Move underlines growing consolidation of networks
Internet service provider (ISP) TalkTalk has confirmed it will offer superfast broadband services on BT’s fibre network on a wholesale basis at some point in the future.
TalkTalk has been trialling BT’s fibre network for some time and the decision means it becomes another ISP to take advantage of the BT’s next-generation network on a wholesale basis, after Orange made a similar announcement in April.
TalkTalk did not confirm if this would be through BT’s Wholesale division or with Openreach’s Generic Ethernet Access (GEA).
Analysts said the news of TalkTalk’s decision will be a big boost to BT, which has bet big on demand for superfast networks, promising to spend £2.5bn on developing and deploying them by 2015.
"It’s good news for BT as it’s invested a lot of money in the network and its whole business case depends on getting a number of wholesale customers," said Rupert Wood, an analyst at Analysys Mason.
"We expect to see other ISPs follow suit over time and there could well be some competitive pricing in the coming months around superfast broadband."
Ian Fogg from research house Forrester said he thought the announcement highlighted the growing consolidation of the broadband market as firms were deciding not to invest in their own networks but instead leverage what was already available.
"The decision by TalkTalk reflects the way the market for broadband is changing from a more open system based around local loop unbundling (LLU) to a straight choice between two networks, Virgin Media or BT for fibre services," he said.
"The economies of scale needed for TalkTalk or other ISPs to deploy their own networks are enormous so it makes much more economic sense for them to work with one another through infrastructure to offer their services."
He added that Sky remained the only major ISP yet to make a commitment to its future broadband services and while it could still go it alone, it would be an expensive option.