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9 April 2018

UK’s fiber market diversifies again with new Vodafone and Elite moves

The UK has become something of a hotbed of activity by alternative fiber providers, aiming to reduce the power of BT’s Openreach wholesale division. CityFibre is one of these companies, and scored a significant boost to its plans last year when it secured Vodafone as a key partner.

Vodafone, which has acquired wireline companies in markets like Germany and Spain, in order to move from mobile-only to quad play services, has more limited reach in its home market. It owns C&W Worldwide, but this is mainly focused on the enterprise, so CityFibre could provide an economical way to add fiber-to-the-premise (FttP) access, and small cell backhaul, to its portfolio.

CityFibre said it would start work on its latest fibre network, in the city of Peterborough, next month, with Vodafone due to launch services early next year. This will be the third midsized city location for the joint effort, which sees the MNO assuming the role of anchor tenant. The others are Milton Keynes and Aberdeen, though CityFibre’s own business started in Hull.

The aim of the partnership is to bring FttP to up to 5m homes and businesses in the UK by 2025, and they have committed to a joint £500m investment in the first phase of the project, which will target gigabit speeds for 1m premises by 2021. In Peterborough, CityFibre will invest about £30m to extend its existing fibre to almost all homes and businesses. As in all the targeted locations, Vodafone will guarantee to lease at least 20% of the lines and will have exclusive access during the build phase.

CEO Greg Mesch said: “Our network has delivered superior services, at a lower cost than BT Openreach. It has fuelled economic growth, innovation and inward investment and paved the way for us to bring full fiber to the entire city. Lessening dependence on BT Openreach and Virgin is not only good for Peterborough, its residents and businesses, it is critical for the UK as a whole.”

The alliance could help Vodafone build up a consumer quad play offering – and support backhaul for small cells – without the expense of buying a cable operator, as it has in Germany (where it acquired Kabel Deutschland) and other markets. There have been persistent rumors of a merger or joint venture between Vodafone and Liberty Global, owner of Virgin Media (the other main UK fiber provider), but that would entail regulatory scrutiny and complexities in execution.  Adding other partners to the CityFibre deal could fill the gap more simply.

For CityFibre, it will bring the means to accelerate its city-by-city roll-out and fund its planned expansion into consumer fiber – its current business, which will still be open to other customers, is focused on backhaul, fronthaul and city networks.

Meanwhile, another UK firm, Elite, plans to roll out 100,000 gigabit broadband connections in the UK, starting in London, using dark fiber. The Next-Gen Network will support the UK’s most cost effective 100Mbps and 1Gbps broadband services, claims the company.

“Our decision to expand our footprint nationwide, starting in London, is a result of understanding where the market is heading. With the increasing demand for high bandwidth connectivity, it became increasingly obvious that this could not be achieved using some of the third party carriers,” said CEO David Simmons. “We needed to be able to take control of the end-to-end delivery, avoiding backhaul capacity issues that limit the industry. By investing from the outset in the backhaul capacity, I am confident that Elite can deliver these high capacity services both now and in the future.”

Elite will connect its on-net exchanges with dark fiber, combined with DWDM technology, because this enables it to scale up more easily as backhaul bandwidth requirements rise.

“It has become apparent that lower bandwidth and unscalable fiber such as 1Gbps and 10Gbps point-to-points have historically been used to link exchanges. We have chosen to offer a completely scalable dark fiber service that isn’t restricted by the fiber itself,” said Elite.