Point Topic Backs Smaller ISPs to Fix UK Rural Superfast Broadband Woes

Q6. One of the biggest problems for smaller rural ISPs (altnets) this year has been the struggle to get funding grants released from the £20m Rural Community Broadband Fund, which is partly because BT and local authorities have preferred not to reveal which areas they intend to cover as part of the BDUK scheme (at least not all at once).

Thankfully pressure from the central government has nudged local authorities to engage on this issue. Do you think this will be the end of the problem and, given that the EU still expects 100% superfast coverage by 2020, what more could be done to help the final 5-10%?

ANSWER:

Point Topic believes strongly that transparency and good information is vital to a healthy broadband market and we think regulators should be pursuing this more vigorously than they do.

But if we look at the last 5% or so then it is hard to see these homes being upgraded to superfast at a cost which the taxpayer would or should accept if it is left to BT and the other big players. Instead we expect that the job will be done by many small-scale local projects, each making the best use of local conditions to run fibre – or possibly a wireless connection – to small and isolated communities. They will use everything from free wayleaves and free digs across friendly land to rich residents who are prepared to put their hands in their pockets. To ease that process we suggest that a flat subsidy, averaging say €2,000 (£1,700) per household, should be provided. We think that lots of small projects will spring up with that incentive and most of the last few % will get covered that way.

Q7. Realistically, how big of a role do altnets (i.e. smaller ISPs that build their own local infrastructure) currently play in bringing superfast broadband to more people and is their impact likely to grow significantly in the future or will it always remain somewhat niche?

ANSWER:

See above – mini-ISPs could have a major role in remote areas with low population density. But their biggest role is that they offer a real alternative to the big players. Consider for example how the fixed-wireless minnows provoked BT to enable even the smallest local exchanges. I think with superfast the small players may end up with a bigger and more attractive niche than fixed wireless, but most mini-networks will end up being adopted by a bigger player.

Q8. During February this year the EU’s proposed Connecting Europe Facility (CEF), which planned to spend an extra £7bn or so on broadband infrastructure development, was wiped out by budget cuts. What are your thoughts on this decision and do you think it would have had a significant impact on the UK?

ANSWER:

The main effect is likely to be in the eastern-EU countries I think. Gap-filling projects will be significantly harder to finance and other sources are harder to find there. Which is why the UK played a big role in achieving the cut and why we’ve been reluctant to rely much on EU money in any case. Meanwhile people in the Commission think that much of the money will still find its way into broadband investment through other channels – regional funds etc. The cust also serves as a signal as to where the funding is expected to come from as well as an indication of how cautious the EU is in potentially disrupting the balance of a market.

Q9. Finally, the government was recently forced by EU competition concerns to scrap the broadband infrastructure aspect of its £150m Urban Broadband Fund for 22 cities around the UK. Instead this has been replaced by a voucher scheme that helps businesses connect to superfast broadband by covering the installation cost. Do you think this is the best use for that money?

ANSWER:

Well, it’s one step towards the idea discussed above for a subsidy per premises for broadband in rural areas. It should stimulate broadband provision in the 22 cities. The missing bit is whether the vouchers will be used in any coordinated way to help finance specific improvements or will just be distributed at random. It would be nice to see an option by which vouchers could be pooled to help finance additional investment.

We discussed this with someone in the Commission recently. They said that the hold up on approval for the Superfast Cities scheme came about because BT and Virgin Media both appealed against the approval granted for Birmingham so all the applications have to wait until that issue is cleared. They believe that BT’s legal team will be able to drag out the process for long enough (two years) so that the approvals expire anyway. Meanwhile the Ministry is resorting to vouchers on the argument that the value per voucher is too small to require EU approval. But the Commission does not see vouchers as a good solution because they don’t create any of the coordination and focus that is one of the main advantages of state funding.

End.

A huge thanks from ISPreview.co.uk to Oliver, Laura and Tim for being so kind has to help us out this year.