News in the Channel - January 2023

ALTNETS

CONTINUED

A primary reason for that is cost; ethernet connections can cost up to £500 per month, whereas FTTP through an altnet provider costs about a tenth of that. Given such figures, it will be tempting for many businesses to make the move, Paul says. “Ethernet revenue is about £1.8 billion per year now. Just under 50% of that market is served by the channel and will continue to be so. But there is a shift going from 100mg, which has been the norm for some time, to 1gb and 10gb and that will become the dominant connectivity for ethernet in the next five years. But other businesses are downgrading from 100mg ethernet to FTTP too so there is an opportunity and a risk. If you have 100mg ethernet but not FTTP in your portfolio, someone could ‘steal your lunch.’. But if you are savvy and shouting about FTTP, then you can get some of these 100mg ethernet customers onto your FTTP service instead.” Taking advantage of opportunities Paul says altnet providers are looking to encourage resellers to take advantage of the opportunities this technology provides. “There are still some resellers pushing legacy products and haven’t yet seen this massive opportunity,” he says. “There are 1.2 million businesses over the next few years looking to get into this. FTTP could be the last connection you ever sell; unlike copper, it is infinitely upgradable. Today, most FTTP comes from 100mg to 1gb, but as optics become cheaper, the normal will become 2gb, then 10gb or 50gb – this architecture is going to power our economy for the next 50 years and channel resellers who grasp that opportunity now and think about how they can make it a part of their strategy can make serious gains in this space. “If they win that customer and look after them by remaining competitive and delivering a good service, the churn will be much less than you expect with copper or ethernet. There won’t be another technology coming along for people to sell to them and that is a key thing for the channel. “Some are really excited about FTTP and what it can do but some are more apprehensive It is trying to get those who are hesitant to understand it is a huge opportunity for them and there are good margins to be made, it’s such a compelling proposition.” Paul adds that Giganet is helping resellers to make it as easy as possible to bring FTTP to the front of customers minds, having developed sales enablement materials, and support for resellers on their sales campaigns. “They just have to put the effort in to get the rewards,” he says.

connections,” he says. “For an alt-net, opening up to the channel is a no-brainer: it opens them up to thousands of sellers to do the work for you.” He adds that he expects more altnet providers to open up to resellers in the next year as more realise the potential revenue it can bring. Paul North from altnet provider Giganet, agrees that these are exciting times for the channel to sell FTTP. “It has been forecast by the end of 2022 there will be about 200,000 businesses on these services but by the end of 2025 there will be 1.4 million businesses that will have moved to these services,” he says. “That’s 1.2 million businesses that will move from older copper-based services to faster broadband.”

Once FTTP becomes more available widespread, Paul North Giganet “

some of those businesses will look to ‘downspin’

from 100mg ethernet to FTTP.

”

Ethernet downspin This shows the size of the opportunity open to resellers in FTTP. But there are other opportunities in the market, Paul adds. He notes that it is predicted that by 2026 88,000 100mg ethernets will be replaced with FTTP per year. “Previously businesses could only get terrible copper or an entry level and high-value ethernet product. Naturally, they would go for the ethernet product because they needed that bandwidth and reliability for their business. It was probably overstretching their budget and overkill for their needs, but it was the only realistic option,” he explains. “Ethernet comes with financial risks too for resellers in the channel. They will typically take on the commitment of three years. Then there is an element of risk taking a £5-7000 ethernet contract and packing it up for the end user and only make maybe 10% margin. “Once FTTP availability becomes more widespread, some of those businesses will look to ‘downspin’ from 100mg ethernet to FTTP.”

giganet.uk