A report this weekend suggested that Sky, TalkTalk, and Vodafone were in discussions to join Virgin Media (VMO2)’s burgeoning wholesale business
Virgin Media has made its wholesale ambitions clear for many years now, ultimately hoping to position itself as a major rival for Openreach on a national level. To achieve this would be no small feat, requiring a competitive offer that could lure away some of the UK’s largest ISPs from Openreach’s network, many of whom have used it for many years
For the most part, discussions surrounding Virgin Media’s potential wholesale offer were fairly muted during the company’s enormous merger with O2, first announced last year. Now that the deal has concluded, however, it seems that a wholesale launch is once again rising up the agenda, with media reporting this weekend that VMO2 is in discussion with various ISPs.
According to a report in the Sunday Telegraph, Sky is “closing in” on a deal with VMO2 for wholesale access to their network. Meanwhile, separate discussions are being held with TalkTalk and Vodafone, though it appears these talks are less advanced.
If VMO2 were to convince Sky to jump ship to their network, it would be an enormous win for the company, one that would have a huge impact on the wholesale dynamic of the UK as a whole. Sky is the UK’s largest ISP, with around 6.1 million broadband subscribers.
BT, however, appear unphased, with sources today telling the media that they expect Sky to remain a major wholesale partner for its full fibre network build.
Of course, Sky does not necessarily have to choose one or the other and could potentially use both VMO2 and Openreach’s network to various degrees.
The backdrop to these discussions, of course, is the pace at which both Openreach and VMO2 are expanding their fibre networks of late. VMO2 is in the process of upgrading their existing network to gigabit-capable speeds, in August reporting that they had upgraded half of their 15.5 million premises footprint to DOCSIS 3.1 technology. They expect to complete the upgrade for the rest of their network by the end of the year. In addition, they are set to add another 7 million homes to their fibre-to-the-premises (FTTP) over the next five years.
Openreach, meanwhile, has deployed FTTP to around 5.2 million premises so far, aiming to increase this to 25 million by December 2026. Couple this with Ofcom’s recent permission to launch their controversial Equinox offer – a wholesale deal aimed to promoting the uptake of FTTP services by giving ISPs up to 30% discounts ¬– and VMO2 will have it work cut out when it comes to competing in the wholesale market.
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