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Virgin Media in talks with power firms to expand network

Subsidies not included

The smart choice: opportunity from uncertainty

Virgin Media plans to expand its cable network to up to a million homes in areas where BT doesn't think upgrading its network will be worthwhile - and the cable company says it won't need subsidies to do it.

It is in talks with power companies for access to their streetside poles, which are used to deliver electricity in many rural and semi-rural areas.

The discussions are sure to be encouraged by the coalition government, which has scrapped a £6 per year landline tax that would have subsidised fibre optics for the "final third" of the country, where BT cannot see a commercial case for upgrades.

At a conference in July the government will explore with industry how "superfast"* broadband can be expanded to cover the whole country by the end of the decade at minimal cost. Ministers have indicated they see partnerships of the type under discussion by Virgin Media as the way ahead.

Kevin Baughan, Virgin Media's director of technical strategy, said subsidies will be necessary for "superfast" broadband to reach all homes, but that they didn't figure in its plan to piggyback on the electricity infrastructure.

"This is about changing the fundamental economics of deploying fibre," he said.

The scheme is in its early stages. A small-scale technical trial is underway in Woolhampton, a village in Berkshire where fibre has been run to 25 homes from two poles installed by Virgin Media in a pub car park. The fibre runs all the way to the sides of houses, unlike in a standard UK cable deployment, where the light signal is converted to an electrical one at a streetside cabinet in order to run over a coaxial line into premises.

Jon James, Virgin Media's executive director of broadband, said the economics of expanding faster broadband into areas rejected by BT make sense. "For them it's not worth upgrading existing customers to slightly better service, but for us it's a new market where we know we'll get 30 to 40 per cent take up," he said.

Virgin Media's network currently covers 12.6 million homes, about half the country.

Competition in the broadband market is set to intensify in the next 12 months as BT's fibre-to-the-cabinet upgrade programme and marketing gathers pace. Virgin Media will launch its 100Mbit/s downstream product by the end of the year, in part to demonstrate the technical superiority of its last mile infrastructure. ®

*The government's catch-all term for the coming generation of fixed and mobile internet access technologies.

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