All aboard? Network Rail seeks £1bn fibre co-investment

Network Rail is seeking a £1 billion co-investment from the private sector in order to upgrade its connectivity infrastructure. 

 

The national railway operator currently uses around 16,000km of data cables that run alongside the rails to support signalling and CCTV, as well as internet services for onboard the trains and at stations. As customer data demands increase, all of this infrastructure is due to be upgraded to enable better performance and safety benefits. 

 

While state-of-the-art fibre connectivity is, of course, the natural choice here, an upgrade to fibre is expensive and would leave a surplus of capacity based on Network Rail’s current demand. Herein lies the opportunity for investors; in exchange for co-investment, the railway company will allow potential investors to make use of the spare capacity on their network. 

 

Exactly how much capacity would be available for an investor to commercialise is unclear at this point, but the idea will certainly be appealing to operators. With a railway network running throughout the UK, Network Rail notes that any co-investor will have the benefit of a wide geographic reach, especially in rural areas, meaning a deal could potentially contribute to the government’s rural broadband targets.

 

For the rail company itself, the co-investment will leave them less reliant on government subsidies and should mean that the costs of the upgrade are not passed on to customers. As part of the process, Network Rail is set to sell off its existing copper infrastructure, in a move that will hopefully reduce the company’s roughly £50 billion in debt.

 

“Our telecoms infrastructure requires an upgrade if we are to meet the growing connectivity needs of passengers and the railway itself – particularly to make sure our fibre capacity can handle more data, at greater speed, more reliably,” said Andrew Haines, Network Rail’s chief executive. “This proposal makes good business sense for all parties. We get a cutting-edge, future-proof telecoms infrastructure; the investor gets a great business opportunity; train passengers in Britain get an improved service for years to come; and the taxpayer saves a significant amount of money.”

 

Network Rail hopes to find a “preferred bidder” before the end of the year. Exactly who this might be is currently unclear and will likely see various operators like BT and Virgin Media checking their deployment plans to see just how beneficial the railway network’s connectivity could be.