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Virgin Media Expand UK Cable Broadband Network – 17Million Premises by 2020

Friday, February 13th, 2015 (7:26 am) - Score 8,255
virgin_media_uk_street_cabinet_engineer_at_work

Cable operator Virgin Media (Liberty Global) has today announced a massive £3bn expansion (called “Project Lightning“) of their existing 152Mbps capable cable broadband, TV and phone network, which will extend the reach of their fixed line services to an additional 4 million homes and businesses (total of 17 million) by 2020, as a nervous BT looks on.

A total of 6,000 direct new jobs, including 1,000 new apprenticeships, are anticipated to be created over the five year period and in a move that Virgin Media are calling the “single largest investment in broadband digital infrastructure in the country for more than a decade“. By comparison BT set aside £2.5bn for their own commercial rollout of FTTC/P over a similar period (that began in 2009/10).

It’s claimed that the move could add an extra £8 billion of value to the UK economy and consumers and crucially today’s investment is all coming from private and not public sources. Never the less the Government has been quick to claim credit.

Prime Minister, David Cameron, said:

I welcome this substantial investment from Virgin Media which is a vote of confidence in our long-term economic plan to support business and create jobs by building a superfast nation backed by world-class infrastructure. These 6,000 new jobs and apprenticeships will mean financial security and economic peace of mind for thousands more hardworking families across the country. Together with this Government’s rollout of superfast broadband which has now reached more than two million UK homes and businesses, this additional private investment will create more opportunities for people and businesses, further boosting our digital economy and helping secure a brighter future for Britain.”

Tom Mockridge, Virgin Media’s CEO, said:

Millions of homes and businesses will soon be able to benefit for the first time from broadband speeds at least twice as fast as those available from the other major providers. Consumers and business owners who want to make the switch to better broadband speeds now have an alternative; you can call on Virgin Media to ‘Cable My Street’.

In virtually all of the areas we have identified for expansion, BT is the only option available right now. Its ageing copper telephony wires are not capable of the ultrafast connectivity that Virgin Media delivers. Soon we will offer unbeatable services to even more homes and businesses across the country.”

At present Virgin Media’s cable network covers around 44% of the United Kingdom (12.5 million premises), while BT’s FTTC/P platform reaches almost 22 million premises or around 70-75% coverage. Clearly Virgin’s move is targeting BT’s current coverage and aiming to erode their grip in new areas, although a figure of 17 million suggests that most of this expansion will still be very much an urban focused development. Meanwhile BT will fight back with 500Mbps G.fast tech in 2016/17 (here).

In addition, Virgin Media also confirmed what we’ve already reported before, that their parent company Liberty Global is preparing trials of next gen Gigabit capable DOCSIS 3.1 technology across Europe for later this year. This technology could “extend Liberty Global’s speed leadership” up to 10Gbps (peak shared capacity – homes should expect considerably less) when it is fully deployed in the future.

Meanwhile, in the short-term, we also keep seeing rumours about Virgin Media’s desire to offer service speeds of up to 300Mbps using existing technology (Euro/DOCSIS3.0) before the year is out, but this has not yet been confirmed.

It’s important to note that today’s expansion announcement is in addition to their existing work, which is bringing 110,000 additional homes across east London, Glasgow, Sunderland and Teesside within reach of their service.

Crucially Virgin said that their new project will prioritise areas for upgrade according to demand from local homes and businesses (naturally focusing on areas closest to their existing network) and thus communities are being asked to register their interest.

UPDATE 8:31am

Virgin Media told ISPreview.co.uk that they predict the new network expansion will give them a UK coverage of around 60%.

One potential problem with this is that Ofcom might now start to view the operator as having Significant Market Power (SMP) in urban areas and we put this question to Virgin Media, although they appear to be adamant that the network expansion will not make them subject to new regulatory measures. Indeed we’d be surprised if they hadn’t discussed it with Ofcom already, although we are asking the regulator and will update again.

On the roll-out itself, Virgin Media told us that there are areas of London, Birmingham and many other places which currently only get poor connectivity and those are the places where they’re most likely to target first, assuming the demand exists (they expect demand to be high). Some extra FTTP will also be deployed, but Virgin aren’t yet giving any clear indications of scale (i.e. it’s mostly still an expansion of their cable network).

UPDATE 9:30am

A spokesperson for Ofcom said they wouldn’t comment on today’s news regarding regulation, except to say, “We welcome Virgin Media’s announcement that it intends to expand its cable network. It demonstrates the vibrancy of the UK communications market, and should result in increased competition and greater choice for consumers.”

It is however worth pointing out that Ofcom don’t measure SMP by geographic reach alone (e.g. KC’s SMP dominance of Hull), although no doubt they will take a closer look at Virgin in a few years time when the next market review is conducted. Otherwise Virgin Media’s financial results are out and they include a bit more about the above project’s funding.

VM Network Expansion – Financial Implications

The U.K. Network Extension will be completed in phases and will initially focus on the most accretive expansion opportunities. Depending on a variety of factors, including the financial and operational results of the earlier phases of the programme, the U.K. Network Extension may be modified or cancelled at our discretion.

Assuming the full completion of the U.K. Network Extension, we estimate that we will incur total incremental property and equipment additions ranging from approximately £2.9 billion to £3.1 billion from 2015 through 2020, including expenditures related to (i) the build-out of our network, which we estimate will account for approximately 80% of our total investment, and (ii) the purchase and installation of related customer premises equipment.

We expect that these expenditures will be predominantly funded through debt financing and will positively impact our organic revenue and operating cash flow growth, with meaningful and escalating benefits beginning in 2017. The U.K. Network Extension will also increase the percentage of revenue represented by our aggregate consolidated property and equipment additions over this time frame.

Including the full estimated impact of the U.K. Network Extension, the inclusion of UPC Ireland and assuming no changes to our current long-range capital plan, we expect that our aggregate consolidated property and equipment additions as a percentage of our revenue will range from (1) 21% to 23% during 2015 and (2) 25% to 28% during the period from 2016 through 2020.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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27 Responses
  1. Avatar FibreFred

    At last!!!

    Wonder if this will affect their non-SMP status

    • Avatar Steve Jones

      Not at all I would suspect. I’d be amazed if they hadn’t already sounded out Ofcom on this.

      It will be interesting to see what technology they are going to use for this. We know VM have been carrying out a fibre trial, and I would have thought that a gpon solution could suit them well. It means not having to put power cabinets into the streets.

    • At 17 million premises I’d say they’re a fair bit over the 50% coverage mark and so this would be an interesting question, which we’re already asking. But equally it’s still borderline and indeed I suspect they would have asked Ofcom first.

      I’ll report back when/if they respond. VM’s PR time have been a bit slow this past couple of weeks.

    • Avatar L2R

      Superb news my shares have grown by 20% in less than 2 years since the Liberty Global takeover and now this announcement. 😀

  2. Avatar Darren

    “Its ageing copper telephony wires are not capable of the ultrafast connectivity that Virgin Media delivers”
    Your upload is 40% slower than BT! lol. One of the reasons I will never have a VM connection.

    SMP status needs to be awarded now, surely.

    Don’t stand still BT, show these yanks how it’s done!

    • Ofcom won’t do anything with SMP until the physical network is in place, so an announcement of plans would not qualify. But in any case it looks as if Virgin may avoid that, according to our update above.

    • Avatar Steve Jones

      SMP will be more about market penetration than coverage.

    • Avatar FibreFred

      What I don’t get is.. and I appreciate its a complex area, if a provider is the sole provider of 150Mbps+ broadband in an area, sure they have SMP as they are the only ones that can offer such a product in that area

    • A national regulator will always look at the bigger picture. Micro managed regulation would be a nightmare and very costly.

    • Avatar FibreFred

      Got ya

      But what about when it scales up… so Virgin can offer a 150Mbps service to 50% of the country , other providers can only offer a service at the same speed to I dunno say.. 5% in the same area, surely Virgin has market power?

    • I think you’re best off talking about hypotheticals to Ofcom as otherwise such comments will just go around and around endlessly and we’re not the regulator.

    • Avatar FibreFred

      Fair point, I just wondered if people had anymore insight into it but yes it is a complex area.

    • Avatar Steve Jones

      Ofcom have no interest in undermining the only other large network infrastructure provider to the consumer market through the imposition of wholesaling rules. For good or bad, their objective has always included getting competition as deep into the network as possible.

      What this rollout could well do is impact the viability of alternative fibre providers doing retrofits (rather than new builds) as facing two network alternatives is another thing.

      Of course, BT are going to have to respond too, if only on through more publcity with regard to g.fast plans. In many ways the killer line is going to be bragging rights on headline speed figures. It’s not that super-high speeds are going to be a life-changing experience for most people (who’ll probably be primarily interested in price, service and enough capacity to stream videos, play games an so on), but because it matters in the PR war.

      Whether BT will react by rolling out g.fast as quickly as possible (which is immature and anything but cheap), or by seeking to reduce the price of GEA-FTTC in the hunt for market share, we’ll see. One thing that a substantial decrease in the wholesale price of GEA-FTTC would do is to put even more pressure on LLU operations. Strange as it might appear, for OR at least, the large LLU operators are a major advantage in the fight against VM as they are such a serious presence in the retail market. It’s very much in BT’s interests to have them dependent on its network which means having a good strategy to sell. They will also want to discourage the idea of any of those operators investing in alternative networks of their own. The sustainability of three different major network infrastructures in one area would be a nightmare for all the operators concerned.

    • Avatar No Clue

      “I think you’re best off talking about hypotheticals to Ofcom as otherwise such comments will just go around and around endlessly and we’re not the regulator.”

      Since when has that stopped him LOL

      This is superb news, coincidentally looking back the expansion is bang in line with what i predicted when liberty global took over and a certain other individual said would not happen. LOL (over and over)

      “Your upload is 40% slower than BT! lol. One of the reasons I will never have a VM connection.”

      And their download is about 48% faster than FTTC so your point is what? Or was it overall Virgin is quicker?

      “SMP status needs to be awarded now, surely.”

      Nope thats based on actual take up not availability or as BT call it homes passed. If Virgin becomes available to 60% they would the way i see it have to have a userbase in over 50% of homes to be a SIGNIFICANT power. Anything less is not really significant.

      “Don’t stand still BT, show these yanks how it’s done!”

      Yes show them how its done like when BT tried their overseas and America adventure before that turned out so well 😉

    • Avatar No Clue

      As for BT reacting they would not of had to worry about reacting if they had done real fibre in the first place, then again they wanted the cheap option and government help, they got want they wanted now they can lay in their bed LOL

  3. Avatar hmmm

    pity I couldn’t receive VM instead of the junk what BT cowboys supply .

    • Avatar No Clue

      Never know maybe at last you will be able to get an award winning product rather than BT junk 😀

    • Avatar hmmm

      That’s good that No Clue might get a service better than the cowboys of openreach it couldn’t be any worse with this junk 🙂

  4. Avatar Bob2002

    Are we going to get a list of the expansion areas? By which I really mean new towns covered.

  5. Avatar adslmax

    VIRGIN MEDIA IS RUBBISH! EVIL COWBOYS AND MORE EXPENSIVE THAN BT FTTC.

    NAD NEWS IS BT WILL GOING TO BITE BACK!

  6. Avatar dragoneast

    The devil is in the detail, as ever. But hopefully this might at least turn out good news for those in urban/suburban areas currently beyond the reach of Virgin, BT’s FTTx offerings, third party FTTP or superfast wireless, and BDUK. So far they seem to have been the forgotten ones. I’m not one of them.

  7. Avatar Bombay Telecom

    Excellent news finally i may be able to actually get a fast broadband service rather than rubbish FTTC that only runs at 22Mb down this road.

  8. Avatar BombayTelecom

    “What do you do that makes 22M rubbish?”

    Its what i would LIKE to do but can not with rubbish FTTC at 22Mb

    help.netflix.com/en/node/13444
    as just one example of what NON “Superfast” Rubbish FTTC can not do here.

    • Avatar Superfarce

      ““What do you do that makes 22M rubbish?”

      Its what i would LIKE to do but can not with rubbish FTTC at 22Mb

      help.netflix.com/en/node/13444
      as just one example of what NON “Superfast” Rubbish FTTC can not do here.”

      LOL he will tell you that you do not need that LOL

    • Avatar BT Infidelity

      Next gen service at knackered old copper gen speeds LOL

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