibre in the ground. There is a massive amount of additional work needed to develop the systems, processes, products, and services … Openreach has had decades to develop and refine all these things,” said Richard. “Zen would have to do a substantial amount of on-boarding and integration work … [and] … with the exception of Virgin Media, the footprints today of the ‘AltNets’ are too small to make this … worthwhile.”

Richard also expressed concern about the Fibre Tax (business rates on fibre). At present new fibre builders are currently benefiting from a rates relief holiday of 5 years in England and 10 in Scotland, although such networks are often planned over 15-20 years. “At Zen, we need to continually upgrade our network, but the existence of a fibre tax makes some upgrade routes significantly less attractive … If the Government is genuinely keen on a full fibre future, I believe they should scrap fibre tax altogether,” added Richard.

Zen’s Chairman also stresses that hybrid fibre technologies, such as G.fast, should not be overlooked. “For a proportion of the UK (e.g. those close enough to the cabinet to get 250 Mbps or faster), G.fast could supply all the broadband speed that customers could need for the next ten years and beyond. A hybrid approach of full-fibre and G.fast could therefore achieve the same end-result quicker and at less cost,” said Richard, although he agrees that “full fibre for everyone” is still the ultimate goal.

One of several other areas that this interview touches upon has to do with the thorny issue of internet content and regulation. The Government’s Online Harms White Paper has made no secret of its desire to tackle fake news, hate speech, conspiracy theories and more via websites and social networks (here). On the one hand Richard welcomes the principle, but he notes that there are some very real problems with trying to regulate it.

Regulators tend to work well where there can be clear measurements and you can evaluate if something crosses the line. But the grey areas in this case are immeasurably bigger when it comes to what is right or wrong. To give an example, when does a Twitter exchange cross the line from being heated to being considered bullying and one that requires proactive action?,” pondered Richard.

Check out the full interview below for more.

Interview with Richard Tang of Zen Internet

Question 1: No doubt Zen has noticed the rapid rise of alternative network providers across the UK, with most focusing upon the deployment of full fibre infrastructure. Even Virgin Media’s parent (Liberty Global) now appears to be considering the possibility of a wholesale solution for access to their network.

Like many ISPs, Zen has traditionally taken their products from Openreach’s infrastructure. Can you now see this changing in the future and would working with other networks make it more challenging to create a streamlined set of products (i.e. FTTP from multiple operators with different wholesale costs/rules in order to achieve the widest coverage)?

Richard’s Answer:

The prospect of Openreach having some full-fibre competition is a good thing, potentially offering both wholesale customers like Zen, and end users, more choice. However, Openreach has a massive head start and the competition has a mountain to climb to catch up. The full-fibre challengers have ambitious plans and are well funded; however, they have two major challenges ahead of them.

Firstly, when it comes to the delivery of fibre networks, there is a lot more to it than simply putting the fibre in the ground. There is a massive amount of additional work needed to develop the systems, processes, products, and services that are essential for the delivery of a complete broadband service. Openreach has had decades to develop and refine all these things, whereas many of these new players are still at the early stages. At Zen, it took us several years with a fair-sized software team to develop our Wholesale systems, and the opportunities to speed up this process with additional funding were limited. I believe some of the alternative full-fibre providers may have underestimated the time it will take them to implement these essential new systems.

Secondly, it will be difficult for these providers to differentiate their offering from that of Openreach, particularly given Openreach’s seemingly ever-increasing ambitions for FTTP. Zen would have to do a substantial amount of on-boarding and integration work before offering services based on an alternative full-fibre provider. With the exception of Virgin Media, the footprints today of the “AltNets” are too small to make this additional work worthwhile. And, as mentioned, we can’t yet rely on the AltNets having mature systems to integrate to, meaning more manual work to provision and manage the services, resulting in more cost and a poorer end-user experience. Even if the AltNets are able to deliver on their ambitions and achieve significant scale, I would still struggle to see how they will differentiate themselves from Openreach. The tiered discount scheme for fibre broadband from Openreach gives us a big incentive to continue to buy from them, so the AltNets would need a very compelling proposition to entice us away.

Although I’ve highlighted big challenges ahead for the AltNet full-fibre providers, I do believe that increased competition to Openreach is a good thing in the long-term – not just for end-users but also for Openreach themselves. That thought provides me with some incentive to want to support the AltNets at some point in the future.

Flick over to page 2 for more..

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Mark Jackson
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 Twitter, , Facebook and Linkedin.
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32 Responses
  1. Avatar Mike

    The only certainties in life are death and taxes.

  2. Avatar chris conder

    I have always been a great admirer of Zen, never heard a bad word about it, unlike a lot of other ISPs. This interview proves they are fantastic. Scrapping the fibre tax is essential if we are to progress, many have been campaigning for years for this. His approach is spot on. I wish he was running openreach…

    Regarding online safety, there is not much government can do, they won’t employ clever enough people, they tend to lock them up instead. GDPR is a prime example of trying to regulate, now one can’t hardly do anything to help people, yet the spammers continue to harrass folk with emails, phone calls and junk mail. I tried to report a phone line down to Sky the other day, and they wouldn’t even test the line unless I knew the customer’s password. The elderly lady in question didn’t even know it herself… so because of GDPR we got no further. Even escalating the call to the line manager wouldn’t let us report it. Madness.

    Well done Richard and Zen, keep rockin. As you rightly point out, competition is King, and the Altnets are saving us. If it wasn’t for Virgin and the early ones we’d still be on dial up.

    • Avatar The Facts

      Or we would all have fibre if Maggie hadn’t stopped it.

    • Avatar GNewton

      “Or we would all have fibre if Maggie hadn’t stopped it.”

      This is ancient past. Let’s stick to the facts here: Nobody has prevented your beloved BT doing fibre now for ages.

    • Avatar The Facts

      Troll record – 1hr 20min.

    • Avatar dave

      GNewton is right though.

      We all know that we are heading towards 1Gbps (and eventually, more) over fibre, so why doesn’t BT focus it’s efforts (and money) on this?

      Also just because BT once proposed to fibre up the whole country, doesn’t mean they would have actually done it to literally 100% coverage. I bet some areas would be waiting even now.

      Is there any country in the world with 100% fibre coverage?

    • Avatar beany

      Thatcher has been dead for over a decade and nothing was there to stop BT near enough a decade before that. I guess some BT juice drinkers will just blame anything.

    • Avatar beany

      EDIT Thatcher has been dead for over HALF a decade.

    • Avatar TheFacts

      Altnets have had since 1985 to fibre all the UK. Why did VM’s previous cable companies give up in many areas 20? years ago?

    • Avatar Roger

      I think you are missing one key fact. BT wanted to roll out a UK Fiber network as long as it maintained its monopoly.

      We can only speculate on what they would mean for options, feature sets and price if BT was still the only provider in the UK. It’s not like they had a good track record up until that point. Don’t forget that between 1965 and 1982 BT’s view of innovation was the Trimphone for its consumer base.

    • Avatar beany

      “Altnets have had since 1985 to fibre all the UK. Why did VM’s previous cable companies give up in many areas 20? years ago?”

      1. Home internet or the world wide web did not exist in 1985.

      2. Virgin Media did not exist until 2006, so how they have had 20 years i guess only you would know.

      3. Most important… You really are dumb.

    • Avatar Go away

      BT the useless company and followers that like to blame others for it deficiencies.

    • Avatar Dave

      “1. Home internet or the world wide web did not exist in 1985.”

      If BT thought there was an advantage to fibre at that time or could see the future advantages, then why not the cable companies too?

      “2. Virgin Media did not exist until 2006, so how they have had 20 years i guess only you would know.”

      Read again. “Why did VM’s PREVIOUS [emphasis mine] cable companies give up”. Any one of the cable companies which existed pre-Virgin Media could have rolled out fibre but none did. Virgin Media could have been rolling out fibre for the last 13 years but has actually done very little, less than BT even!

      “3. Most important… You really are dumb.”

      Pot/Kettle.

    • Avatar beany

      “If BT thought there was an advantage to fibre at that time or could see the future advantages, then why not the cable companies too?”

      You would have to ask the facts who seems to think the internet was around back then.

      “Read again. “Why did VM’s PREVIOUS [emphasis mine] cable companies give up”. Any one of the cable companies which existed pre-Virgin Media could have rolled out fibre but none did. Virgin Media could have been rolling out fibre for the last 13 years but has actually done very little, less than BT even!”

      As stated VM did not exist until 2006. If you and the facts are referring to why Telewest did not do anything to forward the internet in this country, that argument is also void. If you want to know who did what and who was first to do what it goes like this..

      Pipex 1992 First dial up internet connection in the UK.

      Telewest (who you and he may be referring to) First ADSL connection in March 2000.

      Easynet group first ADSL2/+ connection end of 2004 quickly followed by BE unlimited in 2005

      FTTC first test performed by lincs in partnership with Oracle, BT then sniffed in on the action and signed a deal with them in 2008 to develop the tech further.

      Oh and the kicker…

      FTTP
      2008, H2O Networks, rolled out Fibrecity, offering Residential FTTH in Bournemouth, Northampton and Dundee.

      2011 KCOM begins in Hull and East Yorkshire network.
      2011 Hyperoptic launched a 1Gbit/s FTTH service in London, today it is in Manchester, Birmingham, Eastbourne, Glasgow and Sheffield.

      Meanwhile….
      In 2009, BT announced that its internal network division, Openreach, would connect 2.5 million British homes to ultra-fast FTTP by 2012.

      It failed.

      ““3. Most important… You really are dumb.”

      Pot/Kettle.”

      Feel free to dismiss actual facts and history.
      Ill link to where it all came from if you are stupid enough to try to.

    • Avatar dave

      Your history is irrelevant as it is all very Internet centric, which we all know wasn’t used by consumers in 1985.

      Fibre could very well have been used for TV and radio delivery for example, which would have suited the cable companies well.

      It’s likely we would have seen online services similar to CompuServe, AOL etc too (though obviously they would have been fairly quickly replaced by Internet access).

      Fibre is also less of a maintenance headache and a lot of costs would have been saved by now.

      Also, Telewest was not the only cable company before Virgin Media. NTL & Telewest merged to form Virgin Media but there were many others before that happened: https://en.wikipedia.org/wiki/Timeline_of_cable_television_in_the_United_Kingdom

    • Avatar beany

      “Your history is irrelevant as it is all very Internet centric, which we all know wasn’t used by consumers in 1985.”

      Of course, that is the point is it not. How history is irrelevant to who did what in internet networks is the entire point.

      “Fibre could very well have been used for TV and radio delivery for example, which would have suited the cable companies well.”

      No company anywhere in the world used or planned to use Fibre for home TV or Internet back in 1985. Be it BT or cable companies.

      “Fibre is also less of a maintenance headache and a lot of costs would have been saved by now.”

      Again nobody anywhere had planned any nationwide fibre network back in 1985.

      TV networks has nothing to do with it.

      “Also, Telewest was not the only cable company before Virgin Media. NTL & Telewest merged to form Virgin Media but there were many others before that happened:”

      The majority of which had nothing to do with any type of telecoms network. TV which was the focus of everything up until around 1990 was in the most part small regional trials, volunteers or local government funded projects. All TV of that time was also low bandwidth so the thought of even laying expensive at the time fibre cable rather than a cheap coax is utterly ridiculous.

      Quite what your point is i dunno an Altnet was the first to do FTTP, not BT, not cable and they did it because they wanted to do it a whole decade ago and several years before BT.

      BT have done NOTHING first in this country NOT TV, NOT phone, NOT internet and with regards to the internet, to suggest others should do even more like lay fibre networks before BT when BT have done nothing first is frankly hilarious.

    • Avatar dave

      I cannot be bothered to argue with your idiotic ramblings, even the bits which are provably false.

      Adios.

    • Avatar beany

      “I cannot be bothered to argue…”

      Thank you for your time.
      🙂

    • Avatar The Facts

      @Roger – BT in its current form did not exist until 1984. Until then a nationalised industry.

      You may not be aware of telecomms innovation between 1965 and 1982 like Prestel, single mode fibre and many patents.

    • Avatar CarlT

      Your GDPR example is nothing to do with the GDPR. You would have received the same response in the past under the Data Protection Act.

  3. Avatar Archie

    If Virgin allow other ISPs to use their network does that mean we can finally use a different modem instead of Virgin’s hub?

  4. Avatar A_Builder

    The bit that Richard is missing with the Gfast conversation are the gaps in the coverage.

    It is quite possible, as on my street, that I have fantastic Gfast and the guy who lives next to the pod can’t get it because the line loop back to him from my the pole outside the house. How are those gaps filled? If you start doing micro footprint fiber deployments This gets super expensive and by the back of my fag packet costs nearly as much doing a whole street to the pole/chamber.

    So I would counter that and say that Gfast makes sense where the coverage from the PCP is even and where the copper lines are good and in the main short. I suspect *total guess* that OR have used the know line properties taken with uptake rates on 76Mbs packages to select relevant PCPs for GFast.

    Although I suspect the solution set for the above is getting quite small.

    • Avatar Laurence "GreenReaper" Parry

      For me, the most I can get from VDSL2 at ~750m from the cabinet is 7.5/45 Mbps – sufficient for many things, but hardly ideal. G.fast will do nothing for me.

      Meanwhile, Virgin can do 500Mbps, and probably 1Gbps in the mid-term. Without fibre, Zen will probably not get my service and I will be worse off too if I want a higher level of service. (Currently I have both, but I expect to drop that soon.)

      If there is a fibre tax it should be levied equally on everyone using fibre to get to their distribution nodes – including Virgin and cellular providers. But realistically, the best approach might be not to tax at all.

  5. Avatar Martin Espose

    It’s hard to really listen to what he says.
    One of the longest standing ISPs, but they have such an insignificant customer base. Year after year of failure to grow that base. Undoubtedly they have a gold plated reputation, but seem happy to just stick with their loyal customers who pay over the odds.

  6. Avatar Altnets r us

    What Richard has achieved with Zen is no less than remarkable. I respect them greatly. But I think the Altnets have changed the broadband market in the UK considerably.
    Bandwidth usage is increasing at a faster rate. The popularity of streaming services combined with better infrastructure has led to a significant jump in bandwidth.
    Most Openreach CP’s / ISP’s have only been able to sell 80Mb broadband so their usage was always capped. Now that fibre broadband of up to 1Gb is increasingly available bandwidth usage is increasing.
    I agree with the statement about fibre tax it should be abolished permanently. I see this as a tax on innovation as it makes it to expensive to build R&D networks etc.
    However comments about GFast are a little old fashioned in my mind. It is simply another sticking plaster. Fibre is considerably more reliable and faster.
    We have already seen a lack of support for the Openreach 500Mb and 1Gb broadband solutions and that is because they are expensive. Not because the tail circuits are costly but because an ISP needs to upgrade their entire infrastructure nationwide or buy from wholesale (very expensive).
    Zen will need to significantly upgrade their network to roll-out support for these higher speeds. They obviously think they are not required. But I think that will prove an incorrect assumption.
    However think of the likes of talk talk and Sky with millions of customers. Their networks will need significant upgrades.
    Now that Openreach have announced tail costs for 220Mb at the same price for 80Mb circuits and further drops in 500Mb and 1Gb tails I suspect the ISP’s that can handle these bandwidths will start to do well.
    So we have some interesting times ahead for ISP’s and I expect we will start to see some consolidation in the market and some new dominant players.

    • Avatar Altnets r us

      Too 🙂

    • Avatar A_Builder

      That is a very interesting analysis.

      Differentiating factors used to be big with ADSL quality and service level.

      With FTTP SLA, uncontended bandwidth levels will, amongst other things be decisional factors for some.

      Sure the landscape will change. Sure it will require investment. And for sure the innovators will stay on top.

      Lets see if Richard can innovate to stay with the FTTP challenge. Hope so: they do provide a good solution for some situations.

  7. Avatar numbnuts

    Ive been reading that Zen are expanding does this mean they will become another plusnet.. growing huge and offering cheap bb and then poor customer services ?

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