UK Prepares for Incoming “Wave of Bankruptcies” That Will Cause “Blackouts”

A tidal wave of broadband network bankruptcies causing mass blackouts could be on the way due to severe inflation.

Image Credit: Daniel Dino-Slofer

This week the Telegraph published an article stating that many small broadband networks are “being pushed to the brink,” and that many homes throughout the U.K. could be completely cut off from all connectivity.

At the moment, the United Kingdom’s government-approved regulatory and competition authority Ofcom, broadcasting, telecommunications and postal industries is currently working with BT in order to prepare “contingency plans” that would see the company thousands of customers if smallers companies were to fail.

After Ovo Energy cutt around a quarter of its workforce at the beginning of the year, it was already “in talks” to “offload” 100,000 of its broadband customers to TalkTalk.

The report states that many smaller companies which are financed by private equity, pension funds and sovereign wealth have materialised and tried to compete with BT.

Industry analysts seem to believe that increased consolidation in the industry will eventually lead to the creation of a major network giant capable of competing with BT’s Openreach and Virgin Media O2.

However, the report states that increased competition will mean that some companies are going to be “pushed to the brink.”

At the Connected Britain Conference which took place last year, the managing director of Virgin Media O2, Lutz Schuler, warned that plans for the nation’s broadband were modeled for a population three times the size of the United Kingdom.

“It seems to be a bit of a red flashing light that Ofcom is thinking about it at all. It cannot be entirely sustainable when you already have big network builders,” according to an industry source.

As times goes on, even more companies are facing the prospect of being forced into administration or taken over; they are struggling to compete ile inflation is skyrocketing.

In December last year, Swish Fibre already bought People’s Fibre out of bankruptcy; according to the report, the industry could see even more consolidation of the same nature.

Some analysts have said that: “…a wave of consolidation will eventually sweep through the broadband industry.”

An Ofcom spokesperson said that: “We keep a close eye on the broadband market to make sure we know what’s happening on the ground, as part of our work to support fibre investment and protect customers. Usually, when a network company fails, it’s sold as a going concern and customers don’t experience a loss of service. In the unlikely event that a network suddenly failed and ceased to provide services, we would work with alternative suppliers to help customers get reconnected as quickly as possible.”