SSE accelerates broadband investment threatening BT and Virgin Media

British energy giant SSE is reportedly looking to expand its scope by investing in ultrafast broadband infrastructure, accelerating its move into telecoms, and threatening firms such as BT and Virgin Media. SSE is said to be exploring the business case for laying new fiber optics to homes and businesses that would provide more efficient internet connections than copper lines or cable.

The company has been working towards infrastructure investments “all the time” according to David Walter, director of SSE’s broadband business, to establish itself in the telecoms sector, The Telegraph reports. However, at this stage no concrete decisions have been made by SSE and no investment is currently pending.  

SSE’s move into telecoms infrastructure laying could be viewed as a sign of confidence in the growing links between broadband and the utilities sector. SSE and its energy industry rivals are increasingly expanding their scopes to provide thermostats and other technology that requires an internet connection, thus closing the gap between utilities and communications. The move would also be welcomed by regulators that want more competition at the infrastructure level.

However, SSE’s move could also be seen as threatening and disrupting the marketplace with its investment, says Mimosa Networks CPO Jaime Fink. “To compete with BT and Virgin Media, SSE will need to select the right tools for the job,” he said. “Whilst the industry will always rely on deep fibre to feed bandwidth into neighbourhoods and urban areas, fibre-to-the-home (FTTH) is not cost effective and is disruptive to deploy.”

Fink believes SSE should “take lessons from internet providers in the US and use fixed wireless to deliver broadband to the home, which offers speeds akin to FTTH, at nearly one-tenth of the cost.”

Fink added, “New US broadband market entrants such as Google and Facebook are leveraging fixed wireless, with established players such as AT&T and Verizon also considering this approach for rapidly commercialising 5G. The technology could help SSE serve all environments efficiently across the UK, undercutting the market with the speed and price of its service.”

It’s likely that SSE’s investment in new fibre optics would be with partners, according to Mr. Walter. The cost of building the new connections, he said, could be shared with retail rivals, and SEE could use existing backbone networks in the UK, like those owned by CityFibre and Vodafone.

A similar project by TalkTalk in York has caught the attention of SSE to watch how things pan out. Mr. Walter hasn’t ruled out a major acquisition such as TalkTalk as a way of shortcutting SSE’s way to high status in the industry, but he said the company had a “clear idea of [what] multiple broadband subscribers are worth.”