The government have today launched a consultation to work out how money from the Next Generation Fund should be spent. The 50p levy on all telephone lines is the source of the funds and is expected to raise around £175m a year, with £1 billion of this to be used by the government to help provide super-fast broadband to 90% of the country by 2017. Without the use of the fund, it is estimated that next generation broadband, currently available to 50% of the population (thanks to Virgin Media's cable broadband network), would only reach 70% of the country.
"This investment is about bringing the future of broadband to areas of the country that would otherwise miss out. We cannot underestimate the opportunities this will bring for homes and businesses which is why we are taking action to make sure everyone benefits.
"Already the market is delivering superfast internet speeds of 50Mbps to half the country but we cannot be certain that it will reach the communities that are not currently served, which is why we are putting in an extra £1billion to support the market.
"By upgrading our networks we will put the UK at the fore of rapidly developing technologies which will bring jobs, boost business potential and grow our digital economy."Lord Mandelson, Business Secretary
The government aims to stay technology neutral and is evaluating different Next Generation Access (NGA) technologies including Fibre to the Cabinet, Fibre to the Home, Satellite, WiMAX and Long Term Evolution (LTE) which may be viable options. It's currently uncertain when things like LTE are likely to be deployed so fixed line solutions seem like the likely option in the short term.
One thing to note is that this fund is separate from the USC to provide 2meg broadband to everyone. There may be some overlap in this where the USC will fill in broadband not-spots and may use NGA to do this, and as such, the NGA project should avoid unnecessary investment where this may occur. Another consideration they are making is to whether a 'claw back' scheme should be used. This would enable the government to take back a proportion or the entire amount awarded from the fund should there be a return on the investment greater than a specified level in a certain area. This would help save money in areas where the market can fund next generation broadband itself.
The government are also intending that where money is provided, it should be used to fund an 'open access' network. This would of course mean that it would work in a similar way to existing fixed-line broadband from BT where providers can sell their own broadband services over the BT deployed network, helping to give consumers a choice and produce some competition to the market.
The consultation can be read in full on the Department for Business Innovation & Skills website, and is open for responses until 01/04/10.