Gigaclear to bring ultrafast broadband to UK countryside

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This new investment will mean that people in these areas will soon have the opportunity to sign up to receive 1Gb speeds, while Gigaclear themselves will have the opportunity to increase their user base beyond the 30,000 homes they'd connected by the end of 2016.

And while the 150,000 premises they plan to connect with the additional funding isn't massive compared to the numbers connected by an Openreach or Virgin Media, they'll find Gigaclear providing ultrafast broadband where there wasn't even a superfast connection previously.

Not only that, but in expanding their network, Gigaclear will increase the competition felt by the likes of Openreach and Virgin Media, who may in the not-too distant future feel the need to expand their own ultrafast networks in order to respond to the commercial threat posed by their smaller rival.

Vote of confidence

In speaking of the new funding, Gigaclear CEO Matthew Hare said, "Full fibre is the future. This latest round of investment will enable Gigaclear to step up our speed of network delivery and is a clear signal of the confidence investors have in our continued expansion and success."

Two of the investors in question are Infracapital - the infrastructure subsidiary of Prudential - and Woodford Investment Management, who have both filled the Gigaclear coffers before and who are providing £60 million and £15 million respectively.

Added to this, Gigaclear have also brought in new money from RPMI Railpen, who control a £25 billion railways pension scheme and who have invested £35 million in the provider.

Together these old and new investments are a testament to the future viability of Gigaclear, who after having been founded in late 2010 in Oxfordshire went on to win a number of Broadband Delivery UK (BDUK) contracts in (mostly the South and Midlands of) England.

And now, with the £111 million's worth of additional investment, they're looking to become a major player in the UK broadband market, even if most of the projects they're working on have been helped by BDUK funding.

Take-up rates

It's still an open question as to how far they can progress beyond connecting secluded rural areas as part of BDUK, if only because they haven't enjoyed massive take up from the communities they've connected.

For example, at the end of April they celebrated their 10,000th customer, although their network was accessible to 42,000 premises.

To put this in perspective, the Openreach network (still owned by BT, despite Ofcom's recent interventions) is available to around 25 million premises, while BT have over nine million broadband subscribers.

This nine million represents 36% of the available connections, which are competed over by other ISPs besides BT. Meanwhile, Gigaclear's take up rate represents only 23.8% of the available connections, which aren't shared by any other provider.

This suggests that Gigaclear have some work left to do before they can become a serious rival to a BT, Virgin Media or Sky.

Such a conclusion is also suggested by the provider's financial results, which show that they lost £10.6 million in 2016, up from £6 million in 2015.

However, these losses are largely the result of the company being in an expansion phase, which makes it unlikely for them to turn a profit, at least not until the majority of their projects have been completed.

Expansion and competition

But once they have been completed, the people living in the areas currently targeted by Gigaclear will be able to benefit from the kinds of 1Gb speeds that only providers such as Hyperoptic and CityFibre have really been able to provide up until now.

And more promisingly for those living in rural areas in general, it's reported that Gigaclear's strategy revolves around connecting precisely the areas that have so far been neglected by the likes of Openreach.

As such, Gigaclear may emerge as one of the final pieces of the puzzle in going beyond the 90% of the UK currently supplied with at least a superfast connection, providing connections where other suppliers had dared not to go.

They may also benefit from Ofcom's recent move to open up Openreach's infrastructure, which requires that Openreach charge the likes of Gigaclear lower prices for duct and pole access.

By making Openreach's infrastructure more accessible like this, Ofcom may have provided Gigaclear with another key boost, one which could ultimately enable the smaller network to expand beyond its current territory.

And if this happens, then the UK broadband market will benefit from more choice and more competition, causing the likes of BT and Virgin Media to up their game and grow their own ultrafast networks.

That the likes of Gigaclear have already increased choice and competition is perhaps indicated by how BT - who are generally more interested in upgrading their existing fibre-to-the-cabinet network with G.fast technology - have also committed to bringing fibre-to-the-premises (FTTP) broadband to two million premises by 2020.

This may not be much compared to the number of premises served by the Openreach network as a whole, yet at this early stage in the life of FTTP broadband, it's a sign that Gigaclear and other alt networks are changing UK broadband for the better.