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Alternative broadband networks and challenger ISPs could have nearly four million customers by 2025, taking their market share to 14.5%, according to a new study commissioned by TV and mesh WiFi provider Netgem.

The research, carried out by Point Topic, forecasts that these insurgent brands will wrest one million additional subscribers from “incumbent” ISPs over the next four years. 

The study considers the appeal of alternative networks, or “altnets,” companies like CityFibre, Gigaclear and Hyperoptic which are installing their own full-fibre infrastructure to rival Openreach fibre and Virgin Media’s cable networks. It groups them with challenger ISPs, smaller providers which “resell wholesale services from the likes of Openeach to businesses and customers.” These include Shell Energy Broadband and Zen Internet.

Both altnets and challenger ISPs are posing a major challenge to incumbent ISPs BT, Sky, TalkTalk, Virgin Media and Vodafone.

Altnets and challengers have grown their customer base from just over 1 million in 2010, a 5.9% market share, to just over 3 million today, with a 12.5% market share. 

The new research forecasts that they’ll have a combined 3.74 million subscribers by 2025 and a 14.5% market share, as internet users look for better deals and full-fibre connections.

Alternative networks are pouring huge sums of money—a total of £7.66 billion to September 2020—into their full-fibre networks, hoping to be the first to reach many streets with gigabit-capable internet. The Independent Networks Co-operative Association (INCA) forecasts that alternative networks will deliver FTTP to 15.73 million premises by the end of 2025. Openreach, meanwhile, is targetting 20 million premises by the mid to late 2020s. In areas it doesn't reach quickly, alternative networks are seizing customers.

But one complexity that the study doesn’t account for is that some incumbent ISPs sell packages on alternative networks in addition to on Openreach. For example, TalkTalk has recently launched full-fibre plans in Ipswich, delivered over both the CityFibre and Openreach networks in the city, at the same price.

Vodafone and Zen have also partnered with CityFibre alongside Openreach, while TalkTalk sells plans over Freedom Fibre too. If one of these incumbent ISPs ditched Openreach for an alternative network, bringing along its hundreds of thousands of customers, the gigabit broadband landscape could dramatically change.

Netgem, meanwhile, is arguing altnets and challenger ISPs should offer their subscribers mesh WiFi systems to make the most out of their full-fibre connections.

Shan Eisenberg, CCO of Netgem UK, said: “To make the most of the gigabit broadband revolution, altnet and challenger ISPs need to think about offering customers more ways to get the most out of their faster connection as they make the jump from copper to fibre and the leap from household names to newer entrants.

"This could help make growth projections even higher than the data suggests. In fact we now have market evidence that attachment rates of 50% can be reached for both TV and whole home WiFi allowing ISPs to increase both their fishing pool and ARPU, and in turn smash their growth targets.”

Lauren Smith
Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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