Summary Bullets:
• CommunityFibre is switching its focus from building out its fiber network to loading it through intensified customer acquisition.
• There is simply not enough room for so many alternative fiber providers in the UK. There are two options: consolidate or find a defensible niche.
ISP CommunityFibre’s London (England) network covers 1.3 million properties and has over 200,000 residential and business customers. Alongside its fully owned Box Broadband unit (which targets Surrey and West Sussex, England), the company has been rolling out its own dedicated full-fiber network (FTTH) and has a stated aim to pass 2.2 million premises by the end of 2024. Now, despite apparently having strong funding, CommunityFibre has become the latest UK fiber altnet to make redundancies and suspend ongoing network rollout (out of a total 788 employees at end-2022, 380 were in engineering and operations and 148 in sales and marketing).
The revised strategy calls for loading the current infrastructure by growing the customer base and achieving greater market penetration. This might be helped by the company working with Amazon Web Services (AWS) to support its critical IT infrastructure, including moving its customer contact center, marketing outreach, and network analytics onto AWS servers. The company hopes that migrating to the Amazon Connect omni-channel contact center “will create more personalized experiences for customers and manage larger call volumes.”
Despite providing research highlighting the benefits of faster, cheaper broadband (71% of people see broadband as an essential utility, according to CommunityFibre), it appears that CommunityFibre itself and other altnets are not necessarily the answer. CommunityFibre goes to market claiming unbeatable speeds of up to 3 Gbps, outstanding value with full-fiber broadband starting at GBP20 per month, and a network with 99.9% reliability. It also has an impressive Trustpilot score of 4.8 out of 5.
It all sounds too good to be true. And CommunityFibre’s 2022 turnover of GBP20 million indicates the problem. There has traditionally been a legacy mindset in telecoms that says, ‘if we build it, they will come.’ But the fact is that having infrastructure and support capabilities mean nothing without ramping up monthly recurring revenues – i.e., winning business. This is difficult in a highly competitive marketplace where many target customers are locked into 24-month contracts, often with associated services such as TV and mobile. Even a super-low pricing strategy will struggle against customer inertia.
For the sake of choice and innovation, it would be good if the ‘big boys’ of UK local fiber infrastructure (i.e., BT/Openreach, Virgin Media O2, and CityFibre) faced strong competition, but the estimated 150 UK altnets remain subscale in revenue and brand awareness terms. The rule of thumb is that 30% penetration across network coverage looks like the tipping point for success (Openreach is said to be at 33%). Currently, CommunityFibre is running at about 15%. Further consolidation between altnets may help CommunityFibre increase its penetration numbers to achieve survival, but the market is rapidly maturing, and time may be limited.