BDUK reveals next £50m broadband investment
Wiltshire, Norfolk and Devon & Somerset will together receive around £50m from the government to extend high speed broadband access to residents and businesses, the government said today.
It also confirmed the creation of a £20m fund specifically to extending such access to rural areas.
The moves are the next step in the government’s plan to give the UK the “best broadband in Europe” by 2015. To do it, it has set aside £530m, and hopes to attract matching funds from European development agencies, network operators and other government budgets.
The four counties join North Yorkshire, the Highlands and Islands of Scotland, Cumbria and the Herefordshire borders in winning BDUK money. These counties got the nod from the BDUK almost a year ago, and are still in the procurement stage of their projects.
A BDUK statement on 27 May said the new bid winners would now start their procurements. It hoped they would begin upgrading their networks within a year.
Devon & Somerset were the big winners, attracting £30m, with Norfolk getting £15m and Wiltshire £4m. The final amounts will be decided “in the coming weeks”, BDUK said.
The funding round attracted 18 bids. Last week, culture minister Jeremy Hunt told the West Sussex County Council, a losing bidder, that BDUK would work with the losers to improve their chances of government money.
BDUK said too the latest news came “ahead of an announcement later this year on funding for every local authority in the country”. No further details were immediately available.
BDUK said it “anticipated that a mix of technologies will be used, including mobile, satellite and fibre connections to hubs in the heart of communities. It is hoped that suppliers will start rolling out upgraded infrastructure within a year. Internet Service Providers (ISPs) will then use these networks to offer affordable services to homes and businesses.”
The government’s emerging strategy to work through county councils to deliver “next generation access” mirrors its earlier strategy on first generation broadband. Basically they gave BT all the money to upgrade local exchanges to provide ADSL connections over copper wires. Which BT did, and now claims that 99% of homes with telephone lines can get “broadband”.
The government’s action then pretty much translated BT’s former monopoly in telephony into a present one in broadband, especially in the two-thirds of the countryside outside the towns,
BT’s coverage claim is true. In practice the quality of it’s service in terms of speed and reliability are wanting, especially when compared against the service required by customers, or against competitor nations’ ambitions, That said, communications regulator Ofcom and other bodies reckon the UK has the cheapest, most widely used broadband access in Europe, if not the world.
BT has already budgeted £2.5bn to upgrade the parts of its network that cover two-thirds of the population, and has said it will match government funding for the next 25% of the population.
A month ago, Fujitsu Telecom and Virgin Media offered to invest £2bn provided they got around £500m from BDUK and cheap access to BT’s poles and ducts. But West Sussex County Council’s experience suggests the proposal is aimed at extending Virgin Media’s cable TV footprint in towns rather than rural areas.
What seems to be missing from the broadband dialogue is a genuine attempt to find alternative sources of money where investors are prepared to wait for a return.
It is common cause that communications networks have become the “fourth utility” and the associated investment risk should therefore be evaluated accordingly. If patient investors cannot be found, it means they trust neither the government nor the management to deliver over the period.
BT’s MD for next generation roll-out, Bill Murphy, says most BT projects today won’t get funding if payback is more than two years off. The breakeven period on its present network build is 12.5 years, he says.
Without knowing the cost basis for this claim, it is impossible to verify. But assuming he is right, the working life of copper circuits is at least 40 years (BT is working hard to extend even that), and the working life of optical fibre could be many times more.
Why should not BT’s, or indeed any other network operators’ investors not look for a return over similar periods? If only governments can afford to wait that long, why should they simply give money to private firms who will then squeeze their new assets for as much profit as they can wring out of them in the shortest possible time?
In other words, has the time come for the government to consider renationalising Openreach as the nation’s network utility?