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Virgin Media to rent Olympic Tube WiFi

Virgin Media hopes to make money from the WiFi mobile internet network being rolled out across London Underground stations by renting it out to rivals once its free provision agreement expires after the Olympic Games.

The company has sent out proposals to rivals, including mobile network operators Vodafone and O2 , and internet providers BT and TalkTalk, and called for bids under a wholesale arrangement to be launched after September.

Virgin Media wants additional funding to help maintain the network as well as to expand its capacity in the future. It is counting on use of the WiFi network to quickly exceed capabilities given the expected popularity of the service in London.

The group won the contract to roll out a mobile data network to provide internet and emails on most of the city's subterranean stations for the first time. It outbid rivals such as BT and O2, although financial terms of the deal were not disclosed.

The proposed wholesale model will mean that companies can offer the service under their own brand, while Virgin Media will also provide the network free to its customers as well as operate a "pay-as-you-go" model for occasional users.

Andrew Barron, chief operating officer at Virgin Media, said that partners were being sought to "continue to fund the growth of the infrastructure", pointing to the future maintenance costs. "We expect capacity to exceed the infrastructure capabilities," he said. "There will be substantial funding implications."

Mr Barron said that it would continue to talk to Transport for London, which manages London Underground, about how to develop and grow the service in future. He said that "tens of thousands" had already signed up to the service in the 20 stations where it was available.

There are a number of tenders for WiFi provision across the UK, in part to help offload the strain on mobile networks of the rapid increase in demand for internet on the move, with different strategies being devised to generate revenue from the service.

Telefónica's O2, for example, expects to use the customer details gleaned from access to its otherwise free WiFi provision in Westminster to collect information that can be used for advertising and other services. Others, such as BT, retain a proprietary WiFi hotspot network for their own customers.

About 80 stations will offer free WiFi by the start of the Olympic Games. This will be extended to 120 stations by the end of the year. The network is designed for internet access, rather than calls, although it can be used for voice over internet.

Jessica Ekholm, research director at Gartner, said: "By wholesaling WiFi, [Virgin Media] will open up revenue opportunities and open up the possibility for other providers to get a competitive edge and to take advantage of future network developments in the Underground."

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