A lack of competition within any given market invariably breeds complacency, stagnation, and a disincentive to innovate.
BT’s Openreach is archetypal. Though now legally divested from BT, Openreach, still part of BT Plc, owns and controls the majority of the UK’s broadband infrastructure – its cables, ducts and exchanges – as a dour hangover from the days of state monopoly.
Nearly every network service provider is reliant on its assets, with little input as to how they are distributed. It’s a private company with the attitude of a state monopoly.
If one were to ask the Labour front bench, they would likely support this odd arrangement. But as the rest of us know, without competition, a moratorium on innovation (in all but name) preserves a crumbling status quo.
If you want something doing, do it yourself. That’s the response that Dana Tobak, chief executive of Hyperoptic, seems to have taken. The bureaucratic hydra of Openreach has failed to deliver the full-fibre broadband network the UK needs to thrive in the unfurling data economy. So she built her own.
“I’m not trying to specifically beat up Openreach,” she says. “But when you have an existing infrastructure, and you’re making significant revenue from that infrastructure, it’s hard to make the business case for a fundamental change.
“So we are, for example, able to give customers a really superior experience, in terms of speeds and reliability, than you’ll ever be able to do over a copper network. But because it’s not just incremental revenue to us – it’s full new revenue – it makes the business case completely different.”
Backed with George Soros’ money, Hyperoptic runs its own dedicated fibre-to-the-premises network, offering speeds of up to 1,000 Mbps – the fastest in the UK today. In the last three years, it has installed over twenty million metres of dedicated cable across the country – further than the distance from here to New Zealand.
Surpassing 350,000 homes and businesses so far, Tobak, who received a CBE in the New Year’s Honours List for services to the digital economy, is on track to provide hyperfast broadband to two million homes by 2022.
Read more: Britain deserves ‘full fat’ fibre broadband
“There seems to be a focus on a national solution in a way that I think is completely artificial,” she says. “And what I mean by that is, I don’t think that someone in the Highlands of Scotland really cares that they have the same choices for their broadband providers as someone in the middle of London. I think what that person cares about is that they have equivalent choices. What we have seen, specifically through councils, is an expectation that BT will solve everything. And if it’s not BT, it’s not good enough. And I think that’s part of the brainwashing that has occurred over decades of BT being the main solution.”
There seems to be a focus on a national solution in a way that I think is completely artificial
Tobak welcomes the appreciation that Matt Hancock, as digital minister, showed for the competition and guile of alternative providers. He once said he “will strain with every sinew to get [full-fibre] rolled out in Britain.”
“It’s a real shift,” insists Tobak. “We tried to speak to Ofcom a few years ago and they just weren’t very interested. They said ‘what you’re doing is on the edge, what we care about is pushing BT.’ The appreciation that, if you’re going to have full-fibre across the country, there are different solutions and different providers, is welcome.
“For example, Gigaclear is fantastic if you’re in rural areas – I would never try and compete with them. And I think they would say the same about urban areas. To expect to face all the challenges simultaneously is a mistake.”
A cultural shift away from BT as a broadband oracle is clearly paramount to ensuring that the UK has the infrastructure to nurture its burgeoning tech scene. “Imagine every place in the country would have full-fibre by 2020,” says Tobak. “What would the app developers be doing? What would we be thinking about in terms of eHealth, education, and jobs?”
Accommodating shareholder returns over innovation is a privilege exclusive to monopoly – one which some would argue Openreach has abused. Hyperoptic seeks to compete fairly in a free market. And actually, it’s clear that the incumbent’s privilege is holding it back, which only serves to further Hyperoptic’s ambitions.
“I think,” says Tobak, “that from a company perspective, I can see how Openreach is doing what was right for their shareholders.
“But when you look at it in the context of what’s best for the country, it was nice to see the shift both from Ofcom and from the government to appreciate alternative solutions, alternative network providers, and to not expect BT to give the answers for the future. Or not to be the only ones to give the answers.”
When you look at it in the context of what’s best for the country, it was nice to see the shift both from Ofcom and from the government to appreciate alternative solutions
One marked shift, for example, is the cable ducts Openreach operates, initially installed by the state monopoly. They offer significant opportunities to greatly accelerate the time it takes to roll out the new, desperately-needed, full-fibre network. Digging 200m of duct can take days, while fibre cables could be installed in the same length of existing duct in a matter of hours.
Openreach, says Tobak, “was not particularly forthcoming with making it something that could be fit for purpose. It became a bit of a chicken and egg thing – with Openreach saying ‘no one’s using it, so we’re not going to bother putting in any investment’, and then larger players saying ‘it can’t be used so there’s no point in us using it’.”
Ofcom, in a signal that the days of monopoly are numbered, has passed a diktat to ensure all providers can lay fibre in BT’s ducts as easily as BT itself. Full-fibre broadband coverage in the UK currently stands at around two per cent, which compares to over 70 per cent in Japan, Spain and Portugal.
Upon news of receiving her CBE, Tobak thanked Ofcom and the government for “their work in ensuring the right market conditions for industry growth and increased investment.” It will, she says “expedite the rollout of full-fibre, which benefits the nation’s citizens and the digital economy.”