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Is the super connected cities voucher scheme working?
Thursday 01 May 2014 09:30:58 by Andrew Ferguson

The Super Connected Cities scheme got off to a shaky start, its original intention was to ensure islands of ultra fast connectivity existing in a good number of UK cities, but EU State Aid objections killed that idea and the current broadband voucher scheme for small business was the result.

The BBC has highlighted the apparent lack of interest in the Oxford scheme where in the month since the schemes launch there has been just two applications. Portsmouth has seen four applications and Brighton nine.

The DCMS in the BBC item claims the scheme has seen hundreds of applications elsewhere in the country, and we know of one unnamed altnet provider who has had 100 sales via the scheme and appears to be gearing up to handle more. The variability may simply be a factor of how much interaction each city council has with the business community making sure firms are aware of what is available.

The scheme used to require to estimates when applying for a voucher, but this was recently dropped to one to make the application process easier and it is worth pointing out that home workers and sole traders can also apply. The caveat for key workers is that working from home must be for the majority of the time, rather than the occasional day home due to a tube strike. Vouchers can be anything from £200 to £3,000 in value but only cover the installation and connection of the service and requires whatever is purchased to be a step change in speeds, which means a business can actually order a business grade FTTC service as an upgrade from ADSL, if they can find one with a high enough install fee.

We along with many people think that the pricing of Openreach Fibre on Demand was aligned to the value of vouchers available via the scheme, but looking at the various schemes there is a wide range of alternate networks available that are independent of Openreach. There is actually a chance that the voucher scheme might help kick start competition and allow some smaller operators to expand and become a larger force in the cities where they operate, i.e. we may see a subsidy scheme that increases competition.

Most of the cities taking part in the scheme are also planning on rolling out Wi-Fi coverage to public areas and there is a fair bit of competition from operators to get this business and get their hot-spots into street furniture.

Comments

Posted by Selcoms over 3 years ago
Altnets are really benefiting from this scheme. We support a lot of ISPs that are using wireless to deliver gigabit links under this scheme, last month (April) we supplied around 80 links as a direct result of this initiative. Not a lot in BT terms, but a great result for our customers.
Posted by prlzx over 3 years ago
A significant flaw exposed (by conversations with organisations who feel unable to take advantage of the scheme), are the restrictions about what the vouchers can pay for.

If the vouchers were allowed to cover the first 12 months of service (as well as one-off installation) they would have time to develop the benefits and justify budgets or additional funding for subsequent years.

For example no good if the vouchers help install a leased line if they can't already find the monthly cost (in which case they could already afford the install).
Posted by prlzx over 3 years ago
Also there is a funny smell about it if the 2 companies that objected to (integrated) city-wide plans in Birmingham conveniently end up being selected for (piecemeal) voucher scheme take up.

Those companies already have sufficient national market share not to be threatened by a few cities but it is as if they preferred a spoiler tactic to celebrating the opportunity for a city to even try out a different approach.
Posted by prlzx over 3 years ago
Voucher schemes try to apply a method used for e.g. childcare to improving internet connections which are clearly not analogous situation,

but a common element is how it allows a national government to take the credit if it works but shift the blame to local authorities if take is low takeup, and ignoring for example quantifiable factors such as regional economic variations.
Posted by prlzx over 3 years ago
A recurring misconception - a city mapping out zones of public (as in street-level) Wi-Fi needs to be clear static outdoor Wi-Fi points do not provide indoor coverage nor inside local buses trains or trams.

The benefit of street-level Wi-Fi is less than thought unless people are hanging around in zones for some time, so is best targetted at spaces where people naturally congregate e.g. Public squares, transport hubs and hopefully some green spaces.

Wi-Fi along an arterial road does not really address the original aim of "Super-Connected cities".
Posted by HesdinUK over 3 years ago
As Head of Change at Westminster City Council I was responsible for getting the scheme going in London. I have been so impressed about how well the altnet providers have taken up the scheme I've left Westminster to go and work for one (cflbusiness.co.uk) that is offering a 30/15 Mbps service for £40 per month, just the price point that small and medium businesses are looking for. I agree with Selcoms and the article that the scheme may actually increase competition.
Posted by themanstan over 3 years ago
@prlzx

These schemes should never cover running costs. Their purpose is to defray capital outlay which is the challenge for small business. These will always be from different budgets, operating costs will be part of your monthly cash flow and capital outlays are capital items, single large investments. That can be the most risky, especially if you need to raise your debt level or reduce your margins on monthly cash flow.
Posted by AndrueC over 3 years ago
@prlzx: "where people naturally congregate e.g. Public squares, transport hubs and hopefully some green spaces."

..red light districts?

:)
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