Virgin Media to invest £3bn in broadband

Investment criticised for not addressing the 'digital divide'

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Virgin Media is to invest £3bn in improving its fibre-optic broadband network, which it said could deliver £8bn in wider economic benefits and would represent the biggest investment in broadband infrastructure in a decade.

Called “Project Lightning”, the programme will be enacted with the support of Virgin Media’s parent company, Liberty Global. It will extend its ultra-fast fibre network based on business demand and proximity to its existing network, although it will also be rolled out to some areas that it previously did not cover. Homeowners and firms are encouraged to register their interest online.

The Government welcomed the announcement. “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,” said David Cameron.

Virgin Media said economists had estimated that its upgrade, which will extend the network’s reach from 13 million homes to 17 million, could stimulate a combined £8bn of “economic activity and consumer benefit”. The investment would create 6,000 jobs, including 1,000 apprenticeships, it added.

The City of London is earmarked as one of the growth areas under Virgin Media’s plans. The roll-out comes after a trial in the capital’s Tech City area, a technology cluster in central and east London, where companies were offered a cut-price deal if two or more in the same building signed up to a dedicated business line.

Some expressed disappointment that Virgin Media’s investment would not be targeted at rural areas. “This still doesn’t address the ‘digital divide’ as the provider has clearly indicated that investment will focus on areas that are close to its existing infrastructure,” said Dominic Baliszewski, telecoms analyst at broadbandchoices.

Virgin Media’s rival BT is also reducing the cost of ultra-fast broadband for businesses from April, including some installation charges. Ultra-fast broadband offers download speeds of up to 100 megabits per second, while super-fast is up to 24Mb.

BT said its fibre network, which is open to other companies to use, already covered 22 million premises and was growing by the week. “The British broadband market clearly remains vibrant, with consumers and businesses the ultimate beneficiaries,” a spokesman added.

Virgin Media, which has five million customers, said annual revenues for 2014 were £4.214bn – 2.3 per cent higher than the previous year. It said the increase stemmed largely from higher cable subscription revenues, which grew by 3 per cent last year.