Connect with us

International Circuit

Virgin Media O2 reportedly in talks with UK ISPs

A weekend report has claimed that several UK ISPs, including Sky Broadband, TalkTalk and Vodafone, are still in discussions to join Virgin Media’s (VMO2) long-awaited plans to launch a wholesale product, which could act as a direct competitor to Openreach’s (BT) national network.

According to The Sunday Telegraph (paywall), Sky (Comcast) are said to be “closing in” on such a deal and related investment, while the discussions with TalkTalk and Vodafone seem more tentative. None of this will be particularly new to readers of as we’ve leaked details of it before, although VM’s wholesale plans recently took somewhat of a protracted backseat due to the £31bn merger with mobile giant O2, but now the talks are back on.

The CEO of VMO2, Lutz Schueler, similarly confirmed last month (here) that they were still developing a wholesale solution for rival ISPs to access their fixed line broadband network, but he also added that they were “in no hurry” to strike any deals (translation – they haven’t yet managed to finalise any deals).

Going wholesale is a key part of VM’s future plan, but it ideally needs support from a major player (other than Virgin Media itself). Sky, which is still the market’s second-largest residential broadband ISP (and one without its own physical network infrastructure), would is thus a key target. Sky has also made no secret of their desire to work with alternative networks, but we note that they’ve yet to strike a deal to use CityFibre’s network (TalkTalk, Vodafone and others have already done this).

At present, it’s still unclear precisely what structure VMO2 will adopt for their wholesale solution and future rollout. For example, they may provide access to their entire network (mostly Hybrid Fibre Coax), or only their more recent Fibre-to-the-Premises (FTTP) estate. Equally, it’s unclear whether all ISPs would be offered roughly the same products (like on Openreach’s platform), or if they’d take a more restrictive approach (less attractive to smaller ISPs).

In any case, Virgin Media going wholesale would still represent a significant shift in the market and, in one fell swoop, could present Openreach (BT) with a major national competitor at the infrastructure level. All of this has the potential to significantly change the competitive market and may eventually require Ofcom to review their regulatory approach, depending upon the model and rollout adopted by VMO2.

Moving into wholesale would also help to support VMO2’s plan to upgrade their entire fixed line network – c.14.3 million premises in existing Hybrid Fibre Coax areas – to FTTP by the end of 2028 (here). On top of that they’ve previously spoken of a future “ambition” to expand their latest FTTP network to reach an extra 7 million homes over the next 4-5 years, although we haven’t had an update on that for a while.

By comparison, Openreach aim to make their own FTTP network available to 25 million premises by December 2026 (currently 5.2 million premises passed and rising rapidly), although VMO2’s HFC network still holds a sizeable gigabit-capable coverage advantage, but that gap is closing – VMO2’s aforementioned upgrade plan is partly a response to rising FTTP competition.

Openreach will also be hoping that their new FTTP discounts scheme (here), which was just given the nod by Ofcom (despite a fair bit of opposition), will be enough to help them to stay competitive with whatever VMO2 may offer at wholesale.

On the consumer front, it’s important to understand that a VMO2 wholesale product would NOT be the same as Virgin Media offer to homes via their own retail products. For example, we’re likely to see more flexibility on router choices, package speeds and other network features. Some quality of service aspects may also diverge, but again this all depends upon VMO2’s approach and how ISPs manage it. But for now, the wait continues. ISPreview

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!