» ISP News » 

Vodafone and Openreach Moot Joint UK FTTP Ultrafast Broadband Investment

Wednesday, August 23rd, 2017 (7:58 am) - Score 3,902

Last year “industry sources” indicated that Vodafone could be planning to build their own “full fibre” network in the United Kingdom (here). A new report claims that they are now in “early but serious” talks with Openreach (BT) about the prospect of a joint investment on a “large-scaleFTTP/H build.

Vodafone has only recently re-entered the country’s residential fixed line broadband market, after being absent for several years, and so far they’ve done a good job of generating growth by offering some very affordable bundles. The only low point has been their inability to launch a Pay TV (IPTV) product (no quad-play).

Nevertheless it’s been clear for awhile, not least via the operator’s initial but failed discussions of an asset swap with Virgin Media (Liberty Global), that they’d like to go a lot further and perhaps even replicate their FTTP roll-out in Spain. The desire to take on BT is palpable but it’s a tough ask for a side of the market where they’re currently still a minnow (245,000 broadband subscribers) among giants.

Despite this the Mobile dominated operator is known to have been eyeing up Openreach’s new consultation with interest. The latter recently proposed an aspiration to conduct a “large scale” roll-out of 1Gbps capable Fibre-to-the-Premise (FTTP/H) broadband technology, which with the right support could reach up to 10 million UK premises by around 2025 (here); the cost of this has been pegged between £3bn to £6bn (here).

Currently Openreach only plan to reach 2 million premises with FTTP by 2020 and they claim that to go further would require greater industry collaboration (i.e. new investment, risk and cost sharing models), as well as improved planning and traffic management processes, a friendlier regulatory environment to help protect the investment and an agreement on how mass migration of customers onto the new platform can be achieved.

According to the Telegraph‘s “industry sources“, Vodafone are taking the consultation very seriously and appear willing to put some money where their mouth is. The mobile giant is however only keen to target major urban areas, which is hardly a surprise because that’s where most customers’ exist and thus the greatest potential for a return on any investment.

However current market regulation could still prove to be a difficult hurdle because Vodafone may well demand some degree of exclusivity over any jointly built infrastructure (e.g. initial sole use of the infrastructure and first access to the fastest speeds etc.), which would obviously upset rival ISPs in a market where Openreach is required to provide fair and equal access. Ofcom could be flexible but only up to a point.

An Openreach Spokesperson said:

“We have said before that a new, more independent Openreach is open to co-investment models.

We’re currently consulting with all of our wholesale customers on the case for a large-scale ‘full-fibre’ broadband network. As part of this we’re asking about their potential interest in different forms of commitment to new fibre-to-the-premises infrastructure, including co-investment.

We are optimistic that this approach will lead to greater openness and collaboration across our industry, which will in turn achieve better outcomes for connected homes, businesses and people throughout Britain.”

In order to make this viable Vodafone would probably still need to build some scale into their broadband business and that might still require them to gobble an existing ISP. Assuming the prospect of a deal with Virgin Media has been shelved (a natural result of going down the Openreach route) then that only really leaves Sky Broadband and TalkTalk as significant options, both of which piggyback off Openreach’s network.

TalkTalk is financially strained and potentially vulnerable to a purchase. Plus, if the rumours are true, then Sky may also be open to divesting broadband once Fox completes its takeover, although we think that Fox would risk shooting themselves in the foot if they did that (broadcast media is rapidly becoming more broadband centric).

On the other hand this could all be part of a tactic so that Vodafone can better understand their options before making a final decision on the Openreach or Virgin Media route. We’re all for more FTTP/H but there’s certainly some concern that the market’s diversity could be harmed if fair wholesale access isn’t provided to ISPs, particularly smaller providers. A tough balancing act indeed.

Leave a Comment
10 Responses
  1. Chris P says:

    “We’re all for more FTTP/H but there’s certainly some concern that the market’s diversity could be harmed if fair wholesale access isn’t provided to ISPs, particularly smaller providers. A tough balancing act indeed.”

    exactly that, If VF where to invest and demand exclusivity, that would hinder, not foster high speed competition.

    Will be interesting to see what OFCOM make of this proposal.

  2. NGA for all says:

    Difficult to see. Wholesale VULA dominated by copper gain kit, versus or and City wide DPA agreements with no wholesale agreement. That will take a lot to make work.

  3. TheManStan says:

    Unless Vodafone is thinking of some complicated longterm PIA with leaseback to OR of some capacity…

    Which would allow Vodafone exclusivity on majority of capacity the leaseback would be payment for PIA component.

  4. Steve Jones says:

    It’s not obvious how this would work given OR would no longer be working on an equivalence basis. I suppose if this just uses PIA+ with OR paid only for the maintenance and passive infrastructure rental aspects and didn’t put any OR capital into the fibre network itself, then maybe it could work. However, if it’s shared capital input then it raises enormous regulatory issues and I can imagine Sky & TalkTalk screaming blue murder. BT Retail might to, but I doubt Ofcom would pay the slightest attention to that.

    It’s also a bit of a gamble given that this will overlap areas which will already have FTTC, many or which will also have VM as well and most likely are on the target list for g.fast. I suppose OR might withdraw and g.fast proposals for these areas, but unless there was equivalent wholesale access to this new network then I don’t see how they would be allowed to do that and the other ISPs would surely object.

    In all, allowing OR to be involved with preferential deals with any operator is going to be a regulatory minefield. Ofcom wouldn’t allow it with BT Retail, and it’s not obvious why they should allow it for any of the other large ISPs who are on the same footing (OK, Vodafone isn’t yet in that league, but it’s a major operator in other areas and this would have the potential to open the floodgates).

    1. NGA for all says:

      VULA including FTTP provides equivalence and non-exclusive but first mover DPA might tick some regulatory box. Hard to see how it will work.
      Much easier to stick an FTTP forecast in and allow the WLA price control to rise a bit as per the USO analysis.

  5. Matt says:

    I understand people’s negative thoughts about this. But to be honest the country needs a FTTP network if Talktalk or Sky have to lose out when they won’t build themselves out of small pocket areas so be it.

    1. FibreFred says:

      They’ve had a go a building their own and didn’t get far so….

    2. George M says:

      The country needs ONE SINGLE FTTP network which all ISPs use for consumers. (Business users are a different kettle of fish)
      I don’t really want 2 or 3 or more sets of fibres from different companies all ran to my property which is what is planned currently. (virgin plan to FTTP my area which already has Openreach FTTP)
      That is just a massive financial waste and not a good use of resources.
      However to lock people into Vodafone for a period because they paid Openreach to cable an area will hinder consumer choice. A lot of consumers are locked into alternative ISPs by building developers exclusive FTTP deals and this is going to cause issues in the near future.
      Competition at the consumer product level is more efficient than having separate connections to the premises.

  6. alan says:

    ” A new report claims that they are now in “early but serious” talks with Openreach (BT) about the prospect of a joint investment on a “large-scale” FTTP/H build.”

    As likely as pigs flying. Thankfully in this case its a good thing.

  7. Cecil Ward says:

    Completely agree with George M. Don’t need independent overlapping electricity grids either, that’s why only the idea of a sane public service makes sense. The report sounds pretty sinister.

    A side point about duplication: Putting in oversized ducts everywhere is essential too, so that digging up pavements twice never happens, There needs to be a tax on these digs with money from it going back to ISP’s and being ploughed into extending the core network as seen fit, and this would discourage disruption for no good reason plus shoddy work and damage to roads that we end up picking up the bill for later.

Comments are closed.

Comments RSS Feed

Javascript must be enabled to post (most browsers do this automatically)

Privacy Notice: Please note that news comments are anonymous, which means that we do NOT require you to enter any real personal details to post a message. By clicking to submit a post you agree to storing your comment content, display name, IP, email and / or website details in our database, for as long as the post remains live.

Only the submitted name and comment will be displayed in public, while the rest will be kept private (we will never share this outside of ISPreview, regardless of whether the data is real or fake). This comment system uses submitted IP, email and website address data to spot abuse and spammers. All data is transferred via an encrypted (https secure) session.

NOTE 1: Sometimes your comment might not appear immediately due to site cache (this is cleared every few hours) or it may be caught by automated moderation / anti-spam.

NOTE 2: Comments that break our rules, spam, troll or post via known fake IP/proxy servers may be blocked or removed.
Cheapest Superfast ISPs
  • Vodafone £21.95 (*24.95)
    Speed 35Mbps, Unlimited
    Gift: None
  • NOW £22.00 (*32.00)
    Speed 36Mbps, Unlimited
    Gift: None
  • TalkTalk £22.00 (*29.95)
    Speed 38Mbps, Unlimited
    Gift: None
  • Hyperoptic £22.00
    Speed 50Mbps, Unlimited
    Gift: None
  • Shell Energy £22.99 (*30.99)
    Speed 35Mbps, Unlimited
    Gift: 12 Months of Norton 360
Large Availability | View All
Cheapest Ultrafast ISPs
  • Community Fibre £20.00 (*29.50)
    Speed: 150Mbps, Unlimited
    Gift: Double Speed Boost
  • Virgin Media £25.00 (*51.00)
    Speed: 108Mbps, Unlimited
    Gift: None
  • Vodafone £25.00 (*28.00)
    Speed: 100Mbps, Unlimited
    Gift: None
  • Gigaclear £29.00 (*49.00)
    Speed: 300Mbps, Unlimited
    Gift: None
  • Hyperoptic £29.00 (*35.00)
    Speed: 150Mbps, Unlimited
    Gift: None
Large Availability | View All
The Top 20 Category Tags
  1. FTTP (3279)
  2. BT (2951)
  3. Building Digital UK (1860)
  4. FTTC (1859)
  5. Politics (1846)
  6. Openreach (1766)
  7. Business (1612)
  8. Mobile Broadband (1390)
  9. Statistics (1364)
  10. FTTH (1361)
  11. 4G (1202)
  12. Fibre Optic (1136)
  13. Wireless Internet (1120)
  14. Virgin Media (1109)
  15. Ofcom Regulation (1108)
  16. EE (794)
  17. Vodafone (792)
  18. TalkTalk (739)
  19. Sky Broadband (719)
  20. 5G (686)
Helpful ISP Guides and Tips

Copyright © 1999 to Present - ISPreview.co.uk - All Rights Reserved - Terms , Privacy and Cookie Policy , Links , Website Rules , Contact