Renting the network: better connected or false economy?

In the modern world, people cannot afford not to be connected. But what happens when this connectivity becomes literally impossible to afford? Or an area’s historic investment has not kept pace with its business requirements?

Traditionally, the onus has fallen on the UK’s major telecoms players to build networks. With vast resources, providers such as BT and Virgin Media are able to take on some of the financial burden. Last year, Norfolk County Council became the UK’s first local authority to sign a contract with a private sector partner through the Government’s Broadband Delivery UK (BDUK) contract framework.

Buy to Rent

With so much cash available, it is little wonder that large organisations are willing to share costs, especially when contracts invariably operate on a lease line model, where those relying on the network will pay the operator for its use. This model has served the industry well, but perhaps its clients less so.

It was in 2012, with the realisation that an asset ownership model could better serve day-to-day users of a network, that staff from Lancaster University Network Services (LUNS Ltd) formed The Networking People (TNP).

Chris Wade, director at TNP, explains the reasoning behind the company’s formation: “Leasing lines for a telecoms network can represent a false economy, especially for those such as councils with unique requirements and many end users. After an initial contract, typically spanning three to five years, those councils that are leasing lines will either have to extend the contract (and not benefit from new technology or commercial deals) or tender for a new network partner, which can mean heavy installation fees or migration costs. This ‘replace or renew’ model offers no flexibility or long-term sustainability.”

Better Connected

TNP’s ethos stands in stark contrast to the larger providers. It works closely with partners to design a bespoke network that is owned by clients; because TNP is wholly independent and has the expertise to implement its designs, the network can be installed at a reduced cost while asset ownership means leased line fees are dramatically reduced. Owning assets also means the problems associated with the ‘replace or renew’ approach are avoided entirely.

The model seems to have struck a chord with those in need of cost-effective connectivity. Recent projects for TNP have included network builds for Blackpool, Stirling and Shetland Councils and its team is growing rapidly.

Blackpool councillor Chris Maughan, cabinet member for technology, summarises the benefits of the partnership with TNP and owning its network: “[It allows] the council to make significant savings at a time when the cost of telecoms is going up. It is also providing the town with resilient and secure connectivity that is completely under our control to grow and adapt as we do.”

Wade credits TNP’s success to its willingness to maximise on any existing infrastructure. For example, in its Shetland project, the council used dark fibre, microwave radio, ADSL and satellite to build and expand the in-place network in the most relevant and economical way – with TNP assisting to deliver a nearly tenfold increase in speed in some areas, it is projected to save the Council up to £1.6m. Similar savings have been seen by Blackpool Council on its 100 node network and for Stirling Council, which gained a 30% saving compared to an equivalent fixed-line solution.

Model Approach

So will the nation’s largest operators be taking inspiration from TNP’s tailored approach? Chris thinks not, concluding: “For the major providers, solutions can be about economies of scale and long-term leased line income. However, leasing is an outdated model and as anyone that has purchased a house could tell you, owning an asset is both much less costly over time and has more value to those using it.”

This is a guest blog post from TNP