Vodafone UK Moots Building its Own Fibre Optic Broadband Network

Newspaper reports claim that telecoms giant Vodafone, which only recently launched a range of its own fixed line broadband services using Openreach’s (BT) national ADSL2+ and FTTC network, could be planning to build their own fibre optic network in the United Kingdom to rival BT and Virgin Media.

Apparently “industry sources” told The Telegraph that Vodafone have been taking part in Openreach’s first trials of its new wholesale Duct and Pole Access (DPA) product, which is intended to help promote the large-scale roll-out of new “ultrafast” (100Mbps+) broadband services by opening up BT’s huge national network of telegraph poles and cable ducts for use by rivals.

The operator’s 6 week trial of DPA is allegedly being conducted in the town of King’s Lynn (Norfolk, England), although it’s understood to have faced some problems with “blocked ducts, costs and the availability of maps of BT’s ducts“. One of the other operator’s playing with DPA, Cityfibre, also claims to have suffered similar problems (here), although some of those were perhaps to be expected (Openreach has to deal with a lot of blocked ducts in its network).

Feedback from the tests will also play into Ofcom’s on-going Strategic Review (here and here), which has effectively proposed to all but split Openreach from BT Group’s control. The option of full separation is also still on the table, unless BT agrees to some major governance changes.

However so far Vodafone has not made any commitment to build its own network and we’re sceptical about whether they’d take the risk, particularly given Openreach and Virgin Media’s established foothold in the existing infrastructure market. Even if they did go ahead then it would perhaps be more likely to focus upon the low hanging fruit of urban areas.

A more plausible use might be to further expand their existing fibre optic network to more business customers, much of which was acquired via the Cable & Wireless Worldwide acquisition from a few years ago (here). This also gave Vodafone access to their own unbundled (LLU) network, which they use to supply ADSL2+ based broadband services to several UK ISPs.

In our view Vodafone’s best course of action would still be to do a deal with an established player like Virgin Media (Liberty Global), although this would be very complicated and past attempts to reach an agreement have failed.

On the other hand Vodafone is struggling to find a way forward in today’s market and they certainly have plenty of money to do something radical, if they really wanted.