MS3 Communications signed a £5.5 million deal with Welch Civils Limited to start installing the first 50km of fibre optic cables this week.
The work is expected to take between 20 and 26 weeks. It will extend the MS3 network from Barton-Upon-Humber, across the Humber Bridge to Hessle, then through Priory Park, along Witty Street and Hessle Road to the city centre.
MS3's network will initially only be available to business customers.
The first stage of the fibre roll-out will reach about 2,000 potential clients and MS3 already has more than 200 businesses signed up.
Sam Hales, communications manager at MS3, said: "We will only be supplying businesses at first but we are in talks with a few internet providers outside the city to bring them into Hull to deliver to the residential market through our network."
MS3 announced its plans to create a rival digital network to KC a year ago.
The company originally hoped to reach 12,000 customers in Hull last June and then extend this to 25,000 users after another eight to ten weeks. However, the company has been hit by a series of delays with contracts and upgrades to feeder networks.
Its fibre optic network will offer super-fast download speeds of more than 100Mbps.
Once the first 50km of cabling is laid, MS3 intends to extend the network into north Hull, towards Cottingham, and east Hull, along Holderness Road.
Mr Hales said he was confident the new network would attract interest.
He said: "This network is absolutely independent of KC. We are even putting in our own ducts so we don't have to use theirs.
"Our pricing is very competitive and we are Hull's first alternative supplier.
"Hull has never had competition and that is what we are offering."
KC, which is rolling out its own super-fast fibre optic network across East Yorkshire, welcomed the competition, saying it hoped businesses in the area would benefit from improved broadband connections.
Sean Royce, KC commercial and finance director, said: "MS3 has been discussing its plans with us for some time.
"The good news for businesses in Hull is that we share the same vision – that access to high-speed communications is one of the key drivers for regeneration and one that will ultimately help stimulate growth for our region.
"That is why we have been offering our business customers Ethernet products for many years and why we have made such a significant investment in our KC Lightstream fibre broadband services.
"Consumers and businesses in Hull already have access to the fastest broadband network in the UK.
"This announcement that MS3 is building a network could be good for local businesses as it means they may have even more choice in providers."
April 6, 2012