Following the broadband money

UK’s £1.7bn broadband spend passes 1m homes; 13m to go?

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UK broadband - fit for purpose?

UK broadband – fit for purpose?

Last week ministers claimed that the government’s £1.7bn budget has paid for superfast broadband to pass one million homes, so far.

This is 12% of the 8.8 million homes it is meant to serve with speeds above 24Mbps by 2017. As there appears to be no official source for the number of business premises, ministers are free to ad lib broadband availability to businesses.

There was no indication of what upload and download speeds users receive, and there are growing reports that services promised from some cabinets are now being deferred, perhaps indefinitely.

The money is all going to BT under the Broadband Delivery UK (BDUK) programme. It supplements the £2.5bn BT claims to have spent providing “superfast” service to the two-thirds of the population deemed “economically viable”, roughly the area covered by Virgin Media’s cable network.

A department of culture, media & sport spokesman said: “The £1.7bn is comprised of £1.2bn for phase 1 (£530m of BDUK funding plus local and European funding taking this up to £1.2bn) and £500m for phase 2 (£250m from BDUK to be matched by £250m further local and European funding).”

Based on the 2011 census, the Office for National Statistics (ONS) says there were 26.4 million households in the UK in 2013. Of these, 29% consisted of only one person and 20% had four or more people.

According to the department of business, innovation & skills, there were 4,895,655 UK businesses in 2013. Nor BIS, nor the ONS, nor the department of communities and local government (DCLG), which counts the cash raised from business rates, has a number for the physical shops, offices and factories businesses occupy.

That did not stop the Federation of Small Businesses last month from reporting that the national broadband network is unfit for business use. “The current government targets of 24Mbps for 95 per cent of the population and 2Mbps for the remaining five per cent will not meet the future demands of UK businesses.” it said. This includes video conferencing, remote back-ups and cloud applications.

This was tacitly confirmed by HMRC, which now allows firms in “remote locations” to submit their VAT returns by paper instead of online. FSB national chairman John Allan said the move will benefit many small businesses. “However, it clearly highlights the need for the government to tackle the poor state of digital infrastructure in the UK. Too many firms are negatively impacted by sub-standard broadband. It is vital business owners spend more energy doing business and less doing paperwork.”

There are also widespread reports that BT has deliberately ignored central business districts and business parks in both its commercial and taxpayer-subsidised broadband roll-outs. As a result, DCMS set up a £150m SuperConnected Cities fund that will give small business a £3,000 grant to upgrade their broadband connections in up to 22 cities.

The scheme was “red-lighted” In a Cabinet Office report in May 2013. A year later these cities had issued 1,008 vouchers.

Fixed to wireless connectivity was 77:23 with Virgin Media leading the list of suppliers followed by Metronet UK. DCMS said 149 suppliers had registered; 90 had won business as a result.

BDUK’s quarterly broadband performance indicator for June said the £72.4m BDUK has spent so far guaranteed at least 24Mbps download speeds to 888,133 premises. That is £81.56 per premises passed.

Put another way, the government is covering 12,260 premises for every million pounds spent so far. Ministers say they expect a £20 return on every pound spent on this roll-out.

Written by Br0kenTeleph0n3

2014/08/11 at 11:23

4 Responses

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  1. I’d say the FSB comments relate to the fact many outfits can’t afford, or don’t want to afford a leased line for connectivity when they have the possibility of VDLS which to be honest when it works, would do just fine.

    This issue is bigger then just the UK DSL market, its the entire access and backhaul market that is broken and needs some sort of kick.


    2014/08/11 at 12:23

    • You are probably correct. The FSB has asked the government to consider cutting Openreach out of BT to stop the incentives for BT to safeguard its revenue from leased lines. Here’s hoping others feel the same and respond in suitable comment on the latest consultation on the kind of networks the UK needs post-2020. See for the blurb. Of course, saying Openreach and BT need to be separated is one thing; getting the goverment to do it is another, especially as it is on the hook for the BT pension fund if BT should go bankrupt. However, it should be able to afford it; it’s expecting a 20 to 1 ROI on its £1.7bn spend on high speed broadband. That leaves plenty of change as the BT pension fund deficit (just an actuary’s best guess) is only £9bn. Either that, or perhaps the ROI estimate is a tad optimistic.

      On 11 August 2014 12:23, Br0kenTeleph0n3 wrote:



      2014/08/11 at 17:37

  2. Was the intention of this piece simply to fill a quiet news week with a reference to a month-old article and general recap of grievances against BDUK? If the focus is on meeting the needs of businesses, could I recommend that you add to the debate (provide some analysis of the problem and a view on how it may be addressed)? Readers with an interest in the subject may find the following article more thought-provoking:

    Iain Bennett

    2014/08/11 at 17:27

    • It wasn’t exactly a slow news week, what with the DCIS consultation, ministers shooting off their mouths about dodgy claims etc.
      Re the article to which you refer – I do so wish that people would wean themselves off the taxpayers’ tit. The presence of government money in the market inevitably skews it in favour of politically astute manipulators whose prime intention is to get the money, rather than the customers.
      Really – why should taxpayers fund an extension of the Urban Broadband Fund? The only reason it came into being was because BT and Virgin Media threatened legal action against the original plan. Virgin Media (now owned by Americans) is making out like a bandit in this market. All the profit from those £3,000 contracts will go off shore. Is that really what you want?


      2014/08/11 at 20:50

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