Virgin Media (VM) is believed to be mulling a plan to rent its fibre optic broadband network to rival broadband providers, it has been claimed, in a move that could dramatically alter the landscape of the UK’s broadband market.
According to a report from the Guardian, the broadband supplier has drawn up “secret plans to open up its cable network to rival telephone and broadband companies” in around 18 months time. This scheme is being considered, the newspaper claims, to both boost profits and pre-empt possible regulatory intervention intended to force VM to allow access to its network.
VM is believed to have invested heavily in its fibre optic network, which is capable of delivering broadband connection speeds of up to 50Mb. A rental scheme may mean it would be able to recoup the cost of construction far faster than if it remained the sole user.
Responding to developments, analysts have posited that the same business model used by BT for its Openreach division could also be employed by VM if it proceeds with the plan. BT Openreach was created in 2004 to administer rental of its network by ISPs after regulators acted to compel it to do so.
This would have serious implications for the broadband sector. One possible effect is its entry into the wholesale market could result in a fall in rental charges, as VM and BT cut prices in a bid to attract custom. In turn, this may result in cheap broadband packages for consumers as broadband providers pass on the savings they are likely to make.
However, the viability of VM's proposal is called into question by technological changes that Virgin may have to make. These would involve the broadband network being fitted with upgrades that would prepare them for use by third parties.
Mr Berkett recently stated that progress on the construction of the next generation broadband network is “on track”. The company also announced that 47,300 households have signed up for its high-speed broadband packages in the first quarter of this year.