5. As above, we can’t speak about Openreach’s wholesale pricing for FTTP without also touching on the wider issues in Ofcom’s next major Telecoms Access Review 2026 (TAR), which will look to make changes that “promote competition and investment” in gigabit broadband and business connectivity.
What are the other top changes or issues that you’d like to see the regulator tackle in this review in order to help unlock and support altnets? This is a particularly tricky one given the challenge of making big changes in an environment where rising competition may actually give Ofcom more reason to soften regulation against the incumbent, Openreach, rather than harden it.
Paddy Paddison said:
INCA’s position on the TAR can be boiled down to a simple phrase, one that’s in the existing WFTMR: A fair bet for investors. It’s critical for OFCOM to ensure that the future competitive landscape reassures the existing investors in UK telecoms and broadband and also encourages future investment. Over £15bn has been invested in the Altnets so far and there is more to be invested. As these are infrastructure funds, if the investors feel that the UK regulatory environment is being weighted in favour of the incumbent operator then it will reduce the attractiveness of the UK to them, in all types of infrastructure.
There are lots of areas where OFCOM can ensure a level playing field is supported from how PIA works through to pricing mechanisms but if they come back to thinking of the big picture – does this intervention encourage competition or does this intervention keep the incumbent secure? – and they side encouraging competition then INCA and the Altnets will be happy with the outcome.
6. INCA recently launched a new initiative that aims to “standardise wholesale fibre” networks, which was initially backed by 30 providers, and aims to make it easier for retail and business ISPs to purchase services from network operators.
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What are the hardest challenges to overcome in bringing this all together for a final standard, and do you have a rough timeline for when we might see the outcome?
Paddy Paddison said:
Indeed, wholesale standards is one of my most pressing matters. We have broken the issues into three main areas. First is regulatory and within that the clear and present issue is the Telecom Security Act. Compliance is expensive and critical so ensuring Altnets can provide the requirements to the large ISPs is very important.
Second is commercial and, while INCA won’t have any position on the actual values of the commercial relationships, what it can do is provide the framework that all parties will be able to agree to before filling in the numbers and importantly the SLAs and routes for information flow between the parties.
Third is the technical component, which from my view as an engineer is the easy bit. Well, easy once you’ve agreed what it is you’re going to provide, and how, and over what time and how to demonstrate completion. So apart from all the issues getting resolved it’s going well.
The INCA Standards Group chaired by Max Fernando of Glide and with the support of Niall Halpenny of Sonalake is driving this hard and I’m pleased that we’ve had real positive engagement from the ISPs as well as Altnets.
7: Speaking of standardisation, INCA has this year also delved into the complex and often divisive area of infrastructure sharing with your new Infrastructure Sharing Group (ISG), which is attempting to encourage altnets to work together and foster more infrastructure sharing.
In theory, this could boost the roll-out of gigabit broadband and reduce the dependence upon Openreach’s existing cable ducts and poles to run new fibre, while also cutting some costs and reducing friction with some communities (e.g. those residents that don’t like duplication or deployment of certain street works and infrastructure, such as poles etc.).
However, getting so many competitive networks – with infrastructure investments they want to protect – to work together can also be a bit like trying to herd cats. Finding that balance between creating a solution / agreement that is affordable (i.e. attractive and fair enough for operators to want to use) and which, at the same time, doesn’t devalue the physical asset, has historically been very difficult – often needing regulation to resolve.
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In this regard, can you provide a progress update on the ISG since it was launched and a rough indication on when you think we might see the first positive and practical outcome? More to the point, if an agreement is reached, then would Openreach also be allowed to harness this or are they likely to be blocked?
Paddy Paddison said:
This is another complex issue. It is obvious that we should deploy networks as efficiently as possible, therefore reusing infrastructure wherever possible. That said there are a number of factors that will handily place themselves in the way, from quality of the infrastructure being shared to the time and cost of using other company’s infrastructure.
We are working hard on a solution and the activity of the Infrastructure Sharing Group. In terms of Openreach’s inclusion it’s clear that their access to Altnet infrastructure could threaten the business models of some Altnets. Openreach bring along their suite of wholesale partners which would make the Altnet own business plans more difficult to achieve.
A suggested resolution is related to the wholesale standards group, if the wholesale partners can access their potential customers via the Altnet’s network then the need for Openreach to share infrastructure goes away and at the same time the Altnets’ business plan remains intact.
8. One of the biggest challenges for altnets and ISPs to tackle this year has been the problematic introduction of Ofcom’s new One Touch Switching (OTS) system via the industry-led One Touch Switching Company (TOTSCo), which aims to make it quicker and easier for consumers to switch between broadband ISPs and phone providers on physically separate networks.
On the one hand, the fact that OTS is making switching easier is something that could help to boost take-up of often faster and more competitively priced altnet ISPs. But on the other hand, getting the TOTSCo platform to work properly and ensuring that all ISPs use it is still something of an ongoing challenge. What are your thoughts on the troubled development of this system, in terms of what it got right and what it might have got wrong?
Paddy Paddison said:
I remember when number porting came in, the first few months of that were pretty grim with spreadsheets being faxed to each other on a Tuesday. The OTS, while delayed, has by comparison gone fairly well.
What’s gone well? Getting hundreds of companies to communicate their most sensitive data (about customers) seamlessly and securely. What’s gone poorly is that it took longer to launch than many AltNets had hoped and some operators are still struggling to provide information in a satisfactory way. This is something that’s being worked on.
Another issue is the activity of the loosing provider’s retention teams, an unexpected consequence being the extra phone calls and contacts customers are getting which is not always welcomed.
9. Improving consumer take-up is a key focus for altnets, not least as it helps to prove their business case and keep investors happy (as well as potentially attracting new investment). But what more do you think altnets, or the wider industry (beyond what we’ve already discussed above), need to do on this front to generate better adoption?
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Paddy Paddison said:
Did I mention wholesale standards? Why use one marketing budget when you can use four? A flippant answer but one of the most effective ways of getting customers onto the networks is to get the message to them that high speed, reliable internet is right outside their door. Something I’m not sure most people know.
I’ll also speak from my own experience of moving to North Lincolnshire in the last few weeks. It’s only through my industry knowledge that I knew that Quickline operate in the area. If I struggle to find out who the Altnet is in my postcode then the rest of the public are probably blissfully unaware unless they saw the build happening.
I am working with the INCA Board on how to cross that gap and hope to have some news in the new year.
10. I wanted to also touch on some interesting developments over at Virgin Media, which will in 2025 be opening up their existing network to wholesale via a new NetCo entity. This is obviously occurring at the same time as some of the company’s shared parents are backing nexfibre, which is separately rolling out FTTP to areas that Virgin Media haven’t covered before, albeit while using Virgin’s existing build engine.
In the future we might well see both networks coming together as one, which is how many observers already view them. But what do you think this might mean for the current regulatory environment and competition, with respect to altnets, and how do you think Ofcom should respond?
For example, would Virgin Media + nexfibre also have significant market power, or does the addition of such a major player simply give Ofcom more reason to soften overall market regulation on Openreach.
Paddy Paddison said:
VMO2 opening some or all of its network to wholesaling will help customers with choice so I can’t see it as a bad thing. How they do it and what it will cost wholesale operators will be the critical issue though. INCA’s ultimate goal is seeing the UK having a healthy competitive market and it can only be a good thing if VMO2 can be part of that.
11. Finally, Openreach are currently preparing to close roughly 4,600 of their old legacy exchanges across the UK, which will ultimately leave around 1,000 exchanges – the Openreach Handover Points (OHPs) – that are primarily used to provide nationwide coverage of modern “fibre” based broadband and other services (FTTC, FTTP etc.). The first c.100 of these are due to be closed by 2030 as part of an initial pilot phase, but most of the rest will follow during the 2030s.
However, this change creates somewhat of a thorny issue for alternative networks around Ethernet, Inter-Exchange Dark Fibre (DFX), Co-Location and PIA (access to existing cable ducts and poles) services, which are still supplied by some of the “old” exchanges. The costs for at least some AltNet’s of adapting to this could be more than trivial, and Openreach have long been consulting with the industry on how to balance all this.
How much of an impact is the Exchange Exit Programme likely to have on the altnets you represent, if any, and are there any areas of Openreach’s approach to this that still need improvement?
Paddy Paddison said:
Exchange Closure is a significant issue for Altnets as their networks are planned for the long term and changes of core locations when they will have been operating for over ten years (i.e the 2030s) will be difficult and expensive. While we can understand Openreach’s need to close underutilised exchanges due to the changes in their network, what INCA members need is information. When, what and where.
Openreach really needs to start thinking about more than its exchanges as locations for terminating services that are being removed from closed exchanges. It may be better for an Altnet to move to a nearby or more convenient Data Centre not necessarily owned by BT Group.
INCA’s policy team have set out some of its concerns around the Exchange Closure Programme as part of a series of submissions INCA has made to Ofcom in advance of the TAR. All of the submissions can be found on INCA’s website.
ISPreview would just like to thank Paddy for taking part in our interview and we wish him a very Happy New Year for 2025.
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Exchange closures have been known about for 30? years. Maybe not the detail but clearly not alk needed with fibre.
Funders may return once they see a reasonable return on their initial investments. I don’t think the take up levels on some of the altnets are at the levels needed for this.
Additional questions
If an AltNet supplies wholesale to a household name ISP, how do they guarantee the same level of service to that ISP when compared to say a NetCo or OpenReach offering. Tarnishing a brand because of poor wholesale provision service levels will obviously be a big concern for ISPs.
How can AltNets reassure customers that they have a secure product? If a small electricity supplier folds, a supplier of last resort will continue to ensure there is power to a household. Because telecoms has not gone down the route of a single physical network, simply switched between supplier equipment at an exchange, and sending new software to the ONT in the home, provision in the case if a fail will require premises visits to all customers.
Good questions. Recent reports in this site suggest that such questions have been brushed under the carpet.
There’s a need to tread very carefully in all this to avoid contravening the chapter 1 prohibitions of the Competition Act. Altnets should be competing with each other tooth and nail, not being friends and agreeing to co-operate.
Few altnets are in a position where they could survive a fine of 10% of revenue.