Virgin Media O2 will open its fibre broadband network, which offers top speeds of 1,000Mbps to almost 16.2 million homes across the UK, to other internet providers for the first time.
The new nationwide provider will challenge the dominance of BT-owned Openreach, which connects 99% of all homes and businesses across the country. It comes days after Openreach was branded a "typical monopoly" and lambasted for insufficient investment in the network by another broadband boss.
Broadband providers like TalkTalk, Sky, Plusnet, EE, and Shell Energy Broadband all rely on the Openreach network to connect customers. As such, these suppliers are all limited to the top speeds provided by Openreach cables in that area. The BT-owned brand is currently spending £15 billion to connect 26 million homes to its full-fibre broadband by December 2026.
By opening its network to other brands for the first time, Virgin Media will offer a true alternative for broadband providers who want to unlock faster speeds in parts of the UK that haven’t yet been upgraded by Openreach. It builds on a deal struck in October 2023 that saw Sky switch to using Virgin Media cables for its broadband in Ireland.
Virgin Media O2 will create an entirely new company that will compete head-to-head with Openreach. It will sit within Virgin Media O2, but as a subsidiary consisting of its cable and fibre assets, purely focused on its fixed network – which includes areas such as broadband.
However, other parts of the Virgin Media O2 business, including its broadband and paid-TV options for customers and O2 mobile network will be unchanged by the changes.
The announcement from Virgin Media O2 comes too late for the company to benefit from the initial wave of lucrative Project Gigabit contracts from the UK Government – a £5 billion plan to bolster British broadband speeds so that 85% of homes have access to gigabit speeds by 2025.
The average UK broadband currently sits at 69Mbps, whereas gigabit-capable connections can offer speeds as high as 1,000Mbps. That’s 14x faster and will let you download files in seconds, make buffer-free video calls, stream video from the cloud with a hiccup, and more.
Virgin Media’s Openreach rival could benefit from the second wave of Project Gigabit contracts, which are expected from 2025 to 2030, in a bid to expand fast broadband into tough-to-reach parts of the country where no Gigabit-capable internet options exist.
Virgin Media O2 Chief Executive Lutz Schuler said: “This is a logical evolution of our fibre strategy that creates a clear, focused and scaled network entity within the Virgin Media O2 family which underpins our shift to a fully fibre network and reinforces our position as the leading challenger to Openreach in the market.
“Working closely with our shareholders, this network business will provide a platform for potential altnet consolidation and wholesale opportunities in future, offering widescale network choice for other providers, as well as giving financing optionality. While nothing changes today work is well under way and you’ll hear more from us later in the year.”
Virgin Media recently announced plans to work alongside a full-fibre broadband start-up, Nexfibre, to unlock download speeds of 2,000Mbps for customers in certain parts of Glasgow, London, Belfast, and Cardiff. Nexfibre is one of many so-called Alt-Nets that will build a new broadband infrastructure separate from industry heavyweights like Openreach and Virgin Media.
Industry expert and analyst Kester Mann, from CCS Insight, said: “Virgin Media O2’s plans to move into the fixed-line wholesale market by offering access to its fibre and cable networks to other providers represents a direct challenge to BT’s Openreach unit.
“Creating a new network company with a dedicated team could enable Virgin Media O2 to pursue merger and acquisition opportunities in the fixed-line broadband market.With dozens of alternative providers, the UK is ripe for consolidation and such a move would bring Virgin Media O2 crucial scale benefits.
Then-Prime Minister Boris Johnson tours an Openreach facility to learn about the broadband infrastructure network across the UK, which eventually led to the announcement of Project Gigabit
GETTY IMAGES“Attention will now turn to which providers would consider signing up with the new entity, how it could be regulated and whether there will be any response from Openreach. The move should be considered as a positive for UK broadband customers as it creates fresh opportunities for new and existing service providers and long overdue competition to Openreach.”
Virgin Media O2’s new nationwide wholesale broadband network is not expected to launch until the first half of next year, so it could be a while before we see broadband suppliers start to switch allegiance away from Openreach.
An Openreach spokesperson said: “We welcome competition as it’s great for customers and it’s what Openreach was established to enable. We’re proud to be investing billions of pounds to upgrade the UK’s digital infrastructure and, whilst we’re building further and faster than anyone else, we’re also committed to supporting others who use our ducts and poles to build their own networks.
“We’re confident that the unrivalled quality and breadth of our network, as well as the skill of our teams and the strength of our relationships with customers, will see us continue to be successful and deliver a bright full fibre future for the UK.”
Additional Reporting By Martyn Landi, PA Technology Correspondent
