Virgin Media O2, a 50%/50% joint venture between Liberty Global and Telefónica, today announced that its ‘gigabit network’, which leverages hybrid fiber-coaxial (HFC) infrastructure, using DOCSIS 3.1 technology, now passes 10+ million homes across the UK. Through this HFC network, Virgin Media O2 provides average download speeds of 1,130 megabits per second but only offers average upload speeds of 52 megabits per second. Longer-term, Virgin Media O2 has more ambitious plans to upgrade its entire network to superior fiber-to-the-premises (FTTP) infrastructure.
Hybrid Fiber-Coaxial (HFC) – Virgin Media O2
Virgin Media O2 has added an incremental 1.7 million homes to its gigabit network in the cities of Blackpool, Cambridge, Leicester, Nottingham, Oxford, and Swindon, amongst others.
Presently, Virgin Media O2 offers speeds of 1 gigabit per second to 10+ million homes, equivalent to 2/3rds of its UK network. Furthermore, the company will upgrade its entire footprint of 15.5 million homes to HFC, delivering gigabit speeds by year-end 2021.
However, Virgin Media O2’s network upgrade via hybrid fiber-coaxial (HFC) infrastructure, using DOCSIS 3.1 technology, remains an interim step to the company’s long-term plan to offer a full fiber-to-the-premises (FTTP) network.
Fiber-to-the-Premises (FTTP) – Virgin Media O2
In July 2021, Virgin Media O2 announced its intention to upgrade its entire hybrid fiber-coaxial (HFC) network to fiber-to-the-premises (FTTP) by year-end 2028.
Presently, Virgin Media O2 has 1.2 million passings with FTTP, equivalent to 7.7% of its 15.5 million total homes passed. Therefore, the company will upgrade the remaining 14.3 million of its passings with FTTP infrastructure.
Virgin Media O2 anticipates that its upgrade cost per premise passed (CPP) with fiber will be ~£100. Indeed, this implies that the company’s incremental fiber-to-the-premises (FTTP) upgrade cost will amount to ~£1.4bn through 2028. Over the 7-year upgrade period, Virgin’s fiber build-out cost implies an outlay of ~£200m annually.
Notably, Virgin Media O2 benefits from a low cost per premise passed (CPP) with fiber. This is because in many urban markets the company already utilizes fiber for its backbone network and backhaul purposes. Furthermore, the company has access to its own underground ducting, which results in less digging to deploy fiber. Indeed, the company notes that digging is “the most expensive part” of fiber deployment.
In comparison, Virgin Media O2 states that it would cost ~£60 per premise for the company to upgrade to a full DOCSIS 4.0 HFC network.
Fiber vs. Hybrid Fiber-Coaxial (HFC)
Virgin Media O2 highlights a number of points of rationale for upgrading its network to fiber-to-the-premises (FTTP) instead of hybrid fiber-coaxial (HFC) infrastructure, using DOCSIS 4.0 technology.
- Symmetrical: fiber infrastructure is capable of delivering speeds of 1 gigabit per second for both download and upload. Moreover, fiber has the potential, with further upgrades, to offer speeds of up to 10 gigabits per second
- Operating Expenses: fiber delivers long-term operating expense efficiencies relating to energy usage and network maintenance
- Wholesale: arrangements as a wholesale provider are simpler and more seamless using fiber, relative to HFC networks
- Investors: FTTP / FTTH joint ventures have recently been prevalent amongst large financial sponsors both in the UK and globally. To this end, according to reports from El Confidencial, Telefónica has engaged investment banks Barclays and LionTree to identify capital partners willing to support Virgin Media O2’s FTTP roll-out
Competitors – UK Fiber-to-the-Premises (FTTP)
Virgin Media O2’s two key competitors rolling-out fiber-to-the-premises (FTTP) nationally in the UK are BT Group (Openreach) and CityFibre.
BT Group (Openreach)
BT Group is building fiber-to-the-premises (FTTP), through Openreach, to 25 million homes and businesses across the UK by December 2026.
CityFibre intends for its fiber-to-the-premises (FTTP) network to pass 8 million homes and 800k businesses by year-end 2025.