Tumbling towards reality – fibre costs down – value up

By | February 16, 2017

It was entirely appropriate that the UK’s 3rd significant contributor to the FTTH Conference in Marseille was Gigaclear’s Matthew Hare.

Even more appropriately, Matthew spoke on issues of raising investment for full fibre deployments on a day when the FTTH Council issued a report showing that a fully Gigabit Europe would cost far less than previously envisaged.  That report effectively nailed the old notion that the UK would have faced investment costs of >£25bn – such a figure would now represent 22% of the latest estimates for the entire EU area.

That calculation is not entirely valid – many parameters have changed over time – but it is now clear that the early UK estimates (much favoured by those who really didn’t want to venture into fibre) and now firmly embedded in senior minds, were not merely invalid but have grossly distorted policy, regulation and investment strategies.

That aside, Matthew laid to rest the lingering doubts about demand. “If you provide a reliable and future-proofed service there is no shortage of eager consumers”. He was congratulated on navigating the route from start-up to significantly scaled investor opportunity and achieved this in the most challenging part of the market – rural areas that already lack the infrastructures taken for granted in urban areas.

He also highlighted a key investment factor – the provision of an Open Access network. This provides great comfort for investors and is a nod towards a future wholesale position. Interestingly, the previous day’s presentation from Ofcom suggested that the regulator feels the need to encourage investment into a 3rd large-scale wholesale network provider. That line sort of implies that VM will be encouraged towards a wholesale position but details from Ofcom will, apparently, become clearer towards the end of March.

Meanwhile, Gigaclear has demonstrated that, from an investor viewpoint, this is fundamentally a long-term infrastructure business and their success provides much inspiration for smaller market entrants.