CityFibre signs first operator customer for FTTH rollout

Backhaul not included in Vodafone deal for now, but company targets fibre to the tower and dense small cells as part of its future opportunity.

CityFibre, the company that is laying down dark fibre across a large number of UK cities and towns, has signed a wholesale agreement with Vodafone.

The deal gives Vodafone 2-3 years’ exclusive access to CityFibre fibre as the company densifies its fibre build-out in a handful of key cities.

With a core metro rollout already operative in 42 towns and cities, CityFibre’s ambition is to densify some of those rollouts within five to ten cities to reach a minimum of one million and a maximum of 5 million UK homes within four years. In the longer term it wants to achieve 10 million connected premises.

In summer 2017 it raised a recent £200 million equity round, stating at the time that  the raise was intended to finance that densification (starting 2018) along with an expansion of its core metro networks from 42 to not less than 50 towns and cities by 2020, as well as the acquisition of Entanet.

So the deal with Vodafone isn’t a funding deal as such – instead it gives CityFibre commercial security, with Vodafone making a long term commitment to purchase a  minimum volume of dark fibre as CityFibre deploys its denser rollouts.

No backhaul element yet with Vodafone

As well as a FTTP model, CityFibre also has plans to provide fibre to mobile base stations. On a media call, CityFibre CEO Greg Mesch said that the company’s fibre already passes close enough to 7,000 mobile base stations to provide fibre connectivity, and the joint press release also referenced the importance of fibre to future 5G networks. A densified rollout within 5-10 cities would, in theory, provide more fibre support in dense environments.

However, a Vodafone spokesperson told TMN: “This agreement is very focussed on offering fibre broadband to the consumer and enterprises rather than backhaul”.

So if Vodafone does envisage using CityFibre’s dark fibre within its mobile backhaul network, it seems it won’t be doing so imminently.

CityFibre’s Fibre To The Tower (FTTT) capability has so far been tested in Hull, where MBNL (Three and EE’s network provider) took dark fibre to base stations. Mark Collins, Director of Strategy & Public Affairs,  said Three had seen a 380% increase in data traffic coming from those dark fibre-connected base stations. Last week, UK Government minister Matt Hancock said he was astonished how many cell sites remained connected over copper of microwave links, rather than fibre.

The company is also looking to leverage its denser fibre rollouts to support small cell deployments within urban areas. Collins said that the company knows these connections will need to be priced more like a FTTH residential connection than the equivalent of a full leased line price.

“While it is still early days in terms of 5G and how many small cells there might be, the general philosophy we are adopting is that we need to reinvent commercial models for the delivery of fibre and small cells – and that converts more closely to economics of FTTH.  If we can do FTTH cost effectively then we have the right fibre archicteure to deliver price points so backhaul for small cells is right for operators,” Collins said.