London’s CityFibre to build a $800 million gigabit network

When it comes to fiber-based broadband, the U.K. lags behind its European neighbors, which have been aggressive in rolling out really fast networks. Many critics blame British Telecom (s BT) dragging its feet mostly because it doesn’t have any real competition.

A handful of upstarts, including the likes of Hyperoptic and Gigaclear, want to change that. And one of them, CityFibre Holdings of London, is looking to raise over $800 million to build out a fiber network that reaches nearly a million households in the U.K. and will be capable of offering gigabit-per-second speeds.

The new network would reach public services as well. The proposed network will also reach 50,000 businesses, according to Greg Mesch, the company’s CEO. CityFibre is a metro network operator in what are called in the United Kingdom “secondary towns and cities,” like York, Ayr and Dundee.

The British government has lately become aggressive in its desire to wire up Britain with really fast broadband connections and has pledged close to $900 million to broadband enable its rural areas. BT has a $4 billion investment program in place. Analyst firm AnalysysMason estimates it would cost over $48 billion in order to get every home in the U.K. to get fiber-based broadband.

BT running hard

Earlier this week, BT announced two-thirds of U.K. premises will have access to fiber broadband by the end of 2014, one year ahead of its original target of 2015.  Six million premises already have access to the technology. BT also is planning to increase the headline speed of its fastest fiber broadband product to up to 300 Mbps by spring 2012, and at the same time, also double the speed of its fiber-to-the-cabinet service. I’m sensing the idea of competition is pushing BT to accelerate its plans.

CityFibre’s plan is to not only offer the service on its own, but also to open it up to third-party Internet service providers who could buy on a wholesale level from the company. CityFibre manages fiber network infrastructure for public sector services such as police, healthcare groups and local government in addition to working with universities. They operate seven metro rings, and in the city of Bournemouth, own what is currently said to be the largest fiber-to-the-home project in the U.K. Nearly 24,000 homes there will get super-fast broadband in 2012.