Fibre Penetration and Take-up with Eight Advisory

Fibre Penetration and Take-up with Eight Advisory

We are introducing ‘Fibre Penetration and Take-up’, a new video series from Eight Advisory in which our Telecom experts listen to fibre market players talk about the challenges and success factors in the industry.

In this episode one, Chris Stening, Senior Advisor at Eight Advisory, sits down with Dana Tobak, CEO of Hyperoptic, who admits that the company’s success “depends on the mindset that focuses on market penetration and the customer from day one”.


Chris Stening: Hi Dana, great to have you here today. You’ve read through the first part of our report in which we provided an overview of market share and take-up rates, and the impact of consolidation in retail and wholesale markets. Please tell me what struck you from it, what you took away from it.


Dana Tobak: Yes, I think the report is a really helpful overview of the retail market for ISPs and obviously the role of the top five and then on the kind of network side, I think there’s an opportunity to understand that it’s not all the ISPs on all of the network. The key thing and and maybe this is as an entrepreneur is: Where’s the opportunity? Where do you actually find the good stuff ? And I think it’s quite interesting, cause Hyperoptic’s been going for 14 years now and for me with Hyperoptic and in my previous company “Be“, it’s always been about where is the inclination point where you can make a difference and and find an opportunity.


I think what was really key about the report is just that understanding of what the ISP market looks like, in terms of the amount of money going into the marketing side. And then also recognising the dynamics, the fun of the UK marketplace of Virgin and Openreach. I don’t know if Virgin wants to be called an Altnet or not but we couldn’t just completely ignore them from the report itself. But I think it’s helpful to get that overview, so that people unfamiliar with the marketplace can appreciate the intricacies of the UK market.


CS:  Brilliant, thank you. So what’s your sort of view, obviously Hyperoptic are slightly different, but why the Altnet penetration is so low relative to to BT and BT Openreach?



The Altnet community is split in two, what you talk about in your report: there are the ones who are wholesalers like City Fibre and Netomnia they do have You Fibre but what I mean by that is people whose business model is about looking to get one of the big 4 or 5, depending upon if we see Virgin as a as a player, if you will, in the ISP wholesaling market. And the amount of market share you can have is really dependent upon WHO you’re able to get as anchor tenant. So if you look at the case of City Fibre, they’ve been successful with both Vodafone and Talk Talk but of the big 5 they are the smaller players of the big 5. So to a certain extent they won’t have had the opportunity to move as many people from BT’s copper network onto their fibre network because those players didn’t have as high of a market share as BT and Sky do and Virgin in the areas where Virgin is.


So I think the wholesalers are going to be dependent upon who they can sign those wholesaler agreements with and I think there’s a larger discussion of whether BT would ever be willing to offer service over anyone’s network and at least for the moment Sky has not and nor has Virgin. So I think from that perspective is one of the main reasons why we chose to be vertically integrated and actually we integrated those processes quite closely. So what Hyperoptic is known for is financial discipline. For us the the main KPI was not about Homes Passed, our main KPI was actually penetration. And in fact I can I can show you our original business plans and it was all about penetration and recognising that we would pick the places to go where we could see the demand. So we both worked at Demand Generation, we would leverage champions in the communities, and we would make sure that every time you made an infrastructure investment, we would have people lined up to be customers. So we were able to drive simultaneously or slightly one after the other the ability to get the network live and then get customers onto the network. What we see across our network, for example in places where we’ve been live over years is on par if not more than where BT is. And that may be true from other Altnets than have specific business models. But I think the ones that have grown very quickly where operators focusing solely on Homes Passed, may have had less advanced ISP/customer integration business units that would have enabled them to move at the right pace to match the take up rate with the network build. The key answer is, Openreach has the benefit of over 200 ISPs who offer service on that network and they were able to offer very good commercial reasons for people to move for the fibre network versus not. Openreach actually didn’t do the marketing and the work to move people from a copper to a fibre product and for them, they made that network available and of course with BT, BT would move as many people as they could.


So, you have a very different set up for us, all of our customer growth was organic because we weren’t moving people from one network to another and if you look at it City Fibre and Vodafone and Talk Talk on the City Fibre network, at least according to their public reports, have seen some successes at getting new people onto those networks and seeing good growth. I think when you look at some of the other Altnets, they’re basically starting at zero and we’re very proud of our penetration and at least in our comparisons with Openreach we are usually above, but what you’ll find is the different philosophies of those Altnets would lead to different outcomes.


CS: Ok, thank you. So, is there anything that you think that other operators or yourself or industry could sort of do to try and rebalance that a little bit? Or is it something down to individual operators?


DT: It really is down to operators. I think what is bad for the industry is lowering prices solely to get customers. Because it means that customers devalue the broadband that they’re buying and I think that’s bad for industry overall. We’ve all put a lot of money into the ground. We need to be competing on service, we need to be competing on good products, good prices. You have an opportunity given where the market leaders are pricing their products at. But if we’re only acquiring customers with price we’re just as easily going to lose those customers for price. There won’t be any customer loyalty.


I guess for me it’s about the focus on the brand, the focus on that customer experience and making sure that customers aren’t treated like a number, and they’re actually treated like people. And that’s how we think here at Hyperoptic. I don’t think there’s any one answer and that’s the beauty of the marketplace. We have to find out who our target audiences are, we have to integrate with our communities, and I think many of these suggestions are actually in in the paper. A finding a way to get both awareness and interest in buying from people differently than the way the big players do. And that’s been part of the way that we think about the market. We visit our buildings. We make sure we engage with the concierges with the sales and marketing suites, so we have that ability. Now it gets harder as you scale, don’t get me wrong. If it wasn’t hard, everyone would do it. So you know we’re really pleased with how we’ve been able to integrate both of those things which is building the network and getting customers.


CS:  What do you think is the real secret in your success for driving penetration?


DT: It’s about it being a goal from day one. Every decision that we make about infrastructure, whether that is putting kit in a in a building or building what we call a hyperzone, so an area. We are really thoughtful about the demand in that area whether there is competition. Can we make a difference in the product that we’re offering and we ensure that we are continually working with the communities to ensure that we build awareness and we also are able to do Demand Generation as part of the build program. For me it’s the mindset. It’s about the customer. It’s not about the network.


CS: And we’re building a network for our children and our grandchildren. I think that’s something we can all be very proud of. It’s a brilliant industry to work in I think.


Dana, thank you very much for your time really appreciate it and look forward to seeing continued success in the future of Hyperoptic.


DT: Thank you Chris. Loved the report and all the best of luck.


That’s all for today, but we look forward to publishing our next interview in the series soon.


Stay tuned!




Senior Advisor

M&A Transaction Services, Strategy & Operations

Eight Advisory London

Nick Breadner




Strategy & Operations

Eight Advisory London

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