Virgin Media could significantly boost its Wi-Fi plans by acquiring or partnering with Three, according to analyst firm Ovum.
Virgin has confirmed that it's considering rolling out a nationwide Wi-Fi network to challenge BT Openzone and offer more connectivity options for business users on the move.
Fixed broadband providers like Virgin need to adopt a mobility and broadband convergence strategy beyond wholesale agreements, explained Steven Hartley, a principal analyst at Ovum.
A tie-up with Three would give Virgin access to a data-centric network, and provide Three with much-needed scale, the analyst argued.
"BT uses infrastructure already in place to provide Wi-Fi services, but its offering doesn't generate much revenue. Virgin, meanwhile, will have to create a [wireless] infrastructure and then try to differentiate itself," he said.
"By partnering with Three, the opportunity to cross sell is present as Virgin has a reputation as a content provider and a lot of multimedia that it wants to push out."
Even a short-term partnership would make sense, according to Hartley, as Virgin's options are limited, and fourth-generation LTE services are unlikely to begin before 2014.
However, while Hartley believes that the match is logical, an acquisition would be expensive and there is no guarantee that Three owner Hutchison will sell.
Rob Bamforth, principal analyst at Quocirca, is unconvinced that an acquisition would significantly boost Virgin's Wi-Fi offerings, but did not rule out the possibility.
"With the average revenue per customer declining, businesses are increasingly looking at opportunities to coalesce so they can extend their cellular, Wi-Fi and fixed reach and reduce costs," he said.
"Virgin will need to boost the locations in which it is available, and the best way to do this is by partnering with businesses such as coffee shops, hotels and even cloud organisations."
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