On Tuesday 24th November, it was my pleasure to participate in a panel discussion with a number of like-minded colleagues from across the telecoms sector. The panel was set up to deliberate the role of fibre broadband in digital transformation. It rounded off the European Infrastructure Finance Summit and sought to explore opportunities for investment and trends in the digital space.
Chairing the discussion, Brendan Malkin kicked off by drawing attention to the way in which demand for fast, reliable connectivity has accelerated throughout the COVID-19 pandemic, so much so that it is now widely deemed an essential service.
This was a perspective corroborated by Rafael Canada, who commented that the telecoms industry was really one of the few to benefit from global lockdowns, with fibre and connectivity being catapulted into the Critical National Infrastructure category. He continued to explain that investors have had little choice but to re-evaluate their portfolios, adapt their strategies and subsequently offer up greater sums to those looking to develop digital infrastructure.
Matthew Hare was quick to raise that a proven ability to deliver would be imperative for companies looking to secure the investment they were seeking. Lenders do expect a heathy return after all, and so well-established telcos with a demonstrable credibility in providing infrastructure are most likely to flourish during this time.
Neha Puri explored this suggestion further, stating that most investors would primarily be looking for value-add opportunities as the focus on the telecoms sector sharpens. She drew attention to the prospect of real-time monitoring and predictive maintenance, primarily in the transport, logistics and manufacturing sectors, and how connectivity would play a crucial role in delivering this. As an emerging technology, this has whetted the appetite of investors, but Neha warned the successful development of this form of innovation is predicated on the widescale availability of 4G and 5G across the infrastructure.
Underpinning wireless technology is, of course, a labyrinth of fibre networks. The discussion quickly turned to consider how telcos are expanding their coverage for both consumers and industry. As alluded to by Conal Henry, incumbents are now being threatened by market challengers across the UK, with this fervent competition also driving investment in fibre.
But the notion of ‘if you build it, they will come’ is not viable, according to Matthew. He suggested that a certain level of demand must be identified when considering building out network in a given region, and even then the cost and future return must be carefully calculated before committing to a project. But gauging demand is also far from simple. Matthew demonstrated this by drawing attention to Zzoomm’s first full fibre roll-out project in upmarket Henley, where one might expect consumer up-take to be widespread. The reality is the service is considered more of a necessity by residents in some districts than in others.
It’s a conundrum not dissimilar to that faced in the B2B space, as I was able to testify. SSE Enterprise Telecoms’ network expansion journey is pushing forward, full steam ahead. But identifying where there are high levels of business demand requires a substantial level of insight as well as proven expertise of the market. This is especially true in the Mobile Network Operator (MNO) space. Here, a significant overhaul to increase capacity and reduce latency is in progress, alongside the ongoing roll-out of 5G networks. MNOs require robust fibre connectivity and access to nationwide unbundled exchanges to support this high capacity requirement, and to aggregate connectivity to mast sites, contributing to their coverage obligations and helping to broaden services to B2B customers of their own.
Conversely, there are also communities looking to commission digital infrastructure enhancements designed to traverse the landscape of entire cities and beyond, such as the full fibre roll-out across Aberdeenshire. These networks are designed to provide leading edge connectivity to public sector facilities, but also to provide local businesses with the opportunity to lease high speed, high capacity fibre. These arrangements require significant collaboration, but can result in a multitude of operational and financial benefits for all parties once complete. In this instance, a portion of the route relied upon the use of Physical Infrastructure Access (PIA), which has been made available to the industry thanks to regulation.
As Conal stated however, a lack of governance in the past now presents providers of full fibre connectivity with greater difficulty when selling their services. He suggested that the fibre brand has been polluted by companies selling copper into a property, and labelling it as full fibre broadband. The consumer is now confused and most hold misconceptions about what full fibre actually means. It’s something that could have been nipped in the bud according to Matthew, who believes regulators should have mandated rules around fibre advertising from the outset.
We ended the session considering fibre versus 5G as a connectivity solution, with so much attention and hype surrounding the latter. The truth is both are highly valuable assets in the information age. But as Matthew pointed out, pretty much all properties will ultimately end up with fixed connectivity, just as they do with water and energy. They may sit within a region covered by 5G, but ultimately, the cost of delivering fibre is a fraction of that to provide 5G connectivity. As Conal summed up in the final exchanges, 5G is nothing without fibre in the ground.