The cable operator assess options amid changing conditions in the UK broadband market.
Background: The UK cable operator Virgin Media, owned by Liberty Global, runs a network passing 14.9m homes. It currently reports to have 5.9m cable customers, and to serve 45k businesses. The company is investing £3bn in an upgrade (‘Project Lightning’) to reach 17m households, and is testing speeds far in excess of 1Gbps in some UK locations. So far, it has served retail customers directly.
The market is changing: This week, The Daily Telegraph reported that the company is planning to open up its cable network to wholesale access for the first time. This is likely to be due to the changing landscape of the UK fixed broadband market, where Openreach and other competitors (i.e. CityFibre, Hyperoptic, Gigaclear) are investing in FTTP and creating the conditions for vibrant network-based competition in the years to come. If the move went ahead, it would mark a strategy shift toward a business with lower revenue margins, but with potentially larger market shares. It would also put more competitive pressure on Openreach, in the areas where Virgin Media operates its network.
How this could play out: Virgin Media has not yet confirmed the plan, which could hamper Virgin Media’s core business. It is reported that the move could be limited to the areas of the Project Lightning upgrade, and to an exclusive agreement with Sky, whereby the latter would reciprocate by providing Virgin Media with wholesale access to some of its TV channels.
