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BT seek government funds to deliver 90% super-fast broadband by 2017
Friday 03 December 2010 12:07:26 by John Hunt

BT are offering to match £830 million of government funding to provide super-fast broadband to 90% of the population by 2017. The news reported by The Times says that BT will ask the government for funds from the TV license fee to allow it to deliver faster services to much more of the country. The company is to formally make the offer next Monday when the government broadband strategy is released.

It was thought that the license fee contribution from the BBC would be less than this but The Times say that £150 million a year will be contributed toward broadband projects and combined with ab additional £230 million that has been made available from the surplus funds from the Digital Switchover underspend. A department of the Department for Business Innovation and Skills, Broadband Delivery UK (BDUK), has been tasked with helping industry meet the governments plans for universal broadband and to stimulate private investment.

One of BDUK's business aims is to create a level playing field between incumbents and new providers, and this means it is unlikely that they will handover all their money to BT to help fund the rollout. There will be competition for the funds, particularly with small rural projects proving that they are able to deliver services economically that BT were unwilling to do (e.g. Rutland Telecom's FTTC deployment). Trials are to begin in four areas to evaluate technologies that could be used for broadband deployments.

The Times also report that BT will roll out fibre-based broadband to an additional 40 rural market towns that were previously seen unviable. They will also begin a pilot begin next year in Kesgrave, Ipswich, close the BT's technology base at Adastral Park, to pilot 1 gigabit (1Gbps) per second broadband. This trial will mean that we are looking forward toward faster speeds similar to those seen in Japan and Korea. Although a business case for these kinds of access speeds is currently lacking, any investment in to future proofing the network for years to come should be welcomed.

Comments

Posted by MarkHampshire over 6 years ago
"BDUK has been tasked with helping industry meet the governments plans for universal broadband and to stimulate private investment.
"

The market has failed, we know that. Hence:

"BT are offering to match £830 million of government funding to provide super-fast broadband to 90% of the population by 2017."

Quelle surprise, here comes the begging bowl. So predictable, you just couldn't make it up.
Posted by New_Londoner over 6 years ago
Fantastic news if FTTC/P reaches 90% of the population, and for a relatively tiny public sector investment compared to pretty much every other country.

@Mark Not sure I'd characterise the government's £830m as a begging bowl, looks like a pretty good investment if BT has offered to match it.
Posted by Somerset over 6 years ago
Something has to happen, just do it.
Posted by TheGuv over 6 years ago
Not as much a begging bowl - more opportunistic IMO. Smart move for Openreach/BT Wholesale if it comes off.
Posted by doowles over 6 years ago
"Although a business case for these kinds of access speeds is currently lacking, any investment in to future proofing the network for years to come should be welcomed."

And thats exactly the kind of attitude that keeps us behind everyone else. We should be putting the technology in as fast as possible and creating new business opportunities.

Not the other way round :(
Posted by MarkHampshire over 6 years ago
Indeed so. That's the attitude you get when you have a defacto monopoly, conflicts of interest, and as a result negative competition. Put more taxpayer's cash into it? Opportunistic yes. Give the 800m to someone else for LTE and/or fibre using the existing ducts and poles, and I guarantee BT will "find" the money by themselves. Then you'd have, er, a market. The sort of things which "stimulate private investment", to quote... or just keep going and find lack of investment further down the line for the identical reasons and out will come the begging bowl again.
Posted by themanstan over 6 years ago
If £830m is all that they're asking to deliver fibre based products to another ~30% of the population who would be left outotherwise, then it seems good value to me. As is highlighted in the article, there is no business case for investment in these areas so it's the goverments job to encourage invesment in infrastructure! It is not BTs or VMs or any other ISPs job to make losses on infrastructure investment.
Posted by timmay over 6 years ago
This is very bad news because if BT/Openreach are successful it will leave 10% of the country unable to get anything. There would be no business case to connected the scattered few missed houses and villages due to no economy of scale and scattered/remote nature of the not-spots! If BT is to get any funding at all it should be to provide 100% fixed line coverage. 2017 is also a long way off and I doubt 40Mbps will be considered broadband by then.
Posted by New_Londoner over 6 years ago
@Timmay The costs for the "final 10%" will rise disproportionately for fixed broadband provision. Surely this is where satellite and mobile could play a useful role.

You'd need a lot more than £830m to reach them with FTTC/P.
Posted by New_Londoner over 6 years ago
@Mark

The flaw in your argument is that there is not exactly a queue of companies wanting to spend serious money at present.

Why put public money into LTE etc when you can get a much more reliable service with FTTC/P? Mobile has its place for people on the move, and possibly in remote areas if a single cell can reach a large area, but is not suited to serving large numbers of people for long periods.
Posted by MarkHampshire over 6 years ago
The reason no company is going to invest in the infra needed is covered by "defacto monopoly, conflicts of interest, and as a result negative competition" - in particular, that last one.

BT want the taxpayer to help buy them a broadband network as, having woken up, they realise that the phone network is... well, just a phone network, and fixed line telecoms are dying.

If we had that level playing field which BDUK is supposed to be engendering, this news item wouldn't even exist today (and nor, perhaps, would BT)
Posted by New_Londoner over 6 years ago
@Mark

Sorry but your comments dont fit the facts. difficult to see how "fixed telecoms are dying" given the growth of broadband (now over 70% of homes), deploymnet and take-up of FTTC/P etc?

You've got the govt. funding the wrong way round too. The government announced the availability of the £830m a while ago, this looks like a proposal to match fund it in order to get superfast broadband to 90% or so of the population, vs. 66% without public funds.

Contd.
Posted by New_Londoner over 6 years ago
I don't see the issue with this - what is stopping other companies making counter offers if they wish? At least this seems to be a concrete proposal backed by substantial investment, that might actually happen, rather that the nonsense normally spouted about "digital village pumps" etc.
Posted by Dixinormous over 6 years ago
'Give the 800m to someone else for LTE and/or fibre using the existing ducts and poles, and I guarantee BT will "find" the money by themselves. Then you'd have, er, a market.'

If there's so much room for a market why hasn't someone else already deployed there?

You realise BT won't need to find the money, those networks have to be open access.

Anyone would think BT will build then sell BT Infinity exclusively, crazy.
Posted by Somerset over 6 years ago
No mention of 40 rural exchanges to get FTTC.
Posted by GMAN99 over 6 years ago
What strange views Mark. BT won't go to some areas because they are not commercially viable. The "government" want super fast broadband across the country and they are asking them to put up some cash to enable it, once in its a wholesale access that any ISP can use. No-one else is interested in doing this, no-one else is funding it themselves or asking for gov money. What do you suggest just leave people with access to faster speeds?
Posted by c_j_ over 6 years ago
"looks like a pretty good investment if BT has offered to match it. "

Looks like a pretty good way of forcing BT's other customers to pay for it, you mean?

Other suppliers don't have the option of funding proposals like this by taxing their broader customer base, because other suppliers in general aren't appallingly regulated monopolies whose 'management' and 'regulators' should be first against the wall when the revolution comes.
Posted by GMAN99 over 6 years ago
Why would other BT customer's be paying for it?
Posted by MarkHampshire over 6 years ago
Can't we put this "commercially viable" thing to bed once and for all. I'm not talking about places in the middle of nowhere which are not economic to service. Like where I live, for example, population 1300 who have to make do with 3G or even worse ADSL. I mean people in large towns hanging on the edge of an ADSL connection managing 1Mbps. No cable. No LTE. So no competition = no viable business case. Introduce competition. Suddenly, a viable business case appears. Now replicate that over the whole country.
Posted by Dixinormous over 6 years ago
The people in large towns who are being done in the 2/3rds commercially driven roll out you mean?
Posted by MarkHampshire over 6 years ago
"If there's so much room for a market why hasn't someone else already deployed there?" - a large part of the reason is that the poles and ducting were previously only available to the BT Group to use. That only changed very recently. That change should be significant.
Posted by MarkHampshire over 6 years ago
What 2/3 commercially driven rollout?

FTTC is not intended to be a solution for the so-called final third. If it were, for one thing, there would be zero or near zero overlap with VM areas.

However in 5 years, once it's rolled out, given the extended reach even though the signal still has to go down potentially miles of useless phone line, we might be talking about the "final quarter" perhaps.
Posted by MarkHampshire over 6 years ago
@NL - fixed line phone services and fixed line broadband share nothing in common except a piece of wire only really suited to the former, and one incumbent quasi-monpoly provider intent on making people think the two services are in some way related to each other.
Posted by Somerset over 6 years ago
Mark - what do you see happening with access to poles and ducts?
Posted by New_Londoner over 6 years ago
This debate seems determined to ignore what is potentially good news, namely the proposal that matched funding of the governmemnt's £830m will provide super-fast broadband to 90% of the population by 2017. How anyone can see a downside in that is beyond me?

And then there is the reference to deploying rather more quickly to 40 market towns, not to mention the pilot of 1Gbps broadband. I would of thought that woudl be cause for celebration by most of us, but clearly I'm missing something!
Posted by MarkHampshire over 6 years ago
"I don't see the issue with this - what is stopping other companies making counter offers if they wish? At least this seems to be a concrete proposal backed by substantial investment" - agreed. I don't see why BT are any further ahead in the tender than anyone else, this fibre thing is brand new to them too. So I very much hope that companies like BE who are well thought of can get their finger out instead of crowing about how good their backhaul or network is at the back end when it's strangled to death by the last mile for many/most.
Posted by GMAN99 over 6 years ago
"share nothing in common except a piece of wire" - I'd say that's a big share!
Posted by GMAN99 over 6 years ago
No NL it all sounds like good news to me your not missing anything. It would be nice if they named the up to 40 market towns. I would also be nice to get on that 1Gb trial ;o)
Posted by c_j_ over 6 years ago
"Why would other BT customer's be paying for it?"

Who do you think pay for anything that BT do? BT customers (and BT employees and, maybe, shareholders).

This is not "BT offering £830M to match ...". It's BT offering to take an extra £830M off their other customers (BT won't want to take an £830M hit in their bottom line, or even pay the cost of borrowing, if customers can be made to pay instead).

A small ISP like Be doesn't have that option. If they want an extra £Nmilion revenue to cover an £Nmillion spend, the resulting price increase means their customers all go elsewhere.

Clearer now?
Posted by chrysalis over 6 years ago
its pennies for the government especially if the outlay was spread out evenly between now and 2017, however I would insist on a faster rollout, 2017 is a while off and by then FTTC will be obselete.
Posted by Rocklett over 6 years ago
Hmmm, last week BT announce they are lowering the minimum speed of their FTTC product to 5Mbps in order to provide a bigger footprint and on Monday they are to announce they can roll out Fibre based broadband to 90% of the country. One would hope the gov don't fall for this or 5mbps will be considered 'good enough'.
Posted by GMAN99 over 6 years ago
c_j that's a bit of a strange statement, so it surprises you that money taken from their customers is used to expand their service and goes into R&D and lots of other areas? That's how any company operates, you use the money to invest. Since when are they taking an "extra" anything from anyone, what is going up that you know will cover this £830m?
Posted by GMAN99 over 6 years ago
I pay Sky (spit) each month for Sky+ I don't have SkyHD but I've no doubt at all some of my money paid over the last x years has gone into developing SkyHD and subbing SkyHD boxes for other customers. I don't see that as a problem.
Posted by GMAN99 over 6 years ago
Your basically booing BT for having more money than Be? that's not really a decent argument is it?
Posted by MarkHampshire over 6 years ago
Imagine the recession means that lots of shops close. Tesco then buy up all the commercial retail property in the country. They then have to be regulated on rents to stop them pushing everyone else out. The slippery slope begins. A few years later, the high streets are literally falling to bits as there is no investment. Why would there be? Tesco then hold out the begging bowl. At the same time, everyone pays more for poorer services, and at the end of the day, Tesco gets the lions share of the spending both directly and indirectly. That's the key difference between BT and everyone else.
Posted by themanstan over 6 years ago
Hmmm.... c_j are you saying that BT should not invest their profits into new infrastructure? I mean companies are supposed to make profits, give some money back to investors as dividends and re-invest the remainder to ensure that they continue as a going concern. Your statement seems to fly in the face of normal business practice... unless of course you mean that we will see across the board price increases to fund this venture?
Posted by MarkHampshire over 6 years ago
Yes, what you describe is how businesses should work. But when you have a monopoly in nearly half the country, you can do things a little differently via the begging bowl approach.
Posted by GMAN99 over 6 years ago
So what are you suggesting then Mark, this extra 24% (I think they said they'd cover 66% on their own) that this joint venture would cover should just be left as-is and so should Cornwall? So what if BT have more infrastructure in more places, the product is wholesaled so others can use it, your not tied into using BT as an ISP
Posted by chrysalis over 6 years ago
check this article http://www.bbc.co.uk/news/technology-11911478. I seems BT is after that money, that means it will only be used in rural areas and that there will be highly populated city area in the remmaining 10%.
Posted by MarkHampshire over 6 years ago
Put it like this: if we used the funding for LTE, we'd get LTE *and* FTTC for free from BT who *will* find the money. We'll also get a market, the lack of which is the main driver behind our poor broadband speeds and dreadful next gen readiness.
Posted by MarkHampshire over 6 years ago
The BBC article has the same dichotomy:

"..to boost broadband roll-out - by stimulating competition and creating an environment in which business can flourish by removing barriers and cutting costs"

So, that would be sorting out the fibre tax, splitting Openreach away from BT, tax incentives for LTE and sorting out the frequencies? Er, no.

"The government is set to provide £830m for firms"

Compatible statements, or just wilful lack of imagination and determination to tackle the inherent issues?
Posted by GMAN99 over 6 years ago
We've got a market Mark, the problem with it its too cheap which means no-one has the money to invest in anything as the price paid by the customer leaves barely anything for investment.

How are you going to split OR from BT. Who will buy it the government?
Posted by Dixinormous over 6 years ago
There's a consultation on business rates for fibre being done. Splitting OR from BT is not plausible. PIA is coming soon. The BBC are reporting on the story in hand that's all.

The 2/3rds I referred to are the 2/3rds that aren't the final 1/3rd you discuss.

BT would be unlikely to duplicate infrastructure in the near future as any built with public funds has to be open access.

You're taking this all awfully personally.
Posted by themanstan over 6 years ago
Um... removing the most profitable part of BT, how's that going to work? You'd need to split Openreach too. So that Openreach becomes the backhaul and then the portion that supplies the end customer belongs to Retail (the ISP bit) just like all the other ISPs that are served by BT and have LLU. And how do you decide how much backhaul to give BT from Openreach so it's on an equal footing with the other ISPs? Unless your plan is to totally emascualte BT at which point, the government ends up forking out loads of money to the investors for the devalued company.
Posted by GMAN99 over 6 years ago
"- a large part of the reason is that the poles and ducting were previously only available to the BT Group to use." - Also I'm afraid some have this wild fantasy that this will make a difference. The only ISP interested is Virgin. Other ISP's can't afford this and its too inflexible for them, why would say o2 lay fibre to a area where it might end up with only one or two customer who might leave after 12 months?
Posted by GMAN99 over 6 years ago
Its much easier cheaper and flexible for them to rent a virtual service and rely on someone else to put the cabling in place (BT). So... I'm afraid this "access to the ducts/poles and the race is underway" is a bit of a fantasy, in my eyes anyway
Posted by otester over 6 years ago
When you have a system designed to encourage monopolies, don't expect much from the private sector especially when you also hamper what's left with heavy regulation.
Posted by Legolash2o over 6 years ago
I don't see why people are complaining about this, it best if BT have the money, as it has to be shared for other ISPs to use.
Believe it or not but BT know a lot about fiber optics... i think BT should get it especially when they are offering to match the 830m funding which is £1.660bn for faster broadband.

Total would then be £4.16bn... Stop complaining!
Posted by GMAN99 over 6 years ago
If the money can go to another telco that will match BT's monetary input and has the same or a better plan covering as much as BT will and it will be wholesaled I'll be more than happy for the money to go elsewhere.
Posted by Somerset over 6 years ago
Nothing preventing VM installing to every property in the country.
Posted by herdwick over 6 years ago
"fiber to the home may be no more worth of subsidy than Concorde. Flashy and exciting, to be sure – but ultimately not worth the price"

http://bit.ly/i486CN
Posted by GMAN99 over 6 years ago
I've never believed the economic benefits from the outset, its all guff. There's nothing at the moment that we could shove down fibre to the home that would hugely benefit the economy. To businesses sure but that already exists, to the home, no.
Posted by Somerset over 6 years ago
Fibre is a solution, not a requirement, for those in no and slow spots. Slow probably means <10M.
Posted by jumpmum over 6 years ago
Some of you are mad this is BT Openreach going to do this and everybody then gets access; Reality is if BT (Openreach) do it they (have to) wholesale it to every ISP at the same terms. If anyone else does it it will be a monopoly. All credit to Rutland but you have to buy the service from them where they have provided the BB, there is no choice. Where Openreach have provided it any ISP can buy it on the same terms and provide the different services you are all used to!
Posted by jumpmum over 6 years ago
Contd GEA as used on FTTC and FTTP is just a bitstream service and enables all ISPs to provide the service levels they want and the bells and whistles you want, with the choice of provider you want. IF the ISPs want to do it. Anyone prepared to build or rent backhaul from the head-end can do so and compete. Connection is £75, Annual rental £82.50 and the GE is £2000 connection fee.
see http://www.openreach.co.uk/orpg/home/products/pricing/loadProductPriceDetails.do?data=yzq%2FQaGYa3hVgsB2ZYfjHxzfISuq3px%2FWFtgATP2kPRZ6rNZujnCs99NbIKJZPD9hXYmiijxH6wr%0ACQm97GZMyQ%3D%3D
Posted by matbarrie over 6 years ago
Will 50mbs in 2017 still be 'superfast'? It may well be the same as 2mbs today.
Posted by MarkHampshire over 6 years ago
@Legolash - this is a great whitewash. What it's about is a private company getting public funds to install a broadband network they can then sell back to us. Not super-fast, by any means - at the moment, remember, 256kbps is broadband to BT. That won't be changing. The definition of broadbnd, however, should change - suggest 4Mbps is very basic minimal broadband. So all this "90%" programme will achieve is to get most people "broadband" of some description.
Posted by Essex over 6 years ago
The usual BT con trick has risen from the dinosaur grave.

Promise the earth in 7 years time . It alwats promised this and tha in the past. It is needed NOW. We are in this mess because of BT's past dithering and stranglehold on the infrastucture and the regulator.

Posted by cyberdoyle over 6 years ago
http://broadbandcumbria.com/2010/12/15/broadband-nga-fttc-and-the-laws-of-unforeseen-consequences/
great blogpost continuing the discusion with possible futureproof solutions...
chris
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