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UK SMEs Beat EU Rivals by Extracting More Value from Fast Broadband

Monday, October 20th, 2014 (3:12 pm) - Score 1,257
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The latest research from Point Topic and Adroit Economics has suggested that SME businesses could benefit to the tune of 40bn Euros (£32bn+ Gross Value Added) by 2020 thanks to the roll-out of “superfast broadband” services, with firms in the United Kingdom predicted to be one of the top three performers with GVA of 6bn+ Euros (£4.75bn+). But before too long businesses may be asking for 250Mbps+.

Quantifying the economic benefits of faster broadband has historically been somewhat of a black art given the many variables involved, although the MD of Adroit Economics, Dr Steve Sheppard, believes “The weight of evidence has reached the stage where we can, with increasing confidence, state not only the type and source of the uplift but also quantify it in terms of Gross Value Added.”

The figure for Gross Value Added (GVA) is normally considered a reflection for the value of goods and services produced in an area, industry or sector of an economy. In the business sense faster download speeds mean that more can be accomplished, although Point Topic suggests that the data is now pointing to a requirement for plenty of upstream bandwidth too (helps video conferencing, exchanging of large files etc.).

Europe’s current Digital Agenda strategy aims to make broadband download speeds of 30Mbps available to every home by 2020 (with 50% subscribed to a 100Mbps+ service), while the UK Government’s Broadband Delivery UK (BDUK) scheme is spending around £1bn in order to make fixed line superfast broadband speeds of 24Mbps+ available to 95% of the country by 2017 (this is closer to £2bn if you include council contributions). Not forgetting the £1bn or so that BT has set aside for match funding with BDUK, or the many prior commercial investments by various ISPs.

Admittedly our infrastructure might not be as advanced as some of the other EU states (e.g. Sweden), where a benefit was extracted much earlier due to the roll-out of FTTH infrastructure, but the projected impact of broadband coverage and take-up in the United Kingdom still looks to hand us plenty of GVA benefits by 2020; only France and Germany will be ahead.

europe vs uk gross value add broadband 2020

However the current policies may need further improvement because the research projects that SMEs will be asking for speeds of 250Mbps+ by 2020 and upstream performance will also need to be given a strong focus. The report also indicates a current requirement for uploads of 10Mbps, which is at least do-able via existing technologies (e.g. FTTC can deliver up to 20Mbps upstream).

Furthermore Dr Sheppard says, “we’re not sure that we’ve yet identified all the positives that derive from improved broadband“. But we would advise that such projections continue to be taken with a pinch of salt, although there’s no denying that faster broadband, especially when it arrives in areas that were previously either slowspots or notspots, can have a very positive impact upon both ordinary people and businesses. “If you’re looking for a way to improve your economy then broadband offers an impressive return and brings more wealth and jobs per euro invested than almost any other project,” says Sheppard.

Sadly we’re unable to see the full report and so cannot be sure quite how the above predictions have been arrived at. It might also be useful to understand the historic impact of earlier pure fibre optic deployments in countries like Sweden etc.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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6 Responses
  1. Avatar Ignitionnet

    Given the UK is the second largest economy in the EU you would hope we would be right up there for GVA.

    A far better measure might be additional GVA relative to size of economy.

  2. Avatar GNewton

    “the research projects that SMEs will be asking for speeds of 250Mbps+ by 2020 and upstream performance will also need to be given a strong focus”

    I fully agree, the half-baked solution of VDSL simply won’t do, and is not future-proof.

    • Avatar FibreFred

      They best get saving them, the tech is available today, has been for years!

    • Clearly SME business models take in paying for 250Mb leased lines, right?

      Those who can take VM Business will be all good. Those who can’t, we’ll see. Probably depends how much of the family budget BT Retail soak up with content rights.

    • Avatar FibreFred

      That’s how it usually works, if you want something you budget for it.

    • Avatar telecom engineer

      Perhaps but will the majority of businesses be willing to pay for it? Thete is plenty of fibre laying dark for years because businsses dont feel its worthwhile on the whole. As with much of business firms often go for the cheapest offer (seen plenty of technical it firms running a single res dsl service go bananas when issues arise). Vdsl obviously wont provide 200 odd meg in current form but then again, if the predicted demand turns out correct, leased fibre exists on many industrial parks and fttc brought aggregation nodes along with so fttp on demand would technically (ignore current pricing issues) be viable. I dont see an infrastructure issue here…

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