Virgin Media is to extend its cable network to an extra 4m homes and businesses in a significant challenge to BT.
US-owned Virgin Media, part of Europe’s largest cable network, announced on Friday it is planning to extend its reach from 12.6m premises to 17m – almost two-thirds of UK households.
Known as Project Lightning, the plan will take five years to complete, says the company, and is the biggest challenge so far to the virtual monopoly of BT’s network outside large cities.
Virgin, owned by Liberty Global, will invest an extra £3bn in the project, mainly financed through borrowing. It will create 6,000 jobs and apprenticeships in what the company claims is the single largest investment in digital infrastructure in the UK for more than a decade.
As BT ploughs billions into buying a mobile network and Premier League football rights, rivals are beginning to encroach on its broadband infrastructure dominance. Virgin’s build will concentrate on suburbs, and filling gaps in its coverage of towns and cities, rather than rural areas.
Sky and TalkTalk are piloting a superfast network that brings optic fibre all the way to the doorstep in York. It successful, they plan to extend the venture to the UK’s second-tier cities.
The move also comes as BT, Sky and TalkTalk have in recent months added mobile services to their existing offers of home phone, broadband and TV to compete on four fronts – a so-called “quad play” offering.
In a statement, Virgin said: “The UK is the world’s most internet-based major economy (Source: Ofcom). Broadband infrastructure, and the services offered over it, will be increasingly central to the country’s growth over the coming decades.”
The cash invested by Virgin tops the £2.5bn spent by BT on rolling out fibre to the street cabinet to two-thirds of UK premises, and its larger than is £700m budget for bringing superfast internet to rural premises via the BDUK project, which is being co-funded by local and central government.
BT’s fibre roll out, however, has benefitted rivals like TalkTalk which rent space on its network. Virgin does not open its cables to other broadband retailers.
The new digital investment could add £8bn of value to the UK economy and to consumers, according to analysis by economic consultancy Oxera.
The prime minister, David Cameron, said: “These 6,000 new jobs and apprenticeships will mean financial security and economic peace of mind for thousands more hardworking families across the country.
“Together with this government’s rollout of superfast broadband, which has now reached more than 2m UK homes and businesses, this additional private investment will create more opportunities for people and businesses, further boosting our digital economy.”
Households connecting to Virgin Media for the first time will get speeds of up to 152Mb, twice as fast as the best speeds available from BT, TalkTalk and Sky.
Network expansion will be prioritised according to demand from households and companies, with a focus on areas closest to Virgin Media’s existing network.
“Millions of homes and businesses will soon be able to benefit for the first time from broadband speeds at least twice as fast as those available from the other major providers,” said Virgin’s chief executive, Tom Mockridge. “Consumers and business owners who want to make the switch to better broadband speeds now have an alternative.”
The company is asking communities who want better connectivity to register their interest at virginmedia.com/cablemystreet.
Broadband expert Ewan Taylor-Gibson, from comparison site uSwitch.com, said: “Virgin Media’s hefty cash injection will have a marked impact on UK broadband infrastructure, benefiting consumers and creating jobs in the process. More competition and faster speeds can only be a good thing for Brits.
“Almost two-thirds of broadband users now consider themselves heavy or moderate internet users, so the need for superfast speeds is becoming all the more urgent.”
However, he sounded a note of warning about Virgin’s plans.
“The devil is in the detail. Virgin Media will focus its expansion in areas closest to its existing network, based on consumer and business demand. This could mean rural customers are knocked down the priority list if there aren’t enough residents in remote areas.”
