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Virgin Media could open up its cable network to its rivals for the first time, creating significant competition for Openreach in the wholesale market.
Cable broadband in the UK has long been positioned as a premium product due to its speed advantage over the copper and fibre to the cabinet (FTTC) services available from providers, such as BT, Sky and TalkTalk, that use the Openreach network.
The company is testing 8Gbps broadband in Cambridgeshire for example.
However, Openreach’s ongoing plans to build fibre to the premise (FTTP) have led Virgin Media’s parent company Liberty Global to conduct a review, according to The Daily Telegraph. FTTP will erode Virgin Media’s speed advantage and its key differentiator.
The newspaper says Liberty is debating whether it makes more sense to move into wholesale – a market that offers lower margins but also presents an opportunity for greater market share.
Broadband providers would welcome the extra competition and although Openreach’s coverage is far greater than that of Virgin Media, the £3 billion ‘Project Lightning’ project will see the cable network reach 17 million properties. Sky is reported to be interested in a wholesale agreement.
But the move could threaten Virgin Media’s core business, especially since rivals would be able to offer cheaper cable services. One suggestion is that Virgin could limit wholesale access to the ‘Project Lightning’ areas of the network, especially since expansion has been focussed in parts of the UK already served by Openreach.
That would protect Virgin’s core subscription base while also offering competition in Openreach areas.
In February it was reported that Virgin Media was considering a takeover bid for Hull-based telco KCOM.