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British Telecom had virtually sewn up the mobile backhaul market in the UK, but now it is under severe pressure from Virgin Media Business, which has signed an eight-year deal worth over £100m ($161m) with MBNL, the joint venture between T-Mobile and 3UK.

The huge contract will see Virgin upgrade backhaul infrastructure for the combined mobile networks of 3UK and Everything Everywhere, the T-Mobile/Orange joint venture. This will support increased mobile broadband capacity in preparation for LTE roll-outs, harnessing 1Gbps Synchronous-Ethernet services over Virgin's fiber network. The company will set up 14 regional aggregation networks to connect thousands of base stations. It will focus first on the highly contended areas of the MBNL network and then extend the capabilities across a broad footprint. However, some rural areas will not be covered, and will remain reliant on microwave backhaul.

George Wareing, head of mobile and broadcast at Virgin Media Business, told TotalTelecom:

"We're absolutely taking share off BT. [MBNL's backhaul] was part of BT's estate. We're trying to bring competition to this market." He said that Virgin planned to use the MBNL win to move aggressively against BT, adding that the deal was not about immediate 3G and LTE capacity but about future proofing - "We're providing 1Gig today but 10Gig access with 100Gig aggregation is on our roadmap," he said in the interview.

This wasn't the only news in a tumultuous week for UK mobile markets. The UK government has committed heavily to a cellular-based solution for smart grid, announcing a tender for $4.59bn worth of contracts to build a new wide area network for this purpose. This will enable the UK to conform with European Union mandates to support national smart metering by 2020, but unlike many other countries, the country is relying on a wireless network to support about 50m meters and other devices, rather than the PLC standard adopted elsewhere. The network will be funded by the government and is likely to rely on GPRS technology rather than 3G or LTE, because meters do not require huge bandwidth, and 2G is affordable and well understood. Any bidder must commit to national coverage with connectivity back to a centralized company, DCC, which will handle data processing and security.

"It'll be interesting to see how cellular takes root, seeing that the UK is the first proponent of it, while other European countries have adopted the prime PLC standard," said David Leeds, senior manager of smart grid for GTM Research.

Also in the UK, recently appointed cellco CEOs are having their say. David Dyson, the new head of 3UK, has called on the government to legislate to prevent next year's spectrum auctions being further delayed by lawsuits from the larger operators. The UK sale of 2.6GHz licences has been postponed repeatedly over the past few years and is now scheduled to be combined with the 800MHz sales in 2012. Disputes have raged over spectrum caps and how the sub-1GHz frequencies should be distributed among the four cellcos - Vodafone and O2 are the only holders of 900MHz GSM licences, which could be refarmed for low frequency 4G, but they argue that these are less desirable than the 800MHz digital dividend spectrum, and so the two bands should not be treated equally under spectrum ceiling and floor rules.

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