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Neos expands fibre to four cities with Three UK as anchor tenant

Sarah Mills Neos 16x9.jpg

UK carrier Neos Networks is expanding its wholesale fibre network in Liverpool, Birmingham, Manchester and London, and has signed a deal with the local authority that covers Oxford.

Neos – which was SSE Enterprise Telecoms until March 2021 – is also building a national network for Three UK, the mobile operator owned by CK Hutchison of Hong Kong.

“We gave them 100Gbps capacity from the word go,” said Sarah Mills (pictured), head of wholesale at Neos. “We can give them 200Gbps when they want it. [Three] needed a fibre provider to build a core network and they are talking about getting fibre beyond the denser urban areas.” The news follows yesterday’s announcement that Three is building a new IT infrastructure to boost its business-to-business market. 

Neos is especially working with Three as BT restructures its network – which many carriers use to deliver services to towers. BT plans to retire 4,500 of its 5,500 exchanges over the next few years, focusing on just 1,000.

“How many of these 1,000 can we go to?” asked Neos CEO Colin Sempill. At the moment Neos reaches 550 unbundled exchanges and is working on the business case for 57 more.

The company is planning to expand its fibre network to cover as many of the remaining exchanges as possible with high-capacity fibre. “We can easily get to 750,” said Sempill. “We want to get as close to 1,000 exchanges as we can.”

Neos is planning to offer services to other service providers based on the infrastructure it is building for Three UK, “which uses 1% of our capacity”, said Sempill.

Sempill said that Neos is spending an average £100,000 to unbundle one exchange – implying a cost of £55 million for all 550 the company reaches now. Sempill conformed Capacity’s estimate of the spending. “It’s a big outlay, but we’ve had a big anchor in Three.”

Neos has already started expanding its urban fibre networks in Liverpool, Birmingham and Manchester, said Mills, “and we start in London in January”.

Liverpool will be in service at the start of 2022, Birmingham and Manchester will go live from the middle of 2022, with London intended to come on stream in February 2023.

Neos is focusing on the wholesale market in those four cities, she said, concentrating on business districts, but will also consider multiple dwelling units in some areas where they are within 150-200 metres of Neos’s end points. “We have to consider the competitive landscape [in London]. We don’t want to overbuild [competing fibre providers],” she added.

The Liverpool, Birmingham and Manchester networks do not duplicate other providers’ infrastructure, she said.

Sempill said: “There is a tremendous push to fibre-to-the-home [FTTH] at the moment in the UK. But there is less of a push to fibre-to-the-business.”

Neos hopes to start dealing with that with today’s announcement of a deal with Oxfordshire County Council, the local authority that covers the university city of Oxford and a wider population of 692,000 people.

Under the deal, Neos will connect more than 200 public service sites across the county in a bid to improve digital and social inclusion. It will use its network as well as those of other suppliers – including BT’s Openreach, Virgin Media Business and Gigaclear – for the service, which will link schools, libraries, council buildings, doctors’ surgeries, fire stations, leisure centres, community centres and museums.

Oxfordshire County Council is backing the project to the tune of £5 million, and central government is providing another £2 million from its Project Gigabit scheme.

Oxfordshire has a head start on many parts of the UK, with 98.4% of the population already having access to superfast broadband.

Sempill said: “In building and deploying this new fibre infrastructure, we’re able to provide Oxfordshire County Council with an important core fibre network that will bring new digital services to its premises, as well as to the homes of many across the county in the near future.”

Neos won the contract following a competitive procurement process, the company noted.

Neos is owned 50% by electricity company SSE and 50% by private equity investor Infracapital, which also owns FTTH provider Gigaclear.