UK’s Network Rail catches the network sharing bug, seeks fibre investment partner
- UK rail network operator is upgrading its data transport infrastructure
- New fibre lines will have a lot of capacity not needed by Network Rail
- Private investors invited to help fund upgrade and get a slice of the capacity
- Move taps into growing appetite for shared infrastructure
National Rail, the body that owns and operates the UK’s railway network infrastructure, is to upgrade the data transport network that runs alongside its railway tracks and is communications network operators to co-invest £1 billion in its new fibre rollout in exchange for capacity on the new network.
The move makes sense and should appeal to multiple potential investors as the appetite in the telecoms sector for infrastructure asset sharing grows.
National Rail says investment partners will, in return for their cash, get “the right to commercialize spare capacity,” though it’s unclear just how much spare capacity will be available and what kind of rights investors will have to the physical infrastructure or over what period of time. (We have requested further details from Network Rail.)
But with data network infrastructure running alongside 16,000 kms of tracks throughout the UK and with demand growing for network capacity from telcos, enterprises, wholesale operators and data centre/cloud infrastructure companies, it’s hard to imagine there won’t be some level of interest in Network Rail’s offer (depending on the terms and conditions, of course).
For Network Rail, the move provides it with an opportunity to source the capital it needs for its network upgrade “without relying on subsidies from government or passengers” (don’t get me started on the implications of the final part of that quote…).
The company wants to upgrade the data network cables to improve its operations (improved monitoring and signalling, for example) and provide the foundation for improved on-board communications services for train passengers.
But “as Network Rail will not require the full capacity of new cutting-edge fibre optics, there will be sufficient capacity for a third-party to run its own telecoms services – making use of the significant geographical reach of the national rail network to meet demand for improved fibre connectivity across Britain, and taking advantage of the lower cost of fibre deployment along the railway when compared with other deployment methods.” That statement suggests Network Rail is seeking a single third party investor but it’ll be interesting to see if there is an opportunity for multiple investors to share the capacity.
Network Rail is also positioning the opportunity as a way to “support the Government’s commitment to roll out gigabit-capable connections across the UK, with £5bn allocated to supporting deployment to hard-to-reach areas,” as the rail network does run through many rural and otherwise hard to reach areas and could provide the fibre backbone from which additional fibre branches could be run to cell towers, data aggregation points or even buildings and homes, though there is no indication that Network Rail has any plans to extend the reach of the fibre network in that way itself.
“This proposal makes good business sense for all parties. We get a cutting-edge, future-proof telecoms infrastructure; the investor gets a great business opportunity; train passengers in Britain get an improved service for years to come; and the taxpayer saves a significant amount of money,” boasted Network Rail CEO Andrew Haines.
Network Rail aims to sign a deal with “a preferred bidder” before the end of 2021.
So who might be interested? Depending on how well the rail data network map fits with existing or planned transport network investments or upgrades, the likes of BT, Virgin Media (which has business and wholesale operations and which is due to merge with mobile operator O2) and Vodafone could be potential partners, as could Neos Networks, the new name for SSE Enterprise Telecoms.
- Ray Le Maistre, Editorial Director, TelecomTV
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