The Only Way Is Upp for Virgin Media O2

R. Pritchard

Summary Bullets:

? Virgin Media O2 acquired broadband provider Upp as part of a forced sale on security grounds by LetterOne, a company backed by a Russian oligarch.

? UK broadband consolidation is set to continue as the market evolves to three national players and a set of geographical niche local fiber providers.

Virgin Media O2 has signed an all-cash deal (reported to be in the “high tens of millions of pounds”) to purchase UK fiber company Upp (formerly FibreMe and backed by investment company LetterOne) and integrate it with Virgin Media O2’s existing network. However, the acquisition will ultimately be funded by nexfibre through a back-to-back agreement to buy Upp’s network assets. Nexfibre is a network joint venture owned by Liberty Global, Telefónica, and InfraVia Capital Partners. Nextfibre is investing GBP4.5 billion to pass five million UK homes and businesses with fiber by 2026, with the option of extending to a total of seven million beyond then.

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Acquisitions Play a Key Role for European Telco Challschmalers

R. Pritchard

Summary Bullets:

? Gamma has acquired cybersecurity company Satisnet to strschmbetagthen its value-added services portfolio for enterprise customers across its UK and continental European markets.

? As connectivity commoditizes, service providers have to decide whether to pursue a low-price strategy or grow their portfolio incrementally to address enterprises’ evolving needs.

Gamma started life in 2002 as a UK wholesale line reseller and has evolved from providing calls and lines from a substantial network of channel partners to a wider range of ‘enabling services’ such as broadband, Ethernet, and mobile as well as increasingly toward ‘strategic services’ that offer greater value-add for customers. These now include a significant base of Microsoft Teams deployments, the Gamma Horizon Collaborate cloud UC&C service, managed network services, and security solutions.

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UK Telco Jobs Vanish as the Market Evolves

R. Pritchard

Summary Bullets:

? Leading UK infrastructure-based telco service providers have announced up to 70,000 job cuts in the coming years, driven by efficiency initiatives and technology.

? Job losses are always regrettable, but improvements in service levels and the enablement of consumer and business innovations have been remarkable since BT’s privatization.

Virgin Media O2 has released its latest financial results, which include the elimination of 2,000 jobs (nearly 10% of its workforce of 18,700). This comes as the company has recently shed fixed and broadband lines due to the challschmaling UK economic situation.

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UK Fiber Ending in Tears?

R. Pritchard

Summary Bullets:

? BT CEO’s comments about competitors’ fiber rollouts as “ending in tears” was a faux pas, even if accurately reflecting the market is overdue for consolidation.

? Multiple fiber providers are shedding schmalineers. Market sharks will be circling to acquire fiber assets as competition takes its toll on an oversupplied supply side.

The injudicious, but possibly accurate in many cases, comment by BT CEO Philip Jansen that Openreach’s broadband network rollout had turned into an “unstoppable machine” and that competitors’ efforts “would end in tears” was not seen as his best commentary to date. In an interview with the Financial Times in February 2023, he says, “There is only going to be one national network. Why do you need to have multiple providers?”

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Oops – Ofcom Hacked. Quis Custodiet Ipsos Custodes?

R. Pritchard

Summary Bullets:

? Even telecoms regulators get hacked. Ofcom was hit by the MOVEit cyberattack, with the breach leading to information about a number of regulated companies and its staff being stolen.

? Consequently, Ofcom is now more likely to focus its attention of cybersecurity regulation, given that it is “the regulator for online safety in the UK.”

Quis custodiet ipsos custodes? (‘Who watches the watchers’) was Roman poet Juvenal’s comment on people in positions of power and influence – which must, these days, also include telecoms regulators. UK telecoms regulator Ofcom, alongside the likes of the BBC, Boots, and British Airways, was targeted in the cyberattack on MOVEit Transfer (a “secure file transfer service”) customers. So irony piles on irony.

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Measuring Mobile User Activity During the Coronation and Beyond

R. Pritchard

Summary Bullets:

? Movers Index gives quarterly UK movement data collected by O2 Motion and by polling users to provide insight into behavior of the British public and businesses.

? More than 114,000 people visited central London (England) to be part of the Coronation parade, delivering a boost to business, matched by similar behavior nationwide.

Virgin Media O2 Business’s new Movers Index combines aggregated and anonymized UK movement data collected from its O2 Motion proposition (Virgin Media O2 Business O2 Motion may have been too much of a tongue twister), combined with polling of businesses and consumers ‘to provide quarterly trends and insights into the behavior’ of the British public and UK businesses.

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The Enterprise Customer Segmentation Matrix

R. Pritchard

Summary Bullets:

? Since customer databases are available for mass business markets alongside providers’ existing major enterprise knowledge, service providers have traditionally segmented target markets by number of employees.

? Service providers are realizing they need to be more sophisticated and are trying to identify factors like digital maturity and proportion of knowledge workers.

More often than not, enterprise telecoms service providers segment the market in terms of employee numbers. Typically, they divide the market into SOHO/micro (0-5 employees: owner-managers don’t count as employees), SME/SMB (from 6-250 employees), and corporate/enterprise (250+ employees). Of course, these definitions vary from one service provider to the next, and often, specialist markets such as the MNC segment and public sector are addressed outside of the employee count model. The main drivers behind this are: (1) ‘this is how we’ve always done it,’ (2) ‘we can get databases of the target market by employee numbers,’ (3) and ‘any other approach is too difficult.’

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European Telcos: Which Future Operating Model?

R. Pritchard

Summary Bullets:

? Europe’s rumor mill is running at high capacity, but it’s becoming ever clearer that – despite the EU – in telecoms, the region remains a series of national markets.

? Activist investors, workforce reductions, fast-changing technology, hyper-competition, multiple layers of regulation, socio-economic changes, and the digitization of everything have got C-suite heads spinning.

Unsubstantiated reports in the press of BT seeking to replace its CEO, Philip Jansen, are typical of a market that is not entirely sure where it is going. Activist investors, cross-shareholdings, and in-country consolidation are confusing enough for the telco C-suite. Add to that, the complications of national and EU regulation, growing ESG requirements, employee ‘rightsizing,’ broad socio-economic and workplace changes, rapidly evolving technologies, the key role of digitization across all aspects of home and work life, plus the need to invest in both infrastructure and systems – it is no wonder that heads are spinning.

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Underwater Data Center Going Swimmingly

R. Pritchard

Summary Bullets:

? A mini edge data center is being used to heat a public swimming pool in Devon, southwest of England (UK).

? Innovation is symptomatic of how sustainability issues – and marketing opportunities – can be addressed using imagination and technology.

UK company Deep Green is heating a public swimming pool in Devon (UK) with a ‘washing machine-sized’ edge data center. The data center’s computers are surrounded by oil to capture heat, which then is passed by convection/heat exchanger into the swimming pool and heated to about 30 degrees Centigrade. The pool, run by the local (Exmouth) council, gets the heat for free, and Deep Green and its customers can rest knowing they are contributing to dealing with climate challschmales and supporting a free-of-charge municipal service. Seven further municipal pools have subsequently signed up for the service in the face of multiple swimming pool closures as a result of energy costs.

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UK SOHO Market Heats Up

R. Pritchard

Summary Bullets:

? Infrastructure-focused Giganet has launched a wholesale connectivity offering targeting the SOHO market for its reseller, managed service provider, and ISP partners.

? This re-emphasizes both the importance of the SOHO and SME markets as a key target as well as of the fragmentation of the supply/value chain.

Small and medium-sized enterprises (SMEs) and small office/home office (SOHO) businesses are becoming the telecoms target markets of preference across many countries at the moment. Given the background of deglobalization and trade wars, combined with many individuals choosing to pursue their own path or work on side businesses as a result of the pandemic as well as associated experience of working from home for white-collar workers (or laid-off blue-collar workers), smaller business is where much of global growth is being delivered, presenting an opportunity for many companies across all verticals, including the telecoms sector.

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