Recent research by Neos Networks reveals that the competitive landscape of the UK broadband market is prompting nearly all alternative broadband providers (altnets) to consider mergers and acquisitions, as well as partnerships. The survey conducted by Censuswide in early 2025 collected insights from 100 senior decision-makers within the UK altnet sector, highlighting significant challenges these companies are facing.
Funding Challenges
Many altnets are grappling with tough economic conditions that adversely affect their growth strategies. According to the study, 48% of respondents have struggled to secure funding over the past year, mainly due to high interest rates which 48% identified as the leading cause of their financial difficulties. Regulatory hurdles and stringent lending standards further complicate their ability to obtain the necessary financing.
Customer Acquisition Barriers
When addressing customer acquisition, 55% of participants noted that their target market is often locked into existing contracts, indicating fierce competition from established providers. Additionally, 47% cited a lack of awareness among potential customers as a challenge, with many altnets facing competition from up to four other service providers in their operational regions.
Regulatory Pressures and Financial Impacts
Altnets are also contending with regulatory obstacles. The transition away from BT’s copper network to full-fibre infrastructure means many altnets must remove equipment from BT exchanges, a process set to commence in January 2027. The average cost for these adjustments is estimated at £1.4 million, placing further financial strain on these providers.
Technological Strategies
In response to competitive pressures, the majority of altnets are leveraging technology to distinguish themselves, with 53% deploying software-defined networking and network function virtualization. Additionally, 39% are implementing 5G fixed wireless access and focusing on artificial intelligence and machine learning for their business support systems.
Diversifying Services
Looking ahead, 98% of respondents anticipate moving beyond traditional residential broadband offerings. Their aspirations include launching smart home technology (46%), providing enterprise connectivity (43%), and introducing security solutions (42%). Furthermore, 35% mentioned plans to offer multi-service packages, including TV and entertainment options.
Customer Satisfaction Focus
When prioritizing their objectives for the upcoming years, 55% of altnets emphasized customer satisfaction as their primary goal, surpassing other revenue-focused initiatives like increasing subscriptions and enhancing operational efficiencies.
Industry Insights
CEO of Neos Networks, Lee Myall, indicated that the altnet sector is at a pivotal moment, facing intensified competition, financial pressures, and evolving regulations. He noted that altnets are crucial in transforming the UK’s connectivity landscape and are exploring various strategies for market strengthening and long-term growth.
The findings of Neos Networks are supported by a recent report from the Independent Networks Cooperative Association, highlighting the increased momentum among UK altnets to promote gigabit connectivity, particularly in rural and underserved areas.