Connected Britain 2024 was bigger and better than ever before, not just in size and stature, but also in terms of the important decisions that the UK fibre market is navigating.

Tackling one of the most pertinent issues of the event, Strategic Imperatives’ Director of Strategy Donal Hanrahan hosted a lively roundtable discussion on wholesale empowerment and the future of wholesale in the UK fibre market. Joined by PXC’s Chief Product and Marketing Officer Neil Wilson and Jeremy Chelot, CEO of Netomnia & Brsk, Donal posed some fascinating questions to help tease out key strategic moves being made across the industry.

Missed the roundtable? Don’t worry, in this blog you’ll find some highlights from the discussion…

Donal: So why are we, Strategic Imperatives, hosting a discussion about wholesale? Well, we’ve actually been supporting wholesale for the last 15 years and in that time, we’ve processed literally millions of copper lines for over 200 service providers across the UK, facilitated through our WLR gateway into the BT Openreach network.

In this market, there was only one wholesale network, so we were essentially connecting the ‘many’ to the ‘one’ using BT Standard APIs and their customer journeys. However, with the expansion of the fibre infrastructure market, there’s now more than one wholesale network. It’s no longer connecting the many to the one, we’re now connecting the ‘many’ to the ‘many’. With that, the complexity of the relationships between wholesalers and service providers has increased, which is essential to why we’ve developed The Fibre Café as a means of addressing that complexity.

With wholesale generally, we’re no longer asking: Will wholesale happen? It’s here today and many say we’re at a tipping point, particularly with the news regarding the deal between Sky and CityFibre. I think we’re not just at the tipping point, we’re now accelerating towards wholesale.

From our perspective, we see that this is true through The Fibre Café. Today, there are 22 million premises that are accessible via the platform.

We’re here to highlight the role The Fibre Café plays in the fibre ecosystem and what better way to do that than to have one of the largest UK Altnets (Netomnia & Brsk) on the stage here today, as well as the UK’s fastest growing wholesale telecoms platform (PXC). We’re delighted to be joined by Jeremy and Neil, both clients of The Fibre Café, to give their perspectives on how they see The Fibre Café from two different perspectives.

Without further ado, I’ll hand it over to Jeremy and Neil for them to introduce their businesses and give us their own individual perspectives. After, we’ll come back and continue our discussion about the future and some of the trends that we’ll discuss amongst us.

My first question is toJeremy: Jumping into the trends in our industry and the UK market, let’s talk about consolidation, as I know you have some strong views on that. How about we start with where the market is headed?

Jeremy Chelot: Thanks, Donal, of course, happy to start there. Using Netomnia and the momentum we continue to gain as a principal example, I believe eventually we’ll end up with three main infrastructures in the UK. I know people might think that there might be more, but I’m inclined to disagree. However, I do think other organisations outside of a ‘big three’ will exist to service smaller pockets.

Netomnia did not exist four years ago and now we are building faster than the largest fibre providers, including CityFibre, while spending less.  Netomnia is funded to three million homes and our plan is to go significantly further than that. So, at the end, there will be a huge degree of consolidation over the rest of the decade. By 2030, I think we’ll see the market dominated by three networks.

I’m a huge believer in this consolidation. As far as I’m concerned, Netomnia has completed our first step through merging together with Brsk – the largest merger so far and a meaningful milestone for us as a business, but also our industry.

I think we’ve set an example of the advantages of an aggressive M&A strategy, and I don’t think it’s too hard to convince you that other organisations will learn a lesson from what we’ve done and follow suit.

M&A is never easy, it’s complicated and takes a lot of resources. However, it is sometimes required to meet a vision your company has set out to achieve.

Donal: Ok, thanks Jeremy. Over to Neil, who can speak about this from the buyer side looking at the networks. How does the potential for consolidation impact your decision making as to who PXC connects to?

Neil: Firstly, I think consolidation is clearly good for the UK market. We need multiple networks to be competing, and that will only benefit the end customer to have choice. Generally speaking, true competition benefits product innovation, pricing and service. I think from a channel perspective, it causes several challenges because we’ve got a thousand channel partners that are all trying to work out where they fit in this future ecosystem.

Of course, these partners are always considering: Where should we place our bet? Who do we want to integrate with? Who do we onboard, when, and what are our opportunities afterwards? It’s not straightforward, as accessing a range of services at the same time as onboarding and de-risking is really expensive and time consuming. In a lot of cases this isn’t necessarily the core business of a lot of UK telco resellers and providers.

That is one of the areas where PXC comes in, as onboarding and de-risking is our core business. We have powerful solutions for optimising integration with key partners to help solve any friction or stickiness.

We’re particularly experienced in reducing risk by making sure we back the right partners, offering customers the peace of mind that they’re going to be connected to the right networks and have access to the right infrastructure. This confidence is crucial as the market integrates and consolidates at pace.

Donal: Exactly. The Fibre Café also has a key role in that derisking and consolidation process, managing it a layer down from PXC.

Donal: Neil, you’re a beneficiary of the price pressures that come from wholesalers in competition. Where do you stand on it?

Neil: Well, I think consolidation in the market and getting to the point where there are multiple super strong wholesale providers is really positive. It helps PXC, because it allows our customers to be unashamedly competitive and strive to provide the most value. However, there is an unspoken rule that once you’ve got competition, you get downward pressure on margins, which causes a problem for everyone within that food chain. And that’s where things like automation and integration become absolutely critical.

As a provider, you’ve got to make sure that you minimise your cost to serve, to make sure you can maintain margins in a world where there might be stronger, fiercer competition. So, again, it’s a nod to The Fibre Café but also to our own systems and processes to make sure that we are as streamlined as possible and capable of passing on as much of that benefit to the customer to maintain a healthy wholesale community as well.

Donal: Very good. Jeremy, what are your thoughts on the pressures facing your business to reduce its wholesale pricing?

Jeremy: Altnets in the UK have a lot of pressure in terms of pricing, particularly compared to the ISP layer. When you see the different pricing that Altnets advertise versus, say, the pricing of a BT or a Virgin, you would expect to see a trend at the wholesale level of added pressure.

I would argue that this pressure is largely due to the potential for the market to lower prices in general.

When you combine the margins from big players such as BT and Virgin, it invites competition. Then, when competition arrives, and it will, it will always put pressure on pricing because that’s absolutely key to how new players enter the market.

At the wholesale level, the two or three key players, starting with Openreach, are all doing the same thing. The impact of this is increased competition to win and retain customers.

The question remains, what are the retail ISPs going to do? Because what we’ve seen is a clear dichotomy between wholesale prices. In recent times, the wholesale price has actually flatlined, yet the BT price remains inflated.

Change is going to happen in wholesale and it is going to happen quickly. The cost of infrastructure and increased competition is the catalyst for price changes, and we’re going to see a degree of collaboration from the largest providers, such as Sky and CityFibre, who understand they cannot dominate the market alone. They’ll be unwritten rules about everyone making some money, managing their own niches, and producing better services, but this isn’t to say that competition won’t be steep. That’s the game they are playing, and Altnets need to be aware of this.

Donal: From a Strategic Imperatives’ perspective, our investor base has been building and running both wholesale and retail operations for years. So, we have a full understanding around the mechanics of price pressures, and we see The Fibre Café’s role as moving beyond that initial glue between the wholesalers and the service providers and moving to resolve the sticky customer journey.

We’re working with a call centre application at the moment as just one example. We’re also looking at the power of automation and standardisation across the service provider journey and how they support customers across disparate networks. We’re devoted to making this process as seamless as possible, driving standards for APIs, onboarding and provisioning.

We think significant strides can be made in alleviating cost pressure for clients on the service provider side and also the wholesale side.

The Fibre Café’s role in helping to solve these ecosystem pressures will undoubtedly increase and we’re excited to see what the future brings.

Interested in learning more about how The Fibre Café can help your business? Get in touch to schedule a call to learn more.

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