UPD Government Finalise Ultrafast Broadband Funding for 10 Major UK Cities

The government’s culture secretary, Maria Miller, has today confirmed the final funding allocations for 10 of the largest UK cities (including all four capitals) in its now £114.1m strong Urban Broadband Fund, which aims to support the roll-out of “ultrafast” (80-100Mbps) broadband ISP services and “high speed public wi-fi“.

The “super-connected cities” money, which has been increased by £14.1m from the original £100m pool (not counting the extra £50m pot for 10 smaller cities), forms part of the wider £30bn National Infrastructure Plan (NIP) and will only be used to upgrade broadband services in areas “not served by the private sector” (i.e. where BT and Virgin Media have yet to improve).

The 10 Largest UBF Cities (Funding)
* Edinburgh – Capital of Scotland (£10.7m)
* Belfast – Capital of Northern Ireland (£13.7m)
* Cardiff – Capital of Wales (£11m)
* London – Capital of England (£25m)

* Birmingham (£10m)
* Bradford + Leeds (£14.4m joint bid)
* Bristol (£11.3m)
* Newcastle (£6m)
* Manchester (£12m)

It’s interesting to note that practically every single one of the cities ended up receiving either the maximum or close to the maximum of their expected funding range (e.g. it was originally estimated that Bristol might receive between £4.2m to £12m and it ended up with £11.3m).

In total some 230,000 residential and 55,000 business premises are expected to benefit from today’s announcement. Local city authorities and private sector operators, such as BT, will also be expected to match-fund with the government’s investment.

A further £50m is still waiting to be allocated to a final selection of 10 smaller cities (from a shortlist of 27 small cities), which is expected to be announced in Chancellor George Osborne’s Autumn Statement on Wednesday 5th December 2012.

Maria Miller MP, Culture Secretary, said:

“Fast broadband is essential for growth and is key to the country’s economic future. These 10 cities have produced ambitious and comprehensive plans which will turn them into digital leaders and give their local economies a real boost.

The new investment will help put these cities at the centre of the digital stage, competing for jobs and investment with the best in the world.”

Overall the new money should help support the government’s target to bring superfast broadband (25Mbps+) services to 90% of the UK population by March 2015. But many will no doubt question why public money is needed in such dense urban areas, where the case for private sector investment should be significantly easier to make.

Crucially it’s often overlooked that large sections of our major towns and cities, such as significant chunks of London’s South East corner, often suffer from poor broadband connectivity (i.e. sub-2Mbps download speeds) just like many rural areas. We took a more detailed look at this in our recent article – Lack of Fast Broadband is NOT Just a Problem for UK Rural Areas.

It’s worth pointing out that funding for the UBF is not currently handled under the government’s Broadband Delivery UK (BDUK) framework, although BT recently proposed for this to be changed (here). The fear is that such a move, if approved, could potentially result in BDUK’s restrictive rules, such as only allowing BT and Fujitsu to bid for contracts, being imposed upon the process.

A change like that is sure to anger many city dwelling telecommunication providers. Cities often have a far greater selection of ISPs to choose from, many of which can handle infrastructure development. Similarly Fujitsu’s rival Fibre-to-the-Home (FTTH) network has so far only been costed and targeted for more rural areas.

Finally it’s worth pointing out that the EU, despite its on-going competition concerns with the semi-separate BDUK process, has already granted state aid approval for Manchester and Birmingham’s plan. It’s worth taking a quick look at why Birmingham’s decision was arrived at so quickly (e.g. dark fibre access) since it may help to enlighten similar proposals for other cities (details here).

UPDATE 11:23am

The officially press release for today’s announcement contains an interesting footnote, which reads, “The total sum allocated to the 10 cities is £114.1 million, which exceeds the £100 million originally allocated to the first round of the super-connected fund. We expect to manage the costs within the overall £830 million available for broadband.”

This could suggest that the £150m+ UBF and potentially also the £150m Mobile Infrastructure Project might be funded out of the BBC’s extra £300m contribution, yet that won’t be distributed until after April 2015 (full details) and the above UBF still has 2015 as its target. Suffice to say that this is causing some confusion and we are currently asking for a clarification. It might just refer to the extra £14.1m.