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UK Government Propose New Broadband Investment Fund for Altnet ISPs

Wednesday, November 25th, 2015 (2:16 pm) - Score 1,862
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The Chancellor of the United Kingdom, George Osborne, has today given his Autumn Statement 2015 (Spending Review) and unfortunately there wasn’t much in terms of new support for broadband and mobile infrastructure, but we did get word of a new investment fund for alternative network ISPs.

At present the existing Broadband Delivery UK programme and related projects, which are overseen by the Secretary of State for Culture (John Whittingdale) and the Digital Economy Minister (Ed Vaizey), aim to make fixed line superfast broadband services available to 95% of the population by 2017/18 (rises to 99% by 2018 when you include wireless / mobile solutions).

The target first involves pushing related services out to 90% of UK premises “by 2016” (supported by £530m from BDUK) and another £250m was later allocated to raise that target to 95% under the Superfast Extension Programme (details). Extra match-funding has also come from local authorities, the EU, UK Growth Deals and the private sector (e.g. BT).

However we should remind readers that the first 70% or so of coverage has already been largely tackled through commercial investment (BT and Virgin Media etc.), which means that state aid gobbling projects have tended to focus more on the final third (30%).

On top of all that it was revealed earlier this month that the Government would also work to introduce a national minimum broadband speed of 10Mbps (Megabits per second) via an update to Ofcom’s Universal Service Obligation (here), which unlike existing commitments is legally-binding. BT has also said that they’d be able to support this (here).

As such we had been hoping that today might reveal more about the Government’s strategy for BDUK’s Phase 3, which is intended to help improve connectivity for those in the final 5%. Unfortunately we didn’t quite get that, but there was this little bit of new information.

Extract from the 2015 Spending Review (Autumn Statement)

Improving competition

1.222 Competition between broadband providers supports the delivery of the fast and reliable broadband a modern, productive economy needs. Innovative approaches to supporting the market will help deliver ultrafast speeds to nearly all premises. The government will explore setting up a new broadband investment fund, to support the growth of alternative network developers by providing greater access to finance. The fund would be supported by both public and private investors, and would be managed by the private sector on a commercial basis.

Long-term investment

2.103 Up to £550 million will be invested over the Parliament to make the 700Mhz spectrum band available for mobile broadband use. The government will complete the £1.7 billion investment into the superfast broadband programme to ensure it is available to 95% of premises by 2017.

2.104 To ensure the benefits of digital communications infrastructures are felt across the economy and translated into productivity gains, the government will publish a Digital Transformation Plan in early 2016.

The South West

1.265 The government is also investing £10 million in better broadband infrastructure for the South West.

Curiously there was no mention in today’s document of the recently announced 10Mbps broadband USO or the subsidy for Satellite services (applicable to the final 1-2% of premises), although that may be because they’ve already discussed them on numerous occasions (see the above Budget 2015 link).

The remarks about £10m for broadband in the South West and “up to” £550m to help free 700MHz for Mobile Broadband (note: it use to be “up to” £600m) were both mentioned in the prior Emergency Summer 2015 Budget and so we can skip past those too.

As such the only piece of interest left is this talk of a new Broadband Investment Fund, which will probably be informed by the Government’s £10m Innovation Fund that continues to pilot 7 projects to “test innovative solutions to deliver superfast broadband services to the most difficult to reach areas” (i.e. the final and predominantly rural 5%).

Various fixed wireless, fibre optic and subsidised Satellite solutions have been tested as part of the above fund, which involves alternative network providers instead of the big boys like BT. Our impression from today’s announcement is that altnet ISPs will be getting more support in the future, but the details remain wafer thin.

Otherwise the vast majority of BDUK funding, which has been matched by local authorities and the private sector (total public investment of around £1.7bn), has so far also gone towards BT after the operator was able to pick-up nearly all of the related contracts (they’ve often been the only bidder). BT has been predominantly deploying their ‘up to’ 80Mbps capable FTTC (VDSL) technology and some other solutions (FTTP, FTTrN etc.).

Recently several smaller ISPs have also won BDUK Phase 2 contracts (e.g. Gigaclear, AB Internet and Airband), but they’re in the minority and it’s hoped that BDUK Phase 3 may change that. But catering for the final 5% is often disproportionately expensive, not least due to its focus on smaller villages and other complex infrastructure challenges, which makes it very difficult to deliver a reasonable return on any investment.

The Size of the Final 5% (c1.5 Million Premises) – BDUK Data

* Approximately 20% of the unserved areas are likely to be in areas with greater than 2,000 premises per km2, however the majority of these are in cities where BDUK’s current approach is to stimulate the market through demand-side measures.

* Approximately 20% of the unserved areas are likely to be in areas with population density between 500 and 2,000 premises per km2; and

* Approximately 60% of the unserved areas are likely to be in areas with population density below 500 premises per km2.

At this point it’s worth noting that the original date for completion of the first 90% target was actually around spring 2015, although it was later adjusted to the ambiguous “by 2016” (this goal will probably be hit in early 2016). Similarly BT has previously hinted that the second 95% target (extension) might not actually be achieved until 2018. The project is thus running roughly one year behind the original schedule, but most of that relates to earlier administrative delays.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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19 Responses
  1. PeterM

    This has to be welcome news for mobile coverage and fixed wireless.
    Now, if we could some how link the mobile coverage and slow broadband problem in rural areas by using the same masts for the mobile companies transmitting equipment and the fixed wireless operators transmitting equipment, we may even be able to kill two birds with one stone!

  2. Is the USO also 10 Mbps upload? Rural businesses and homes absolutely need that in the world of cloud computing and storage.

    • PeterM

      No.
      You would probably get about 2Mbps upload on a BT line with 10Mbps download.
      With satellite the speed would be irrelevant for cloud computing – because of the latency.
      Many Fixed Wireless would give you the same upload as download even on their cheapest packages.

    • Craski

      “Many Fixed Wireless would give you the same upload as download even on their cheapest packages.”

      @PeterM
      I have seen this but dont think it is the norm. I think it depends on what the WISP back haul connection is. i.e. If they are using a leased line then they may have plenty up bandwidth to share out but smaller WISPS may be working off a number of FTTC connections so wont necessarily have symmetrical up bandwidth to dish out. I think it also depends on radios being used as a lot of the cheaper radios used for CPE are not duplex radios so have to schedule down/up bandwidth and/or tweak the radios to get best mix of up/down performance for each install.

    • PeterM

      @Craski
      Yes, you are probably correct but the potential to upgrade a fixed wireless service will always be there without to much extra investment.
      To increase the USC to a 10Mbps upload on BT lines would of course need rather more investment – ie G.Fast.

    • 2 Mbps just won’t cut it for anyone trying to use Office365, Google Drive, iCloud Drive, Dropbox, etc. etc. etc.

      The USO will need to be delivered by FTTP for those on really low speeds.

    • PeterM

      @BreakupBT
      Have no illusions the powers that be have no plans to give all the final 5% FTTP. Only a very small proportion may get it – if you are very lucky. The spend on BDUK2 is tiny.
      Just don’t let them dump Satellite on you!

  3. AndrewH

    What I want to know is what are BT doing about extended reach in their commercial areas.
    I’m on a commercial activated cab but too far away.
    No one can tell me anything at all.
    Will BDUK be allowed to spend Phase 2 money in commercial areas?
    No one seems to know.
    If BDUK don’t have any say over these cabs how is anyone going to make BT extend their reach at any point.

    • PeterM

      @AndrewH
      BDUK have certainly upgraded cabinets in commercial areas in West Sussex. So it is being done. But they won’t if another operator such as Virgin Media serves your locality.
      The answers may be found if you check out the BDUK project website for your county.

    • What you need is FTTP on Demand. Get in a time machin to 2014 (when BT were still offering it) and order it from:

      http://business.bt.com/business/comms/fibre-on-demand/

      Sign a 3 year contract and get BT Business Infinity 80/20 for £40 a month plus distance-based connection charge.

      Because copper’s so amazing (according to BT and no-one else), many people tried to get off it with the FTTPoD product, so many people in fact that BT stopped offering it in January.

    • Ignition

      The only FTTPod product offered ever has been the 330/30 variant. Given Openreach charge £99+VAT per month for this £40 retail is unlikely.

      Fact checking is always a good thing.

    • GNewton

      The original FoD (minimum three year contract) was £38 + VAT monthly fee, plus the various installation fees.

    • Ignition

      I’m aware, hence my use of present tense referring to the monthly fee.

      I would purchased it for the home office had it stayed there.

    • robR

      @Ignition

      That like says £200 + VAT – so take your own advice?

    • Ignition

      @robR Quoting myself: ‘Given Openreach charge £99+VAT per month for this £40 retail is unlikely.’

      I was referring to the Openreach charge, and the retail comment was a direct response to the previous post. Perhaps reading more carefully rather than being so keen to be argumentative would be wise.

  4. fastman

    breakup fod is depolyed and provisioned the same way as an leased line its a 121 service and no benefit to anyone expect the individual -stopped because wrong product at wrong time

  5. fastman

    breakup if there were more thn just person offering better wasys of getting a solution rather than fod — a dirct conversaion with openreach would have helped

  6. Mike Lloyd

    All of the above is way above our heads. But we are a small community down here in Cornwall with about 50 houses and our broadband speed is around .6mps! Some of us are lucky and actually scream with joy if we get 1mps. Our exchange is around three miles away and our cabling goes underground (not ducted) and the exchange actually pumps out 8mps max but the drop off is considerable by the time it gets to us. We are therefore obviously hoping to be in the final 1% to be “sorted” – God knows when and we arnt holding our breath. There must be thousands of small communities like us out there suffering but frankly BT doesn’t care.

    So, we are looking for some help and advice: Does anyone have ANY experience of resolving this type of issue?

    Any help would be appreciated.

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