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A Sliver of New Detail on the Government’s Broadband Investment Fund

Friday, December 11th, 2015 (8:46 am) - Score 854

After some prodding and probing we’ve managed to secure a slither of additional information on the Government’s recently proposed Broadband Investment Fund, which is designed to help alternative network providers to secure funding to build out their infrastructure.

The fund was quietly announced as part of last month’s Autumn Statement 2015 (here), although virtually nothing is known about how it would work or its goals. Some also speculate that it could end up becoming a substitute solution if the Government are unable to secure EU state aid approval for future contracts under their primary Broadband Delivery UK programme (here).

Extract from the 2015 Spending Review (Autumn Statement)

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.

Thankfully we have been able to secure a small slice of additional information about the fund from the Broadband Delivery UK office, which doesn’t add much but may help to illuminate the structure and approach behind it.

New Investment Fund Details

* Smaller, alternative network developers stimulate competition and innovation, extending the reach of faster broadband beyond the plans of larger networks. Access to cost effective capital will allow these alternative networks to expand, but there is currently a lack of suitable finance available in this area.

* The government is engaging with industry to explore whether the establishment of a dedicated investment fund, managed on a commercial basis, would help address this and act as a catalyst for private investment in alternative networks.

* If deemed feasible, including there being sufficient investor appetite, government would work with industry to develop a fund mandate and look to appoint, through a competitive process, a fund manager to raise and manage the fund.

* HMG could become a cornerstone investor in the fund. If so, the fund manager would be responsible for raising at least a matching amount of private capital on no better terms to sit alongside government’s investment.

It’s likely that the fund will focus on helping to connect remote rural areas, possibly as part of BDUK’s Phase 3 plans for tackling the final 5% of the United Kingdom that aren’t yet covered by existing scheme(s). We suspect that more will be learnt in time for next year’s Budget 2016 announcement.

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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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4 Responses
  1. DTMark says:

    Looking at the scenario with LAs trying to get people to tender for the crumbs that BT left behind, with seemingly significant or total control over where BT went, was given to BT to pick the “best” areas.. this reads as:

    “We gave BT free money to do all the easiest, cheapest and/or most commercial bits. If anyone would now like to put up some private finance to build out to what is left, we won’t give any money but we might help you to borrow some.”

    I can’t really see it being a roaring success.

    1. MikeW says:

      True. The “value for money” test required by the EU and central government certainly meant the cheapest bits were done – and by extension were also the most commercial and easiest. No way around that, given the original requirement.

      Wherever the council stopped with the “value for money” test, and swapped to a “area filling” requirement, there would be bound to be a “bits and pieces” problem.

      However, I don’t see that having an investment fund means that the government will be handing out no more subsidies. Just that it is handing some of the financing differently. There may be subsidies in addition to the fund – but we know no more details yet.

      Given that Fibre Garden seemed to struggle because it ran out of cash without reaching the threshold where the subsidy payments were handed over, this kind of fund might help projects ease over that cashflow problem.

    2. gerarda says:

      I agree with Mark – any proper rural coverage was doomed from the outset by the outside in approach.

  2. James M says:

    Meanwhile they will keep giving 13BN a year to India to fund it’s space programme.

    All so backwards and wrong.

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