On the face of it, Wednesday’s Autumn Statement – the U.K. government’s annual fiscal update – had nothing much to offer the telecoms industry beyond the usual guff that broadband is important and we need more of it so the economy can thrive.
Give it a second read though, and the Autumn Statement’s snippet on broadband appears to be a tacit admission that the government’s strategy for extending broadband coverage to harder-to-reach areas has failed to foster sufficient infrastructure competition.
"Competition between broadband providers supports the delivery of the fast and reliable broadband a modern, productive economy needs," reads the document, which was delivered to parliament by Chancellor of the Exchequer George Osborne.
"The government will explore setting up a new broadband investment fund, to support the growth of alternative network developers by providing greater access to finance. The fund would be supported by both public and private investors, and would be managed by the private sector on a commercial basis."
You don’t need the memory of an elephant to recall that the U.K. had a gilt-edged chance to stimulate broadband infrastructure competition with the creation of Broadband Delivery UK (BDUK), which was tasked with allocating public money to fund network investment in economically challenging, i.e. remote, parts of the country.
As well as catching the eye of incumbent BT, Japan’s Fujitsu drew up a plan to deploy a wholesale fibre-to-the-home (FTTH) network covering 5 million rural premises, using equipment supplied by Cisco. TalkTalk and Virgin Media had expressed their intention to use the network to reach remote parts of the U.K.
That was in 2011. By the time BDUK began allocating funds, it was clear that all was not well, given that BT and Fujitsu were the only two telcos pre-selected for BDUK’s framework agreement – the document local councils were advised to use when launching tenders for broadband deployment.
Fujitsu eventually scrapped its FTTH plan altogether, citing various unspecified issues with the BDUK process, leaving local councils with BT as the only viable choice.
BT and the government maintain the lack of competition for BDUK funding serves to illustrate the challenge of building a case for rural high-speed broadband deployment, rather than issues stemming from the BDUK process itself.
That argument rings a little hollow when you see announcements from the likes of Gigaclear about the rural gigabit networks it is rolling out. In October, the company passed its 10,000th property, and currently enjoys a take-up rate of approximately 40%. Last week, it announced a trial of a 5-Gbps broadband service.
Community-led projects like Broadband for the Rural North (B4RN) seem able to make the figures add up too. In September, its gigabit network went live in Tunstall, a village of 200 people in remote north-east Lancaster.
B4RN’s 1 Gbps broadband service comes with a one-off connection fee of £150, and costs £30 per month. By comparison, BT’s fastest broadband package offers a peak speed of 76 Mbps, and including line rental, costs £47.99 per month plus a one-off charge of £6.95. Over 12 months, a B4RN customer will pay £510 for 1 Gbps broadband, while a BT customer will pay £582.83 for a 76 Mbps service.
A slew of altnets, including CityFibre, Hyperoptic, and Community Fibre, are cherry-picking urban locations that are ripe for FTTH rollout. What would U.K. broadband network coverage look like if these companies had received a wodge of public cash for the purposes of rural network deployment?
Meanwhile, BT’s rivals are lobbying Ofcom and the government to force a full structural separation of BT and its infrastructure arm Openreach on grounds that it will stimulate fixed network investment. BT argues that splitting out Openreach risks creating regulatory uncertainty that could threaten future network investment.
Given Chancellor Osborne plans to maybe have a big, serious think about setting up a funding scheme for altnets, rather than a wholehearted pledge to do so, he might just be waiting to see what happens with BT and Openreach before he commits.
That might take a while, so it is fortunate then that Total Telecom’s Connected Britain event will be back in 2016 to keep all the issues around U.K. broadband firmly on the agenda.
This year’s event saw operators, vendors, regulators, analysts and academics trade ideas – and in some cases have a good old-fashioned argument – about the whys and wherefores of the U.K. broadband sector, so expectations are high for Connected Britain 2016. Click here to find out more.
