MUNICH -- Gigibit Europe -- Fiber network investor CityFibre says the UK needs to avoid over-reliance on fixed-line incumbent BT if its nascent gigabit market is to flourish in the years ahead.
CityFibre is keen to establish itself as an infrastructure rival to BT and is currently building fiber networks in a number of UK cities and towns.
The operator -- which is currently involved in eight gigabit projects but aims to increase this number to 100 over the next decade -- has been a fierce critic of the broadband situation in the UK, where BT Group plc (NYSE: BT; London: BTA) remains the only infrastructure player with a nationwide presence.
Speaking at Light Reading's Gigabit Europe event in Munich earlier Tuesday, Mark Collins, CityFibre's director of strategy and public affairs, said that infrastructure competition is needed if the UK is to make improvements to the availability and penetration of high-speed broadband services.
"The UK is not even on the league table for fiber-connected premises in Europe," he said. "Often it is the challenger networks that bring real choice and competition and can shake up the status quo quite a bit."
Unlike BT, CityFibre does not provide its own retail services, instead offering dark fiber infrastructure on which retail partners can launch their own broadband products.
The operator seeks to minimize the risks associated with investing in fiber infrastructure by securing commitments from customers before it starts to roll out its networks.
In Edinburgh, for instance, its ISP partner Commsworld has been able to secure commitments from 200 business customers and 300 council sites, representing a contract value of about £20 million (US$30.3 million) against a capital expenditure budget of between £10 million ($15.2 million) and £15 million ($22.7 million).
Although it caters heavily to enterprise and government customers in many of its existing Gigabit Cities, CityFibre's highest-profile deployment is a consumer-oriented joint venture with Sky and TalkTalk -- the UK's second- and fourth-biggest broadband operators respectively -- in the city of York.
The companies are rolling out an FTTH network to some 20,000 premises and hoping to lure customers from BT by offering higher-speed services at a lower cost.
In York, TalkTalk is advertising a 900Mbit/s service for a monthly fee of £21.70 ($32.90), undercutting the £25.20 ($38.20) it charges customers using the 7.3Mbit/s service it provides over BT's network. (See TalkTalk Unveils Cut-Price Gigabit Service.)
"The feedback from consumer service providers is that customers won't migrate if costs are higher so you need to price at a level that is competitive with the incumbent's copper pricing," said Collins.
The rollout could be replicated in other cities and towns up and down the country, with Sky and TalkTalk eager to wean themselves off a wholesale relationship with BT.
Broadband players that provide services over BT's network have been sounding increasingly unhappy about their dealings with the former state-owned monopoly, and calls for regulatory authority Ofcom to mandate the "structural separation" of BT -- splitting its access network business from its retail arm -- are growing louder. (See Split BT to Lessen Regulation, Says CityFibre.)
CityFibre also appears to have been troubled by recent regulatory moves aimed at forcing BT to provide dark fiber services to other companies. (See Eurobites: Nokia Names the 5G Date.)
It has urged Ofcom not to set a price ceiling for dark fiber access to BT's network, arguing this would drive down market rates and undermine the infrastructure investments it is making. (See BT Kicks Up Stink Over Dark Fiber Proposals.)
Despite the efforts of CityFibre and other infrastructure investors, including Gigaclear and Hyperoptic , Graham Finnie, Heavy Reading's analyst-at-large, remains relatively pessimistic about the gigabit outlook in the UK market. (See Gigabit Broadband 'Fragmented' in Europe, UK's Gigaclear Raises $46M for Rural Gigabit and Hyperoptic Takes Gigabit to Glasgow.)
According to Finnie's latest forecasts, FTTH penetration in the UK will have risen to just 1.7% by 2019, putting it behind most other countries in the region.
In Sweden, the leading country in this regard, penetration is set to reach 49.2% by 2019, says Finnie.
— Iain Morris, , News Editor, Light Reading