In this episode, Adam Bradley, Head of Telecoms at Eight Advisory and Chris Stening, Senior Advisor at Eight Advisory, sits down with Nick Rawlings, Chief Marketing Officer of Gigaclear, who mentions crucial strategies on how to be successful in the competitive market of Altnets.

Chris Stening – Hi everyone I’m Chris Stening, Senior Advisor with Eight Advisory and I’m very pleased today to be here with Nick Rawlings. Nick is the Chief Marketing Officer of Gigaclear, and with Adam Bradley, one of the partners here at Eight Advisory. We’re talking to Nick about the report that we recently rolled out and also some of the learning and experience from Gigaclear. Adam, over to you to start the conversation.

Adam Bradley – Okay, thanks very much Chris and Nick thanks so much for joining us in the latest of our take-up interviews. I think you’ve had the chance to look at the whitepaper we wrote on fibre take-up in the UK and possibly also some of the interviews we’ve done with other leaders in the fibre sector. Tell us what your main thoughts and takeaways are from the article.

Nick Rawlings – Well, firstly it’s a very helpful overview of the UK fibre market, both parts. Particularly the second part on take-up and drivers of take-up is stuff that I readily recognise, live and breathe every day as Chief Marketing Officer at Gigaclear. It’s a robust rounded summary of the market. Couple of take-outs for me; the thing which resonated was the idea that driving penetration take-up is about long-term strategy not just short-term tactics but the dynamics of the market and indeed consumer adoption. Particularly when you think about customers in contract, it’s about having a consistent approach to your customers to the marketplace that allows you to win penetration and win customers over time. It’s not about a single tactic or kind of monthly or quarterly campaign.

Reality is that less than 10% of the potential consumers out there are addressable every month because many within a contract need this kind of consistency of approach to win in the long-term rather than just the short-term win. It teed up nice that kind of choice for a lot of operators, at least tradeoff between wholesale and resale approaches to the market, we’ll maybe get on to talk a little bit about Gigaclear’s philosophy on this. On one hand you’ve got the allure of a wholesale offering which brings lots of ISPs to the party when it comes to driving take-up, versus a retail one which starts with a smaller entity but puts maybe more control in the hands of the ISP to make their own luck and drive their own time scales for take-up and their own strategies. And then lots of lots of interesting input on all the classic go-to market disciplines.

There’s maybe a bit that precedes the report which is super relevant where in understanding success of take-up is about; where the network is built in the first place, the perspective of how you choose where to build whether that is a competitive overbuilt area or not, what kind of customer profile you look to build to, how you think about the creation of the network basically. That has quite a lot of bearing on everything that follows which the report picks up from, but that maybe is an element that we brought out more about the context of where the network is. Because between the different Altnets out there there’s some very different takes on the approach to selecting a market and whether overbuild or not, urban or not, is the preference. Those were my first thoughts on the report.

AB – Brilliant, ok. Thank you. Nick, you’ve touched on some of the points in what you just said but if we think of the levers and approaches that an Altnet might use to drive take-up up towards the levels that we highlighted in the report of someone like Openreach. What do you think the main actions and levers would be in the context of your strategy.

NR– From my point of view there’s couple of things. There’s that first piece around selecting where the network is built is particularly important to us. Our philosophy: we are on a mission to target rural and ultra-rural communities really with our fibre offering. We want to take fibre to areas where there is none today and we really want to avoid overbuild in the long term as well. We see limited benefits for investors or indeed a low benefit for our customers in having been one of many fibre networks that does not say we have zero overbuild but we meticulously tried to minimise the risk of that in what we do and have a very clear build strategy about building contiguous networks but in ultra-rural places where consumers historically have been not favoured by the incumbent in terms of the levels of broadband speed and service available. We’re addressing more of a latent consumer need for faster broadband than exists in towns if they’ve got decent FTTC speeds.

That selection process of where we go is important to our strategy. We want to be unique; we want to serve rural consumers. Then when it comes to how we approach the market, picking up on those similar points to the report. We’ve tried to take a long-term view and one that founded in customer needs and customer insights. We’re principally a retailer, we do a little bit wholesale, but we’ve built really a retail business that starts with the idea that to be successful in winning consumers as a challenger brand you need to build a brand. There are some classic marketing disciplines required at the outset to not just shortcut to the functional product benefits but to sell out stall of who we are, what our mission is to make people aware of us to do the hard yards of building brand awareness. And then brand consideration in our community so people see us as a preferred brand to buy from rather than a cheap alternative to what they’ve got. In our philosophy there is the idea of building a brand for the long term and trying to use that as a point of competitive advantages is important.

The third element then comes down to execution. The job of take-up becomes very specific with things like channel performance, targeting of offers, price, price setting, return on marketing investment. We’re very data driven, we’re very focused on the execution in our channels; what can we do to help improve our online buying journeys, we get a greater conversion level, how can we train our telesales people to deliver high levels of yield. How can we fine tune our offering and proposition to the customer based on the data we’ve got to kind of optimise take-up there. How do we think about our marketing communication channels and how to improve the execution and frequency of those to get the right return on investments. These are quite generic answers. Because while full fibre is a unique, a beautiful thing, it’s still about addressing consumer needs and building a go-to market plan that is good at all of the classic disciplines almost agnostic of whether you’re selling fibre or other things so brand, channel, and execution right through the go-to market plan.

CS – You know that we obviously interviewed Ben from Ogi and of course Ogi and Gigaclear share a similar sort of investor pool. And Ben talked a lot about sort of as you have about building the brand, about where do you build in order to get great take-up. So, you know Gigaclear have clearly got a really encouraging take-up and you’ve been building for a long time. What else is there in there for you that is really the secret success. Is it just about execution or is there something else you’ve not mentioned.

NR – The other advantage we’ve got, add on scale, still is the fact that we don’t just target rural areas we show up in rural areas. We’ve got quite a granular community focus in how we go about things. As a scale operation we don’t do field selling, don’t do door to door which is a slightly contrary view on the market. But we do invest in community engagement, in people who, and the report talks about this very articulately, the idea of needing to engage consumers not just at the points of ready for service but significantly before that. And individual residents as well as community power brokers like Parish councils and local Facebook groups to help localise your pitch and appeal.

And I take a lot of pride in the fact that we do still show up community by community. We enable a community hub, free access point in every community we go to as part of our deal of building there. Because the build even if it’s skillfully done does come with a bit of disruption and some traffic lights from time to time. How to kind of stop right at the outset with good quality community engagement and then follow that through all the way through life. We’re trying to retain a presence in the community after RFS through things like local sponsorships and other community initiatives. That means that we stay relevant at a local level. So yes, it’s a broadcast marketing machine that is, looking at the data and the kind of what we can do online etc., but that sort of married with a sort of a hyperlocal approach. And having spent a bit of time with the Ogi team and Ben I know they very much believe in that philosophy as well and they’re great at that stuff. We believe similar things to the Ogi guys on that.

CS – One of the things Nick that we sort of pulled out in our report, this might feel a bit different for Gigaclear. When you look at the average penetration of the Altnets, it’s about half that of the average that BT have seen. Now I know that Gigaclear are in a slightly different position but any sort of thoughts on why that is and what might need to be different.

NR – Well, it’s hard to do an apples for apples comparison of Altnets versus BT, Openreach. The incumbency benefit that Openreach have got with all the major ISPs on the platform already and the ability not to have to sell and switch a new customer but to effectively upgrade their products, is just a different dynamic than if you are a small- medium sized Altnet starting with zero client ISPs on your platform and having to win every single customer as a competitive switch in the marketplace. You might say tongue-in-cheek maybe slightly that, why isn’t BT and Openreach’s penetration much higher given that enormous incumbency benefit they’ve got almost all the customers in the UK on their broadband network. Why have not more switched already to full fibre. It’s a harsh comparison to make that against the context of an Altnet.

The report touches on then some of the other difficulties of comparison about sort of age of network cohorts. And likely a lot of Altnets have got a much more recently built network which is only just going live so they haven’t had as much time to sell. There are some inherent difficulties in making the comparison. We’ve done well in penetration, we’re kind of humble, we don’t think we got all the answers, we don’t think we’ve got it cracked. But we have focused as a sort of vertically integrated ISP with our build to try and have a very clear end to end approach of where we build a network, which consumers we then seek to win on to our network and then following that through with a retail-centric approach. And a business unit in my area which is singlely focused on penetration. Having penetration is a clear objective helps. Even when you do that well, there are some incumbency benefits that Openreach has which still make it difficult to catch up even after the kind of effect they put all the customers on their network to begin with.

As an industry overbuild is problematic and it particularly benefits, it has a cooling effect on the Altnets in favor of Openreach. You have the spectre of Openreach arriving, it does have an impact on investors’ appetite, to go into certain communities. It kills the retail business cases for penetration quite often. A great degree of transparency and adherence to plans on where people are building, not just Openreach but across all of us would be beneficial. I don’t see that really benefiting UKPLC in the long term to have 3 or 4 networks in a particular geography. Being clear on where people are going to build and being able to stick to that.

In the sales and marketing space there’s been some interesting publications from Ofcom about the advertising fibre broadband. And I think this is another incumbency benefit that if you already have a large FTTC base calling everything fibre is probably neat because you can wrap everybody up in the illusion that they are on one of many new generation products. And it makes the job harder for an Altnet to explain the rational product difference between a part fibre and full fibre products.

In terms of things that could change, just being clearer and more transparent on the different technologies available and not prodding consumer confusion would be useful, that would aid Altnets making a more straightforward case about the kind of product difference and the benefits of full fibre.

AB – Nick, thanks so much for your insights and comments. I really appreciate your time, it’s very great to get a view from a rural focused operator compared to some of the other operators that we’ve had on this series. Again, I really appreciate your time and I look forward to speaking to you again maybe at some point in the future about Gigaclear’s progress and driving better take-up for the product, so thank you.

NR – Thank you, Chris. Thank you, Adam.

CS – Cheers, bye bye.