LSE calls for Government to put more into broadband pot
Academics behind a paper that looks into the Costs and Benefits of Superfast Broadband in the UK, believe they have identified a shortfall in the funding for the 2 Mbps Universal Service Commitment and the secondary goal of 90% of the UK having access to superfast broadband (service at 25 Mbps or faster.
The shortfall is not small, it is some £1,100 million, with around £1,300 million already coming from the various public authorities behind the BDUK projects. The FT has a comment from a DCMS spokesperson indicating that this shortfall has been known about for sometime, and the public money was meant as a stimulus to reduce the risk allowing commercial operators to roll-out services to more of the UK.
For once we feel we must agree with the DCMS, as since the creation of the BDUK, and the crude outlines for the project were announced, the fact that commercial operators were expected to match fund has been well known. It is this level of match funding that has often meant areas are left with one or two operators willing to roll-out a service. Since many of the smaller operators would not be able to raise the £10m to £30m needed to match fund in most counties.
The LSE brief gives little clear indication where the figures come from, but a summary is easy for money available up to 2015:
- £530m from Government for USC and final third projects
- £20m in a rural broadband fund, to assist the hardest to reach areas (update 10th May 2012, there is some doubt whether this is new money or part of the BDUK £530m)
- £100m to ten of the larger cities across the UK
- £50m announced in the Budget for ten smaller cities to improve broadband
This gives a total from central Government of £700m, and local authorities are expected to match fund this, hence the £1.3 billion figure from the LSE. How did the LSE arrive at a £1.1 billion shortfall? We suspect it is based around some 2008 figures that indicated FTTC across the UK would cost £5 billion. With totally commercial rollout of FTTC/P by Openreach due to reach 2/3rds of the UK, then an approximation of £2.5 billion for the remaining 24% to hit the Government target, and provide 2 Mbps to the remaining 10% is what we believe Government broadband policy has been based around.
The need for commercial investment, has been well recognised by Fujtisu and BT, both declaring themselves happy to put money into the pot, in both cases the amounts previously suggested are very close to the supposed shortfall. Evidence of BT putting money where its mouth is, can be seen with the £30m added to the £32 million pot in Lancashire (BDUK allocation was just £10 million).
In the UK we love to complain, and be able to point the finger, but based on what we have been able to read so far, the LSE paper appears to ignore well known public facts, and even makes the claim that 2 Mbps if fast broadband, when a symmetric 2 Mbps has been the broad definition of broadband in use since its inception many years ago.
Further investment to allow deeper penetration of fibre in the local loop would be welcomed, and while this has to be the ultimate goal of any broadband projects, it is simply the case that this would be prohibitively expensive to accomplish, with costs for the UK varying between £15 billion to £29 million. Some studies have shown the rewards are potentially higher, the question is who wants to invest that money, and receive the return on investment. Or should the UK forget commercial realities, and create a non-profit fibre network, which would involve years of legal wrangling and probably not deliver its first connection until 2017. The latter model has its attractions, but the opportunity was four to five years ago, we are now in a fire-fighting situation if we believe the 2015 goals are worth sticking to.