£100m sounds like a lot of money, but when you consider that Australia is investing some A$27.5 billion in its National Broadband Network, one can perhaps better judge the Governments commitment to Broadband as a national infrastructure project.
The Chancellor did not talk about the £100m that would be shared around ten UK cities in his speech, but it was covered in the National Infrastructure Plan 2011. This Urban Broadband Fund is in addition to the £530m BDUK funding that is meant to ensure a 2 Mbps Universal Service Commitment, and where possible in all local authorities ensure a superfast broadband connection (25 Mbps or faster) is available to 90% of properties/businesses. A further £300m would also be available in the 2015 to 2017 years, which has previously been announced. The speed target for the cities is also higher than the superfast definition the BDUK uses, with a target speed of 80 Mbps to 100 Mbps.
Four of the ten cities are known already, London, Cardiff, Belfast and Edinburgh, the remaining six will be determined in a competition. The four national capitals have a combined population of around 9 million people, and already have widespread superfast services from Virgin Media and Openreach as will the vast majority of cities across the UK within the next year or two. The key part to this investment appears to be that it is an attempt to address those parts of each city where businesses are unable to get superfast broadband, due to firms like Openreach or Virgin Media deciding to not invest in that part of a city.
This patchy coverage arises due to the legacy of when the Virgin Media fibre/coax network was rolled out, and for FTTC products Openreach generally does not enable all street cabinets on an exchange for the service, based purely on whether it believes each cabinet can meet their ROI targets.
The problem in cities is generally not that of availability, it is one of an affordable service being available to a business. For example an 80 Mbps guaranteed service across a 1Gbps fibre link can be installed in Cardiff for around £5,000, with a monthly rental of £2,400. This looks expensive, but the 80 Mbps is actually guaranteed, and there would be no problems if the business did utilise this bandwidth 24/7. The figures become much more affordable if an Ethernet service such as this were to be shared between 5 or so businesses in the same building. The cost in rural areas increases, a postcode in rural Surrey for the same service could cost £8,000 to install, and £3,700 per month to rent.
We would like to think that firms such as CityFibre and Geo Networks will be in the running for this extra investment, and provide full fibre to the properties that would benefit. Unfortunately the reality of splitting £100m across such a large area means, the most likely result is a FTTC solution, where a cabinet that may serve 50 to 100 premises can be enabled for VDSL2 for around £20,000 to £40,000. Which nicely dovetails into the roll-out plans of Openreach.
In terms of a Broadband UK, filling the final gaps in the cities will help the image of a modern connected country, but at a time when firms like Fujitsu are saying the sums do not stack up for a quality solution outside the main cities in Scotland, then one has to conclude that this investment is actually increasing the Digital Divide. Ironically one conclusion of this investment may be that businesses that need better affordable broadband gravitate towards the larger cities, thus adding further strain to transport infrastructure. Congestion is such in most UK cities that a reversal of the migration to cities that started with the industrial revolution is needed, and ensuring provision of affordable superfast broadband in the market towns would go some way towards this.
In terms of further money, the Plan does reveal that some draft guidance is being produced to try and help local areas access the European Regional Development Fund with a view to securing additional funds for broadband investment, with perhaps another £100m available via that route. The plan makes no mention of future attempts to secure funding for the UK from the £8 billion the EU is making available to enable countries to meet the 30 Mbps for all by 2020 target, which should start to be available in 2014 and onwards.