Our money is on the 6 full fibre pilots becoming 6 voucher schemes
It is only a few days since HM Treasury working with DCMS issued a press release talking about six pilots accessing a total of £10m to help deliver more full fibre and Gigabit speeds were specifically mentioned. Alas even on the Sunday it was started to become clearer to us that this is not a pilot like most people understand it and it seems likely the innovation involved is more about how a voucher scheme can be administered rather than physical innovation in how full fibre can be deployed more cheaply and quicker to more premises.
Talking during the fibre tax rates relief debate The Minister for Digital Matt Hancock re-iterated 'we recently announced further details of £200 million of support for getting full fibre to local bodies, schools, hospitals and other public services to help them deliver their services more effectively and ensure that the branches of fibre are rolled out more broadly'. There was some hope on Sunday that the pilots would also include homes, but given the original wording and this latest version it seems clear that what we are talking about it is business broadband, i.e. reducing the cost of leased line and Ethernet services, or put another way to encourage more metro fibre networks from operators who are not Openreach of Virgin Media.
So forget the media coverage of more full fibre for homes or rural roll-outs, we believe and instead look at what is going on in Westminster where a voucher scheme with vouchers to a maximum value of £2,000 are available to help businesses upgrade to ultrafast broadband speeds. The scheme in Westminster is funded to the tune of £2.8 million from the European Reginal Development Fund and has some 100 suppliers on the books.
West Yorkshire has already declared as a voucher scheme, and it is thought that the City of Bristol is working towards a scheme too. Unfortunately there is little in the way of detail other than the £10 million is going to be split six ways and with the West Yorkshire scheme supporting vouchers to a value of £3,000 it is clear that the pilots will be on a first come first served basis.
Voucher schemes are not evil, which some may think we are saying, the previous voucher scheme for business connectivity which got off to a rocky start did prove popular and apparently post analysis indicates that every £1 of voucher generated £8 of benefit to the economy. Our concerns are about ensuring the public understand the pilots are going to immediately increase the availability of fibre to the home.
Of course the ultimate hope for those backing the pilots will be that if operators get a critical mass of local body and business customers in an area that a subsequent roll-out of fibre to the home will take place, and this is very much the playbook as written by CityFibre. The previous BDUK projects were often seen as a perfect gift for BT and Openreach and while the Fibre on Demand product does dovetail with a voucher scheme the competition in that arena means even if Fibre on Demand ever delivers connections in a reasonable time frame it will only capture a fraction of the market.
On a final note of realism we would hope that hospitals of a reasonable size, i.e. what most people would consider to be a hospital rather than a clinic or oversized GP surgery would already be using business grade fibre connectivity and also have diverse routing to ensure connectivity between other hospitals, if there is any hospital with more than a single ward of beds in the UK reliant on just ADSL2+ or FTTC then serious questions of fit for purpose need to be asked of management and their telecoms provider. Where we believe the vouchers will help in the health arena is by allowing GP clinics to join onto the core infrastructure, and this increased connectivity with reliable technology would help increase resiliance so that when resources are stretched GP clinics can play an increased role if needed. Connectivity will not heal anyone, but access to scans, test results and conference calls with other staff (reducing the amount of travel) all help towards delivering a decent quality of care.
We hope our sceptism is wrong and that the six pilots do deliver what does count as premises passed by the proper definition of fibre to the premises rather than just increasing competition in the metro ethernet marketplace, particularly as the remaining £190m is likely to be spent in a similar fashion.
Rounding up we know that the voucher schemes do usually allow those who work from home the majority of time to apply but remember that suppliers under the scheme are likely to be selling business grade services, and a business grade 400 Mbps connection generally costs a lot more per month than a consumer grade 400 Mbps service. The extra cost is down to things like use of business grade routers with remote management, better bandwidth guarantees (e.g. most consumer products have a budget of only 1 to 2 Mbps), improved support options and service level agreements e.g. same day hardware replacement. So if you are a home worker and do go chasing a voucher don't be shocked when you get quotes for a 100 Mbps service that is a lot more expensive that a Virgin Media cable VIVID 100 Mbps service.
Update Friday 8th September We appear to have been close but not all six will be pure voucher schemes, West Sussex is looking at using the anchor tenant model with the public sector at the centre and re-use of ducting is expected as part of the Tameside Borough (part of Greater Manchester). We have been informed that its not so much the direct funding of the connections for public buildings and business premises that is under trial but what effect this has on the market and whether this will stimulate more full fibre to be built. If we word that a different way, its basically a chance for all those who have said that re-use of infrastructure and anchor tenants are what is needed to kick start roll-outs to find out if this is the case.