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ISP Vodafone UK Extends FTTP Broadband with Openreach Deal

Monday, November 11th, 2019 (9:13 am) - Score 5,882

Mobile operator and ISP Vodafone UK has today moved to mix the on-going rollout of their new 1Gbps capable Fibre-to-the-Premises (FTTP) based “Gigafast Broadband” network with Cityfibre by striking a new commercial deal with Openreach (BT), which gives them access to the latter’s “full fibre” network too.

At present Vodafone’s Gigafast FTTP packages are only available via Cityfibre’s new network as part of an exclusivity deal, which remains in place until each city network build has completed. Cityfibre is currently in the process of investing £2.5bn to cover a “minimum” of 1 million homes and businesses in 12 initial cities and towns by the end of 2021 (Phase 1), which aims to reach 5 million premises across 37 cities and towns by the end of 2025 (here); so far they’ve completed 106,000 premises and are rapidly ramping-up their rollout.

By comparison Openreach (BT) aim to cover 4 million premises with FTTP by March 2021 and then 15 million by around 2025 (currently 1.8 million completed). However both networks have some overlap between each other, while their wholesale pricing and speed tiers are quite different (Cityfibre is symmetrical but Openreach FTTP is asymmetrical with slower uploads), which can make mixing different networks tedious for ISPs.

On the other hand Openreach has recently reduced their full fibre prices (here and here) and they’re preparing to offer a series of targeted discounts from early 2020 (here), which might help to address some of that imbalance between their network and rival alternative networks (altnets). Nevertheless, just creating an ordering system for multiple networks can be a slow and costly process for any ISP.

The challenges mentioned above may help to explain why today’s announcement will initially only include part of Openreach’s new FTTP network. From spring 2020, Vodafone will start making Vodafone Gigafast Broadband available to customers in Birmingham, Bristol and Liverpool via Openreach’s FTTP. At present Cityfibre’s rival FTTP is not building in any of those three, although Bristol is on their tentative future list.

The service will then “grow as Openreach expands its footprint and will be available to 500,000 premises in these locations by mid-2021 under phase one of this strategic agreement,” which is well below the 1.8 million premises that they can cover today. The agreement “includes the option for further phases that could extend coverage to other places.”

By mixing the two networks Vodafone can now say that their Gigafast Broadband is “currently live or planned in 15 cities or towns.” So far, Vodafone Gigafast Broadband has already gone live in Aberdeen, Bournemouth, Coventry, Huddersfield, Milton Keynes, Peterborough and Stirling via Cityfibre, with additional places to follow this year and next (e.g. Cityfibre will shortly go live in Cambridge, Edinburgh, Leeds, Northampton and Southend-on-Sea).

Nick Jeffery, Vodafone UK CEO, said:

“Vodafone is committed to a full fibre future and to creating the infrastructure Britain needs to compete and win in the digital era. This initiative with Openreach builds on our existing commitments with CityFibre and underlines our belief in the power of digital technology to connect people for a better future and unlock economic growth for the UK.”

Clive Selley, Openreach CEO, said:

“Our full fibre broadband network already covers more than 1.9 million premises in the UK, and Openreach engineers are building it to another home or business every 26 seconds. We’re keen to upgrade customers as quickly as possible to this new, ultrafast, future-proof platform, so we’re proud that Vodafone’s placing its confidence in Openreach to deliver a great broadband experience for their customers. We’re determined to be the partner of choice for all Communications Providers and we’ll do that by offering the best connectivity and service with the widest possible coverage throughout the country.”

The mixing of two competing full fibre networks – especially ones with some big differences – is a significant change in the market and one of the first deals of its kind from a major ISP, although Sky Broadband have also been openly talking about engaging with altnet providers (they’re currently Openreach dependent) and TalkTalk look set to mix their own FibreNation FTTP build with that of Openreach’s products in the future.

Vodafone are clearly hedging their bets a bit here, although they’re also being polite to Cityfibre by respecting the existing agreement and seemingly not taking a service from both in the same areas. We suspect this may change further down the road, depending upon how the market pans out and their exclusivity arrangements.

One big other question this raises concerns how Vodafone will approach the promotion of their Gigafast packages. At present they headline with Cityfibre’s cheap symmetric speed services and they won’t want to confuse consumers, which could result in certain packages only being shown after an availability check is run.

Interestingly the press release says all of this will complement Vodafone’s “availability of 5G in more places than anyone else, with 58 cities across the UK and the rest of Europe now live,” although they don’t mention any backhaul (capacity) agreement with Openreach; this may just be a general remark rather than a specific reference to the new deal.

One thing is certain, as the number of competing full fibre networks grows then so too will the desire for retail ISPs to make use of more than one of them. All of this could be further reinforced once Virgin Media (Liberty Networks) sets out their rumoured wholesale proposition, which could be announced in the near future. The UK fibre market is going through a very fundamental change.

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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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13 Responses
  1. Avatar NGA for all

    It would cost Vodafone very little to assist in taking orders in rural locations while assisting in industry wide demand aggregation in the final 3.5% to push the available monies to go further.

    • Avatar CarlT

      Cost Vodafone even less to strike deals to use existing and under construction networks, committing to certain levels of take-up only rather than shouldering some of the build cost.

      If you’re that interested in demand aggregation in that last 3.5% you fixate over go run a mailing and marketing campaign yourself.

  2. Avatar Roger_Gooner

    Do we have any update as to if/when Openreach will provide symmetrical speeds using XGS-PON?

  3. Avatar Matthew

    Eventually I imagine if CityFibre get to there 5 Million Openreach will have to transition to Symmetrical special if Virgin also transition that way. Is there any real reason openreach decided not to do symmetrical from the start on there FTTP rollout?

    • Avatar David

      It might be because the average consumer does not want to pay what it costs? I doubt it will be the same as say Gigacear or Hyperoptic. Other providers have a profit (I think) and they start at around £240 a month for 1000/1000 over BT. Cityfibre are not in my area but I have been told today that the ECC”s for my new line are “within Tariff” so don’t apply- which means I will only have to pay the costs, which are more than the ones Cityfibre can provider but only by about £50 a month – so for a 1GB symmetrical it’s going to be £590 a month. I do hope the likes of Voda and others roll out up this way – in the next town to the West 1GB is £199 a month over Cityfibre’s network – and this is where the threat to others will start from.

    • Avatar David

      I meant if you have ECC’s and you get supplied by Cityfibre there is about £50 a month off the monthly cost – all contracts are 3 years as it’s a leased line.

    • Avatar CarlT

      Other than commercial reasons quality is a major one. Even though it’s only 32 punters sharing the split having a single customer able to take 80% of the capacity is a bit dicey.

  4. Avatar Meadmodj

    Understandable as Vodafone can’t depend on just Cityfibre for roll-out timescales. If they do get a broadband agreement with VM then they will be able to choose between BT, VM or Altnet by postcode/wholesale cost for either Ultra and Giga. Tactically this has to be a winner for an early lead in coverage if they can achieve it.

    Consumers are going to have to get used to a post code lottery for what services are available (its already there) and going forward it is easy for Vodafone or Sky to set their systems accordingly. This includes mixing asymmetric/symmetric products.

    There are a number of factors that mean symmetric will remain more expensive. The reality is that retail down will remain 4 or 5 times higher than upload, upload to Internet costs ISPs money, providers will need to maximise the effectiveness of the shared distribution fibres (fibre tax liability long term), ISPs need to differentiate their business products and just because FTTP is advertised as giga it doesn’t mean the real ISP service provides is.

  5. Avatar CarlT

    Excellent.

    Vodafone are, wisely, maintaining close relationships with infrastructure builders of all varieties knowing they may end up owning a whack of infrastructure of their own and will at very least have wholesale access to it.

    Vodafone are, without question, the most forward thinking of the mass market, and are replicating the model that has brought them success elsewhere.

  6. Avatar Michael Sculthorpe

    Are there any plans for FTTP
    in Wales?

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