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UK’s Hyperoptic on how to get gigabit to the home

Britain’s broadband market used to be widely lauded for its combination of high speeds and low prices, something achieved through a mixture of strong competition and careful regulation. But as the gigabit revolution has taken hold elsewhere, the U.K. has been left trailing its counterparts in Europe, America and beyond.

Now a cohort of companies — most of them new entrants like Gigaclear and CityFibre — is trying to turn that around. But how do you do it?

“We’re focusing on London,” says Dana Pressman Tobak, the managing director of Hyperoptic, one of the companies leading the charge. “Our approach is to hit high density areas, start with multiple-occupancy dwellings and build up from there.”

This might seem obvious, but it’s not always the first strategy for British internet providers, who have traditionally focused on making sure they can get broad geographic coverage and scale. That approach has been partly pushed by marketing requirements, partly because it’s something that plays well with regulators, and partly because having a business you can defend means it’s important to get the largest customer base possible.

For example, as Om reported last week, local rival CityFibre is looking for $800 million to build out a large scale fiber network so that it can hit 1 million subscribers as soon as possible.

But Tobak says Hyperoptic is starting at the other end, with something that focuses on a small number of users and very specific areas like London’s East End — notorious for poor connectivity, despite being the heart of the English capital’s startup scene.

“People have looked for solutions that will work across the country, but as egalitarian as we would like to be, it doesn’t make it cost effective,” she says. “We’re focused on ‘notspots’, including south of the river, Westminster, Holborn and Covent Garden. There are definitely pockets, and we’ll extend from those.”

The focus on cost effectiveness means that customers lucky enough to live in a building served by Hyperoptic can get 1 gig download speeds for £50 a month ($80), with a typical £40 ($63) setup fee.

Dana Pressman TobakIt may differ from rivals in this very limited approach — but the tactics doesn’t come from out of the blue, however. Hyperoptic is run by the same team that founded Be Broadband, a local provider that achieved industry-leading speeds before bought by Telefonica/O2 five years ago.

Very limited rollout was always part of Be’s gameplan — and gigabit fiber is, she says, what the business had always intended to do before O2 paid £50 million for it (around $90 million at the time).

But this relatively limited rollout doesn’t mean they aren’t planning to expand.

As well as adding a business-level product, by next year Hyperoptic hopes to start moving out of London into other large British cities — focusing again on large residential complexes which mean they can. And to get there, they also need money: while they’re self-funded right now, the company does plan on taking growth investment.

“The more we’re willing to finance, the faster we can go,” she says.

However, there is one thing that Hyperoptic won’t be doing: pretending it’s breaking new ground.

While Be was an exciting play in the market for its time, and something of a global pioneer, Tobak points out that the hullaballoo about gigabit speeds in Britain and America is hardly revolutionary. For every Atlantic provider that is trumpeting their high speeds, there is another in South Korea, Japan or Scandinavia for whom it is already the norm. Almost everyone is playing catch-up right now.

“I’m not going to pretend that technologically we’re doing something the world hasn’t done before,” she says. “But with a very small group of people we have made things happen.”

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