Somewhere in excess of 68 percent of U.K. consumers now can buy home broadband services at gigabit speeds, though fiber to the premises covers only about 37 percent of U.K. homes and business locations, according to Ofcom.
More important, from BT’s standpoint, is actual retail customer adoption, which seems to be about 27 percent of homes passed. That is a problem, balanced somewhat by Openreach wholesale sales.
If one assumes that any fiber-to-home network is sustainable with a minimum of about 30 percent take rates (actual paying customers as a percentage of locations passed), then BT has a bit of a way to go to reach sustainability.
“For their models to work, most operators assume a 40 to 50 percent penetration rate,” say analysts at Kearney. That arguably applies to larger internet service providers with legacy operations, rather than upstarts that typically have lower operating costs.
“The difference in net present value between a 50 percent and a 30 percent penetration rate may well be the difference between a positive NPV and a loss,” they note.
That can be difficult in a multi-supplier market with three or more competent suppliers of fixed access, plus two or three suppliers of fixed wireless targeting.
If one believes that three to six suppliers is too many in the home broadband business, then consolidation seems inevitable.
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