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AltNet Woes Grow as UK Full Fibre ISP Zzoomm Sees Job Losses

Tuesday, May 2nd, 2023 (7:08 am) - Score 6,640
zzoomm yellow van

Oxfordshire-based alternative network and UK broadband ISP Zzoomm has reportedly become the latest full fibre builder to hit troubled waters. The provider is understood to be laying off 300 employees in its construction team (engineers and office jobs), which is said to reflect about 50% of their workforce.

Zzoomm, which aimed to build their Fibre-to-the-Premises (FTTP) network to cover 1 million premises across 85 UK towns by the end of 2025, has generally focused their rollout on smaller towns in parts Berkshire, Oxfordshire, Herefordshire, North Yorkshire, Staffordshire, Wiltshire, West Yorkshire and Cheshire. So far they’ve covered 135,000 Ready for Service premises (up from 50,000 in July 2022) and signed-up 11,000 customers.

NOTE: Zzoomm is fuelled by an equity investment of £100m from Oaktree Capital (here) and a £100m debt facility via an international banking consortium (here).

Customers who take the residential service typically pay from £29.95 per month for an unlimited 150Mbps (symmetric speed) package on a 12-month term with an included router, which goes up to just £64.95 if you want their top 2Gbps tier (or £39.95 for 900Mbps+). Most of their packages also discount the price for the first 3 months of service. Overall, they’re quite competitively priced.

However, much like other full fibre operators, Zzoomm may be under pressure due to a combination of issues, such as rapidly rising costs (build, leases etc.), aggressive competition from rivals (e.g. overbuild) and the related need to secure a viable level of take-up by consumers.

All of this has a tendency to dampen the appetite of investors to keep the taps fully open and finding fresh sources of funding has become more of a challenge for everybody, which tends to slow builds (i.e. forces the operator to focus on take-up, rather than new fibre) and that in turn puts pressure on jobs. Only last week we reported on similar problems at Lightspeed Broadband (here).

According to The Telegraph, Zzoomm’s management has now begun the traditional 45-day consultation process, with staff being informed via one-on-one meetings whether or not their jobs will be retained. But a spokesperson for the operator still said they expect to see faster growth in 2023 than 2022 (it’s unclear if they mean coverage, revenue or something else) and are even actively recruiting for some roles, as well as considering acquisitions as part of their growth strategy (not long ago they were sniffing around Trooli, but ultimately lost out).

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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 X (Twitter), Mastodon, Facebook and .
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Comments
30 Responses
  1. Avatar photo Harvey Glenn says:

    The scattering approach they take is inefficient and difficult to make an adequate return on investment. It’s not an ideal business model when competing against the giants of OR and Virgin.

  2. Avatar photo Jonathan P says:

    The Altnets have one massive problem; very slow take up.

    The only way they can start making money is by getting customers to sign up, it’s obvious it’s not happening fast enough and the investors want to start seeing a return on their money.

    It’s clear Cityfibre are trying to tackle this problem, first with redundancies and then by pouring resources into advertising, launching their TV advert campaign and their brightly coloured bus (also known as the Teletubbies or Mr Blobby Tour bus).

    1. Avatar photo Rob says:

      Cityfibre finished work on my street 5 weeks ago and is ready to order, I got a good fixed price contract from virgin media until September 2024 so until then I’m with virgin media

    2. Avatar photo Bandy McBroadbandface says:

      Rob. You do know that there is no such thing as a fixed price contract with Virgin now right? Check your T&C’s You have a price rise next April baked into your contract.

    3. Avatar photo Andrew G says:

      There certainly are fixed price contracts with VM, it’s just that they’re not very common (as VM obviously don’t want them) and they’re certainly not advertised. A good few instances of customers with fixed price deals discussed in VM’s help forum. Best way of getting one is to play hard ball with VM’s retentions to agree that what you’re getting is a fixed price for the duration of the contract. And if you can get that (most likely as an existing punter on the last few days of a 30 day notice period) then make a DSAR for call recordings because you might need the evidence if VM do try and inflate the price in the next 18 months. VM are appalling for agreeing one thing by phone, and then putting a different deal on there system. The law gives the agreed terms legal force, but if you don’t have the evidence then enforcing your rights is far more difficult.

  3. Avatar photo Ad47uk says:

    i can kind of understand why they are laying off some of the construction teams, for a start they are at the end of their build here, so they don’t need construction teams. People should have known it was only going to be a temporary job.
    Jonathan P is correct that Alt nets have slow take up, but openreach is not doing as well as they thought pushing people to FTTP.
    We have a few problems here.
    Some People are fine with what they have and don’t need anything faster. Some people just can’t be bothered with the hassle of having FTTp installed, I am one of those. Higher prices for FTTP don’t help, I mean more so for Alt nets, while the prices compare well with providers using the Openreach network on faster speeds, they don’t do so well on slower speeds, that is if they offer the slower speeds at all. I have said before, if Zzoomm offered something around the 75Mb/s speed at around £24 a month, I may be more interested.

    The other thing, and this is the main problem, people will stay with the provider they are with, even if they change to FTTP, they will stick with what they know, this is where Openreach has a big advantage and they know it

    1. Avatar photo XGS Is On says:

      ‘i can kind of understand why they are laying off some of the construction teams, for a start they are at the end of their build here, so they don’t need construction teams. People should have known it was only going to be a temporary job.’

      The construction guys go on to build elsewhere. They didn’t hire a bunch of people specifically and only to build Hereford. Had they been hired to do so they would’ve been hired on temporary contracts, not permanent, and wouldn’t be going through redundancy.

      ‘….but openreach is not doing as well as they thought pushing people to FTTP.’

      Openreach take up of FTTP is well over their expectations.

      ‘…if Zzoomm offered something around the 75Mb/s speed at around £24 a month, I may be more interested.’

      Many of their costs are fixed and they have bills and debt repayments to pay. There’s a price floor below which they’re losing money. That floor is very similar whether they’re selling 75 Mbit or their 150 Mbit: the usage difference between the two on the network is minimal.

      Some altnets are able to sell at breakeven or even at a loss briefly. Given this news I suggest Zzoomm aren’t one of them.

    2. Avatar photo charles says:

      Temp job?

      I build for CF and I was trained and I am employed by Kellys – I know there is work for the next 10 years and then it’s all maintenance and installs. We are currently digging up the street.. there is a massive shortage of people to keep up quite frankly

    3. Avatar photo Ad47uk says:

      @XGS Is On

      Some of the people on site are local, don’t know how many but there are a few, I know of two and they are not going elsewhere, so I thought it was the same for a lot of them. But I suppose training different people in different areas don’t make sense.

      You say openreach FTTp is doing well over expectations, don’t see a lot of them around here. If they were doing that well then I would expect to see a load of their vans, see more Zzoomm around than Openreach.

      I realise costs are fixed and they have bills, debt and other things to pay, but a customer is money and a customer on a lower speed decide at some point to update to a faster speed.
      The thing is now, what is happening to Zzoomm is what I was worried about and is one of the reasons I put them at the end of my list. Their CEO already flogged one network, so he may get rid of Zzoomm and god knows who would buy it up.

      I now have two months remaining on my contract, so I need to my thinking hat on. either see what plusnet can offer me or go with Now broadband.

    4. Avatar photo Ad47uk says:

      @charles, If I was you, I would refrain from saying you are trained by Kelly’s. I have seen some of their handy work, another reason why I am in no rush for FTTP.

    5. Avatar photo Jason says:

      @Charles… “I build for CF and I was trained and I am employed by Kellys – I know there is work for the next 10 years”

      You KNOW there’s work for the next 10 years?!

      Haven’t you been reading the news? Do you really think Cityfibre will be around 10 years from now? Or even 10 months from now!

  4. Avatar photo Jason says:

    Not surprising really given the lack of demand for FTTP services at the moment

    1. Avatar photo XGS Is On says:

      FTTP demand is good. Openreach had to restructure things to get more install capacity, some altnets are seeing installs at a decent and accelerating clip.

      It was never going to be 100% take up in a year – networks are still being built and people are under 12-18 month copper contracts and unlikely to look at moving while in contract.

      About 10% of people change ISP each year. If FTTP can capture nearly all of those, which it seems to be in areas where it’s available, things are fine.

    2. Avatar photo Jason says:

      Not exactly right there . The public dont know who these new companies are . Whos going to
      part with their money on a company they have never heard of before .

  5. Avatar photo Harry says:

    In todays episode of the Altnetmaggedon

    Zzooms 1m homes is in trouble, telecoms does not work like twitter or the govt where you can just fire most of the staff and the thing runs better than ever. However they don’t even have a plan on their website so it is likely that the 1m target was just a dream stretch goal anyway and their actual target was something in the lower 6 digits

  6. Avatar photo Jack says:

    Part of the problem now is Openreach is targeting the areas Zzoomm have rolled out.

    Anyone who wasn’t tempted before won’t be now as their existing ISP will now offer Openreach FTTP.

    I’m a current Zzoomm customer and when my contract is up I’ll be moving back to an Openreach provider.

    1. Avatar photo Ad47uk says:

      Why are you changing from Zzoomm? The people i know that is on Zzoomm seem to have a good service with them, the router is naff, but once that is changed it is fine. Zzoomm network is more advance than Openreach.
      Openreach do seem to target places where Alt networks are, before that they are not interested.

    2. Avatar photo Jack says:

      @Ad47uk for me customer service is terrible, it seems like they were the first department they made redundant.

      Openreach might be older technology but it’ll let me go back to A&A.

    3. Avatar photo Ad47uk says:

      I have heard that customer service is not the best, but the couple of households I know that are with Zzoomm they seem to be ok. Not sure what your problem is with customer service, there are people on social media complain about it, mainly due to the router. there are also a lot of people that seem happy with Zzoommand a lot of saying replace the router and it works well.

      I don’t know why people are having so many problems with the router, it is supposed to be the Wi-fi and yet from this room upstairs I can see two zzoomm routers on my phone, one of them from two doors down is a pretty strong signal and the one over the road is as strong as my own TCP link router, almost.

      If I was going for Fttp then I would certainly look at zzoomm, the network is better, but I don’t need the speed. Saying that plusnet seems to be slowing the speed down for my connection, makes me wonder if that is a ploy to annoy me so much that I will go for their FTTP service. If they think that then it will backfire.

    4. Avatar photo Jason says:

      Wont be sad to see the back of this company

    5. Avatar photo Ad47uk says:

      I would love to see the back of out of reach, but it will nto happen. I hope Zzoomm and other alt networks keep on going. do you really want a country where we have a monopoly as a network?

      I realise that a lot on here either work for out of reach or have shares in Bloated Toad, which is why they don’t want Altnets.

    6. Avatar photo James says:

      An FTTP network is an FTTP network- saying OR network is older and not as good is not true. The majority of altnets use OR infrastructure and head end equipment. OR network is however prone to damage….from alt nets installing their kit and not taking care of the existing network.

  7. Avatar photo What's coming next? says:

    So we see a pattern emerging, as Zzoomm, Cityfibre and others have so far done…

    First they restructure (make people redundant to reduce overheads) then they slow their build rate, but when they’ve done that and take up rates don’t improve, what happens next? I guess we’ll find out soon.

    The investors are only in this for one reason, to make money and if that doesn’t start happening when planned then they won’t hesitate pulling out, selling up to cut losses and take their money elsewhere.

    1. Avatar photo Paul J says:

      Next step for Cityfibre is already in progress… They’re been bought by Liberty Global/Virgin Media.

  8. Avatar photo Andy says:

    Zzoomm have been a real nuisance in our area. Their installs causing significant disruption in town and their spam marketing campaigns are irritating. While I sympathise with those whose jobs are at risk its hard to care about the struggles of this company. I’ll be waiting for Openreach to roll out FTTP.

    1. Avatar photo Ad47uk says:

      That what happens when new networks are built, I bet the GPO had same problem when they started their phone service.
      I do agree with you about the amount of leaflets they put through the door, I get at least one a week. but you can stop it by getting in touch with them.

    2. Avatar photo SED says:

      Why are you so supportive of the BT monopoly? You know what’s going to happen once they squash all competition who they aren’t already in bed with right? These price hikes we see now are just the beginning.

  9. Avatar photo Tom Field says:

    Thank God. Matthew Hare finally being found out! Should have been weeded out after Gigaclear fiasco…

  10. Avatar photo OldMendip says:

    I have a feeling of deja vu about the AltNet business, I’m old enough to remember when BT were Post Office Telephones! When BT were privatised and the telecom market opened up to competition we were promised great things and in the most attractive areas new companies were soon digging up roads and installing new cables ( some used co-ax for greater bandwidth) and we were assured things would continue to get better for all. The reality was different, it was too expensive for 6x competing companies to lay cables everywhere- in less densely populated areas nobody was willing to invest. Fast forward to the Internet present day and it all looks very familiar, technology has changed, but across most of the land Openreach is still the only cable to the premises. They dictate what speed I can have and until that 60 year old bit of copper is replaced…… The AltNet companies long term will do no better than the cable companies before them, it is about traffic vs cost (after any state subsidy) of cabling up an area.

  11. Avatar photo B.Kennedy says:

    ZZOOMM Truespeed and county to merge

Comments are closed

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