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£400m fund aims to kick start FTTH roll-out to 2 million premises
Tuesday 22 November 2016 09:43:25 by Andrew Ferguson

Has the Government been shamed into funding a pure fibre roll-out?

Ahead of the Autumn Statement it has been revealed how much money will be in the Digital Infrastructure Investment Fund, a concept that was mooted in 2015 but never got the money needed. The sum of £400m is apparently considered enough for 2 million premises of FTTH/FTTP or if you prefer headline ready superlatives hyper-fast or pure fibre gold standard broadband. Call us boring but call the technology what it is rather than try and find a fluffy name for it.

This is not a give away, investment funds usually have to be returned under various conditions and our understanding at this time is that operators seeking to access the fund would need to match fund and/or access commercial investment.

Two million premises is around 6.8% of UK premises but it all depends on alt-nets and smaller operators drawing down on the fund and some may prefer to continue as they are operating on their own community funding, or borrowing from commercial investors. BT as part of its 12 million ultrafast premises roll-out is aiming for 2 million FTTP premises and Virgin Media recently announced that 2 million of its Project Lightning roll-out would also be FTTP based. Combined this is potentially coverage of 20%, and with the addition of others like Hyperoptic, KCom, Gigaclear, IFNL, Community Fibre, B4RN and others something in the 20 to 25% might be possible a lot depends on the degree of overlap.


Click image to zoom in
Interactive map showing multiple FTTP operators in the UK

The current situation of 1.94% FTTP coverage is shown above, and looking at it you wonder how that can be just 1.94% of UK premises, and the answer is a good number of the postcodes in rural areas comprise just one premise.

There are some calls that this money is being spent wrong and should not be spent on pure fibre, but rather on those who get the slowest speeds i.e. the 230,000 getting under 2 Mbps and the 1.1 million under 10 Mbps. The difference with this fund versus the previous BDUK project is that it will be down to the operators where they deploy, and given that Openreach VDSL2 has held up reasonably to competition from Virgin Media with 200 and 300 Mbps speeds one would expect the smaller providers to focus more on the market where high take-up rates are guaranteed.

A key point is that this fund is not about building more backbone, numerous wholesale options for that already, but delivering the fibre directly into the homes and offices of businesses. Additional points are how long will the fund be accessible for and what time frame are operators expected to deliver within and are there minimum speed targets i.e. its perfectly possible to deliver FTTP but only sell a 50 Mbps service.

Will this stimulate BT to do more? Well that all depends on the other announcement that is expected soon, i.e. will Ofcom pursue a full separation of Openreach from the BT Group or accept the half-way house deal on the table? If anything the availability of investment money for smaller operators and the excitement this announcement is generating suggests that a full separation could be a step too far, i.e. an unleashed Openreach given access to ready funding would be able to dominate the access market even more than it does now, or put another way by being tied to the older BT Group it has lots of legacy commitments, but a live or die on its own feet would demand and probably be given more freedom to deliver what TalkTalk, Vodafone and Sky have been campaigning for.

Comments

Posted by gerarda 14 days ago
Is this going to be an hyperfarce to replace the current superfarce, spending more money on borderline commercial areas while ignoring those in the greatest need, an approach "justified" on the basis of "return on investment"?

Posted by andrew (Favicon staff member) 14 days ago
As far as we know the areas covered are all down to the operators, so if 1000 B4RN clones can raise the match funding, every highland farming area and hamlet could have Gigabit.
Posted by gerarda 14 days ago
We aren't likely to have 1 B4RN clone never mind 1000 if there is need to make a return on investment.

If getting a return was possible then other clones would already be in place.
Posted by burble 14 days ago
Maybe I've been to simplistic in my reading of this, but it seems public money is to be used where private funding should be able to cope without help.
Posted by godsell4 14 days ago
private funding wants to see an ROI much sooner than is possible with an alt-net, unless the alt-net charges a large install cost or monthly fee and joe public baulk at that immediately even if it is hobson's choice. So this will push the alt-nets into locations where BT have decided they are marginally uneconmical only, so on edges of large towns and villages with +50 properties.
Posted by Kareha 14 days ago
Wow, 2 million homes, they really spoil us.
Posted by hvis42 14 days ago
The problem I see with thisis that this becomes a vicious cycle targeting low hanging fruits (like G.Fast). Those already on FTTC will see speed go up, and those in remote areas and urban EOLs suffering from sub 2Mb/s today won't benefit anything. It is just more "economical" to invest where they already have done things right.
Posted by WWWombat 14 days ago
Hmm. Only £200 per property?

IIRC, the current BDUK subsidies to Gigaclear allows them to budget an extra £500 per property (£1,500pp instead of £1,000pp).

That suggests the government don't have in mind a project that takes FTTP to the edge of today's superfast rollout.

It looks more like an attempt to have altnets involved in Ofcom's target: 40% of core Britain getting a third, pure fibre, competitor to BT and VM.
Posted by TheEulerID 14 days ago
@WWW

The legality of a third, publicly subsidised broadband operator in areas where VM and BT will provide NGA networks in the "ultrafast" category is going to be highly questionable, even if/when the UK leaves the EU, and it's completely out of the question now.
I also image it would cause a storm among Conservative MPs with under-served rural constituents if money went to those who were already had a choice of NGA providers.
Posted by WWWombat 14 days ago
Subsidies might be questionable, but a repayable investment fund less so.

Having listened to Radio 2 (nice appearance by @Andrew), you can tell how much angst it will cause if this money goes to anyone who gets more than 2Mbps.

But I can't see it being enough of an investment to target those people. To persuade a semi-commercial entity to bother.
Posted by TheEulerID 14 days ago
@WWW

Even a repayable investment fund would need to fall within state aid rules if there is comparable commercial investment. If it's, in effect, a repayable loan and other operators have to use commercial funding sources in the same area it could still be a big problem, especially if it was de-risking and on soft terms. Whilst it's not quite BDUK (only opart of which is repayable with "claw-back", it has certain similarities and that required an OMR.
Posted by RuralWire 14 days ago
This appears to be really quite simple. Having got a bit bored with subsidising the superfast cherry picking with BT, HMG now wishes to spice up the proceedings
by investing (on commercial terms) in some hyperfast cherry picking with the alternative network operators.
Posted by pug205rally 13 days ago
As ever it appears those adequately served are likely to benefit and others are left behind as I cannot see the investment going anywhere other than the most technically easy to achieve. Most BDUK funding appears to have been allocated on meeting a notional definition of high speed internet for a few, not a marginal increase for the many it would appear and this feels like more of the same
Posted by WWWombat 13 days ago
It looks like this money shouldn't be thought of as for rural areas, or as a way to reduce the digital divide, or for "superfast"-level work.

Those targets are being handled elsewhere - BDUK and the USO - with work likely ongoing for more than 4 years.

This money really looks to kickstart altnet competition for the enhancements to come beyond superfast.

That *might* happen in rural or fringe areas, and it might not.

It *will* happen in parallel with BDUK/USO work. Yes, that will cause howls of protest.
Posted by RuralWire 12 days ago
@WWWombat - The investment fund is not about delivering better internet access to the harder to reach rural homes and businesses, but neither is BDUK. That's
the point that some folk are making. A case of marginalising the marginalised. That's not the mood music that the Government, the FTTC/G.fast corporate suits or
the FTTP fashionistas wish to hear, but that's tough.
Posted by godsell4 11 days ago
I can confirm, as one of those in the final 3%, but really not far from civilisation, BDUK cash has been planned for other locations and the USO seems a long way off.
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