Once upon a time, Hyperoptic was a small ISP that sold fast gigabit fibre services but only to folks and firms in London. Now it’s setting up shop in six other cities and it’s not stopping there.
Hyperoptic is the brainchild of Dana Tobak and Boris Ivanovic, the duo who helped set up Be Broadband, the UK’s first ISP to offer ADSL2+.
But that was an age ago, when copper telephone line-based ADSL2+ was considered cutting edge. Fibre optic broadband is changing things in the UK and Hyperoptic is poised to be at the forefront of the urban ultrafast revolution.
We recently caught up with Tobak, Hyperoptic’s managing director, for chat about the state of the company and how things have changed since our last visit.
We talked about possible press stunts involving a giant pair of scissors wrapped in fibre-optic lights cutting a copper-coloured ribbon – to symbolise both the opening of a new building and cutting ties with the past.
The main advantage Hyperoptic has over ISP’s offering FTTC (Fibre to the Cabinet) using BT’s Openreach network is speed. Currently the top download speed most ISPs offer is 76Mbps and even then, due to the limitations of FTTC’s copper last mile, you’re only likely to get those kinds of speeds if you’re on the same street as the green cabinet.
Although Virgin Media’s network is capable of providing gigabit broadband speeds with DOCSIS 3.0 technology – the tech it’s using to deliver broadband to customers right now – that’s by the by as they’re not delivering it right now.
Then again Virgin’s network stretches to around 12 million UK homes. BT has connected over 19 million homes to fibre-based broadband. Both networks have the kind of reach Hyperoptic doesn’t have. At least not yet. As we discussed the state of Broadband Britain, touching on things such as City Fibre’s pilot in York and the rural fibre networks of Gigaclear and B4RN, Tobak sketched out Hyperoptic’s vision for the near future.
Recombu: Hyperoptic has announced launches in Manchester, Liverpool and Leeds. You’re in, or preparing to be in, seven cities. The last time we spoke there was talk of plans to reach 11 by 2015. Is this still the case?
Dana Tobak: That’s about right. We’re looking at where our next territories are going to be and I suspect that there will be an announcement in the fall. We have a subset of where we think those might be but as with previous cities it’ll be based on expression of interest and where the most demand is.
What’s interesting is that as we extend outside of London we’re coming across different freeholders and developers so that gives us an opportunity to see where [when] we’re working with someone in Manchester for example, they might have other properties in Leeds and Liverpool, but they also might have properties in other cities. It helps that there’s a relationship already in place.
R: Are you finding that these relationships dictate where Hyperoptic decides to go more than demand, or as much as?
DT: It’s a mixture. What we’ve proven with our model so far is that it tends not to matter so much where we go. We’re in such a wide breadth of buildings. From East Village to the Factory Quarter in Acton in W3, really top end buildings, to housing associations and across the board demand is there! We haven’t shown for example that Knightsbridge Apartments wants us more than East Village or anywhere else.
We have an agreement in the East Village development with Get Living London, where a 20 meg broadband service is included in the rent [see Recombu’s story from 2013 here] but we don’t have any particular deal with Triathlon Homes. But, what we’re seeing is that people are taking up 100 meg or a gig and take up is just as strong here as it is elsewhere. Regardless of where people are living, demand for faster broadband is there.
R: Right now we’re seeing people signing up for 76Mbps services or 152Mbps services and they seem to be happy with that. Do people really need a gigabit broadband service now? What can you do with 1Gbps downloads and uploads?
DT: The short answer is everything is just faster. I was on Virgin’s 100Mbps service in the past, now I’m on a gig. Before when it’d take five minutes to download a movie or whatever it now takes a minute. Could I live by waiting an additional four minutes? I probably could! But now I’m used to stuff only taking a few seconds.
I have Apple TV at home and I’m an American by birth, so I watch a lot of Jon Stewart [The Daily Show]. By the time I’ve picked the episode I want and I click download, I simply hit the next button and it says ‘Ready to Watch’, right away. Whereas before, on other services, I’d have to wait a few minutes… it’s just a different experience. It doesn’t make me a better person, but I just enjoy things more!
Of course the other benefit is I have two daughters at home and they’ve got to the age where they’re watching things online but I can still do whatever I want to and get that same instant gratification feeling. I get it watching my shows and they get it watching their shows, so everyone’s happy.
R: So is it mainly the small things that make a difference?
“By the time I’ve picked the episode I want on Apple TV I click download and it’s ready to watch, right away.” – Dana Tobak, Managing Director, Hyperoptic DT: The key thing is it depends what you do online. If you keep a lot of data in the cloud, and you take a lot of pictures, shoot movies and you store that in the cloud, I think it will make an impact for you. You’ll be able to immediately share your content around to your various devices and have things where you need them to be. That’s the benefit of having up to a gig upload as well as download. For browsing the web and watching catch-up TV you might not notice so much of a difference.
One thing we see is that when people get these kinds of services, they tend to try a whole bunch of things out and then they find that their lifestyle changes because now they can do things they couldn’t do before.
I think it’s a thing of can you live without a gig? Yes you can, can you live without a Ferrari… absolutely… except we’re offering people a Ferrari service for the equivalent price of a coffee a day.
R: You’re primarily focussed on delivering services to new developments and apartment blocks. But if the demand was high enough could you deploy anywhere in the cities you’re set up in?
DT: That’s trickier. The reason why we do what we do right now is based on the technology used. If we go out to the suburbs and rows of houses, we’d have to start putting up cabinets and use a different kind of technology. Not that it’s not doable, not that we wouldn’t ever do that, but it’s a different technology and a different cost model. Nothing’s impossible but it’s just not on our agenda right at this moment.
R: When you say you’d put up cabinets, given your focus on being a pure fibre ISP, you presumably wouldn’t use something like FTTC for those areas?
DT: I don’t see why we would, quite frankly. We certainly wouldn’t want to overbuild with FTTC in an area where BT is already supplying that service. We could do point to point fibre still using cabinets, running fibre to each individual home. But that’s where you’ve got multiple civils [civil engineering planning permissions] and it’s just a much more complicated process.
If you look at other people doing gigabit, the Gigaclears and B4RNs of the world, they’re experts in this kind of stuff. The way in which they deal with things like streetworks – it’s just a completely different model to what we’re doing.
R: What do you think of CityFibre’s plans to team up with Sky and TalkTalk in York?
DT: Good on them, if they can make it work. What’s interesting about CityFibre is that, again, they’re not competitors to us. They’re focussing on the smaller cities with populations of between 50-100k and we’re focussing on 100k and above.
R: You’ve got Gigaclear doing fibre out in villages, CityFibre in towns and cities and Hyperoptic in the big cities. Are you consciously not treading on each other’s toes?
“At some point, everyone will be on a direct fibre connection.”DT: It is an ongoing experiment to see how it will work between the three parties and anything that creates competition in the marketplace, we’re quite supportive of.
R: BT and Virgin Media have demonstrated that, depending on the technology and location, they can deliver gigabit speeds right now. But neither is doing it today and they won’t be doing it tomorrow. But they will at some point in the future. Virgin has demonstrated 1.5Gbps over DOCSIS 3.0, so theoretically they could start rolling that out whenever…
DT: The cost for them to do that tomorrow would be quite prohibitive. Right now the technology exists, potentially. How many head ends and how many cabinets would they need to have to be able to support that? They would need a substantial infrastructure rebuild. But now they have a rich parent [Liberty Global], so it’s up to them how to spend the money.
Virgin’s footprint and ours don’t cross that often. Mainly because they don’t typically go into multi-dwelling units and they like to go out onto the streets, because that’s where they have their cabinets and that’s how their model works.
But I can’t imagine that they would go up to gigabit, given the money that they’d have to spend. We’re very efficient in how we spend money which allows us to price our services as we do.
And it’s the same thing with BT, in order for them to implement these tests they’re doing with G.fast… [with Huawei] I mean it could happen at some point. At some point, everyone will be on a direct fibre connection. I hope it’s a Hyperoptic connection! BT’s going to try to get people onto their lines and Virgin’s going to try to get people onto theirs.
Ultimately, what we have to appreciate is that different solutions work for different topologies of neighbourhoods and different buildings. I know that we have the most efficient approach to how to connect residential blocks and BT or maybe Gigaclear probably has a more efficient approach to how they deal with rural areas. I think it will come down to if we want to spend the least amount of money to get everyone fibred up, it’s not going to come down to just one supplier.
R: The last time we spoke you mentioned that an IPTV service was in the works. BT and TalkTalk have their YouView-based services, as do KC in Hull and soon Plusnet. Is Hyperoptic still thinking about TV?
DT: We have looked at selling YouView as well, but we haven’t completed the trials. What we have found is that for the most part, depending on people’s living arrangements… In order for people in residential blocks to receive TV, they need an IRS system [Integrated Reception System].
If you live in an apartment block, whether you want receive Sky or terrestrial, an IRS system is something you need in order for everyone in that block to receive TV. So there’s a cost associated with that which people living in a house don’t have to worry about.
As you know YouView has a digital terrestrial component and an IP component. If YouView had an IP-only version of it’s service, then that’s something we’d be very supportive of. We’re still trialling things at the moment, but who knows how things will look five years down the line? If you’re only getting your content from Netflix then do you really need a TV service?
R: Does the internet spell the end for the licence fee then?
DT: [Laughs] Maybe! Who knows?
R: Hyperoptic sells three packages – 20Mbps, 100Mbps and 1Gbps. While gigabit broadband is great are you considering launching other packages, 50 or 200Mbps, or increasing the speeds of the lower tier services?
At the moment we’re not looking at launching any more packages because if you get too granular we don’t think it really helps. There is consideration that as we do more things for council housing and social housing, whether we would offer a lower-end package. That’s still just something we’re considering.
If you think about the 20Mbps package, given that you get a real 20Mbps service [guaranteed 20Mbps speeds down and 1Mbps up] it’s just a phenomenal service at its price point.
R: Besides the possibility of new packages, what else can we expect from Hyperoptic in the foreseeable future?
DT: We’re talking to some of the developers we’re working all over the UK with about new buildings. We want to be there when the bricks are being laid so our cabling can be there from the moment the properties are ready for people to move in. That way we can think about doing things like offering three months’ free broadband to residents.
We are looking at developing a Service Level Agreement [where other ISPs can use Hyperoptic’s network to see services] for business broadband. For consumer ISPs, it’s something that’s always up for discussion. Overall we still have a relatively small footprint but it’s growing every day. When it gets to at least a six digit size, then we’ll be in a position whereby we can have some of those discussions and decide whether it’s right for our business model.
Hyperoptic is available in selected buildings in London, Reading, Bristol and Cardiff and will soon be available in premises across Manchester, Liverpool and Leeds. Head over to Hyperoptic’s site find out if you can sign up for gigabit fibre broadband. If Hyperoptic isn’t available in your city you can register your interest here.
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