Why are so many ISPs going out of business?
Recent years have seen swathes of ISPs going out of business, but what does this mean for consumers?
Consolidation can be a sign of strength in a competitive business sector, but it may also be an indication of troubled economic times.
The absorption of numerous car companies into British Leyland in the 1970s certainly wasn’t a positive, and the more recent Stellantis mass merger hardly benefitted Alfa Romeo, Citroën, et al.
Similar events are occurring in the home broadband industry, as the number of ISPs fluctuates in response to mergers, takeovers – and sometimes failures.
The latter recently befell G Network, a struggling fibre operator whose proposed takeover by Community Fibre fell apart after rodent damage was found across its network of cables.
With no suitors willing to bail the company out and repair core infrastructure, G Network went into administration, though it remains trading at the time of writing.
G Network was among the many modern altnets set up to try and challenge the established home broadband giants.
However, even these industry leaders haven’t been immune to struggle, as past news stories about the travails of TalkTalk and the problems at Plusnet demonstrate.
Manchester-based altnet VISPA, which had been operational since 1999, ceased trading in February and promptly entered liquidation proceedings.
There have been mergers between Zzoomm and FullFibre, while CityFibre conducted an equity swap in 2024 to acquire Lit Fibre.
Netomnia and brsk recently merged, before being taken over by the owners of Virgin Media (and therefore O2) and nexfibre in a £2 billion deal.
Brand names are disappearing left, right and centre, but what’s behind so many ISPs going out of business?
And how should you respond if your provider ceases trading or goes into administration?
Money money money
ISPs bear a lot of responsibilities, none of which are especially affordable even in a benign economic climate.
This is most certainly not a benign economic climate, with punitive tax rises and spiralling staff costs placing an unprecedented burden on corporate shoulders.
ISPs have to pay for licenses, offices, engineers and customer service staff. They have to run servers, host email packages and – in the case of full fibre altnets – physically lay their own cables.
These are huge costs which need to be outlaid before a single customer can be serviced, and they’re costs which tend to be covered by borrowing that then incurs interest on repayments.
It doesn’t take a great deal – dwindling household spending, increased competition, a price war among competitors, a real war in the Middle East – to make the economics of this high-spend investment unviable.
Even an ISP piggybacking on the Openreach telecommunications network will face substantial costs just to advertise their existence and attract new customers.
With the stock markets roiling in fear after tariff chaos, AI bubble concerns and soaring oil/gas prices, liquidity is evaporating and lending is becoming much harder to acquire.
Companies are also less willing to roll the dice on future profitability, instead seeking the security of absorption into a larger rival with deeper pockets.
And let’s not forget that the UK has a finite number of homes, many of which are now served by more than one full fibre connection. There are only so many customers to go around.
Little wonder, then, that rural altnet Voneus recently reported pre-tax losses of £38 million on turnover of just £6.3 million.
What should I do if my ISP fails?
ISPs going out of business has become sadly commonplace, but consumers are relatively well insulated.
Industry regulator Ofcom will swiftly appoint a replacement ISP to step in and maintain services, though the failing ISP may pre-emptively do this itself.
Plus, as the G Network case proves, being in administration doesn’t necessarily prevent an ISP from continuing to service its existing customers – or even seeking new ones.
If you’re unable to get online, use a smartphone to check the ISP’s website homepage.
By law, any administration or liquidation announcements must be published here, though they might be overlaid on top of existing content and not instantly be obvious.
Run a news search for the ISP’s name in case other people are reporting similar connectivity issues.
Contact your bank to prevent future payments being made, and then – still using your smartphone – browse the packages listed here on BroadbandDeals.co.uk to find a new ISP.
