Neos Networks research highlights future hurdles for altnets

Recent research by Neos Networks reveals that almost all altnet providers are considering M&A and collaborations with other service providers as a means of survival and expansion in the UK’s broadband market.

The research from 100 senior decision makers at UK-based altnets was conducted by Censuswide this year, and highlights some of the hurdles that many face.

When asked about acquiring customers, 55% said their target customers are ‘locked into preexisting contacts’ - a clear indicator of the growing competitive pressure from legacy providers.

This was followed by a lack of awareness (47%), with many facing competition with up to four other providers in regions where they have networks.

Tough economic conditions are also affecting growth strategies, with almost half (48%) of those surveyed saying that it has been difficult to access funding over the past year, including high interest rates exacerbating this challenge, with 48% citing them as the primary reason behind their struggle for funding.

Regulatory constraints and strict lending criteria were also cited as significant barriers to securing financing.

Altnets also face other regulatory challenges, including the knock-on impact of BT’s closure of its copper network as it transitions to full fibre. As part of this modernisation, most altnets are now under pressure to remove equipment from BT’s exchanges, which are due to start closing in January 2027.

As many look for a path forward, almost all (98%) said they expect to move beyond just offering traditional residential broadband to broaden their services and appeal, with nearly half saying they plan to launch smart home technology.

43% say they will offer enterprise connectivity, and 42% also say they will launch security solutions and packages.

55% say that improving customer satisfaction is their primary goal for the next few years, beating out other, more revenue-critical operations such as increasing customer subscriptions and driving operational efficiencies.

Lee Myall, CEO at Neos Networks commented: “Altnets have played a pivotal role in reshaping the UK’s connectivity landscape, driving the expansion of full-fibre networks and challenging established incumbents.

“However, the industry now stands at a crucial crossroads. Heightened competition, financial pressures, and shifting regulatory frameworks mean that altnets must evolve rapidly to secure their long-term future.

"Our research highlights that altnets are exploring a variety of strategies - from mergers and acquisitions to strategic partnerships and service diversification - to strengthen their market position and pave the way for sustainable growth."