Homeowners Face Soaring Costs as “Altnet” Threat to BT Overblown

Industry Experts Say Fears of Upstart Competitors Challenging Telecom Giant Unfounded

LONDON – British homeowners are grappling with skyrocketing internet and phone bills, but fears that upstart “altnet” providers pose a serious threat to telecom behemoth BT are greatly exaggerated, according to industry analysts.

“The notion that these small alternative networks will topple BT anytime soon is simply not realistic,” said Jane Thompson, a telecom analyst at CityGroup. “BT’s infrastructure and market dominance remain unrivaled.”

Homeowners Squeezed by Rising Costs

Mary Watkins, a retired teacher in Leeds, has seen her monthly internet bill from BT jump by nearly 20% over the past year. “It’s getting harder to afford staying connected on a fixed income,” the 68-year-old said. “But what choice do I have? BT is the only real option in my area.”

Across the UK, prices for home broadband have surged an average of 15.8% over the past 12 months according to industry watchdog Ofcom. BT, which controls around 35% of the home broadband market, has been one of the biggest drivers of price hikes.

Altnets Gain Ground, But Hurdles Remain

Meanwhile, dozens of smaller “altnet” competitors like CityFibre, Gigaclear and Hyperoptic have been rapidly expanding their own fiber networks in a bid to challenge BT’s dominance. In 2022, altnets connected over 1.2 million new homes according to industry group INCA.

“We’re offering consumers real choice, better service and lower prices,” said Mark Collins, CEO of altnet provider CityFibre. “BT has gotten complacent after years without meaningful competition.”

However, significant barriers still limit the altnets’ ability to capture substantial market share from BT in the near-term:

• BT’s existing network reaches over 95% of UK premises, while altnets only cover around 8%

• Switching costs and contract lock-ins make many BT customers reluctant to change providers

• Altnets lack the brand recognition and marketing muscle to challenge BT’s dominance

BT Shrugs Off Altnet Threat

For its part, BT remains unconcerned about the rise of the altnets. “We welcome competition, but the reality is that no one comes close to matching our network reach, reliability and value,” a BT spokesperson said.

BT plans to invest £15 billion to expand its fiber network to 25 million premises by 2026, aiming to stay well ahead of the altnets. “We’re confident we’ll continue leading the market for home broadband long into the future,” the BT spokesperson added.

Regulators Unlikely to Intervene

With consumers facing painfully high broadband bills, some have called for regulators to step in and limit BT’s ability to raise prices. But few expect action anytime soon.

“Ofcom has shown little appetite for aggressive moves to rein in BT,” said Robert Jameson, a regulatory lawyer at Simmons & White. “As long as there’s a perception of growing competition from the altnets, even if it’s limited, regulators will likely stay on the sidelines.”

As the altnets slowly chip away at BT’s dominance, homeowners across the UK will be watching to see if true competition can finally emerge to ease the burden of soaring broadband costs. But for now, BT’s position at the top looks secure.