1 Gbps for 15 million premises by end of 2021 Virgin Media declares
Today sees a big change to the UK broadband landscape as Gigabit broadband will be available to all the homes Virgin Media services with its current top speeds of 200, 350 or 500 Mbps (variation is because some areas don't sell top speed currently) with the plan being to complete the upgrade from DOCSIS 3.0 to DOCSIS 3.1 by the end of 2021. The first 1 million of the 15 million premises should be up and running by the end of 2021.
The question for 1 to 2% of people ready to chew their own arm off for this speed though will be the price, the existing top end package with 'average speeds' of 516 Mbps is £99/m when in the minimum term period and £139 at other times - though price is artificially high as for some reason Virgin Media require you to take their full cable TV line up too.
For those popping the champagne into the fridge to celebrate this announcement meaning the UK will be the top of the global speed charts we suggest waiting and just making some ice cubes for a nice glass of cold squash for now! Why? Because as things stand today it is only around 1 to 2% of Virgin Media customers who elect to buy the fastest speed, a great many are only on the slower 100 to 200 Mbps service not because they need the speed but because it came bundled with the TV package. It is possible we may see 'free' speed regrades just as used to happen some years ago but we can be 99.9999% certain that Virgin Media is not about to flatten its product range and give everyone the Gigabit package.
The reason why this Gigabit announcement is important is future proofing and Virgin Media facing up to the challenge that CityFibre is bringing to the table. The old duel between BT Consumer and Virgin Media is something that is well understood by both parties and Virgin Media can easily undercut any BT Consumer pricing hence why so many are often on legacy speed tiers due to price deals struck a long time ago. The roll-out of FTTP across massive chunks of exchange areas by Openreach will be a concern but it is the aggressive wholesale pricing that CityFibre can offer on its GPON FTTP product that will scare Virgin Media more we believe.
The BBC coverage of the announcement has Virgin Media suggesting its DOCSIS network once running over DOCSIS 3.1 could count towards the 100% full fibre target but this is only possible if Boris Johnson is willing to water down a pledge less than 24 hours after entering office. We warned that this might be a short cut taken earlier in July when talking with The Register. Another possible shortcut would be to use a weaker definition of premises passed, i.e. say addressable which means within 250 metres of a FTTP network and this is worth around 12 million premises today and the combined figure comes in at 70%-71% coverage if this lower grade definition is accepted.
Delivering the 100% full fibre target is not a slam dunk and while happy to be told we are being pessimistic we believe we are just being pragmatic and highlighting the change in scale of the level of work required. Something that Virgin Media recognises too.
The government needs to prioritise putting in place the right conditions to encourage and incentivise a faster buildout, that means making it much easier to build and looking at how it can make the investment case much more favourable to build faster.Virgin Media Chief Operating Officer Jeff Dodds
The sort of things that make the investment case better are favourable treatment of the fibre tax that exists via business rates, along with curbing the amount of amount of overbuilding that will take place, rationalising the way leave system to stop lots of money being spent in legal costs.
Back from the politics and onto some basic DOCSIS 3.1 news again, the roll-out should improve the situation where local residents in busy areas are fighting each other for capacity, for those with zero interest in the faster speeds they do not need to change anything since the existing cable modems should carry on working.
While the DOCSIS 3.1 upgrade will make the local network Gigabit capable the question remains about what will happen to the Virgin Media core network which has had a couple of blips described as losing 1-2% of capacity but were very noticeable. This of course is a question for all the providers pushing towards Gigabit products now, i.e. giving Gigabit to the consumer means that any weakness in your core network and links to the outside world will become a lot more visible - though for the majority of customers so long as the HD and 4K streaming video CDN (cache) inside the network continues to deliver many may not notice.