Fibre Penetration and Take-up with Eight Advisory – Interview with Ben Allwright

This time Chris Stening, Senior Advisor and Nick Breadner, Partner sit down with Ben Allwright, CEO of Ogi, who emphasises “that it is necessary to have a clear purpose, brand and values in every action, with a strong focus on customers, employees, community and ecosystem”.

Chris Stening: Hi, my name is Chris Stening, I’m a Senior Advisor with Eight Advisory and I’m joined today by Ben Allwright who’s the Chief Executive Officer of Ogi. Hi Ben. 

Ben Allwright: Hi Chris. 

CS: And also by Nick Breadner a Partner here at Eight Advisory. So, we’re going to talk a bit about the report that we rolled out and have a bit of a conversation with Ben. So, Nick I’ll hand over to you to start things off. 

Nick Breadner: Perfect, thank you, Chris, and thank you for taking the time Ben. I guess let’s just jump straight into it what struck you most about the piece and what did you take from it. 

BA: Fundamentally, I thought it was a good report. Actually it really addressed some of the key issues. I think it’s easy to characterise the fibre industry and fibre Altnets all very similarly, but actually there a lot of differences between the various operators out there and certainly address the question of retail versus wholesale. But obviously you’ve also a difference between more urban and rural providers. There are providers that have a very regional strategy, and those that are building everywhere at the same time, and those that are perhaps just offering a very basic broadband product, and those that have a more sophisticated offering that perhaps includes wholesale long distance and business services, when we characterise Altnets as a report set out to the beginning. But generally, I think the report contains a lot of interesting things. I think one of the things it did was highlight some of the complexities and challenges of becoming a retailer, but obviously that’s a road that Ogi has taken and we’re really pleased that we have. But I think you need to invest a lot of time and energy into building your brand and being clear about your goals when making this decision. You need to know who you’re as an organisation, who the customers are you’re trying to target and you really need to build a brand, a presence, an ethos and values that underpin the journey to becoming a retailer. Because it’s a big thing to build a consumer brand. And I can understand why a lot of operators, as you say in the reports, have chosen to do that is simpler in many respects it aligns quite well with it becoming the models of Open Reach and others. But of course, it’s also difficult to place your future, your prosperity in the hands of ISPs because until you’ve got that scale it’s hard to bring those operators to your network, to any real degree with any real commitment and of course you’ve got all of those integration challenges as well. So now in general I thought that the report was smart, it talks a lot about things like hyperlocal which is you’re really building your brand up locally really working with local communities. This is the thing the Ogi’s really proud of. We got various funds and lots and lots of initiative that target getting under the skin of those communities. We firmly believe that you can talk to each other and build trust. One of the things that the big providers struggle with is gaining, building and maintaining trust over the long term. Of course, they have the advantage of having been around for a long time, so there is a certain level of latent trust. But if you look at Trust Pilot scores and things like that as well, you’ll see they struggle to deliver a service performance and sort of maintain that trust. So, it’s a very interesting report and there’s a lot in there that plays I think to a lot of strategic and tactical choices we’ve taken too. 

NB: Let me just pick up on that point that you made there then about your retail brand, you’ve clearly built a really exciting retail brand. How have you balanced doing that alongside building a network in a rural area as well? 

BA: We recognised from the get-go that as important as building up the sort of the network build and delivery and operations machinery, we needed to really focus on building a consumer brand that resonated. Now we’re fortunate in that we’ve chosen a target geography with a really strong sense of identity. Wales has a very strong sense of national pride and national identity. We as much as possible try to tap into that right from the outset and build a brand that was strong in purpose it’s for Wales, it’s in Wales, it’s old Wales. We employ Welsh people; we employ a lot of Welsh businesses to support us in our ecosystem so by really bringing that in and then just investing the time up front. Laying out that purpose, laying out those sorts of values and then building that into our culture so that we hire against those values we performance manage against those values and if necessary, we exit or change to maintain those values in our organisation. I think that means that we got a very authentic brand. Ogi is a rallying call, it’s a terrace chant, it’s fun, it’s engaging, it starts a conversation. We really wanted to tap into that Welshness and make sure that we were bringing something to market that was demonstrably different from anything that had been before. BT, Virgin, Talk Talk, these are incredible brands, these are big brands, they have huge marketing budgets. How do you cut through all of the noise about fibre, how do you cut through the ultras, the gigas, the networks, the fibre all of these terms are used so readily. What do they mean when it comes down to sort of heart-based decisions rather head based decisions, what do they really mean. So, we really tried to build a brand early on that talked to people’s heart rather than just their head. Obviously, you need excellent products, well priced and ultimately you need to deliver fantastic service but we also tried to get under the skin of the Welsh people and then we built upon that by recognising what people in Wales value, the social aspects, the community aspects and really build them into what we stand for. So, probably if I’m honest we may have got further ahead with the build if we’d have been so focused on builds from the get-go and we’d have sort of maybe pushed things like branding to the back of the queue. But we really wanted to make that a key part of becoming a vertically integrated provider. We also spend a lot of time developing not only a residential product portfolio, but a business product portfolio and we went out to the market with Voip as well as broadband as well as all those business services. So, there’s quite a lot of investment early on. There are other Altnets that galloped ahead and maybe built more premises than us faster. We wanted something that was here for the long term that would be the Welsh alternative telecommunications provider not just another Altnet certainly not one looking to flog their assets to another bigger Altnet, but one that really resonated and was here for the long term. So, I think that’s been great for us. I strongly recommend people recognise that building a retailer is a very significant investment of time and energy, it’s not something you slap on the network when you’re done. 

CS: Perfect, thank you. I think that leads us into a little bit on the next question we had for you here which was, what’s your view on why the Altnet penetration is lower than Open Reach. 

BA: I think your reports have shown some good points around this. I mean fundamentally it is still quite an early move of product there are some people the gamers, the heavy home users, the hybrid workers particularly people who work in technology industries or it savvy who recognise that 200 meg is demonstrably and massively different and better than 40 meg. But there’s a large percentage of the market who doesn’t really see that and it won’t necessarily get the utility out of that and faced with making a choice between you or an existing provider even if you’re providing more speed at a better price, may well just stick with an existing provider anyway because switching apathy mainly. But increasingly I think with Covid and with the number of people now home working people are recognising the value of fibre and the difference between fibre as a catchphrase and real fibre that comes all the way to your door. But it’s taking a while to build that momentum, we are seeing that momentum come through. The Altnets are gaining market share much more quickly than the incumbent operators, right. So that we still maybe lag behind people’s aspirations, at first I think some of those aspirations were just unreasonable. There are quite a few Altnets out there who thought they’d have 30, 40, 50% in the market just by delivering a fibre network and I think that was a bit naive. But ultimately, I think the momentum is building. Clearly if you go into an area with very poor broadband provision and you come in there with a really good product and well-priced you are going to see you’re a very strong taker. We had plenty of villages in some rural areas where we were able to go in and get 50% 70% take-up in sort small pockets. But when you go into larger communities which may already have super fast where 40 meg, 50 megabytes may be the average. You know, you’re having to compete on more than just speed. You’re really having to educate and inform and you’re having to probably come in with pricing and offers that providing that switching impetus for people. So, I also think people tend to underestimate the incumbents. Maybe they have no trust pilots and maybe they are a little bit slow and maybe they are very reliant on open reach. And a huge program of works, but they’re also pretty smart making people, when fibre’s available, to switch quite quickly, quite seamlessly. They’re very good at marketing, they’re very good at catching people coming out of contract and re-contracting them. Those things are impediments to Altnets, grabbing customers even if they come to a good point where they might want to switch. There’s lots of reasons. You touch so many in the report about brand awareness, about fibre understanding, about first mover advantage, about people being in contract and so there’s lots to think about to get the customers. But my personal belief and certainly from Ogi’s perspective is the customers are coming. Many of us now slow down our builds for a while, while capital is more scarce. But actually, that’s not for us been the impediment to setting we thought it would be. I mean our original thesis was, we need to constantly be releasing more network, to give us the customers. But actually, we found that by getting the right products and the right positioning at the right price and having now built ahead of steam with our brand and our reputation, the customers are coming. And as more and more customers are happy to cut the cord on Sky and cut the cord on Virgin and the more the more people are buying OTT services people are coming. I personally think that the biggest challenge for many Altnets is just a scale of overbuild. If you’re in a community where there are three or four other competing providers even if you’re fantastic you know what percentage take up can you really expect to get out of even a mature market. If you focused more on more rural areas and you’ve got quite a complete offering and you’ve built a really, really strong brand and a great reputation maybe you can be one of those operators against the 30, 40, 50%, why not. For a lot of approaches, it’s just overbuild and that’s where I think people are turning to things like consolidation because they’re running out of ideas. Where we’re playing where there’s still relatively low amounts of competition, great product, great price. Your people will come over time. 

CS: So, you talk quite a lot about the things that have made Ogi successful and you talked about your brand that you’re very proud of and justifiably so. You talked about the purpose that you’re living in and making everything Welsh having the right products and services. Do you think that it’s that combination of all those factors that’s made you successful or is there something else in there. 

BA: I think company culture I’d say is a strong part of what makes us a good company, the shared experience, the shared passion. Welsh people are extremely passionate. I’m not Welsh but I really love working with them. They’re really passionate. They’re really passionate to do something great for Wales and although I think at the doorstep people are buying on products and price in the main, I still think there is this real strong sense of community and people getting on board with something. So, I would say there’s a lot to do with the passion of the staff and the people in the ecosystem we operate in. It’s also fantastic to operate in an environment where you can reach people, senior stakeholders very quickly. So, we’re able to get to in a way that you know work I spent a lot of my time working in England, but it’s very difficult to get to people in power, their diaries are so chaotic and they’re so hard to reach. But in a place like Wales where lots of people are interconnected and internetworked news travels fast and it’s quite easy to get handed around, it’s relatively easy to get meetings with MPs. Hermes is member the Senate or even the First Minister. If you wanted to you know these things are doable. So, it’s quite easy to build a reputation at the senior stake or whatever and get that support and advocacy and I’d said we had a lot of support in Wales from those people who can provide you some wind in your sails. We’ve been really fortunate to operate in this kind of place. I think it’s so crowded in a lot of England now really, really difficult to cut through and get the kind of support we get here in Wales. I think that it’s a big part of our success. 

CS: Ben, thank you so much it’s a really lovely story about what you built and created with your team in South Wales. We look forward to following your success. So, 20%, I saw that you passed just keep going. What’s next on planned for Ogi, further expansion. 

BA: Yeah, I think like most businesses, I think we’re all looking for more funding we’d all like to do a bit more. There’s still loads to go. I believe there’s loads to go and beyond the residential community there’s lots and lots of really exciting business in Wales as well. It’s been a fantastic place for investment as one of Europe’s largest data centre’s here. There are two more slated coming to South Wales in fairly short order there’s a subsea landing cable coming in West Wales. There’s a lot of activities big in the tech sectors, big in the thin tech sectors, big in the media sectors, there’s loads going on in Wales. So, I think spending as much time tapping into and building networks for the business community as well. We just built a really exciting high-capacity trunk route between Cardiff to that data centre in Newport called Vantage and then all across the Prince of Wales bridge into England. We plan to connect that into Bristol as well. Looking at all of the aspects in the ecosystem working with Welsh Government, working with other major Welsh stakeholders to develop out other sites there’s lots of postindustrial sites as well that are being associated for a further investment. So, like most operators we’d like more capital, but there are also just fantastic opportunities in Wales that we’d like to tap into and really work with those stakeholders to make Wales as prosperous as we can possibly make it. And finding those synergies and aligning our interest with Welsh interest, I think has been, is one of our key strengths we intend to keep doing that. 

CS: Brilliant, thank you so much for your time, Ben, really appreciate that, thank you. 

BA: It’s been a pleasure speaking to you Chris and Nick. 

NB: Thank you, Ben. 

BA: Thank you again. 

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

Stay tuned!