The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software.
Pete Pizzutillo:
This episode of The Broadband Bunch is sponsored by ETI Software and VETRO FiberMap.
Hello and welcome to another episode of The Broadband Bunch. This is Pete Pizzutillo recording live from Connected Britain 2023 in the ExCeL Centre in London. I’m joined today by Krystian Heald, he’s the head of partnerships for ISPA.
Krystian Heald:
ISPA, the Internet Service Providers Association.
Pete Pizzutillo:
There you go, thank you for that. And so, Krystian, you’ve been to this event before.
Krystian Heald:
Yep.
Pete Pizzutillo:
What’s your reaction so far?
Krystian Heald:
I think it’s been quite exciting. This is the largest we’ve seen in Connected Britain. I think it’s a sign of the market and where we’ve got to in terms of the deployment of gigabit-capable fiber. It’s quite an exciting time. There are a lot of questions in the industry and a lot of things happening. So, yeah, it’s good to see so many like-minded individuals come out today as the industry body for ISPs in the UK. There are lots of members here, lots of conversations, and lots of topics we cover and engage with these sorts of key stakeholders. So yeah, really important for us to be here, and it’s an exciting day.
Pete Pizzutillo:
So before we dive into more about the show, tell us a little bit about what your organization’s mission is and what your role is.
Krystian Heald:
So ISPA, or the Internet Service Providers Association, for short, is the UK’s largest trade association for service providers, network providers, and vertically integrated ISPs. We have about 150 members, and our role is primarily to advocate for the industry to the government and also bring the industry together to have vital conversations through events, member groups, and policy meetings. So yeah, we’ve got a council of about 14 representatives from industry, and it’s run by a secretariat from Clarity which is the organization I work for behind the scenes.
Pete Pizzutillo:
Got it. And so what are some of the major themes that you guys are talking about right now? Because I know the UK is in kind of an interesting place in its evolution in broadband.
Krystian Heald:
Yeah, so I think the government gave the UK a mandate not so long ago to extend gigabit-capable fiber to 85% by 2025. And I think what we’re seeing from the industry is an enthusiastic take up of that. So I trust the industry. There’s been a significant drive there to deliver that rollout, and I think currently there is full fiber to 56% of properties across the UK. I think gigabit capability is up at about 75%.
So yeah, there’s been a really exciting time in terms of the rollout of gigabit-capable fiber. I think new conversations are coming into the sector at the moment. I think there are a lot of conversations around taking up and delivering on customer service and ensuring broadband is accessible to everyone throughout the UK and everyone including those sort of struggling a little bit more in the current cost of living crisis are still able to access. And I think the industry is doing a lot of work towards that.
And cohesively, events like today and events we put on we talk about how to tackle those issues head-on and how the industry can work with the government to ensure that connectivity in the UK is delivered to everyone with speeds and with services that people need at a day where digital connectivity is everything. Whether it’s your job or speaking to your family members who live in different parts of the UK or across the world, it’s essential. So these are the key topics that we’re focusing on.
Pete Pizzutillo:
Looking from a new entrance into the marketplace, me personally, right? There’s a lot of churn, it looks like, and chaos in the marketplace. People talk about consolidation. There’s some consolidation happening already. There are some rumblings of it coming. And, as you mentioned, this money was given out at some point in time a few years back, three billion dollars or something, and the dynamics have changed, right? Because the cost of money increased, resources were constrained, and the take-up rates didn’t hit the business cases that they thought, operationally. It’s harder to pull it off. Your opex is there, so profitability is concerned.
So, I guess, the question is, what are some of the lessons learned between here and there? And what do you see some of the winners focusing on? I know you can’t talk specifics, but what should operators be thinking about in terms of being able to overcome some of the challenges that you’re seeing today?
Krystian Heald:
Well, I think I’d like to start the answer off with kind of going a little bit off-kilter and just saying that the industry has done a lot of work in a very difficult climate. There has been a lot of work across the sector from various of our members to ensure that we keep up with the rollout, and we also try and push take-up and still deliver on affordability initiatives that enable people to connect. And I think the industry has done a very good job of that under a significant strain in the current economic climate we’re in. So I think we need to sort of accredit the industry for the work they’ve done.
But yeah, like you say, I think everyone is aware that consolidation is coming into the market at the moment. How that turns out or where that turns out, I think we’ve started seeing a few of the mergers from current investors. So the phone group merger happened and the acquisition of Truly last year. So it’s an interesting time in terms of the key priorities.
As an industry association, we don’t know who will win or wouldn’t like to comment necessarily who will win at the end of this. We expect to see consolidation, but I think sort of the key priorities for us as an industry representative body is to ensure that those that do merge and acquire are supported by the government in terms of continuing that rollout and ensuring the hardest-to-reach areas are delivered and consumers get a great service. And I think that those that do end up winning at the end of this will be focusing on those as key targets moving forward. And it’ll be exciting to see what happens in the next few years.
Pete Pizzutillo:
Yeah. So to kind of play that back, there is consolidation and churn which may be natural, anyway, given all the entrants into the market. But there’s still work to be done, right? And so the government and private partnerships need to be as strong as ever because we still have areas to cover. We still need to figure out how to continue to provide services. And a lot of what we talk about is access is just the first level, right? So getting connected to all of the homes is one thing, but having that broadband mesh enables all these advanced capabilities like telehealth, distance learning, and all that.
I think there is a lot that the government can do to prioritize funding and make sure that the legislative blockages are cleared out so that you are actually building. I mean, really, it’s just the foundation. So what’s step two in taking that foundation to the next level?
Krystian Heald:
As in what needs to happen next to ensure that foundation? It’s difficult to comment on. But I think there is work to be done in terms of with events like these you see a mixture of partner vendors and members and ISPs delivering. You’ve seen across our membership. You’ve seen across our partnership secondary vendors and tertiary vendors start engaging with the ISPs and CPs to not only deliver a fast broadband speed but also deliver a network that delivers customer service and customer satisfaction.
And across the industry, you have started to see that engagement. And you’ve seen organizations come into the market to support our members with that, and it seems to be a really active sector. I think, as a head of partnerships at ISPA, that those kinds of engagements are really important. It’s really important to create a platform for those people to engage and have a conversation and work as an industry. Now we’ve delivered quite significantly on the rollout remit that we were given; how do we deliver on the actual capabilities and service?
And there is some really good work going on across the industry to ensure delivery of the service. I think there are some really good ISPs out there with some great customer satisfaction and engagement with that and reaching out to those communities they operate in to make them aware of the new connectivity that’s out there. So I think there is a lot of good work going on. And I think over the next few years you’ll see a continuation of that work and a continuance of the conversations to make sure that delivery happens.
Pete Pizzutillo:
Yeah. One point you made about differentiating or at least focusing on customer experience, is that I think it’s a mandate, the one-touch switching requirement. So can you just explain what that is for people not in the UK?
Krystian Heald:
Yeah. One-touch switching is essentially a platform to allow consumers to instantaneously switch from one provider to another within, I think, 60 seconds. So there is no sort of in-between of canceling one kind of contract and going to the other. This was a mandate brought in by Ofcom in, sort of, late 2022. And industry since this has done a lot of work. There is a company called the One Touch Switching Company which was founded and supported by industry members. We actually represent the smaller ISPs within the company on that board. But there was a quite significant mandate from the government to introduce this. It involved a lot of work in the industry to deliver this. I think the industry’s done really well in terms of getting it to a stage where we’re not far away from implementation.
I think as an industry there is an agreement that inevitably is a good thing, and it encourages a bit of competition in the market. It improved services as a result and greater messaging to consumers. So I think as an industry we encourage this kind of thing, and we’ve worked hard as an industry to try and deliver that. I think there was a misunderstanding from the government in terms of how quickly the industry can deliver on those systems.
Pete Pizzutillo:
That’s right.
Krystian Heald:
But no, it’s an interesting part of legislation that was brought in. It definitely made the industry act, but it should encourage a bit more competition across the sector. And we advocate for it, but we advocate for it with realistic implementation time frames. But it’s new, and it’s interesting.
Pete Pizzutillo:
It really is interesting because in the US, right, they are trying to put guardrails around affordability and transparency. So the FCC came out with the nutrition label for broadband, and essentially that’s how people do comparative shopping. That’s an apples-to-apples comparison which is essentially attacking the switching friction. It’s a pain to cancel and all that kind of stuff. So making it really accessible really flips the work back to the ISP to say, “We need to continue to compete for the consumer’s trust and confidence in us daily.” It really will inform your field service, your customer service, and all your consumer-facing operations.
Krystian Heald:
Yeah. Man, I think the UK government is trying to bring in an open comms which is a similar kind of piece to that which from the way it’s been described will be an introduction to sort of a country to marketplace for service providers. However, I think as an industry as a whole there is so much pressure on us at the moment in terms of delivering on the rollout, take up, delivering one-touch switching that, again, the implementation needs to be understood that this is with industry as a whole has an onus on it which is quite significant at the moment. There are several consultations coming across from Ofcom, from the government about different aspects of the sector, and there is a lot of work going into that. So putting one more priority on the pile —
Pete Pizzutillo:
May not be the best time.
Krystian Heald:
It may not be the best time.
Pete Pizzutillo:
Yeah, yeah, yeah.
Krystian Heald:
So we’re not against it, but I think time frames need to be considered in terms of the implementation if not as an industry objective. The government likes to keep them applying things to us, and we’re open to engaging and encouraging broadband to be a focus because its connectivity is essential. But also to work with the industry to ensure that delivery can be achievable.
Pete Pizzutillo:
Sure. Yeah, practicality does benefit everybody. Let me ask you a question, you talk about the internet service providers. Do you have any satellite providers in the UK?
Krystian Heald:
So I’m not aware of any other members that specialize in satellite connectivity. I think the focus mainly has been on the fixed and the mobile and the fixed wireless over the past few years, so I don’t necessarily have a stance on satellite. I’ve spoken to a few people about satellite connectivity. There is a conversation around harder-to-reach areas and whether that is a viable solution for that.
Pete Pizzutillo:
Yeah, same thing in the US. Kuiper and Starlink and Viasat, they’re all – There is a lot more area in the United States, so maybe that’s the driver. But the ongoing argument is, can they provide the types of service from a speed and reliability perspective that a fiber optics FTTH solution could provide?
Krystian Heald:
Yeah. I’m no expert on satellite technology and connectivity technology within satellites, so I couldn’t comment on that. What I would say is that the rollouts that have gone out across the networks in terms of the FTTP networks that are being built, the gigabit-capable networks across the UK, they are delivering speeds that the UK has never seen before and deliver it in an expedient manner. The UK itself is quite a condensed population. There are lots of urban areas within it. It’s not spread out as the US, so the requirements for satellite provisioning might be different, and it’s one to see.
I think the harder-to-reach areas are a question mark. How do we get to that last 15% of properties across the UK? And the solution to that I can answer. That is for ISPs and network builders to decide on how best to deliver that way.
Pete Pizzutillo:
Understood.
Krystian Heald:
But that is the next frontier I’d say. It would be interesting to see how the industry goes with that.
Pete Pizzutillo:
Yeah. So we’re at Connected Britain 2023. Next year when we’re sitting here, what’s different? There’s a lot of chaos going on right now. There’s a lot of maturation that’s happening, and there’s still people drawn to this market. What are you expecting to see in 12 months?
Krystian Heald:
A little bit of consolidation I’d expect, a few mergers, a few acquisitions. I still think there’ll be excitement there. I think what we have seen over the past few years is a transition to look beyond the building and to look more on the delivery of the service. So I think there will be more conversations around that next year. There are still definitely conversations around build at the moment, but there’s been a lot of great work in that area from the industry. So it’s, “What’s next? What happens next?” And I think consumer-focused delivery of service. I think, hopefully, the economy will be in a little bit of a better climate by 2024, so there’s maybe a bit more buoyancy in terms of investment, investor focus, and that kind of thing. But who knows? Who knows where we’re going to be in 2024?
Pete Pizzutillo:
No, we’re holding you to it.
Krystian Heald:
Yeah.
Pete Pizzutillo:
You said it, it’s on record now. No, that’s helpful. I appreciate that. So Krystian, how can our listeners learn more about the Internet Service Providers Association?
Krystian Heald:
So we have a website, www.ISPA, I-S-P-A.org.uk, which has our email addresses and where to engage. You can also reach out to me on LinkedIn, Krystian, K-R-Y-S-T-I-A-N, Heald, H-E-A-L-D. And more than happy to get in touch and speak to people. We have 150 members; we have 12 partners. And we do in-person events throughout the year. We engage government; we engage industry. We have the great ISPA Awards which is in its 25th year and will be a fantastic celebration of the industry’s achievements over the past 12 months. And it’s really, yeah, just get in touch. Reach out via email, at Krystian@ISPA.org.uk. And we’re always happy to have a conversation and learn about people’s interest in the ISP sector in the UK. It’s very buoyant and very exciting, and there’s lots to come.
Pete Pizzutillo:
Yeah. It’s an exciting space, and I want to thank you guys for all you’re doing for the industry. We need a united front, sometimes in other places it is a little too fragmented and policymakers need to break it down and understand the basics and then figure out what’s the next priority. So thank you for your help, and thank you for joining us on the show today.
Krystian Heald:
Thank you for having me. It’s been very good.
Pete Pizzutillo:
We’re here live at Connected Britain 2023. This is The Broadband Bunch brought to you by ETI Software and VETRO FiberMap.
