Virgin Media / O2 announce major fibre upgrade

20 August 2021 Broadband

VM02 Mega-Merger

Virgin Media O2 recently announced a major network upgrade that will see up to 14.3 million premises with FTTP tech by the end of 2028. The announcement came in the first combined second-quarter financial results since the £31 billion mega-merger was approved by the Competition and Markets Authority (CMA) in May 2021.

Newly dubbed VMO2 plan to completely upgrade the current Hybrid Fibre Coax (HFX) network as part of what CEO Lutz Schülercalls “the next evolution of our network, building on the investment, firepower, and leadership we already have and ensuring we’re fibre fit for the future”.

Network Upgrades: DOCSIS 3.1, 4.0 & FTTP

VMO2 was already busy upgrading their fixed-line network with the latest DOCSIS 3.1 upgrade before they made the announcement about the FTTP fibre broadband rollout. The newly merged operator still expects to complete the DOCSIS 3.1 rollout by the end of the year.

D3.1 gigabit technology provides excellent download speeds but poor upload performances. Whereas, according to a news article on VMO2’s website, full FTTP “is capable of delivering symmetrical 10Gbps download and upload speeds and beyond”. The long-term effect of this will no doubt harm the competitiveness of HFC (cable) technology and is considered the major factor behind VMO2’s switch to full fibre and shareholders Liberty Global and Telefónica backing the decision.

Government’s Broadband Targets

Consensus between the upper echelons and shareholders has certainly got “Virgin Media O2 off to a flying start” as CEO Lutz Schülerput it at the beginning of his statement in the Q2 2021 report. VMO2 expansion of their network (Project Lightning) has switched to FTTP and already supplied 1.2 million premises with upgraded fibre broadband. If VMO2 continues their current pace they will attain symmetrical speeds of 1.1Gbps across their entire network by the end of the year. To put this in perspective, they will be four years ahead of the Government’s broadband targets.

The Government wants gigabit-broadband for at least 85% of UK premises by 2025. As part of that commitment, the Government has pledged £5 billion and added 1.8 million premises eligible to receive gigabit-speed internet. This will allow users to download HD movies in less than 30 seconds and prepare the UK for next-generation 8K quality video streaming technology. With VMO2 already setting the foundation for this technology, the removal of the HFC (cable) network is inevitable.

Cost of the Network-wide Full FTTP Upgrade

The cost of the estimated 7-year project is said to add a “modest increase” to VMO2’s £2 billion a year expenditure budget. Apparently, the upgrade rollout will be the UK’s most efficient as the company will use its fully-ducted network. The cost will be approximately £100.00 per premises plus customer installation costs.

Upgrades for the future DOCSIS 4 cable network is £60.00 per premise. However, VMO2 already announced that investments in the full fibre broadband FTTP upgrade will eliminate the need to spend money on future versions of DOCSIS. Especially when the latter will struggle to keep up with the demands of faster speeds.

VMO2 also reported in the Q2 2021 an addition of 36,000 new broadband subscribers, fixed-line customers increased by 22,000 to a total count of 5.7 million, and that more than 40% of their broadband customers also signed up to a mobile contract with them.