Vodafone UK and BT Still Talking Fibre But Only Little Progress

The outgoing CEO of Vodafone Group, Vittorio Colao, has told an investors meeting, which was discussing their plans for next generation broadband ISP and mobile infrastructure, that they’re still talking with BT (Openreach) about the possibility of an agreement on fibre services but they’re not yet in the “right place.”

Last year readers may recall that Vodafone was widely reported to be in “early but serious” discussions with BT about the possibility of a co-investment deal (here), which could have seen the two arch rivals working together in order to expand the coverage of 1Gbps capable Fibre-to-the-Premise (FTTP/H) broadband technology across urban parts of the United Kingdom.

However the prospect for such an agreement appeared to suffer a blow after Vodafone and Cityfibre jointly announced a £500m deal to deploy a Gigabit FTTH network to a “minimum” of 1 million UK homes in 12 UK cities by the end of 2021, with an option to extend this up to 5 million UK premises by 2025 (here).

Nevertheless it appears as if Vodafone are still engaged in some degree of discussion with BT, although the details and progress remain unclear.

Vittorio Colao, Vodafone Group CEO, said:

“CityFibre in the U.K. We have seven cities announced. 1 million homes have been targeted and 0.5 million are already identified, so that is being rolled out. There’s a bit of movement in the discussion with BT on other stuff. But to be honest, it’s not enough. It’s just managing our movement, not yet what we need to really have them in the right place. But we will continue and we’re engaged in the discussion.”

Last year it was speculated that Vodafone might 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 might 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.

Another challenge would be the very different costings and wholesale arrangements that exist between Cityfibre and Openreach networks, which could make it difficult to offer a simplified set of products to consumers at the same price. Vodafone are currently also focused on building fixed line broadband market share through a strategy of very aggressive pricing and that would be harder to deliver via FTTP from Openreach than Cityfibre.

Finally, at the start of this year ISPreview.co.uk also asked Vodafone about the prospect of them adopting Openreach’s new 330Mbps capable hybrid fibre G.fast broadband technology (here). The operator responded to say that they had “no firm plans to launch” this and were focused on FTTH, although it’s possible that their position may change as G.fast coverage is expected to expand rapidly to 10 million premises by 2020.