£114m divided between cities to address market failure
In the budget earlier this year the 10 super connected cities were announced, and in August the decision was made over how the money should be shared between them, and now the split has been made public and another £14m has been found to bring the total investment from central Government to £114m. The split is:
- London - £25m
- Leeds and Bradford - £14.4m
- Belfast - £13.7m
- Manchester - £12m
- Bristol - £11.3m
- Cardiff - £11m
- Edinburgh - £10.7m
- Birmingham - £10m
- Newcastle - £6m
The projects are often touted as going to provide city-wide access to ultra fast broadband at speeds of 80 - 100 Mbps, and while we are generally supportive of projects to improve broadband coverage we are very unsure whether these projects can justify themselves in terms of addressing market failure. We understand that Manchester and Birmingham have already cleared the EU State Aid hurdle, mainly through inclusive of magic dark fibre access, and though only in limited areas of the city.
Looking at the other plans that are available for other cities, it seems a patch-up process is underway, and the money will be spent in areas that are already undergoing existing re-generation programmes.
The money provided by central Government is not the sum of that available, some cities are applying for additional ERDF funding, and it seems a BDUK-like formula of match funding from the city council and subsequent commercial bidders will reign. The result of this is likely to be that BT is going to once more win a great many of these contracts, and we might see chunks of the money going towards subsidising Fibre on Demand for businesses in the cities.
To subsidise a product that has not even been tried on the market does not sound like market failure, and there are also companies such as Ask4 and Hyperoptic supplying fibre to the building solutions in UK cities. None of the cities are sticking to just fibre roll-outs, but the example of Leeds and Bradford which has seven strands to how the money will be spent is worth showing:
- 100 Mbps+ broadband across identified Priority Zone
- Business Demand Stimulation
- Wireless Networks - WiFi in City Centre and wireless on Leeds-Bradford Corridor
- City Information Portals
- Public Service Delivery Pilots
- Telehealth Pilots
- Schools as Community Hubs with 100 Mbps connections
If BT is to bid for any of these projects we hope that they will offer something much more than their standard FTTP products, which at this time have limited upstream capacity, which for the creative digital industry will be as much a limit as downstream capacity.
For those reading this who live in a city and do not own a business, the projects appear to offer some improvements, as a common theme appears to be that FTTC will be made universal, though how this is achieved unless BT is already lined up to win contract is unclear. For those residents to be in the Priority Zone or where dark fibre is to be deployed, they may see an alternative broadband option, in addition to Openreach, Virgin Media and the soon to be launched 4G services.
The lack of vision in the UK is common theme, and the spending of public funds to hit a speed target that is below what people can afford to buy from BT (FTTP areas offer 330 Mbps), Virgin Media (120 Mbps) and others (up to 1 Gbps) is more evidence of that. Those with vision are talking Gigabit and how their network has potential to be upgraded to 10 Gigabit in a few years time.