Virgin Media announces £3 billion broadband boost in bid to fight BT

Virgin Media and its owner Liberty Global have announced a five-year investment plan dubbed ‘Project Lightning’, involving a £3 billion boost to upgrade and extend the UK broadband provider’s internet infrastructure.

According to Virgin, the project is the biggest single investment in its history and claimed it will connect some four million more UK homes and businesses to broadband offering up to 152Mbps. The firm also said the plans include the creation of 6,000 new jobs, of which 1,000 will be apprenticeships.

Citing Ofcom as the information source, Virgin said the UK is the world’s most internet-based major economy, and claimed the £3 billion spend will translate into a combined £8 billion economic activity and consumer benefit. “Fast, reliable, cost-effective internet access is vital in giving British businesses a sharper digital edge,” Peter Kelly, Managing Director of Virgin Media Business said.

“Our multi-billion pound private investment means companies in more parts of the country will benefit from the best connectivity. With small firms alone contributing £378 billion to the economy, digital tools have the power to unlock growth, create jobs and generate wealth for Britain.”

Virgin said the four million households and businesses it will add by 2020 will take the total number of premises its broadband serves to almost 17 million. “Millions of homes and businesses will soon be able to benefit for the first time from broadband speeds at least twice as fast as those available from the other major providers,” Tom Mockridge, Virgin Media CEO said. “Consumers and business owners who want to make the switch to better broadband speeds now have an alternative; you can call on Virgin Media to ‘Cable My Street’.

“In virtually all of the areas we have identified for expansion, BT is the only option available right now. Its ageing copper telephony wires are not capable of the ultrafast connectivity that Virgin Media delivers. Soon we will offer unbeatable services to even more homes and businesses across the country.”

However, it is worth pointing out BT offers fibre broadband connection too. The telco also recently announced it plans to upgrade its network with a large-scale deployment of G.fast technology, which it claimed will enable speeds of up to 500Mbps within the next decade, and 200Mbps by 2020.

Another thing worth considering is that while Virgin’s broadband expansion programme is likely to benefit consumers and businesses alike in busier areas and locations close to Virgin’s existing networks, it may not be the same story for those in more rural locations.

“Virgin Media’s hefty cash injection will have a marked impact on UK broadband infrastructure, benefiting consumers and creating jobs in the process,” Ewan Taylor-Gibson, broadband expert at consumer comparison site uSwitch.com said. “More competition and faster speeds can only be a good thing for Brits. Almost two thirds (65%) of broadband users now consider themselves heavy or moderate internet users, so the need for super-fast speeds is becoming all the more urgent.”

“But the devil is in the detail. Virgin Media will focus its expansion in areas closest to its existing network, based on consumer and business demand. This could mean rural customers are knocked down the priority list if there aren’t enough residents in remote areas to convince Virgin to ‘Cable My Street’.

Virgin said its business offer is specifically tailored for small and medium companies to support their growth. As part of the new plans the firm unveiled a new proposition for start-ups in London where it will install managed internet access to shared-occupancy office buildings. Apparently this will also be extended across other parts of the UK later.

“Our next-generation fibre-rich networks reach 50 million households across Europe, enabling our customers to discover and experience the endless possibilities of the digital world,” Mike Fries, Liberty Global CEO said. “After a record operating performance, Project Lightning is a significant investment that demonstrates the confidence we have in Virgin Media and the UK as a place to do business.”

Even the UK Prime Minister David Cameron chipped in with the excitement over the investment plan, describing it as a “vote of confidence in our long-term economic plan to support business and create jobs by building a superfast nation backed by world-class infrastructure,” apparently without trying to steal Virgin’s thunder.

“These 6,000 new jobs and apprenticeships will mean financial security and economic peace of mind for thousands more hardworking families across the country. Together with this Government’s roll-out of superfast broadband which has now reached more than two million UK homes and businesses, this additional private investment will create more opportunities for people and businesses, further boosting our digital economy and helping secure a brighter future for Britain.”

In light of the recent UK M&A movement with BT’s pending acquisition of EE, and merger talks between O2 and Three it seems everyone is starting to sharpen their strategies. Earlier this week we saw Sky fork out a record £4.2 billion for the rights to air Premier League football games, a sharp increase of 83% from its existing contract, thus gaining the bulk of them over BT. It looks like Virgin is now also showing it will put up a fight to the ex-monopoly telco in the broadband sector.