{"id":37319,"date":"2024-02-24T00:01:33","date_gmt":"2024-02-24T00:01:33","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=37319"},"modified":"2024-02-23T16:31:46","modified_gmt":"2024-02-23T16:31:46","slug":"broadband-isps-react-to-virgin-media-o2-uk-going-wholesale","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2024\/02\/broadband-isps-react-to-virgin-media-o2-uk-going-wholesale.html","title":{"rendered":"Broadband ISPs React to Virgin Media O2 UK Going Wholesale"},"content":{"rendered":"

The first retail broadband ISPs have begun to give their reactions to Virgin Media<\/a>’s recent change of strategy (here<\/a>), which will see them open up their existing fixed line network to wholesale via a new business (NetCo). Most internet providers have welcomed the move, but some are sceptical of NetCo’s ability to match Openreach<\/a> (BT<\/a>).<\/p>\n

At present Virgin Media<\/a>’s existing gigabit-capable network covers a shade over 16 million UK premises via a mix of different fixed line technologies, albeit primarily Hybrid Fibre Coax<\/strong> (HFC), followed by Fibre-to-the-Premises<\/strong> (FTTP<\/a>) lines using Radio Frequency over Glass (RFoG) and some FTTP<\/a> via XGS-PON. The operator is also working to upgrade their entire HFC network to FTTP<\/a> (XGS-PON) by 2028.<\/p>\n

However, the current network is closed, which means that only Virgin Media<\/a> can sell broadband packages over it. Suffice to say that the recent decision to open that network up to wholesale is a significant, albeit long-expected (they’ve been talking about it in the open for years), development and one that could potentially give Openreach<\/a> a major new competitor to worry about.<\/p>\n

Put into a wider context. Once all of the planned builds and upgrades by the separate nexfibre<\/a> (they’re separate but share the same parentage) and NetCo networks have completed, the combined FTTP coverage could reach up to 23 million premises (c.75% of the UK), which is only a little shy of the 25 million that Openreach<\/a> expects to reach by December 2026.<\/p>\n

What does the industry think<\/span><\/strong><\/h3>\n

ISPreview has spent the last week canvassing opinion on the development, including from various dedicated retail ISPs and a few rival network operators – both on and off the record. Overall, the internet providers we spoke with were broadly positive about the development and were planning to seek more information, although for most it’s still a game of “wait and see<\/em>“, until the new NetCo goes live.<\/p>\n

In the meantime, some of the respondents held a question mark over NetCo’s ability to compete with the likes of CityFibre<\/a> and Openreach, not least because the latter is obligated by regulation to treat all ISPs fairly, keep to specific performance standards and not to preference its parent (BT<\/a>).<\/p>\n

By comparison, NetCo is under no such obligation and will also need to be careful when it comes to signing exclusive agreements, so as not to create too much division on product and price between partners. Pricing is also, more broadly, another area of uncertainly for some ISPs, particularly since Virgin Media tends to lean more toward the premium end, which could struggle if that translates to NetCo’s wholesale products (AltNets are particularly aggressive on price).<\/p>\n

Some providers also noted that Virgin Media hasn’t run a wholesale network before, at least not on the consumer side (different market from their business \/ Ethernet wholesale solutions), and questioned whether NetCo can be truly competitive without the risk of cannibalising Virgin Media’s own base.<\/p>\n

Finally, the odd provider also raised a few technical questions over how NetCo will manage the division, setup and availability of products on a network that is still split between technologies with different capabilities – one that is also in the middle of a long transition (HFC to FTTP). But this may not be a million miles from how Openreach handles FTTC<\/a> vs FTTP etc.<\/p>\n

The key takeaway is that ISPs currently have a lot of questions and not a lot of answers, but we did still detect a clear appetite to engage with the operator, which suggests that a strong initial interest does exist. Sadly, not all of those we engaged with wanted to comment on the record (e.g. TalkTalk<\/a>, perhaps for obvious reasons<\/a>), while a few others (e.g. Sky Broadband<\/a> and BT<\/a>) didn’t respond at all.<\/p>\n

Alan Stephenson-Brown, CEO at Evolve Business Group, said:<\/strong><\/p>\n

“At Evolve we welcome the news that Virgin Media O2<\/a> will open its fibre broadband network to other internet providers. As a new nationwide provider, it will challenge the dominance of BT-owned Openreach, which currently connects 99% of all homes and businesses across the country. That can only be a good thing for UK businesses.<\/p>\n

Currently, all broadband providers rely on the Openreach network to connect customers. As such, these suppliers are limited to the top speeds provided by Openreach cables in that area.<\/p>\n

By opening its network to other brands for the first time, Virgin Media is paving the way for more true alternatives for broadband providers who want to unlock faster speeds in parts of the UK that have yet to be upgraded by Openreach.<\/p>\n

Furthermore, going forward, any Openreach rival stands to benefit from the second wave of Project Gigabit contracts, which are expected from 2025 to 2030, in a bid to expand fast broadband into tough-to-reach parts of the country where no Gigabit-capable internet options exist. In turn, businesses will be better able to fulfil the connectivity targets that we know are a priority for them.”<\/p><\/blockquote>\n

In fairness, Evolve seems to be ignoring about the sizeable group of alternative networks that exist (often in the same areas as Openreach), many of which are open to wholesale and some of which even have significant national coverage (e.g. CityFibre<\/a>).<\/p>\n

David Barber, Strategy Director at Zen Internet<\/a>, said:<\/strong><\/p>\n

\u201cWhile VMO2 has the advantage of scale and brand, there are other factors we would need to consider when assessing any potential relationship. These are similar to when we look at any altnet and primarily encompass footprint, service, and commercials, with true ambition and commitment to wholesale a crucial consideration.\u201d<\/p><\/blockquote>\n

A spokesperson for Vodafone<\/a> UK said:<\/strong><\/p>\n

“Vodafone<\/a> is keen to see a competitive and sustainable wholesale fibre market develop that will help to deliver high quality, affordable fibre for customers. We also encourage the setting of quality thresholds that all fibre networks need to be above.”<\/p><\/blockquote>\n

A spokesperson for iDNET<\/a> said:<\/strong><\/p>\n

“We\u2019re encouraged by this announcement as we\u2019re keen to partner with as many Alt-nets as possible. Having a choice of carriers to offer to our customers brings benefits to everyone. Virgin will need to be competitively priced compared to BT Wholesale and have robust provisioning and fault handling processes, preferably available via an API that we can integrate with.”<\/p><\/blockquote>\n

An Openreach spokesperson said:<\/strong><\/p>\n

\u201cWe welcome competition as it\u2019s great for customers and it\u2019s what Openreach was established to enable. We\u2019re proud to be investing billions of pounds to upgrade the UK\u2019s digital infrastructure and, whilst we\u2019re building further and faster than anyone else, we\u2019re also committed to supporting others who use our ducts and poles to build their own networks. We\u2019re confident that the unrivalled quality and breadth of our network, as well as the skill of our teams and the strength of our relationships with customers, will see us continue to be successful and deliver a bright full fibre future for the UK.\u201d<\/p><\/blockquote>\n

A spokesperson for Andrews & Arnold (AAISP) said:<\/strong><\/p>\n

“[We] see Virgin Media as possibly becoming something akin to the biggest Alt-Net out there. Their footprint size is extremely appealing to A&A, so we are hopeful that technically and commercially it is viable.<\/p>\n

Also, there are a huge number of addresses which are served by both Virgin Media and Openreach infrastructure, so we would be able to offer true carrier-resilient fast connectivity to customers in those addresses, if we do agree a deal with NetCo for wholesale services.”<\/p><\/blockquote>\n

A couple of ISPs said they were also unclear on when NetCo would actually launch, although a related slide for the plan specifically pointed to this occurring during the H1 2025 period. Suffice to say, it’ll be at least a year before they actually press the button and by then they’ll have managed to upgrade HFC areas covering several million lines to 10Gbps capable FTTP (XGS-PON).<\/p>\n","protected":false},"excerpt":{"rendered":"

The first retail broadband ISPs have begun to give their reactions to Virgin Media’s recent change of strategy (here), which will see them open up their existing fixed line network to wholesale via a new business (NetCo). Most internet providers have welcomed the move, but some are sceptical of NetCo’s ability to match Openreach (BT).<\/p>\n","protected":false},"author":1,"featured_media":28790,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[419,56,32,475],"class_list":["post-37319","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-docsis3-1","tag-fttp","tag-o2","tag-virgin-media"],"share_on_mastodon":{"url":"https:\/\/mastodon.social\/@ispreview\/111983525947566247","error":""},"yoast_head":"\nBroadband ISPs React to Virgin Media O2 UK Going Wholesale - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The first retail broadband ISPs have begun to give their reactions to Virgin Media's recent change of strategy (here), which will see them open up their\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2024\/02\/broadband-isps-react-to-virgin-media-o2-uk-going-wholesale.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Broadband ISPs React to Virgin Media O2 UK Going Wholesale - 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