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No new broadband tax, money to be taken from the BBC
Wednesday 20 October 2010 14:51:04 by Andrew Ferguson

The Spending Review by Chancellor George Osborne has some news for broadband users, particularly those who are not likely to be in the two thirds of the country where next generation services are to appear in the coming years. Rather than a levy/tax as was proposed under the previous Labour Government (50p per month per landline), the BBC is to contribute to £530 million over the next four years towards projects.

We knew the £230m surplus from the Digital Switchover fund was destined for use to meet the Universal Service Commitment (USC) due in 2015. An additional £300m from the Television license fee will push this to the £530m. If this funding were to be bolstered with match funding by commercial operators, the £530m could make a serious dent in the final third issue, but it is more likely to be spent on various trials and funding projects where commercial operators have no desire to add their own funds.

Some areas of the UK should hopefully see some progress in terms of next generation broadband as four areas are mentioned today as being places for trials: Highlands & Islands, North Yorkshire, Cumbria and Herefordshire. Some of these areas have had money previously spent to roll-out first generation broadband and as such represent the danger of centrally administered trials and projects. This often ends up with projects meeting the target, but often very little effort is made to provide a future proof solution.

The BBC is facing a tough time, with the TV licence frozen for the next six years at £145.50, and it is now expected to fund S4C and the BBC World Service. It is possible that some of the £1.35 a month in the licence fee that is earmarked for digital TV and new technology may be used to fund the £530 million. Also the TV licence fee in its current form, is not actually required if you only view TV after it has been broadcast, which means if you only view catch-up content via the various TV players online, you do not need a licence. To maximise revenue the prediction is that this 'loophole' may be closed, and even viewing catch-up content will require a licence.

The 50p levy suggested by Labour had many critics, but it would have raised around £150m a year. The Government, by taking the money from an existing licence/tax, is effectively raising the same amount of money via a less visible route, which may bring criticism that it is a stealth tax.

The big question now, is what sort of services will be created with this funding. Any solution that does not attract the mainstream service providers onto it runs the risk of never being able to sustain itself commercially without year on year funding from sources like the BBC. If one works on Fibre to the Premises (FTTP) costing perhaps £1000 per property, then maybe half a million properties could be given a truly future looking connection. This is unlikely and it seems more probable that Fibre to the Cabinet (FTTC) will be used, with wireless networks being deployed in some areas. These would allow more properties to be covered for the same money, but run the real risk that in ten years time further upgrade work will be required.


Posted by otester over 7 years ago
Good news indeed.

FTTC everywhere would be nice.
Posted by djay over 7 years ago
Finally we may get fast broadband in Cumbria as bt were holding off untill they got government funding. Sooner rather than later would be nice.
Posted by andrew (Favicon staff member) over 7 years ago
I would not get too excited, they are talking of trials, which often means small scale, so imagine a year for that phase. Then another year to decide on the areas to actually provide live service too, and it will be 2015.

The news is good if you are lucky to get the service.
Posted by cyberdoyle over 7 years ago
the beauty of the proposed cumbria project is the digital village pump idea, where a fat pipe into the community is provided by funding, then the communities dig their own fibre to it. This will mean they can have access to future proof connectivity and choose their own method of distribution. fiwipie. The cumbrians won't be conned again. They have learnt to their cost the limitations of copper.
Posted by New_Londoner over 7 years ago
@CD, DJay I don't believe proposals on what will be deployed in each of the four trial areas have yet been submitted, let alone any decisions taken.

@CD This so-called digital pump idea is all very well but who pays to deliver the bandwidth to the village in the first place, who puts in and connects the fibre (as opposed to digging a few trenches), who pays them, and then who then actually offers service over the resulting links? At the moment it is a concept that is long on hype and rather short on practical detail.
Posted by New_Londoner over 7 years ago
Contd. The last point is especially important - you only have to look at various other projects like the South Yorkshire Digital Region, Lightspeed, Velocity etc to note the lack of service providers.

Bear in mind the self-build element may act as a deterent to any service providers wanting to offer service level guarantees etc., so may restrict services.
Posted by Legolash2o over 7 years ago
Why the hell do they need trials, why cant they just get the hell on with it and go for FTTC and digital pump ideas!

We don't need more trials!!!!!!
Posted by GMAN99 over 7 years ago
I can't see digital pumps being workable, I know the con's have this crazy idea of letting the public run their own schools/hospitals etc (total craziness) but I can't even seen how a local community could run a local network to be fair. No disrespect but in terms of costs of laying fibre, bringing on line new properties (do they stump up a large connection cost of possibly 100's of pounds?) maintenance and support etc. I just don't see the gov funding a pipe to a village and then saying ... there you go
Posted by GMAN99 over 7 years ago
... plus even if the gov covered the install cost would the residents be able to afford the rental of the uplink? How would it be shared equally. Or if you are proposing that you would be able to use any ISP down the pump backhaul that would be a nightmare, no ISP would go near it because of the make up of the link, they can't possibly support up to the pump and then community does beyond it, its a support nightmare. Sorry but its pure fantasy in my view.
Posted by Legolash2o over 7 years ago
Be easier just to give it to BT lol and say you can only spend that on FTTC and in the places with less that 2Mb speeds!

Posted by Somerset over 7 years ago
cd - how do communities dig across roads? Answer - pay a telco. Any community project needs 24x7 support which implies a 'proper' company managing it.
Posted by GMAN99 over 7 years ago
For me the only way this can truly work is that it goes towards making these areas commercially viable for Openreach FTTC but there's two problems with that.

1) It falls well short, I think BT said it needed a billion or two from the gov to make up the numbers
2) Taxypayers money is paying BT to do this which will upset some people

But even FTTC won't work at some of these rural spots, whatever goes in has to be done properly, not fibre and two plastic cups, it needs to be done right and last for generations and be wholesaled so the end user have choice and VFM
Posted by Legolash2o over 7 years ago
Although im not the biggest fan of BT, i still think they should do it with FTTC.

@GMAN99, FTTC should be good enough and last long enough, since BT didnt pay for the install costs it should be Value For Money and with vLLU it will have choice as well.

Since BT pay less fibre tax.... then that's another reason for BT to install it.
Posted by Legolash2o over 7 years ago
It wont fall short, it will just bring FTTC to the areas with sub 2Mbps areas, not the entire final third..... BT themselves since starting FTTC said it was cheaper than they thought.

Its a shame its not £530m a year instead of £132.5m but its better than nothing.
Posted by Somerset over 7 years ago
Not having a wholesale soulution rules out having, for instance, a Sky package.

Sky, TalkTalk etc. may not be happy being excluded from 33% of the country.
Posted by GMAN99 over 7 years ago
What I mean is some of these areas can't be serviced by FTTC? I thought the cabs were a long distance from the premises
Posted by Legolash2o over 7 years ago
Can't they put a cab where the wires enter the village, i assume that all the phone lines in a village come from one duct/pole, just plank a FTTC cab there, that way you would not have to relocate any of the phone lines.
Posted by GMAN99 over 7 years ago
Maybe if all of the lines are concentrated but again its even more cost
Posted by Legolash2o over 7 years ago
i would think that would be cheaper. I dont see how that would be more cost.
Posted by GMAN99 over 7 years ago
You'd be putting a whole new cab at a new site to support both the copper and fibre uplinks to the exchanges. As opposed to a new smaller cab next to the existing copper cab (which is being done everywhere else)
Posted by Legolash2o over 7 years ago
Nah it shouldn't cost more, they could technically get away with just supporting fibre as i can imagine most users who get most users in these areas probably pay £20-30+ for sub 2Mb, when BT Infinity for example offers upto 40Mbps for £19.99 so im sure those users would prob ditch their adsl2 connections.
Posted by Legolash2o over 7 years ago
Voice calls which would normally use copper could get converted to VOIP once it reaches the cab taking the copper link out completely.

So in the end a small FTTC with fibre support would be needed or something similar to Rutland Telecom method which was cheap.
Posted by Legolash2o over 7 years ago
Rutland Telcome qouted £50,000, so...
53,000,000 divided by 50,000 = nearly 18,000 villages could be upgraded to FTTC, Since BT pay less fibre tax then possibly more. If RT can do it for £50k then i don't see why BT can't...
Posted by Legolash2o over 7 years ago
530,000,000*** not 53,000,000
Posted by Legolash2o over 7 years ago
11,000 villages. Sorry pressed wrong key on calculator.
Posted by GMAN99 over 7 years ago
I just can't see how its cheaper to provide FTTC in rural areas that in urban otherwise what has all of the fuss been about?
Posted by Legolash2o over 7 years ago
Its because there is not enough customers to make a good return on their investment. But if Rutland Telecom can do it for £50k, and if its out of the £530m BBC fund, then BT will have nothing to lose.

RT used sub-loop unbundling so if BT did something similar they could do it for cheaper. Correct me if I'm wrong.
Posted by Legolash2o over 7 years ago
For example if their are 40 people in a village and if they pay £20 a month for broadband then that would be around £9600 a year (before tax, etc..)

If a cab in a town or city has around 200-300 per cab then that's £48,000-£72,000 year (before tax, etc..) so it's more viable to put it in a town/city.
Posted by Legolash2o over 7 years ago
BT just want someone else to pay for it and will just say its not economically viable but yet when another provider brings some competition then it suddenly becomes viable... Typical BT!
Posted by New_Londoner over 7 years ago
@Legolash2o "But if Rutland Telecom can do it for £50k..."

But the £50k figure (which I suspect is dependent on connection to Openreach network for less than £x), ignores the fact that a minimum number of people have to pre-commit to taking their broadband and voice services from RT as the service provider, and also to pay a cancellation fee if they cease service after a minimum period.

Difficult to see public funds being provided for any monopoly retai loffering like this, and the model wont work without the on-going revenue stream.
Posted by GMAN99 over 7 years ago
But the £20 a month (whether its rural or urban) doesn't go to BT it goes to the ISP of which they pay BT a rental charge depending on what they've bought from BT. Anyway.... the big bit is the installation which is the stumbling block, if the gov paid for that it must be viable for BT even in small numbers like 40 people in a village because after the install its just a case support/maintenance and normal running costs. It must be worth it then.. (cont)
Posted by Legolash2o over 7 years ago
It would be cheaper than 50k for BT as they pay less fibre tax, much less. Either way it has to be done, UK say minimum 2Mbps, EU say 30Mbps minimum, there no other choice except FTTH.

If BT do it then other providers can use it too i.e. TalkTalk, Sky, etc..

Posted by GMAN99 over 7 years ago
What people don't realise is that the install costs to the customer for FTTC won't go anywhere near the actual costs needed to provide it, they have to be recovered as part of the ongoing rental so the pay back is long. If the gov paid for the install in these areas then it must be viable.

Lego the wales example isn't typical, BT did come in with a viable FTTC at the same price, not that we know of anyway.
Posted by GMAN99 over 7 years ago
Yes Lego it has to be a wholesale offering anything less is not good enough
Posted by Legolash2o over 7 years ago
Im sure it would cost the same to maintain a 10mile fibre link to a cab as it does to a cab 300m away.

Fibre is not really affected by difference, so technically it has the same chance of going wrong as any other FTTC cab.
Posted by Legolash2o over 7 years ago
install cost is the big factor but that would be covered by the £530m, i thought BT charge line rental regardless of your ISP?
Posted by New_Londoner over 7 years ago
@Legolash2o "as they pay less fibre tax, much less"

Actually no, at least not according to either the EU or the UK courts.

"If BT do it then other providers can use it too i.e. TalkTalk, Sky, etc.."

And, as posted above, this is where the economics fall over vs. the example you gave of Rutland, as the latter retains all of the on-going retail revenues. If you take that away then you need to recover the costs elsewhere.
Posted by New_Londoner over 7 years ago
The simple fact is that it costs a lot more to deliver FTTC / P in rural areas, hence the approx £140m to do Cornwall, one county. On that basis, £520m will not go very far at all!

And then you have to bear in mind that a fair % of those living in rural areas don't leave in tight-knit communities conveniently close togetehr round a village green that would suit a single FTTC cabinet.

Posted by Legolash2o over 7 years ago
recover the costs? how, again.. it would be out of the £530m? It wouldnt cost BT a penny to install it, just to maintain it.

Fibre is cheaper to maintain than the existing copper network.

Also as i said above with the UK and EU targets it has to be done anyway. Then again i bet all the 530m will get spent on meetings and consultation fees, etc... LOL :D
Posted by Legolash2o over 7 years ago
I was on about the entire final third, just the ones with less than 2Mb connections...
Posted by New_Londoner over 7 years ago
As per other comments, you're looking at long lines so probably have to consider FTTP to single dwellings, which begins to eat a lot of cash. Given the spending cuts today, its difficult to see that sort of money being found any time soon.
Posted by Legolash2o over 7 years ago
so how do you think the money should be spent?
Posted by spetznaz over 7 years ago
Yaaaawn.. no mention of Wiltshire, I thought this was prime tory hunting ground?.. worse than Labour with their subsidies of Wales and the north.

Posted by New_Londoner over 7 years ago
Fair question. TBH best bet to get max bang for our collective buck is to look for some form of matched funding - ie use it to partly fund deployments in the final third areas so that they become economically neutral versus the rest of the country, and see how far the money can stretch.

I just hope that the BBC remains viable in the meantime, as Sky needs effective competition at all levels.
Posted by Legolash2o over 7 years ago
wouldnt that need the fibre tax to be scrapped?
Posted by Legolash2o over 7 years ago
i meant if its not with BT?
Posted by New_Londoner over 7 years ago
@Lego As above, I don't believe the line that some companies are taking about the so-called fibre tax, which is provin ga convenient excuse to justify non-investment.

The UK courts found against them on this, as did the EU, with both finding that no companies were being unfairly advantaged. I note the originator of some of these claims were trying to justify non-payment of long-overdue rates, and even managed to mis-brief their own representatives about the extent of their own network and therefore liability.

So sorry, but case thrown out by multiple courts and other authorities.
Posted by Somerset over 7 years ago
How much cheaper is FTTP to maintain than copper? Remember both can be broken and there is active kit on the end of fibre.

Note there is currently no product for voice over fibre so copper still needed.
Posted by Legolash2o over 7 years ago
still should get rid of the fibre tax, just to see what excuse they start to use :P

Personally i still think think the government should invest in 100% FTTP but others would disagree bet you would too.
Posted by New_Londoner over 7 years ago
100% FTTP - based on principles being applied to spending cuts, not sure why someone in a rural area should be subsidised by tax payers to get a much better service that is available in the bulk of the country UNLESS line length means FTTC, BET etc cannot be deployed, in which case fair enough to offer FTTP as no viable alternative.

The approach of mixed solutions that appears to be on offer in Cornwall seems reasonable.
Posted by Legolash2o over 7 years ago
100% FTTP to the entire country LOL...
Posted by GMAN99 over 7 years ago
TBH people will be more concerned with feeding their families and getting kicked out of home's than subbing the final third based on today's announcements.

Its not exactly the best sell.. Pay for your broadband and pay for someone else's, its the best two for one offer ever!
Posted by Legolash2o over 7 years ago
we;; every other country on this planet is doing it with government support, as i said on another article that the Danish are planning 100% FTTP!

Seriously I think it's just the UK and the broadband investment will be worth it as it would probably make more money in the long run. Jobs, better healthcare, etc....
Posted by zyborg47 over 7 years ago
You watch the quality of content on the BBc go even more downhill now.

FTTC don't bother me, if we get it then we do, if we don't so be it. i prefer my slower unshaped, unlimited cheaper service. too k me long enough to go to LLU. :)

Happy as i am, sure faster speed would be nice, but i am not that bothered.
Posted by russianmonkey over 7 years ago
Lets say theres one person out in the middle of the 'final third'

It costs £50,000 to provide him with an FTTC connection due to the length of the copper from the exchange to the cabinet.

Assuming BT makes a profit on him of say £15 per month, it'll only take over 3000 months to pay it, or 277 years.

Where's the ROI there?!
Posted by russianmonkey over 7 years ago
Cont... I know some people will go "but this fund will help"

Assuming the same rates as before, we can do 10,600 properties... which isn't a lot.
Posted by deadman1984 over 7 years ago
this is great news more money been pumped in for broadband about time to who cares about the cuts lets get our broadband upgraded and get fast stable connections all over least this money will upgrade the smaller areas easy then you simply go up to a bigger area etc my exchange is to be upgraded next year wooo cant wait bring on fibre baby
Posted by Blognorton over 7 years ago
Good to see the BBC thoroughly spanked for its disgraceful behaviour over far too lnog a period. I hope a lot of bureaucrats lose their sinecures. Too much to hope that the bias in their news coverqge will cease.
Posted by Legolash2o over 7 years ago
russianmonkey, that's 10,600 villages not properties assuming each village will have one FTTC cab.

Im sure a farm will be within a mile distance of an FTTC cab if they put them in villages, if they are not then FTTH and maybe the farmer could put some cost towards it.

Back on topic, im also glad its more than the £230m :)
Posted by Legolash2o over 7 years ago
Point to Multipoint wireless maybe a better solution that's what we are getting in our town.
Posted by Legolash2o over 7 years ago

Would be better to put that £2bn towards fibre rollout.......
Posted by MarkHampshire over 7 years ago
The final third is not about a few people living in isolated communities in the middle of nowhere. It is predominantly (based on population numbers) all the people living toward the edge of any medium to large town with only one exchange in the middle, who cannot get 2Mbps. In such cases, you're talking about hundreds or even thousands of homes.
Posted by GMAN99 over 7 years ago
Mark, as far as I know no-one has mapped out the final third so its hard to know where and how many come under that name
Posted by MarkHampshire over 7 years ago
Here's a simple example: Welwyn Garden City. Small to medium size town, exchange in the middle. Pop AL7 2QF into the speed mapping sites and broadband checker, and you'll find that even at only 3km from the exchange to the edge of town, ADSL is not, actually, available at all, let alone at 2Mbps. Now replicate that through the UK.
Posted by Dixinormous over 7 years ago
MarkHampshire - bad example. Market driven FTTC Phase 6, also can get DSL, albeit slow DSL at a Mbps or 2.

WELWYN SMWEP FTTC Hertfordshire Dec 2011
Posted by MarkHampshire over 7 years ago
I lived there. It can't have ADSL - at least not that exact street, though the not spot map shows a few people nearby who have managed to get as much as a half to one meg. That in a small to medium "ordinary" town, not in the middle of nowhere, at a fairly short distance to exchange, and is "final third". Still, good news for a few thousand people that they will finally be getting broadband for the first time in 2011, assuming they do those cabinets. Plenty more postcode examples available - just look at any town of similar size or larger and scroll to the edges.
Posted by ElBobbo over 7 years ago
"Note there is currently no product for voice over fibre so copper still needed."

Made me chuckle. You mean there's no product with BT's stamp of approval because it's in their short term interests to keep the copper network around.
Posted by New_Londoner over 7 years ago
@Mark"all the people living toward the edge of any medium to large town with only one exchange in the middle"

Don't think these count as the "final third" as any FTTC installation will address them. Analysis Mason and others have produced reports with maps showing where the final third might be.
Posted by Somerset over 7 years ago
ElB - tell us more.
Posted by Somerset over 7 years ago
The issue is how you have different suppliers for voice and broadband.
Posted by MarkHampshire over 7 years ago
I wasn't aware that FTTC - which is still going to take another five years to reach 66% of people - allegedly - was deliberately targetting all the final third areas on the edge of towns or was in any way meant as a comprehensive solution. Just because an "exchange" is enabled doesn't mean that any specific areas it serves will be.
Posted by ElBobbo over 7 years ago
Somerset - VOIP, and multiple VOIP providers? You know it's all switched as it is, right? Calls are routed digitally once they hit the exchange right now.
Verizon, Utopia, FTTH around the world all offer internet and digital phone services.
Having the option to choose different VOIP and internet providers would be trivial.
Posted by themanstan over 7 years ago
Was the USO changed? Or is BT still required to maintain a working copper network parallel to the fibre one? If that's the case then they still have higher operating costs maintaining two networks... and they can't get rid of copper without OFCOMs say so.
Posted by New_Londoner over 7 years ago
You're right that Verizon offers VOIP, doesn't offer a choice of providers though, as far as I can recall.

The edges of large towns are not in the final third by default, just being a long way from the exchange is not an issue with FTTC. You're right that not every cabinet is covered, but no reason to think that this means everywhere a long way from an exchange.

As before, see Anaylsys Mason report for their projections of where the real final third area might be.
Posted by chrysalis over 7 years ago
have any city areas not in the FTTC rollout had funding like this yet? seems to be only rural areas.
Posted by Legolash2o over 7 years ago
I would love for an organisation to go round door-to-door asking questions about their broadband needs.

1. Are you happy with your broadband connection?
2. Do you want faster speeds in your area?
3. If faster speeds where made available would you sign-up to that package?

No i don't mean online surveys as not everyone has the internet. I mean actually going to door-to-door, face-to-face. No 'RaceToInfinity' crap, physically asking people about their demand is the only way to know. It would stop the argument once and for all.
Posted by Legolash2o over 7 years ago
ISPs say there is no demand for great speed in villages, how do they know.. have they asked, doubt it.. Maybe they dont want to pay £30 extra for just half a meg but would pay £30 for FTTC.

So as above, the only true way to find out about demand, who wants/needs faster broadband is to go door-to-door to find out, any agree?

They probably afraid of the answer...
Posted by Somerset over 7 years ago
ElB - perhaps you could explain how you would separate VOIP out so copper can be removed.
Posted by GMAN99 over 7 years ago
Door to door? Seems a bit expensive why not just phone people?
Posted by Legolash2o over 7 years ago
Phoning people would be fine and yeah cheaper, just as long as most the people get asked.

EIB, well if you had FTTC then the calls would get converted at the cab, you can buy a VOIP ATA Adapter and plug you phone into it and it would be converted to VOIP.
Posted by Legolash2o over 7 years ago
Somerset not EIB.

Anyways, in the CAB it would be done be in a similar way. So in the end it goes down the copper but then gets converted on-the-fly when it reaches your cap essentially removing the copper between the cab and the exchange :)
Posted by Somerset over 7 years ago
Remove the copper from cabinet to premises is the question.
Posted by Legolash2o over 7 years ago
That's even easier. BT, TT, Sky, etc.. would have to sell VOIP services, VOIP phones have so much more features :P

You get given a number and if your phone is setup correctly, you could plug it into any network in the world and you would still get calls from that number :P
Posted by Legolash2o over 7 years ago
Our current providers BT, TalkTalk, Sky, etc.. don't offer any VOIP packages, even to those who already have FTTH.
Posted by Legolash2o over 7 years ago
When BT provided those HomeHubs with the extra phone, you could assign it a different number, thats pretty much how it would work if you had FTTH. Correct me if im wrong.
Posted by New_Londoner over 6 years ago
Legolash2o "Our current providers BT, TalkTalk, Sky, etc.. don't offer any VOIP packages, even to those who already have FTTH"

My Infinity HomeHub has Broadband Talk, so definitely gives me VOIP. Same with Total Broadband previously. Not sure about the other providers, but BT definitely offers VOIP.
Posted by weeji over 6 years ago
could anybody tell me if the barrhead exchange in glasgow will be enabled, it holds 14000 residents and alot of customers ,like myself are over 6km away from it ( pollok, silverburn area)nobody gets speeds over 1.5mb.please help
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