David vs Goliath – Virgin Media Threatens Rival UK Full Fibre ISP Toob

The CEO of UK cable and TV operator Virgin Media (Liberty Global), Lutz Schüler, was warned a tiny rival start-up ISP called toob that it “will use everything to keep them out of our city,” which is a reference to how both plan to deploy 1Gbps speed broadband services across the port city of Southampton in Hampshire.

At present Virgin Media’s Hybrid Fibre Coax (HFC) dominated EuroDOCSIS 3.0 network – offering speeds of 500Mbps+ to consumers – already covers three quarters of Southampton, although the operator confirmed last week that it would also become the first to benefit from their 1000Mbps+ capable upgrade to new DOCSIS 3.1 network technology (here).

Much of the infrastructure that Virgin needs for this to work already exists and as a result the upgrade itself is almost akin to flicking a switch (i.e. no need to go around digging up streets again), except existing customers will need to upgrade their package and receive a new router in order to benefit from the D3.1 performance boost.

However the announcement was also interesting for another reason. Earlier this year a new Portsmouth-based ISP called toob, which was setup by several of Vodafone’s former directors and has already attracted an investment of £75m (despite not having built anything yet), put the port city first on their list for a new 1Gbps Fibre-to-the-Home (FTTH) network (here).

The provider also has a longer term ambition to expand their full fibre network to pass more than 1 million homes and business over the next 10 years, although initially they would start their rollout in 2019 around the central southern part of Southampton before reaching the rest of the city by the end of 2021 (target is to have 100,000 premises covered by then – possibly including other parts of the UK).

The move has not gone unnoticed by Lutz Schüler (FT paywall), who doesn’t mince his words when promising to “fight back” against the rise of smaller alternative network ISPs (i.e. not only toob but also Cityfibre, Hyperoptic etc.). Schüler added that most such players were more akin to “fibre to the press than fibre to the premises.”

Lutz Schüler, CEO of Virgin Media, said:

“We have a Porsche. We would be fools not to leverage that.

It’s good to have competition but we will use everything to keep them out of our city.”

Them be fighting words. At this point we’re going to avoid getting in to the endlessly tedious game of sports car comparisons (awaiting toob to reply that they have a Koenigsegg Agera RS etc.), although Virgin clearly has a huge advantage in that their infrastructure is already present and it’s unlikely that toob would be able to match Virgin’s Pay TV product (at present that’s not something they’re even thinking about).

On the other hand toob’s pure FTTH network would be able to deliver symmetric Gigabit speeds, which is something that Virgin won’t be able to do without a much more significant Full Duplex D3.1 upgrade (no sign of this yet as it requires some big and expensive changes). Equally toob could undercut Virgin’s packages with aggressive pricing but doing this does tend to stretch the payback model for investment.

Admittedly most people don’t tend to need or understand the benefits of ultrafast uploads, which is partly because ISPs almost always focus their advertising on download performance and this is something that will probably work in Virgin’s favour.

No doubt some people will see this as the big boy crapping all over the smaller player(s) but it’s important to remember that these are urban areas, which are naturally aggressively competitive and thus in order to play in these waters you have to be anticipating the possibility of a fight (not that any of this helps the goal of reaching nationwide full fibre coverage). We assume toob has considered this already.

Unfortunately we don’t have any contact details for toob and their website is devoid of such information, although if they want to offer a comment in response to Virgin’s CEO then please do drop us a mail. In the meantime we’re still waiting for their build to start, although Virgin’s 1Gbps service will be live across the city by the end of 2019.