Virgin Media Business has signed a deal with BSkyB (Sky) that will see Virgin's fibre network used to connect around a third of Sky's unbundled local exchanges with its nationwide broadband network.
The five-year agreement, which Virgin claims is worth over 49 million, will see the core of the network in place by the end of 2013 and will deliver speeds of up to 10Gbps through its High Capacity Services offering.
Virgin claims to be the second biggest provider of backhaul infrastructure in the UK
The agreement will not use or affect Virgin's access network, which connects to customers' homes and offices.
Tony Grace, managing director of Virgin Media Business, said: "High capacity connectivity is vital in today's digitally driven world. Whilst we're concentrating on developing better services for the public in our consumer division, we also believe that our high capacity network is ideally placed to provide the underlying infrastructure that can help other providers with their backhaul capacity needs."
While the two companies are competitors at the consumer level, it is not unusual for rival firms to provide business services for each other, claims Catherine Haslan, senior analyst in the telecoms wholesale division of Ovum.
"We're not surprised as this is the latest in a series of backhaul deals that Virgin Media Business has secured with telecoms and media companies in the UK. Indeed, the backhaul infrastructure business has accounted for the vast majority of growth for Virgin Media Business in the last 18 months," Haslan.
"Such deals work for both parties as the wholesale provider receives additional revenue on its network investment, while the buyer gets the benefit of using that network without having to invest in building it itself."
