Government Rural Gigabit voucher or USO intervention?
The Rural Gigabit Broadband voucher scheme has been running for a while, long enough that 44,792 vouchers are in the pipeline and some 29,142 have been used to deliver a Gigabit capable connection.
So the 500,000 premises with Gigabit connectivity from Government funding, where does this come from? Well the bulk of it is FTTP via the BDUK schemes. Our tracking of what Openreach are delivering in terms of FTTP suggests 551,000 premises passed using things like BDUK funding, vouchers, community schemes and other gap funding, so once you add 30,000 or so properties from the vouchers and what Gigaclear has delivered via schemes such as FasterShire the half million looks a reliable figure.
What the 500,000 is not though is 500,000 homes or small business with an actual Gigabit connection, since where FTTP is rolled out people buy what they can afford and as Gigabit usually carries a price premium the entry level speeds will be what sells en-masse. Looking at Openreach back in Q2 2020 for the BDUK type areas only 17% of speed tests using FTTP were above 100 Mbps.
Someone thinks that what is needed is a committee to look into this and thus a new Gigabit Take-Up Advisory Group (GigaTAG) has already been setup with the aim of boosting take-up of Gigabit connections.
It will be led by Which?, the FSB and CBI, with membership including Ofcom and industry representatives, to look at encouraging more consumers to engage with this new technology and to take advantage of the benefits that they will bring.It will specifically explore increasing business take-up by promoting the benefits that gigabit broadband has brought to companies that already have it, and the role firms can play in incentivising their employees to upgrade too.DCMS on GigaTAG
The meetings we would expect to be short since the issues seem to be:
- Price of new service compared to existing cheap service
- Perception that FTTP and Gigabit capable services mean you have to buy something very fast e.g. 900 Mbps package
- Need to change provider to join the Gigabit service
- Plenty of people are likely in 2020 to be happy with the 40 Mbps or so they have today and thus not see the need to upgrade, this will change over time though.
- Lack of information from comparison sites people are familiar with or just trust due to the amount of TV advertising done. We work hard to keep our coverage checker and API as up to date as possible, but looking at the wider pure comparison websites the level of information given to the public is woeful. The problem is not just lack of availability data which is there for those willing to support the cost of creating it, but also an understanding of what the various products are beyond the slick marketing.
So the Rural Gigabit vouchers, what are they and who can use them?
- Residential properties can apply for a voucher with a maximum value of £1,500
- Eligible SME can claim a voucher of up to £3,500
- Vouchers are only available rural areas, check on Government site https://gigabitvoucher.culture.gov.uk using postcode check, which will also show firms who may be able to supply something using a voucher in your area.
- Your existing connection needs to be below 100 Mbps
- Single households cannot apply, needs at two or vouchers to be applied for, this can be a mixture of residential or business
- Vouchers cannot be used in conjunction with the broadband USO
- New connections should at least double your existing speed, so if you have 60 Mbps FTTC and get FTTP installed you would need to install a service of at 120 Mbps or faster
- Minimum speed of the new connection must be above 30 Mbps
There is something like £70 million left in the voucher pot to be used up, so if you did not get a decent response from a broadband USO request or want to jump the queue while waiting for FTTP to appear natively in your area it is time to club together with some other households nearby.
The vouchers are more flexible than the broadband USO which is generally a 4G connection or if lucky a FTTP connection. For those who applied for the broadband USO but got told FTTP was the only option but were asked for a silly amount of money above the baseline £3,400 that is funded by BT (and industry levy) the freedom to choose another provider to handle the Fibre on Demand order may prove worthwhile. For those who got Fibre on Demand quotes in the £30,000 and higher bracket if happy to spend £250 on the survey stage then ISP such as Cerberus have the track record of dealing with Openreach.
Vouchers work well for those who are engaged with the market and their problems, but we suspect the average person just wants someone to take on the task for them and deliver the connection. There are problems that may impact on the final 100% Gigabit target though, if vouchers deliver services to those keen to bite your hand off for higher speeds, the clusters left behind will be more fragmented and providers may seek even higher subsidies to deliver and in terms of take-up they are only going to be selling to those who've not expressed any interest in the faster services.
Selling FTTP with speed options of 50 Mbps to 900 Mbps is easy if delivering to an area where existing speeds are under 15 Mbps, but as the Gigabit roll-out for 2025 is going to have to overbuild villages and hamlets where a good number can get 30 to 60 Mbps speeds the up-sell is going to be harder. Remember too that for web browsing once connections have reliable DNS lookups and speeds of around 40 Mbps and faster there is not much difference compared to using a 300 Mbps FTTP service where the DNS lookup time was similar.