UPD2 Government Name 12 Smaller UK Cities for Ultrafast Broadband Boost

The UK government’s Chancellor, George Osborne MP, has today announced his Autumn Statement and revealed the final list of 12 “smaller cities” that will benefit from around £50m (Urban Broadband Fund) to help expand the coverage of “ultra-fast” broadband (80-100Mbps+) and “high speed” public wifi services into neglected areas.

The “super-connected cities” fund, which was originally announced one year ago as part of the governments £30bn National Infrastructure Plan (NIP), has already allocated £114.1m to 10 of the country’s largest cities (including the four capitals). An extra £50m was later set aside to help upgrade broadband services in areas of small cities that were “not served by the private sector” (i.e. where BT or Virgin Media have yet to improve).

A shortlist of 27 eligible cities for the extra £50m, which could only bid if they had a Royal Charter and more than 45,000 homes and businesses (35,000+ in Northern Ireland), was first published in May 2012. But this has now been whittled down to a final selection of just 12 cities (up from the original promise of ten).

George Osborne said:

“On top of broadband expansion for our countryside and our larger cities, we’re funding ultrafast broadband in twelve smaller cities.”

The 12 Final Smallest Cities for Broadband Funding
* Brighton and Hove,
* Cambridge
* Coventry
* Derby
* Oxford
* Portsmouth
* Salford
* York
* Newport
* Aberdeen
* Perth
* Derry-Londonderry

The new money is, subject to state aid approval, intended to help support the government’s target of bringing superfast broadband (25Mbps+) services to 90% of UK people by spring 2015. But many have questioned why public funding should be needed in dense urban areas, where the case for private sector investment is normally easier to make (Lack of Fast Broadband is NOT Just a Problem for UK Rural Areas).

Furthermore cities often have a far greater selection of infrastructure development focused ISPs to choose from, although many of those providers fear that the UBF will follow the same path as the Broadband Delivery UK (BDUK) framework by awarding most of the budget to the dominant players (e.g. BT).

Indeed when Birmingham attempted to launch its Smart City scheme, which effectively sought to build a new fibre optic network, BT and Virgin Media reacted by launching a legal challenge because they feared the new network would overlap with theirs. The Smart City plan claims its scheme would be “genuinely open to all operators“.

Mark Collins, CityFibres Director of Public Policy, told ISPreview.co.uk:

“CityFibre firmly believes that a modern, pure fibre network brings benefits to all of society; including public sector, businesses and residents. Our networks are a foundation of innovation and economic development and essential for our digital economies.

We also believe in pro-competitive markets – establishing infrastructure competition and giving businesses and service providers a better choice. The Government’s super connected cities initiative seeks to encourage the deployment of ultra-fast broadband in some of the UK’s bigger cities – it is an initiative that CityFibre broadly supports.

However, there is a big danger that incumbents will manipulate the process to prevent a competitive environment – we are seeing this in Birmingham today with BT and Virgin’s challenge to the Birmingham’s state aid decision. As a result, innovation and realisation of transformational gigabit infrastructure is hampered.

Therefore, the Government and city leaders should actively support participation from CityFibre and others by ensuring open and fair procurement, a pro-competitive environment and a vision that supports investment in open access, future proof, gigabit fibre infrastructure.

We are looking forward to engaging with the successful cities receiving an allocation of the £50m Urban Broadband Fund.”

Clearly many of the competition concerns with such investment have yet to be fully addressed. We hope to add further details on this later, if any surface.

UPDATE 1:12pm

Added a comment from CityFibre.

UPDATE 1:26pm

We just scanned through the official HM Treasury statement and couldn’t find any extra information beyond what has been said above. Precise information about how much each of the smaller cities has been allocated is expected to follow in the not too distant future.

UPDATE 6th December 2012

Some more comments from around the industry have come in.

Harry Cotterell, CLA President, said:

“It is all very well to pour money into cities to give them state-of-the-art broadband but many rural areas still suffer from slow or no broadband.

The £10billion support provided to the institutional sector to deliver new house building will not assist rural areas because it will focus on big projects not the small-scale developments needed in rural areas.”

Dana Tobak, Managing Director of Urban ISP Hyperoptic, said:

“The news today that the Government is allocating funding to bring 12 cities ultra-fast broadband is welcome news for the market and is another demonstration by the Government that more needs to be done to increase broadband speeds in the UK. Not-spots are still prevalent across many urban areas it has named. We hope that these funds will be used to plug these gaps and concentrate on the last mile to future-proof our networks.

As part of the funds allocation the Government also needs to be sure it is considering all types of proven solution providers. We urge the Government to allocate these funds via a fair and open process that is accessible to those companies that have proven they can efficiently implement fibre technology regardless of their size.”

In other words, Hyperoptic is saying don’t just give the cash to BT and or Virgin Media.