Ofcom is reportedly drawing up an emergency plan to tackle feared internet outages hitting households across the UK.
The Telegraph reported that “runaway inflation threatens to cause a wave of bankruptcies” among smaller broadband suppliers.
More than 150 broadband start-ups “backed with billions of pounds of private investment” have flooded the market in a bid to “capitalise on the upgrade to ultrafast speeds”, the paper said. But some are being pushed to the brink “as they struggle to compete with the might of BT’s Openreach and Virgin Media O2”.
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Contingency plans
Ofcom is reportedly drawing up plans for BT “to take on thousands of customers” if smaller rival suppliers begin to fail. An industry source told The Telegraph that “it seems to be a bit of a red flashing light that Ofcom is thinking about it at all”.
The market “cannot be entirely sustainable when you already have big network builders”, the unnamed source added.
Sudden failures of broadband companies could cause abrupt outages, because customers have to be physically switched over to a new network.
An Ofcom spokesperson said that “usually, when a network company fails, it’s sold as a going concern and customers don’t experience a loss of service”.
“In the unlikely event that a network suddenly failed and ceased to provide services, we would work with alternative suppliers to help customers get reconnected as quickly as possible,” the spokesperson added. “This could be through Openreach or an alternative provider, depending on the circumstances.”
BT declined to comment.
Packed market
The chief executive of Virgin Media O2, Lutz Schuler, warned at the Connected Britain conference last September that the nation’s broadband plans were in line with a population triple the size of the UK.
As smaller networks struggle to compete amid rising inflation, a growing number face being forced into administration or taken over.
In January, Comms Business reported that small network builder Swish Fibre had snapped up failing rival People’s Fibre, “an Essex-based ISP that specialises in full fibre, for an undisclosed sum”.
And The Telegraph reported last week that Ovo Energy was “in talks” to “offload” its 100,000 broadband customers to TalkTalk, after cutting around a quarter of its workforce at the start of the year.
But while the internet market is packed, demand has increased. Broadband TV reported in December that more than eight million UK homes had full-fibre broadband, up by three million from the previous year.
Industry analysts have predicted that increased consolidation in the industry will ultimately lead to the creation of a major network operator capable of competing with BT’s Openreach and Virgin Media O2.
