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How the U.K.’s new wholesale fixed broadband network could change the user experience

Giulio Sinibaldi

In February 2024, Virgin Media O2 (VMO2), and its shareholders (Liberty Global and Telefónica) sent shockwaves through the U.K.’s fixed broadband market with the news that they are planning to create a wholesale competitor to BT’s Openreach. The new entity (NetCo) will consist of VMO2’s cable and network fibre assets, covering around 16.2 million premises in the UK with plans to upgrade all the premises to FTTH in the next few years.

In this analysis, we compare the fixed broadband experience of our VMO2 users against those users on the major Openreach tenant ISPs that aren’t owned by BT — given that these ISPs will have the option of choosing from multiple wholesale service providers that cover a large share of their customer base.

Key Findings:

  • The VMO2 network’s much smaller footprint compared to that of Openreach’s implies that NetCo will — at least initially — only be able to compete for wholesale ISP tenants in a limited capacity, with a focus on urban and suburban areas.
  • However, within VMO2’s footprint, our VMO2 users on average have a better fixed broadband experience than those on the major ISPs that are Openreach tenants.
  • The majority of our Vodafone, Sky and TalkTalk users in VMO2’s footprint are in the two slowest maximum download speed brackets. We estimate that up to four million subscribers in these brackets might be covered by the upcoming Netco wholesale network or nexfibre. A small majority of our VMO2 users are in the two slowest speed tiers. 
  • When we look at the experience of our users in VMO2’s footprint on the slowest speed bracket, VMO2 users have a more consistent experience than those on Sky and TalkTalk, and the same applies to Sky users on the second slowest speed bracket — up to 61Mbps. However, VMO2 has no advantage in Consistent Quality over Vodafone across the two slowest speed brackets.


As the map above shows, where VMO2 is present our users on its network typically observe the fastest maximum download speeds. VMO2’s network is concentrated in urban and suburban areas. Nexfibre, the independent fibre joint venture between Liberty Global, Telefónica and Infravia, will continue to operate separately after the creation of NetCo, focusing on fibre network expansion into greenfield areas — those outside VMO2’s footprint.

NetCo and nexfibre have plans to reach up to 23 million homes with fibre up from the current figure of more than four million. In April 2024, nexfibre announced that it has hit one million premises passed out of the five million it is aiming to reach by 2026.

To put these figures into context, back in December 2023, Openreach said that it had reached 12.5 million premises passed with full fibre – half its 2026 target. Further, according to Ofcom’s Connected Nations update: Spring 2024, 62% of the U.K.’s homes (18.7 million) are covered by full fibre, implying a total of approximately 30 million homes.

 

In the above charts, we compare the average fixed broadband experience of our users on the major ISPs by market share that are BT Openreach tenants (BT, Sky, TalkTalk, Vodafone, Plusnet and EE) against those with VMO2, within VMO2’s footprint. For this analysis, we assumed that NetCo’s/nexfibre’s wholesale capabilities will cover all the locations where VMO2 currently offers broadband services.

Across four key measures – Consistent Quality, Video Experience, Download Speed Experience and Upload Speed Experience, our Virgin Media O2 users have a superior experience than those using the major ISPs that are Openreach tenants. VMO2’s average download speeds are more than double those in that group. Out of the major Openreach tenants. Vodafone performs most strongly as it is less than one percentage point behind VMO2 on Consistent Quality and ahead of the other tenants on average download and upload speeds.

As in the U.K. most users buy packages that throttle or cap their speeds to a greater or lesser extent with higher speed packages typically costing more than lower ones, users’ choice of package has a significant impact on their experience.

To delve deeper into the potential opportunities created by the introduction of NetCo and allow for clearer comparisons between the analyzed ISPs, we have segmented our users by the maximum download speeds they observe within VMO2’s footprint with the brackets set based on the speed packages sold by each ISP. The maximum download speeds in this analysis — as per our standard fixed broadband methodology — are those seen by our smartphone users over Wi-Fi connections.

 

This analysis shows that most users place in the slowest two speed brackets across Sky, TalkTalk, VMO2 and Vodafone. This is especially pronounced for TalkTalk and Sky, with 71.4% and 66%, respectively of our users’ download speeds placing in the bottom two brackets. The same is also true for VMO2, but to a lesser extent, with only 51.9% of our users placing in the slowest two brackets.

As the majority of our Sky, TalkTalk and Vodafone users’ maximum download speeds place them in the bottom two speed brackets, we have focused our attention on the user experience in these brackets. While the speed brackets vary from ISP to ISP due to the different packages, we ensure the fairest possible match-ups by comparing speed brackets in this way. This is because while the precise promised speeds may vary, ISPs are competing using comparable speed packages for customers with similar requirements and price sensitivity.

 

We now look at Consistent Quality on the two slowest speed brackets. Consistent Quality measures how often users’ experience on a network was sufficient to support common applications’ requirements, such as watching HD video, completing group video conference calls and playing games. In addition to download and upload speeds, it assesses latency, jitter, packet loss and time to first byte.

Starting with the slowest bracket, VMO2 users have a more consistent experience than those on Sky and TalkTalk*. There is no difference between TalkTalk and VMO2 in the second speed bracket for Consistent Quality, but there remains an experience gap between VMO2 and Sky in VMO2’s favor. The fact that Vodafone does better than VMO2 in both speed brackets is surprising given that like Sky and TalkTalk it relies extensively on Openreach’s network. The difference is likely due to the ISPs’ core network policies and the customer-premises equipment (CPE). Our users on these ISPs see little difference in their Video Experience within the slowest two speed brackets, but with a large jump across all four between the slowest speed brackets and the next one up — reporting scores of 68.7-69.8 points on a 100-point scale and 74.5-75.7 points respectively.

* All comparisons between ISPs based on speed brackets have not been subjected to Opensignal’s marketing claims and data methodology, and therefore cannot be used for marketing purposes.

We have seen that within VMO2’s footprint, our users on its network on average have a more consistent and faster experience than those with ISPs that are Openreach tenants, while also having a better experience when streaming on-demand video over Wi-Fi connections. In addition, as the majority of our Sky and TalkTalk users place in the bottom two speed brackets when segmenting them by their maximum download speeds with the boundaries based on ISP’s speed packages, we have compared the experience of our VMO2 users on these speed brackets against those on Sky, TalkTalk and Vodafone. VMO2 users in the slowest speed bracket have a more consistent experience than those on Sky and TalkTalk and the same is true versus Sky, with packet loss being a particular issue.

From a user experience perspective, wholesale access to VMO2’s network appears competitive to those of Openreach current tenants, particularly for users in the lowest speed brackets. However, as pointed out by ISPreview, switching wholesale networks is a complex process and can take a lot of time. This combined with the fact that NetCo is not expected to go live until H1 2025 and the fast pace of fibre rollout in the U.K. may mean that the user experience landscape will be significantly different by the time the first ISPs migrate over to NetCo.

Opensignal has deep insight into the real-world fixed broadband experience, which can be used to inform commercial decision-making and better compare how ISPs compare against each other. For more information on how Opensignal can aid both your network and marketing operations, please contact us.