Update - 15:25
Virgin have confirmed this afternoon that they have no "secret plans", as alluded by the Guardian, and in fact no plans at all to unbundle their broadband network, making it available on a wholesale basis, as they plan to keep focus on their current high speed broadband offerings.
Virgin are looking at opening up their broadband network to other providers in a move that could place them as a competitor to BT in the wholesale market. This would allow other service providers to sell the underlying Virgin products such as their 50Mbps broadband along with services such as telephone lines and television products.
Although the move has been mooted in industry circles for a while, the news in the Guardian yesterday indicates that Virgin may have this up and running within 18 months. One possible reason for the move is perhaps to preempt Ofcom forcing unbundling, similar to how BT were forced to open up their exchanges to competitors several years ago.
Whilst Virgin do not have the nationwide coverage that BT do (Virgin cover around 57% of homes), they do have a valuable fibre/coax based network which can help drive take up of faster broadband services. BT's competitive fibre to the cabinet (FTTC) service is expected to cover around 40% of homes by 2012, but will probably only offer speeds up to 40Mbps. In contrast, Virgin already offer 50Mbps now and are able to upgrade this to 100Mbps when there is demand. This puts Virgin a large step ahead of BT and will definitely help them draw in other ISPs who will want to be offering the fastest service possible to help keep their customers onboard.
This is not to say that BT will be displaced from their role in providing the majority of broadband connections. Virgin don't have plans to build out their network to a larger area, so the 57% coverage is unlikely to change. What may happen is that this could drive down wholesale prices of broadband as BT try to ensure that service providers stay with their wholesale service. It could also induce a larger disparity in prices between the areas that have Virgin services available and those that don't, as with BT not having competition in some areas, prices could remain stagnant.