BT Group Plc’s infrastructure division Openreach has started an evaluation process to seek a third strategic vendor alongside Huawei and Finland’s Nokia Oyj for the full-fiber roll-out, a spokesman said in response to questions from Bloomberg News.
US-based vendors are likely to be among the bidders, said people familiar with the matter, who asked not to be identified because the discussions are private.
“We already manage a large and diverse supply chain across our full-fiber build, and we’re constantly reviewing our options to make sure we can carry on building a high-quality network that offers great value for money,” the spokesman for BT’s Openreach said by email.
He declined to say which companies may be considered. Cisco Systems Inc, based in San Jose, and Adtran Inc, based in Huntsville, Alabama, are among the companies interested in the work, according to people familiar with the matter who asked not to be named.
Britain’s National Infrastructure Commission said last year it would cost £33.4 billion to build and maintain a national full fiber network over 30 years.
Adding a third vendor would bring bigger supply capacity and more competition that could push down costs for BT, which is struggling to accelerate network upgrades without cutting dividends to shareholders.
The move also underscores the pressure to curtail Huawei’s dominant position in communication networks following warnings that the company may be a security risk.
US officials have said Huawei would not be able to stop the Chinese government accessing its systems to spy on other countries or disrupt communications, something the company denies.
Those security concerns around Huawei have tended to focus on its role in next-generation 5G wireless networks.
Huawei’s dominance
The fiber contract could be a potential game-changer for the winning bidder’s UK operations.
Openreach’s full-fiber network now reaches about 1.9 million homes and the company is ramping up spending with the aim of connecting 15 million or more by the mid-2020s — about half of the country.
BT will be seeking proposals from potential suppliers by early January and aims to make a decision some time in the second quarter of next year, said one of the people familiar with the matter.
Trump’s campaign
Whoever gets the deal, it’s likely to be welcomed in Washington. President Donald Trump is trying to persuade allies to ban Huawei from their networks but the campaign has failed to threaten the Shenzhen-based vendor’s dominance in network equipment.
Britain and other European nations have been wary of singling out Huawei for punishment and have leaned toward allowing it continued access to less sensitive parts of their networks on condition that its activities are monitored more closely.
While the political turmoil caused by Brexit has delayed any definitive decision, British government officials have made it clear that network operators should not depend too heavily on Huawei.
Relying on a single supplier is a risk to the “security and resilience” of the UK’s telecom networks, the government said in a supply chain review document published in July.
“The dependency risk is most pronounced in the mobile and fixed access networks where supply is dominated by three global players” including Huawei, the UK market leader, it said.
Prime Minister Boris Johnson has set a goal to install gigabit-speed connections nationwide by 2025 and committed £5 billion for a rural build-out. The opposition Labour Party has said it would spend £20 billion nationalising the network and making broadband free for all if it wins a Dec 12 election.
BT connections are still based mainly on slower, less-reliable copper but it’s pivoting to fiber in the face of government pressure and rival investments backed by finance industry players such as KKR & Co Inc and Goldman Sachs Group Inc.