Service provider Vodafone and fiber to the premises (FTTP) network builder and operator CityFibre have signed an agreement that will see Vodafone lease capacity on CibyFibre's upcoming FTTP network expansion project. The deal could be worth more than £500 million over 20 years.
CityFibre has announced a project that aims to reach 1 million homes in the UK with an open access fiber-optic broadband network by 2021 (see "CityFibre plans to raise £200 million for FTTH projects, acquisition"). The deal with Vodafone contains provisions for the two parties to extend the agreement to expand coverage to another 4 million homes and businesses by 2025. The FTTP deployment is expected to begin in the first half of 2018. Marketing of services is expected to begin in the middle of 2018, with the first customers connected late in that year.
Vodafone will enjoy a period of exclusivity to market its services on the new FTTP infrastructure "predominantly during the build phase of each city network," the companies say. The contract calls for Vodafone to make a minimum volume-based commitment for 10 years, which increases over the period to 20% of the initial 1 million premises the build out aims to reach. The £500 million contract value estimate assumes that the 10-year 20% minimum volume commitment is maintained throughout the subsequent 10 years.
The deal provides Vodafone with access to the new fiber infrastructure for less money and with better service conditions than what BT would charge via its Openreach business unit for comparable access to its copper telephone line broadband network, the companies claim in a press release. BT competitors have been critical of the access Openreach provides to BT's infrastructure; UK regulator Ofcom has ordered Openreach to separate from BT, in part to address such criticisms (see "Openreach to separate from BT"). The deal with CityFibre represents a lost opportunity for Openreach.
Vodafone is already a CityFibre customer, having leased access to existing FTTP infrastructure (see "Vodafone taps CityFibre for fiber-optic network link"). CityFibre runs open access FTTP networks in several UK markets (see, for example, "Sky, TalkTalk, CityFibre partner for 1-Gbps FTTH in York" and "CityFibre plans gigabit FTTP services in Glasgow"). It says it has major metro duct and fiber footprints in 42 cities across the UK as well as a national long distance network. CityFibre uses the fiber network footprint to offer active and dark fiber services.
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