UPD UK Government Pledge £1bn for Pure Fibre Optic Broadband Rollout

The Government has admitted that the United Kingdom is “falling behind on the roll out of full-fibre” (FTTP/H) ultrafast broadband and confirmed that tomorrows Autumn Statement will aim to rectify that via a new £1bn Digital Infrastructure Fund, which should help 2 million extra homes get access.

At present the existing Broadband Delivery UK programme, which is coupled to around £1.6bn of public investment, is already rolling out fixed line “superfast broadband” (24-30Mbps+) to cover 95% of the United Kingdom by the end of 2017 (this should rise to around 98% by 2019) and they’ve recently passed the 91% mark. Most of this has been done via contracts with BT (Openreach), although smaller alternative network (AltNet) ISPs like Gigaclear, Call Flow Solutions and others have also played a role.

On top of that the Government are developing a new Universal Service Obligation (USO) for broadband, which is expected to focus on the final 2% and will aim deliver at least a minimum Internet download speed of 10Mbps. BT are predicted to take most of the strain for this, but inferior Satellite connectivity is also expected to play a role.

However the new Digital Minister, Matthew Hancock MP, has recently signalled his belief that “gigabit speeds” and pure fibre optic (FTTP/H) broadband connectivity are “the future” (here) and he’s been encouraging specific support for AltNet ISPs to help deliver on this (here).

According to today’s brief pre-statement announcement, the Government believes that “the UK is already a world leader in superfast broadband coverage” (we do well in terms of raw coverage, but “world leader” is debateable), yet in the same breath they also admit that the country is “falling behind on the roll out of full-fibre” and wish to encourage a “gold standard” of full fibre optic broadband (aka – Fibre-to-the-Premise / Home [FTTP/H]).

Pure fibre optic lines deliver information using laser light and can offer stable Gigabit class speeds (1000Mbps+), although they’re also significantly more expensive and a lot slower to roll-out due to the need for extensive civil works (roadworks etc.). By comparison BT has preferred to make the most efficient use of its existing hybrid fibre and copper network via 330Mbps G.fast, which is cheap and quick to deploy but also less reliable and more susceptible to performance problems.

On the other hand BT has promised to make their own Gigabit capable FTTP network available to 2 million UK premises by 2020 and Virgin Media has set a similar target for 2019, while Altnet ISPs rather optimistically believe that with the right support they could add another 4.9 million to the total by 2020 (here).

Today’s brief press statement confirms that a new Digital Infrastructure Fund (DIF) will be setup with around £400 million of public investment to help get it started, while the rest is expected to be matched by the private sector. It’s hoped that the total public and private investment through the fund could even reach £1.5bn over the life of the scheme, which will run until 2021.

Elsewhere local authorities will also be able to bid for a slice of £740 million, which is intended to help them both trial and roll-out future ultrafast 5G based Mobile Broadband networks (note: the final technology standard for this won’t be ready until around 2017/18 and spectrum won’t even be fully released until 2020).

Greg Mesch, Chief Executive of CityFibre, said:

“As a pure fibre infrastructure pioneer and the company behind the UK’s growing ranks of Gigabit Cities, CityFibre welcomes the Chancellor’s support to accelerate the deployment of fibre and 5G to homes and businesses.

Britain’s industrial strategy needs a digital backbone, and it is essential that we move quickly to plug the UK’s ‘fibre gap’ and empower our service-based economy. This new funding, stimulating competitive fibre rollout at scale by new communications infrastructure builders, is a catalyst for the delivery of the UK’s fibre future.”

Malcolm Corbett, CEO of INCA (representing Altnets), said:

“We welcome the Chancellor’s support. The Altnets are the entrepreneurial companies and communities building new, future-proofed, pure fibre and wireless networks. They are doing a fantastic job and the Chancellor’s support signals that Government is serious about creating a more competitive environment for new digital infrastructure.

Digital Minister Matt Hancock said that pure fibre and wireless networks are the future. We agree and we are building those networks today.”

If any of this sounds familiar then that’s not a surprise because the DIF is effectively the final model for last year’s proposed Broadband Investment Fund (details), which is designed to help AltNet ISPs (i.e. NOT BT and Virgin Media) to secure funding for the construction of new “ultra-fast” (100Mbps+) broadband networks.

However we should say that the BIF was never specifically focused on rural areas and indeed many such AltNet ISPs also deploy in urban locations too. We expect the DIF to follow that same approach, which should partly support Ofcom’s Strategic Review and its on-going attempts to build more competition for Openreach’s (BT) national network.

Mind you we wouldn’t be surprised if there were some restrictions to prevent the investment being used to deploy ultrafast networks in locations where such connectivity already exists, although it remains to be seen if this would protect BT’s future G.fast and Virgin Media’s existing HFC DOCSIS networks. We suspect there might be legal challenges if it failed to protect such existing networks.

All of this will also help to keep the UK competitive with the new EU commitment, which recently set a target for “all European households” to be within reach of a minimum Internet download speed of 100Mbps+ by 2025, with businesses and the public sector being told to expect 1Gbps+ (here). However the UK has yet to paint such a specific goal for its own ultrafast plans.

We’ll have more details tomorrow, but tens of billions more would still be needed in order to deliver truly universal FTTP/H coverage.

UPDATE 10:52am

We’ve just had some extra comments from Sky UK (Sky Broadband), Hyperoptic and techUK.

Andrew Griffith, Sky’s Group Chief Operating Officer, said:

“We welcome the Government’s announcement on broadband investment, which chimes with our view that the future is full fibre. Government has played its part through this package of measures, which should help kick start the investment needed to push the UK up the league table.

But we won’t achieve the necessary step change in driving full fibre investment across the country unless Ofcom also takes bold and decisive action on the future of BT Openreach.”

Dana Tobak, CEO of Hyperoptic, said:

“We have been actively engaging the government to encourage more investment into Fibre-to-the-Premises – today’s news is a very positive step in the right direction, which will help the rollout of full fibre broadband across the UK.

Investment in pure fibre networks is a no-brainer as it supports our increasingly digital dependent economy. Of course, the devil is in detail and we would also call upon the government to be more aggressive on its broadband targets, support full fibre, and enable the market conditions to encourage private sector investment, which will ultimately enable Gigabit Britain.”

Antony Walker, techUK Deputy CEO, said:

“For Britain to make a success of Brexit we need to take our digital infrastructure from good to great. The announcement of this funding for fibre broadband and 5G mobile is a powerful signal to the world of the UK’s ambition to be a leading digital nation.

However, it is just a start. The full costs of deploying these new networks across the UK will be many times greater than the £1bn announced today. Public funding therefore needs to be targeted carefully. We believe the bulk of the investment required should come from the private sector. Too unlock that investment we need Government and Ofcom to work with the industry to set out a wider long-term strategy for telecoms.

That strategy needs to focus on what more Government and Local Government can do to drive down infrastructure deployment costs. It also needs to set out a regulatory approach that recognises the need to attract long-term private investment from around the world.”

Dido Harding, CEO of TalkTalk, added:

“At TalkTalk, we’ve long been convinced that fully fibre internet connectivity is vital for the UK’s digital future. We’re delighted that the Government is supporting this cutting-edge infrastructure, and encourgaing competition between alternative providers to ensure that people up and down the country can enjoy full-fibre broadband as quickly as possible.”