ISP KCOM Invest £100m to Expand UK FTTP Broadband Network

The incumbent broadband ISP for East Yorkshire and Hull, KCOM, has today announced the “first phase” of a major new £100m project to expand the coverage of their 1Gbps Fibre-to-the-Premises (FTTP) broadband service beyond their current network area, which will initially reach new parts of East Yorkshire and North Lincolnshire.

Regular readers will know that 2019 was a huge year for KCOM for two major reasons. Firstly, the operator finally completed their £85m “Lightstream” project, which upgraded their entire network of 195,000+ premises across Hull and parts of East Yorkshire in England with their gigabit speed Fibre-to-the-Premises (FTTP) broadband ISP network; plus a little FTTC / VDSL2 (here).

Secondly, Macquarie Infrastructure (MIRA / MEIF 6 Fibre) won a bidding war to takeover the operator at a hefty price tag of £627m (here). As part of that deal Macquarie promised, among other things, to increase the “amount of business with third party ISPs” and to “use additional investment to expand the fibre network beyond the current footprint.”

We have been waiting for news of that expansion and today we learnt that it would involve growing their “full fibre” into new parts of East Yorkshire and North Lincolnshire. We think the initial funding of £100m is roughly enough to double the size of their fibre network to c.400,000 premises, but much will depend upon whether they aim to target lots of poorly served rural or urban and suburban areas (rural areas cost a lot more).

Dale Raneberg, KCOM CEO, said:

“Our investment in Fibre To The Premises technology to date has made Hull the UK’s first full fibre city, with broadband speeds that are the envy of the rest of the UK.

I’m delighted to announce the first phase of our new, ambitious plans to bring our award-winning broadband to many more homes and businesses in East Yorkshire and North Lincolnshire. By investing to develop and expand our networks we hope to deliver benefits to residents through infrastructure that will also underpin growth and innovation across the region.

Our full fibre infrastructure is contributing to the creation of a regional powerhouse. This new programme will more than double our investment in Fibre To The Premises.

The £100m investment we’re announcing today is a huge vote of confidence in our regional business from our new owners, who recognise the great potential this region has to grow and prosper with quality ultrafast broadband.”

Nicky Morgan, UK Digital Secretary, said:

“We want every corner of the country to benefit from world-class, gigabit-speed broadband, so I welcome this big investment from KCOM to give more businesses in Yorkshire and Lincolnshire the opportunity to take advantage of the fastest internet connections.

This Government has committed £5 billion to make sure the hardest-to-reach areas aren’t left behind and, together with industry investment, it means real progress is being made to build a connected, 21st century Britain.”

At the time of writing no detailed roll-out plan or timetable has been revealed, although it’s likely to be a programme that spans several years. We also get the impression from KCOM’s language that they may ultimately end up investing much more than £100m into their expansion (i.e. this is just the start).

The news raises another interesting question around regulation, since at present Ofcom deems KCOM to be an operator with Significant Market Power (SMP) across their network patch and thus are subject to certain requirements. However any expansion beyond that area might create somewhat of a regulatory split since they would most likely be growing into a more competitive market, which could include some overbuild of Openreach (BT), Virgin Media and others.

On the other hand Ofcom has generally adopted a light touch approach where FTTP expansion is concerned (i.e. they don’t want to slow the early roll-out by enforcing lots of new rules). In any case we await further details of the new roll-out plan and once we have those then it will be easier to assess the impact.

UPDATE:

The first areas have been named (here).