What followed was more complicated. Build costs ran higher than projected. Subscriber take-up in newly connected areas was slower than forecast. Debt financing, which many altnets had used to fund deployment, became more expensive as interest rates rose. Several operators went into administration. Others were acquired, merged, or restructured under new ownership. The competitive landscape that existed in 2022 has been significantly reorganised.

For ISPs that are still building, operating, or growing their networks, the consolidation wave has left a changed environment. Understanding what has shifted and what it means operationally is a useful exercise at this point in the cycle.

The core issue for many altnets was the gap between passing premises and connecting them. Passing a home means running fibre past it; connecting it means a subscriber choosing to switch from their existing provider and paying for the installation. The cost of the latter — marketing, acquisition, installation — does not appear on the balance sheet until the subscriber signs up, and at low take-up rates, the revenue per premises passed can be far lower than business models assumed.

The Project Gigabit programme added further complexity. Government contracts required delivery at specific timelines and coverage levels, with clawback provisions for shortfalls. Operators that took on contracts at the height of the funding cycle found themselves committed to build schedules that became increasingly difficult to execute as material costs and skilled labour costs increased.

Openreach’s accelerated FTTP rollout also changed the competitive dynamics in many areas. In markets where altnets had expected to be the only full-fibre option, they found themselves competing with a well-capitalised incumbent that could match their product offering and had an existing billing relationship with the customer.

When an altnet exits a market, it leaves behind connected premises. Those subscribers need a new provider. In some cases, the acquiring operator absorbs the customer base directly. In others, subscribers find themselves without service or on an expiring contract, and actively looking for an alternative. ISPs with coverage in those areas can move quickly to acquire these customers, often at lower acquisition cost than a standard campaign.

Consolidation also sometimes creates wholesale access opportunities. An operator that has built network in an area but is not actively retailing services may be willing to offer wholesale or resale arrangements to ISPs that can activate subscribers more efficiently. It is worth monitoring which networks in your coverage area are under new ownership, and whether their commercial strategy has changed.

In some cases, the network infrastructure itself becomes available at reduced cost. Dark fibre, duct access, or physical network assets from wound-down operators have occasionally come to market at prices that offer better value than building from scratch. This is not a guaranteed opportunity, but it is one that strategically minded ISPs are watching.

The consolidation wave is probably not finished. There are still independent altnets operating on business models that were structured for a lower-cost, higher-take-up environment than the one they are in. Some will find a path to sustainability through operational efficiency, strategic acquisitions of their own, or geographic focus. Others will not.

For ISPs that depend on wholesale access from a specific altnet, monitoring the financial health of that provider is prudent. A wholesale partner going into administration mid-contract is a serious operational disruption, and contingency planning for that scenario is not paranoia. It is basic risk management.

Investor scrutiny of altnet economics has also sharpened. ISPs seeking growth capital or debt refinancing will encounter more detailed questions about take-up rates, build cost per premises, customer acquisition cost, and churn than they might have two years ago. The business cases that attracted funding in 2021 and 2022 need to be revisited with current assumptions.

One practical implication of the consolidation environment is that ISPs absorbing subscribers from departed operators may encounter a diverse mix of CPE that was deployed by someone else, on a different provisioning platform, possibly with different firmware and configuration. The ability to onboard these devices onto your own Cloud ACS environment, or to replace them efficiently with pre-configured devices through a no-touch deployment process, determines how smoothly that subscriber migration goes.

The UK’s broadband market is consolidating toward a smaller number of better-capitalised operators. That process is not yet complete, and it will continue to produce both disruption and opportunity. The ISPs best placed to benefit are those who have built efficient operations, strong customer retention, and the deployment infrastructure to absorb and activate new subscribers at speed.