Ofcom fibre data points to intensifying wholesale competition

The UK is on course for 91% full fibre coverage by May 2026, according to new forecasts from Ofcom.

The telco regulator said in its latest Connected Nations report that by then – as long as all network builders follow through with their current build plans – the number of houses passed by fibre will reach 27 million, up from 15.4 million in May this year.

Coverage of 91% would – according to the FTTH Council Europe’s most recent figures – bring the UK broadly in line with where European heavy-hitters Spain and Portugal sit today.

“Although much of this planned build is focused in urban or suburban areas, rural areas could also see substantial network upgrades,” noted Ofcom. “If all planned deployments are realised, 98% of urban properties would be gigabit-capable by May 2026, up from 81% this year; and 75% of rural properties would be covered, up from 42% in May this year.”

Openreach alone aims to cover 25 million premises by the end of 2026. In July, the incumbent’s FTTH footprint stood at 11 million. In August, rival wholesaler CityFibre revealed its fibre network now covers 3 million premises, and it plans to cover 8 million in total.

Then there is Nexfibre – the joint venture between Virgin Media O2 (VMO2) parents Telefónica and Liberty Global, and InfraVia – which has set a target of passing up to 7 million premises by 2027. VMO2 will be Nexfibre’s anchor tenant, and leveraging that network will increase its own fibre footprint to around 23 million premises.

It doesn’t take a maths wizard to figure out that all these deployment targets add up to more than 27 million. And that’s before you consider smaller altnets that have highly-targeted rollout strategies – like Hyperoptic in London, or Gigaclear, which focuses on rural, community-led projects – for example.

“We have collected and collated data from UK broadband firms about their full fibre rollout plans for the next three years,” said Ofcom. “Based on this data, three quarters (76%) of UK properties could have gigabit-capable services available to them from two or more providers by May 2026, more than double the amount by May this year (30%).”

Depending who you are, this particular forecast will either be encouraging or deeply troubling.

Overbuild puts retail ISPs in a powerful negotiating position, and their end users will most likely benefit by way of affordable gigabit broadband services. In addition, the prospect of overbuild exerts pressure on wholesalers to build in greenfield areas, extending the reach of fibre into hitherto unserved locations. Ofcom and whichever government is in power can notch it up as a win for consumers, and vindication of the UK’s overarching gigabit broadband strategy. Champagne and knighthoods for everyone.

On the other hand, from a consumer’s point of view, there is disruption inherent to the civil engineering aspects of digging overlapping fibre networks.

Furthermore, the prospect of overbuild is not quite as enticing if you’re a wholesaler sitting on a big pile of debt, or an investor that has ploughed millions into an altnet.

Earning a decent return in a timely fashion is more challenging when faced with competition from one or more rivals. Having to look for greener pastures that lack competition generally means rolling out fibre in areas that are more costly to serve.

In the medium-term then, in light of the rising costs of capital, labour and raw materials, wholesalers that don’t hit their desired take-up rate might begin looking for a way out.

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