Seizing the open-access opportunity
Entrepreneur David McCourt has envisioned and delivered some of the world's largest open-access fibre networks. Now, as chairman of National Broadband Ireland, he tells Capacity Magazine why it's time for tech innovation to accelerate so operators can embrace the open-access model, and talks of his plans to export this expertise to the rest of the world.
As chairman of National Broadband Ireland [NBI], you’re delivering the rollout for a €3 billion contract awarded by the Irish state in the country’s National Broadband Plan. Can you tell us about the project?
Across almost all developed countries, what we see today is a digital divide, whereby certain urban areas have an incredible advantage with access to connectivity and digital services. For too long, underserved areas have been left behind – and in Ireland’s case, as in many other countries, this is predominantly in rural locations.
In 2019, the Irish government awarded us the contract for the largest public-private partnership in European telecoms, with the brief to design, build and operate a new national wholesale open-access network that would give world-leading connectivity to over 1.1 million people across the country who don’t have access to high-speed broadband through any commercial operators.
Ireland can take a lot of credit, as it’s possibly the boldest and most ambitious project of its kind globally – with the new network planned to span 96% of the country’s land mass by the end of our seven-year build programme.
You have been financing, building and operating non-regulated open-access networks since their inception over a decade ago. Why do you think it was important for the NBI network to follow this model?
In 30 years of building networks, we at Granahan McCourt Capital, the investment firm I founded, have been proud to introduce a number of industry firsts. Through our various ventures, we were the first to build a competitive network in the US; we were the first overbuilder; and we were the first to bundle video, voice and data, which, of course, is now taken for granted. The common drivers behind these moves are understanding how to create networks with real scale, a focus on improving quality of service and making customer experience seamless.
In the case of the National Broadband Plan, it was important that the NBI network was able to deliver on all of these factors. As the biggest investment in rural Ireland since electrification, it’s critical that the new network achieves strong take-up in order to deliver value back to the state. Our experience tells us that open access is the best way to drive this scale.
How has the market responded to the NBI network?
The reaction has surpassed our most positive expectations. In the first two years, we had almost 60 global and regional service providers selling services on our network. This was done seamlessly and painlessly because we had developed and onboarded an operating environment that was purpose-built from the ground up.
Our technology platform, coupled with our purpose-built, state-of-the-art lab, as well as our knowledge in designing, building and operating open-access networks, is making integration for the operators easier than they’ve ever experienced.
By creating purpose-built technology designed for open access, this has translated into take-up rates on the network exceeding 30% of premises passed within six months of it being active and greater than 40% in 12 months. The quality of service and customer experience are also incredibly high as a result of this technology infrastructure, with a net promoter score of 96 being far greater than what we see in other telcos globally.
Comparably, in other markets such as the UK, over 50% of CSPs [communications service providers] have opted for a direct-to-consumer retail business model. The result in many such cases has been somewhere in the region of 10 to 30% penetration of premises passed in the long term, with dim hopes of getting much higher.
What is preventing more networks from making the switch to open access?
The appetite is certainly there in all major markets around the world. The vast majority of network owners acknowledge that they want an open-access platform to increase penetration, but two main issues persist.
Firstly, technology has failed the industry. With 30 years of owning and operating networks, I speak first-hand when I say the only options to build a best-in-class open-access platform usually prove to be cost-prohibitive if you build it yourself, or simply lack the functionality if it’s bought off the shelf. This is a challenge for all network owners world over.
Secondly, the desire to own the end customer and head down the route of the retail business model has fogged people’s ability to create solutions that serve a different, more scalable, customer base – the CSP. Those that can achieve this with a truly open-access wholesale model, in my experience, reap the benefit. We wake up every day with one goal – to make our CSPs’ lives easier. That means fewer service calls, fewer truck rolls, and, ultimately, a lower cost of ownership for our customers, the CSP or ISP.
We’ve seen a lot of investment in altnets, but what do you see as their number-one challenge to overcome in Europe and the US?
In the race for gigabit connectivity, the telecoms industry has become highly disaggregated. Against this backdrop of historically incumbent monopolies in almost every country across Europe and in the US, disruption has been attempted by the emergence of alternative networks.
Across Europe, new altnet entrants are predicted to have a 30% market share by 2026. In the UK market, as a case in point, there are over 100 altnets building out networks.
While at surface level, it would appear that this hotbed of altnets – often with significant investment behind them – have the world at their feet and are playing out David versus Goliath by taking on the established players, one problem remains consistent across every market: take-up. Failure to achieve higher levels of customer penetration will ultimately stall investment and therefore progress.
Do you expect more altnets to try and fix this problem by unlocking the opportunities in open access that you’ve seen in Ireland?
The move to open-access wholesale is under way, but time will tell who will capitalise in this disaggregated market.
Open access is a wonderful business model if it’s done right. But done right means designed correctly, built correctly and operated correctly, and that is not easy. It shouldn’t just be the network operators that embrace this model; investors should want their assets utilised to the greatest capacity possible.
Undoubtedly, some of the more established altnets are well-financed and have grown through M&A, but their legacy technology issues make it very cumbersome to embrace an entirely new business model offered by wholesale open access. I suspect that almost all start-ups in the market will be actively evaluating their technology infrastructure to make a move in open access, as the pressure builds from investors to maximise penetration.
This month [October], you’re announcing that you will start exporting this expertise from what you call a Centre of Excellence to solve some of these challenges. Can you tell us more?
We are bringing together all of Granahan McCourt’s experience in operating world-leading open-access networks, and for the first time providing a purpose-built platform called X3T to enable network operators and communications service providers to capitalise on the trend towards open-access wholesale.
We’re fortunate to have over 30 years of experience in this industry and have helped lead the way in open-access networks all over the world.
Prior to NBI, we owned a company called Enet, which operates the Irish state’s metropolitan area networks. With this, we built one of the first open-access networks in the world and quickly grew it to serve over 70 global and regional service providers. It was here that we started to develop our own technology platform specifically for open access.
Moving from one of the first open-access networks in Enet to one of the biggest in NBI, we continued to build the next generation of this technology platform with inherent knowledge of operating high-performance open-access networks.
Today, Ireland boasts one of the best talent pools globally in fibre networks and we have developed a Centre of Excellence, which includes X3T, to harness this knowledge. This is all geared towards continuing to develop this technology and empower other network operators to expand their opportunities.
Our X3T platform already has over 60 global and specialist CSPs accredited and connected, and we’re looking forward to working closely with other altnets globally to help them embrace open access.
David McCourt is the chairman and CEO of Granahan McCourt Capital – worldwide investors in technology, media and telecommunications – and the chairman of National Broadband Ireland.