Oxfordshire-based alternative broadband ISP Zzoomm, which recently revealed that their 2Gbps Fibre-to-the-Premises (FTTP) network had covered 200,000 premises (RFS) across 23 towns in England (here), has today reported their end of year results (Dec 2023) and confirmed that they’ll cease new building work from the end of this month.

The operator, which has thus far been fuelled by an equity investment of £100m from Oaktree Capital (here) and a £100m debt facility via an international banking consortium (here), has typically focused their roll-out on smaller towns in parts Berkshire, Oxfordshire, Herefordshire, Yorkshire, Staffordshire, Wiltshire and Cheshire.

However, much as we reported a few months ago, Zzoomm’s deployment recently suffered a slowdown and job cuts (here and here). At the time, the provider informed ISPreview that “new network construction is stopping”, although they didn’t give a precise date and added that some existing work would continue (mostly on a local case-by-case basis). Many other network operators have suffered similar issues, partly due to high interest rates and rising build costs.

In that sense the publication of their latest 2023 Year End Results doesn’t add much to what we already knew, but it does provide a useful update on their progress, while also confirming that the “capital raising market remains extremely tight in the UK and the cost of capital available remains too high to generate equity returns.” Accordingly, Zzoomm states that the “focus now is on commercialising its network towards profitability” and “construction of new network is being wound down and is expected to cease by the end of Q2 2024” (i.e. this month).

Just to be clear, the revised focus is said to be having “no impact on the operation of the existing network or the ability to deliver service to new or existing customers“. Zzoomm added that they would continue to invest in commercialisation activities in marketing, sales, customer service and field service functions in order to help rapidly grow their take-up.

The Group expects to have a total of circa 202,000 properties RFS (Ready for Service) by the time the build stops.

Results Highlights

Customer penetration rates accelerating across the network
Average take-up increased to 12% for year to March 2024 (March 2023: 7%)
Numerous geographies / towns now have over 30% market penetration (these are said to be now “profitable“)
Current rate of customer take-up accelerated to 1% per month (2023: 0.9%)
Properties ready for service and contracted customers rapidly growing, excluding large order book
End December 2023, circa 189,000 properties (Dec-22: 94,000) ready for service with circa 20,200 (Dec-22: 6,300 customers) contracted 
End May 2024, over 200,000 properties (May-23: 140,000) ready for service and over 27,000 (May-23: 12,000) customers contracted
Revenue increased to £3.6m (2022: £1.2m) as recurring subscription revenue momentum builds  
Operating loss £21.0m (2022: loss £12.3m) reflecting continued investment in growing the network and infrastructure
At the end of 2023 a total of £148.7m been spent on network build (2022: £95.3m).
At the end of the year, the Group cash balance was £2.9m (31 Dec 22: £18.3m).
Focus on commercialisation with current network construction completed by end of June 2024 – cost base materially reduced

The results also confirm that the number of employees supervising contractors and enabling the build has now dropped to zero, which compares with 233 at the last set of results. But Zzoomm does hold out some hope that “affordable capital” may become available again in the future, which they say “would enable the restart of new Full Fibre build.”

Matthew Hare, CEO of Zzoomm, said:

“Our focus has always been on delivering an exceptional service to happy customers. We are now concentrating on profitably commercialising our outstanding network and brand position, as our current build phase closes, by bringing our brilliant Full Fibre capabilities to many more homes and businesses.

We are well positioned to make acquisitions in fragmented and competitive markets as we are growing faster, have a more highly valued brand and network and stronger commercial proposition than many of our peers. An enlarged group, based around our established operational and effectiveness and technical infrastructure, would benefit from the economies of scale.

New customers are taking up our high value offer at a market leading rates across all geographies. Our high customer satisfaction scores continue to improve, and we are seeing minimal churn, those that are leaving being primarily house movers.

With ARPU continuing to increase, we are now moving towards profitability. Those towns with over 30% market penetration are largely profitable already.”

Customers who take their residential service typically pay from £29.95 per month for an unlimited 150Mbps (symmetric speed) package on a 12-month term with an included router, which goes up to £54.95 (normally £64.95) if you want their top 2Gbps tier.

Insight

Since that first summer in 2019, 5G has become the fastest-growing mobile communications technology in the world. According to David Wang, Executive Director of the Board and Chairman of the ICT Infrastructure Managing Board at Huawei, speaking on stage at Day 0, there are currently around 320 5G network services worldwide, covering around 1.8 billion users. This is three times the growth rate of 4g in the same time period.

Alongside mobile subscriptions, 5G has proved revolutionary for fixed wireless access (FWA), with over half the world’s 5G network operators now offering commercial 5G FWA services. Now, this year, 5G is set to evolve yet again, with 3GPP’s Release-18 – featuring the first standardised version of 5G Advanced – being finalised on the 18 June.

5G Advanced, said Wang, represents a major opportunity for operators worldwide, promising to deliver considerable opportunities for monetization and revenue generation.

5G Advanced: New business opportunities in toC (consumer), toH (home) and toB (business)

To Consumer:

One challenge in the consumer sector is that there has been a sharp slowdown in traffic growth.

The user penetration rate of 5G packages reached 80% by the end of 2023. In the future, traffic growth due to 5G user migration will not be as great.
The OTT bit rate is continually reduced. Wang gives the example of OTT whose bit rate in 2023 was reduced by 27% on 2022.
The average time mobile users spend on their devices is thought to have peaked, and now flatlined at around 160 hours per month.

Firstly, there will be a shift from user-generated content (UGC) to AI-generated content (AIGC), meaning the amount of content produced will rapidly grow. For context, AI has produced 15 billion images in 18 months, more than the total number of photos taken by humans since photography began. That’s just since the start of 2023!

Secondly, AI will enable device interaction in multiple forms (such as voice, touch, and video), which is expected to extend consumer interaction time, up from the current average of 5.3 hours per day that the average person spends on their phone.

Finally, there will be an increase in AI mobile phones and AI wearable devices, which are expected to become ubiquitous. 5G Advanced will be needed to meet the requirements of these higher-rate and larger-capacity devices. The proportion of these device shipments is expected to increase from 11% in 2024 to 90% in 2030.

To Home:

5G Advanced will allow FWA customers to have a fibre-like experience, increasing making 5G a mainstream choice when it comes to home broadband technologies.

In the era of 4G, the average data rate of FWA was around 20 Mbps – enough to be a supplementary choice for the home broadband market.

“Three years after the commercial use of 4G networks, just 30% of 4G operators released FWA services  Now, three years into the 5G era, around 50% of 5G operators have put the FWA service into commercial use,” said Wang. “In the 5G Advanced era, we predict that 70% of 5G operators will commercialise FWA services by 2026. FWA is changing from a supplementary choice of home broadband to a mainstream choice.”

To Business:

One example is in the IoT (Internet of Things) market. 5G IoT deployment has faced two large challenges: that the terminals are expensive and difficult to expand, and the solution relies on an active power supply and is not applicable to high-density deployment scenarios.

5G Advanced will help solve both of these problems through its RedCap and Passive-IoT technologies:

– RedCap: the device price of RedCap is more than 60% lower than that of 5G NR, which can promote the rapid increase of connections in high-value scenarios such as video connections.

– Passive-IoT: Passive-IoT provides 10 times more coverage  than the RFID technology. The cost of labeling can therefore remain within one yuan. It also provides location services. In the future, the number of potential connections will reach 100 billion.

2024: The year of 5G Advanced?

Concluding his Day 0 speech, Wang emphasised his optimism that 2024 will soon be viewed as the start of a new era for 5G. “The standards, technologies, ecosystem, and business elements are all ready,” he said.

“Huawei looks forward to working with the industry to build a healthy 5G-A ecosystem, promote 5G-A standard upgrade, and share the dividends of 5G-A development,” concluded Wang.

News

The deal is expected to increase the scale of Nokia’s optical networks business by 75% 

Nokia has announced the acquisition of California-based Infinera, a global supplier of optical transport networking solutions, for $2.3 billion, as the Finnish company looks to expand its optical networking in North America. 

The deal is expected to “strengthen the company’s technology leadership in optical and increase exposure to webscale customers, the fastest growing segment of the market,” said Nokia. It expects to make €200 million of net comparable operating profit synergies by 2027. 

The transaction, valued at $6.65 per share and working out at $2.3 billion, represents a 28% premium over Infinera’s closing share price on June 26, 2024. The deal will be financed with at least 70% cash and up to 30% in Nokia stock.  

“In 2021 we increased our organic investment in Optical Networks with a view to improving our competitiveness,” said Nokia President and CEO Pekka Lundmark in a press release. 

“That decision has paid off and has delivered improved customer recognition, strong sales growth and increased profitability. We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in optical networks. The combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles,” he continued. 

After the recently announced sale of XX, Nokia confirmed that its network infrastructure will be reshaped on three pillars: Fixed Networks, IP Networks and Optical Networks. 

Just yesterday, Nokia announced that it will offload its subsea unit Alcatel Submarine Networks (ASN) to the French state for €350 million, solidifying its intention to focus on its core network infrastructure portfolio. Nokia will retain a 20% shareholding along with board representation to ensure a smooth transition, at which point the French state will take the remaining 20%. 

Keep up to date with the latest international telecoms news by subscribing to the Total Telecom newsletter 

Also in the news:
Nvdia and Ooredoo launch data centre deal 
Nexperia to Invest 200 Million USD in Hamburg
US launches probe into Chinese telcos over data concerns 

The Northumberland County Council (NCC) in England has put out a general warning to residents after observing a rise in “broadband-related cyber fraud“, which occurs when scammers attempt to impersonate your ISP in order to steal financial data and money. Some 68% of the reported victims have collectively lost £12.57k to this scam alone.

The scam in question typically begins with a phone call from somebody who claims, fraudulently, to work for your ISP. The fake support agent will often say they’ve identified a fault on your line or a problem with your broadband speed, although they might also claim to have identified a virus or security breach of your connection (the irony of this one is not lost). Some can also threaten service disconnection.

However, whatever the approach or tactic taken, the goal is usually the same – to encourage, panic or pressure you into giving up either sensitive financial details or access to your computer. At this point you’ll often be instructed to download a specific application, allegedly to help in troubleshooting the fake issue, but this actually allows the scammer to remotely access the person’s device.

The software you’re asked to download could be a trojan (malware) that’s designed to infect your computer and enable hackers to gain access. But scammers typically prefer to use more legitimate remote desktop / control software (e.g. TeamViewer or similar). In either case, the scammers will use this to access and take control of your system.

Once access is obtained, the scammer informs the person that numerous viruses have been detected on the device and promises a refund. To facilitate this refund, the person is asked to make a small payment of £2.99 to verify their details. But this transaction allows the fraudsters to capture the victims’ card details and subsequently attempt unauthorised transactions, with some victims reporting losses of up to £3,000.

Sadly, the chances are fairly high that many of our readers will have already been targeted by something like this (we get several of these a year in the office), as it’s fairly common across the UK. But the vast majority of people will have been able to spot it and quickly put the phone down (or lead the scammer on a bit to waste their time).

The level of sophistication and knowledge used by such scammers does seem to vary, with some being more convincing due to having researched their victims ahead of time (i.e. they might have already got some of your personal details from prior data breaches). But others may not know your name and may just guess that you’re using one of the big ISPs due to probability (BT, Sky, Virgin or TalkTalk), which they’ll often get it wrong.

What to do?

Firstly, if you do receive such a call, then it goes without saying that you should NEVER – a) download any software they may request, b) press any options / numbers on your phone (particularly if it sounds like the initial message is from an automated system) or, c) give out any personal or financial details to the caller (they often won’t have this and will attempt to trick YOU into giving THEM such details first).

Suffice to say, a little paranoia is always helpful when receiving any kind of unsolicited call, particularly one claiming to be from a company or organisation. If you have any doubt that the call is genuine, then put the phone down, wait a few short minutes (just so the old caller will clear, as that can be an issue on older systems), then find an official contact number for your ISP and call them directly to check.

Consumers should also be conducting regular checks of your bank statements to help identify any unauthorised transactions. But if you have been targeted by this scam or have any information, then please report it to the local authorities or Action Fraud at https://www.actionfraud.police.uk .

Contract-free mobile operator VOXI, which is a virtual network operator (MVNO) sibling of Vodafone, has more than doubled the 4G and 5G data allowances (mobile broadband) on their two entry-level plans. New customers will now get 45GB (GigaBytes) for £10 a month (up from 20GB) or 75GB for £12 (up from 25GB).

As usual, these plans reflect a 30-day subscription that you can cancel at any time, which also includes unlimited calls, texts & picture messages, support for WiFi Calling, 4G Calling and Visual Voicemail, and unlimited usage of social media – regardless of your data allowance (Facebook + Messenger, Twitter (X), Snapchat, Instagram, WhatsApp, Pinterest etc.).

The recent meeting of an overview and scrutiny committee in West Devon (England) saw local councillors, as well as some residents, heap criticism on the state aid supported Connecting Devon and Somerset (CDS) programme and contracted UK ISP Airband for being “inefficient and chaotic” in their delivery of faster broadband networks.

Just to recap. The CDS scheme is a local government-led partnership which has spent many years helping to deliver faster broadband infrastructure to areas where the market has failed to invest. The scheme has already helped over 320,000 poorly served premises to access “superfast broadband” speeds (usually defined as 30Mbps+), but it’s also suffered plenty of big bumps and delays along the way (e.g. the scrapping of Gigaclear’s (here) and Truespeed’s (here) contracts, as well as the earlier rejection of BT’s Phase 2 proposal (here)).

The latest criticism, which has been covered by the Bude & Stratton Post, appears to be focused upon CDS’ various contracts with Airband (no other suppliers are named). Airband has already provided a “superfast wireless network” (FWA) to cover more than 11,700 premises in Devon and Somerset through its pre-existing contracts with CDS.

The provider is currently also delivering full fibre (FTTP) broadband to more than 6,000 premises in Central Devon, North Devon, Torridge and West Devon. On top of that, in 2020 they secured a £25.5m (state aid) Phase 2 contract (here and here) to reach over 40,100 homes and businesses in earmarked areas of Somerset West and Taunton, parts of Sedgemoor, East Devon, as well as areas of Mid Devon, South Hams and Teignbridge. This contract was originally due to complete by the end of 2024, although we haven’t seen any progress updates from CDS on this since last year.

According to the new report, councillors complained that “hundreds of homes and businesses” were being affected by slow broadband speeds and delays in work to install new fibre cables. In other areas, residents say they were having to dig their own trenches to help run the new fibre optic cables (not so easy if you’re disabled or a pensioner), had been suffering from “wifi connections dropping out up to 100 times a day” and it was stated that there had been “technology failures” on 30,000 care devices during the CDS rollout.

Cllr Isabel Saxby (Lab, Bere Ferrers) said:

“People in our area cannot wait till 2027 until technology catches up, if we do not speak up for those people, it will be 2029 or 2032 before they are connected.”

Cllr Neil Jory (Con, Milton Ford), lead member for the economy, said:

“It’s a strategic aim of ours to promote faster broadband, many rural businesses are reliant on it. It’s been a very frustrating exercise, we have pushed really hard but our over-riding impression of CDS is that it is inefficient and chaotic and left us in situation where we are not getting the service we should be receiving.”

Cllr Neil Jory also noted that, at one point, the local authority did have a dedicated “broadband officer” in place who could help related communicates and convene with CDS, as well as Airband. But it was stated that the funding for this position was no longer available, and clearly that hasn’t helped matters.

Sadly, the article doesn’t provide enough context on the complaints, which makes it hard to analyse. For example, it’s not completely clear which gripes may relate to Airband’s FTTP deployments and which are more focused upon their fixed wireless network, as the issues often end up being conflated.

Similarly, the remarks about WiFi drops probably refer to their fixed wireless network, but then the use of “WiFi” terminology could just as easily reflect issues with a separate / internal home network. As for the talk of needing to dig their own cables, it was unclear whether this was only applicable to specific properties.

The reality is that sometimes houses exist so far from the main road (e.g. farms), where the fibre runes, that it is not always economically viable for an operator to trench all the way out to them without charging hefty fees. This is when it may become cheaper for a homeowner to take the DIY approach, if they’re able. Such issues are often more likely to crop up in remote rural areas.

The article itself doesn’t include a comment from CDS (they didn’t respond) or Airband, although we have shot off our own message to related contacts this morning and hope to receive a reply. The local authority is now said to be in the process of calling on both CDS and Airband to “appear at a future meeting” in order to discuss the issues.

Hampshire-based business broadband and cloud provider Onecom, which is backed by LDC and Ares Management Corporation (here), has today announced yet another acquisition after they scooped Leicester-based telecoms and IT provider Daly Systems for an undisclosed sum.

Martin Flick, CEO of the Onecom Group, said: “The acquisition of Daly Systems is yet another transaction that fits perfectly into our expansion and diversification strategy. In addition to broadening our geographic reach across the UK, we foresee exciting cross-sell opportunities with our combined customer groups.”

The move broadly continues Onecom’s current buy-and-build strategy, where a big chunk of their growth is being developed through acquisitions. Onecom was advised by Shoosmiths and HMT LLP for transaction support. Daly Systems was advised by Knight Corporate Finance, Torr Waterfield Accountants and Nelsons Solicitors.

City-focused broadband ISP Hyperoptic, which has so far extended their gigabit full fibre (FTTP/B) network to cover “more than” 1.6 million UK homes (as well as 300k customers) across parts of 64 towns and cities, has appointed ex-BT figure Kathryn Bowden to be their the new Director of Regulation, Policy, Risk, and Compliance.

Kathryn’s career began at BT, where she contributed to Openreach’s regulatory market reviews and established new compliance frameworks. Following her tenure at BT, Kathryn also held “significant roles” at the Post Office’s telecommunications division and Shell Energy.

Richard Woodward, Chief Financial Officer at Hyperoptic, said: “We are excited to have Kathryn join Hyperoptic. Her extensive experience in regulation, compliance, and policy, coupled with her practical approach to risk management, will be invaluable as we continue to grow and evolve. Kathryn’s commitment to regulatory excellence and customer-centric values aligns perfectly with our mission to provide the best in industry compliance assurance and enterprise risk management.”

News 

The move is a huge investment in the North of England, and will create the UK’s third Microsoft datacentre 

Microsoft has announced that it will build a huge data centre on the outskirts of Leeds, on a site costing £106.6 million. 

The deal was announced by Rotherham based property development group Harworth, who said the deal was the largest in its history.  

The hyperscale data centre site will be comprised of two plots, one of 27 acres valued at £52.9 million, and one of 21 acres valued at £52.2 million. The development company has said the site will bring around £4 billion to the local economy and create many jobs. 

Not many additional details, such as completion dates, were disclosed. 

Microsoft currently has two data centres in operation in the UK; one in London and one in Cardiff. Back in November, the company announced an investment of £2.5 billion in expanding its next-generation AI data centre infrastructure across the UK.  

The plan includes bringing over 20,000 advanced Graphics Processing Units (GPUs) to its sites in London and Cardiff by 2026, which are essential for machine learning and AI model development. The investment aims to meet the growing demand for efficient, scalable, and sustainable AI-specific compute power, positioning the UK as a hub for cutting-edge technology. The investment is the company’s largest in its 40-year history in the UK.  

Prime Minister Rishi Sunak called the investment a “turning point for the future of AI infrastructure and development in the UK.” 

Join the conversation on the North’s connectivity sphere at next year’s Connected North event, 23-24 April in Manchester – get discounted tickets here! 

Also in the news:
Nvdia and Ooredoo launch data centre deal
India concludes underwhelming 5G spectrum auction
US launches probe into Chinese telcos over data concerns 

Viewpoint

China Mobile held a press conference in Beijing to announce the commercial use of the world’s largest 400G all-optical premium transmission for intelligence. By the middle of this year, China Mobile expects to realize high-speed interconnection between eight hubs in the “East Data, West Computing” project. This will make it an carrier that provides the world’s first 400G all-optical inter-province backbone network, which features the largest scale and widest coverage among all backbone networks.

In 2022, China initiated the “East Data, West Computing” project. A series of policies was released to guide the collaborative development of computing and network resources, with optical transport capacity playing a vital role. Against this backdrop, there has been a concerted effort among all parties in the industry in the planning and deployment of all-optical transport capacity construction. High-quality all-optical transport capacity connects users, data, computing power, and applications, paving the way for high-quality growth of digital economy.

Li Huidi, Executive Vice President of China Mobile, said that the establishment and application of the first link of China Mobile’s 400G OTN inter-province backbone network signifies the start of the large-scale commercial use of backbone 400G OTN all-optical networks. The project uses more than 1900 sets of OTN devices in 135 cities across China to connect the eastern and western part of the country using optical networks, and as such is the largest of its kind in the world. With more than 30 PB of computing power scheduling capacity on the entire network and less than 20 ms latency between hubs, China Mobile has developed powerful transmission capability to construct the high-quality all-optical transport network spanning the entire country. In the future, the carrier will coordinate the deployment of game-changing technologies such as 5.5G, computing network, and artificial intelligence to promote the transformation from “+AI” to “AI+”, jointly build intelligent and inclusive new information services, drive the growth of new industries and models for digital intelligence, and accelerate the development of new productive forces. All this will benefit countless households and empower all kinds of industries.

At the conference, Huawei showcased the new Kepler OTN platform used by the first link of the 400G all-optical national backbone network (Beijing–Inner Mongolia), as well as the full series of ultra-high-speed 400G and NCE-T transport capacity map solutions.

Over the past decades, Huawei has been working closely with China Mobile.

In 2019, Huawei helped China Mobile introduce the single-wavelength 200G transmission technology in the eastern region, initiating a phase of large-scale 200G construction across China.
In June 2022, Huawei helped China Mobile verify the industry’s first C6T+L6T OTN solution featuring single-fiber ultra-broadband spectrum.
In March 2023, Huawei helped China Mobile complete the lab verification of the first 32T 400G QPSK system.
In June 2023, Huawei helped China Mobile achieve the longest 400G QPSK transmission distance ever on the live network — 6028 km, and win the only optical transmission award at European Conference on Optical Communications (ECOC), a top academic conference in the global optical communications field.

In the computing era, Huawei provides all-optical premium transmission network solution that supports 400G interconnect computing hubs, 100G to sites, and integrated scheduling of computing and network resources. In this way, the backbone and metro networks can be improved in all aspects, reinforcing computing with network connectivity and empowering various industries with computing power. Bob Chen, President of Huawei Optical Business Product Line, said, “In the future, Huawei will continue to invest in the optical transport field and cooperate with China Mobile in fields such as post-400G evolution, computing-network synergy, and AI+ to accelerate green technology innovation and the development of new productive forces, promoting digital intelligence.”

We must seize opportunities and get prepared for the future. Leveraging the world’s leading technologies, Huawei will work with carriers to build new communications infrastructure in the digital era, laying a solid foundation for the development of new productive forces and promoting the integrated growth of the digital economy and real economy on a larger scale and at a deeper level.