Telecommunications: Understanding the Market, Meeting the Demand, and The Solution
Written by Trevor Hackett & Lindsay Rodgers
The Market
The nation’s telecommunications access infrastructure is currently undergoing a major upgrade from legacy copper to FTTH [Fibre To The Home] and 5G-based wireless broadband technologies that can deliver significant enhancements in reliability and speed. FTTH coverage currently extends to 60% of UK premises [January 2024], with a view to extending reach to around 30 million premises passed by the mid 2020s. 5G-based wireless Broadband is currently extending from the initial focus on major towns and cities towards the wider coverage patterns demanded by a mobile service, and typically serves to ‘fill in the gaps’ where FTTH is not technically or commercially feasible in the near term.
The government’ digital strategy has set targets to achieve at least 85% gigabit coverage by 2025 and at least 99% gigabit coverage by 2030. The UK government's policy is that gigabit-broadband infrastructure will be mostly built using private investment, with the government targeting that 20% of the investment will come from the public sector. Project Gigabit is the government’s £5 billion programme to enable hard-to-reach communities to access gigabit-capable broadband. It targets homes and businesses that are not included in broadband suppliers’ plans, reaching parts of the UK that might otherwise miss out on getting the digital connectivity they need.
As well as significant investment from large established Telecommunications infrastructure companies such as BT Openreach, recently we have seen the emergence of a wave of agile, well funded FTTH ‘alt net’ challenger Telco service providers backed by private equity and other investors. Mint Consulting have identified three different types of alt net [each with distinct offerings / solution needs]:
Traditional alt-nets : typically regionally focused, offering Broadband and Telephony services to customers over their own fibre infrastructure. These alt net operators may have a distinct Wholesale business entity responsible for building and managing the underlying FTTH access service infrastructure, and a Retail business entity responsible for building Broadband and Telephony service offerings over the Wholesale access infrastructure and selling it to the end customer. This explicit separation would be evident where the alt net has an interest in offering their FTTH access infrastructure for use by other Retailers as well as their own, and separation is broadly seen as an approach that improves both the flexibility and the value of the business.
Wholesale-only alt-nets : Wholesale business entities focused on providing FTTH access service and interconnect offerings to Retail customers who typically provide their own Broadband and Telephony services over the top. Wholesalers can also provide Broadband and Telephony services for Retailers who lack network assets of their own, supporting a ‘white labelling’ model where the Retailer focuses purely on the end-customer relationship management. Whilst Traditional alt nets are generally more regional in their nature, Wholesale alt nets tend to have a wider geographical reach
Retail-only alt-nets : Retail business entities focused on utilising services provided by Wholesale alt-nets to support the provision of FTTH-based Broadband and Telephony offerings to their customers. These alt nets may integrate directly with Wholesalers or indirectly through a mediator. Note that this category can extend to consider Retailers providing Broadband and Telephony over both FTTH and previous generation access technologies, and this definition would include major service providers such as Sky and Vodafone.
The Need
Alt nets in general experience pressure to progress in both operational and customer attraction and retention metrics, in order to enhance the valuation of their business. Specifically :
Traditional and Wholesale alt-nets need to rapidly Plan and Build the FTTH access infrastructure necessary to support service provision. This is about getting the basic infrastructure in place to ultimately support Broadband and Telephony services, and critically built in places that will justify the investment. In some cases, there could be multiple alt nets providing service to the same premises through different delivery routes [e.g. poles based delivery ‘piggybacking’ on the infrastructure of an incumbent provider, delivery through street cabinets and ‘micro-trenching’ to run fibre past a premise], however generally there is effectively a ‘race’ to be the first alt net to provide infrastructure that can support FTTH-based services to a premise, and onboard customers at that premise once the infrastructure allows it.
Traditional and Retail alt-nets need to attract and retain customers. Critically dependent on the rapid Plan and Build of FTTH access service infrastructure as we have seen, this further considers the importance of marketing to potential customers even prior to the planned build out of supporting infrastructure, their attraction and retention as customers of the alt net.
Traditional alt-nets may wish to consider separating their Retail and Wholesale businesses if they have not already done so - creating at least conceptually separated businesses with distinct integrations and business processes, with shared or distinct technology platforms supporting the businesses under the hood. The separation of the Retail and Wholesale businesses supports the easier provision of access and interconnect services to other Retailers, and as such provides an additional potential source of revenue. This becomes particularly relevant when we consider the market dynamics of Traditional alt nets increasingly offering access services to larger Retail alt nets such as Talk Talk [possibly via a mediation layer], and also potentially becoming the acquisition target of a larger player. We generally believe that a Wholesale / Retail separated Traditional alt net should command a premium in terms of business value over an unseparated one.
Organisations that are bidding for Project Gigabit contracts also have obligations to provide full accounting separation between their Wholesale Access Services and their associated Retail Service Provider.
The Solution
To support the above, alt nets require systems and processes that:
Are tailored to their specific alt net type - considering both the existing state of operation and intent, and an understanding of the business domain and strategic dynamics within the industry. Further, systems and processes should be tailored to the product strategy and customer demographics specific to the individual alt net.
Reflect architectural best practice and deliver against key operational metrics - primarily Time To Market [TTM] to support new offerings or variants of existing offerings launched through increasingly diverse channels, as well as usual operational metrics such as Right First Time [RFT] rate in Order management and Trouble Ticket resolution, minimal Time To Deliver or Resolve [TTD / TTR], etc. This in our opinion requires
Well-separated solutions between Retailer and Wholesaler businesses, and across commercial [BSS] and operational / technical [OSS] layers within these businesses. This aligns with the use of TMF-aligned / standardised integrations, and places an expectation on candidate solutions to support such integrations and ‘fit’ the capability boundaries they imply, whilst also delivering on Telco requirements such as low touch / highly automated business processes
Catalogue-driven solutions such as that provided by Salesforce Industries Communications Cloud to deliver catalogue-configured rather than customised / coded solutions, integrated into the wider infrastructure of the customer’s architectural estate
The ‘fundamentals’ done right – for example, an OSS layer Technical Inventory that is accurate, complete and available to support the design of Broadband and Telephony services to be delivered over existing access infrastructure.
Support phased introduction of capability reflecting the typical business case priority for an alt net across the Quote-to-Order and Trouble-to-Resolve domains. Some examples:-
We would typically focus initially on introducing support for guided ‘New Customer / New Provide’ Quote-to-Order journeys exposed to customers through the company website in the first phase of execution, with in-life journeys [e.g. Modifying the speed of an existing Broadband Service, Ceasing an existing service] handled by sales agents using the native cart interface within the business. Subsequent phases of transformation would progressively introduce web-exposed capabilities for executing customer in-life journeys [modify/cease, in-flight amend and cancel, home move scenarios]
We would typically focus initially on basic triage journeys exposed through an agent journey for customer incident management. Subsequent phases of transformation would progressively introduce web-exposed journeys, and more sophisticated capabilities correlating the known state of the network with customer raised incidents
Summary
In this discussion we have seen key distinctions between different types of alt net and evolutions within the industry that are important to consider in determining the strategic direction of travel of an alt net. This influences what should be built for an alt net both to address immediate need and to support anticipated strategic evolution (for example, building a solution for a Traditional alt net that supports easy transition to a separated Wholesale / Retail model).
In following blogs, we will look more closely at market trends and strategic drivers, and what this means for architecture of alt net businesses.