Lack of government incentives stifling UK business broadband expansion

A huge appetite from UK business for high-capacity connectivity is set to support the next surge of digital investment, offering a great opportunity for alternative network providers (altnets) to meet growing demand for gigabit broadband – yet according to a study from Neos Networks, there are marked shortcomings in government incentives for high-capacity network expansion, stifling the ability of altnets to serve UK business growth.

The UK business gigabit connectivity report – conducted by the ethernet backhaul provider – gathered insights from business leaders and decision-makers at 160 UK companies. The study sought to gauge the business appetite for connectivity investment to support growth and identify the role altnets could play.

Among the key findings was that 42% of UK businesses regard moving to higher capacity connectivity in the next two years as key to their growth plans – rating it either “integral” or “greatly important” to their future success.

For those that have invested over the past 24 months, just over a tenth of businesses (11.2%) noted that investing in connectivity had a direct impact on business profitability. Moreover, an overwhelming amount of companies (98.3%) said they recognised indirect impacts such as productivity, staff retention or client collaboration.

Principal reasons for businesses prioritising higher capacity connectivity were found to be increased computer power (22.4%), operational development meaning more data and higher capacity requirements (21.2%), and greater device usage for each employee (11.6%). One in 10 UK businesses were also actively looking to increase their connectivity to better integrate artificial intelligence (AI) into their processes.

Yet despite this willingness to invest in technology, businesses leaders said the UK government could do more. Specifically, when business leaders were asked if their business had felt a notable impact from the government’s Project Gigabit roll-out – the programme designed to provide 85% of UK properties with gigabit-capable broadband – just 52.5% said yes.

Worryingly, a fifth of businesses believed they were receiving “insufficient” internet speeds for everyday operations. Over half (55.6%) of UK companies said they have risked losing a client or customer as a consequence of poor internet connectivity, speed or reliability.

Like other similar studies, the Neo research revealed a gap between the broadband experience of rural and urban businesses. Urban and rural-based companies both prioritise connectivity investment in future growth plans. Nearly twice as many urban businesses as rural ones wanted better connectivity to give them a competitive advantage. Rural businesses identified connectivity investment over the next two years as a key part of “levelling up”, with 25.9% describing it as “integral” to growth plans. They’re over two times more likely than urban businesses to define it that way.

Assessing the key trends revealed in the report, Neos Networks said the business appetite for high-capacity connectivity is clear, and that this provides a great opportunity for altnet providers.

“As businesses strive to keep pace with technology, companies in underserved rural and competitive urban areas will naturally require greater network capacity,” said director of wholesale business development Simon Willmott.

“While the UK government has backed network investment with Project Gigabit, they must now go further in making connectivity expansion commercially viable – with grant incentives, access rights and wayleaves. Supporting altnets to unlock the next stage of network expansion in this way can only be positive for UK business and solidify the UK’s position as world leaders in the digital economy.”

Tom Brook, head of IT at altnet Broadband for Surrey Hills, said: “The presence of any altnet for a rural business is instantly going to improve their internet speeds and increase productivity. And where multiple full-fibre services exist in an area, altnets can provide higher upload speeds in comparison with the major national provider.

“Altnets have an excellent opportunity to provide services far sooner and in better consultation with those in the hardest-to-reach locations,” he said. “Altnets may also be able to provide the next generation of speeds earlier than the national telecoms provider. We already see some providers offering 2.5, 3 and 10 gigabit services across their network, where the national provider is only just starting trials.”