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Government Opens Review to Improve Business Access to Broadband

Wednesday, February 24th, 2016 (2:16 pm) - Score 833
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The UK Government Departments for Culture, Media and Sport (DCMS) and Business, Innovation & Skills (BIS) have today jointly launched a new review that aims to specifically look at increasing the level of “affordable and high quality fibre broadband” available to businesses.

At this stage there aren’t many hard details on the review itself, although it’s noteworthy that the Business Secretary, Sajid Javid, made the announcement as part of a speech to the EEF trade association, which champions manufacturing and engineering in the United Kingdom.

Earlier this month the EEF called on the Government to take an “urgent” look at the market (here), not least because they had found that over a quarter of small businesses and half of medium-sized firms were allegedly paying “inflated” costs of more than £5,000 a year for broadband Internet connectivity. Clearly DCMS were listening.

Sajid Javid, Business Secretary, said:

“The UK remains one of the world’s leading manufacturing nations, contributing over £171 billion to the UK economy last year. I was proud to secure an investment of almost £7 billion as part of the national science capital commitment in the Autumn Statement and we have invested £300 million in High Value Manufacturing Catapults in just 5 years. But I want us to do more; I want Britain to be at the forefront of the fourth industrial revolution and to lead the world in innovation.

Developing new technologies, an extensive digital infrastructure, vibrant competition and consumer choice are all vital for UK businesses and central to the UK being at the forefront of ‘Industry 4.0’.

That is why today I have announced a wide-ranging review of business broadband in the UK. As a one nation government I want every business, regardless of size or location to benefit from access to the fast, reliable connectivity they need to thrive.”

Terry Scuoler, Chief Executive of EEF, said:

“Access to high quality broadband is critical for business and manufacturers increasingly rely on it. This review is therefore timely and should lead to a significant push by government and providers to help improve digital connectivity and affordability so that companies in the UK can take advantage of more global opportunities.”

Apparently the review will look at “what steps can be taken to encourage choice and competition which will help drive down prices while delivering a better service“. All of that sounds an awful lot like exactly the sort of work that Ofcom are already in the process of doing (examples here, here and here).

Many businesses will also benefit from the Government’s on-going Broadband Delivery UK programme, which aims to help ensure that superfast broadband (24Mbps+) networks will be put within reach of 95-96% of UK premises by 2017/18. This is particularly important for smaller businesses and home workers, where an expensive leased line may simply not be affordable.

On the other hand the Government’s will also need to recognise that different businesses need different levels of connectivity and domestic grade broadband connections simply won’t cut it for everybody. Furthermore it’s likely that the outcome of Ofcom’s Strategic Review, which is due tomorrow, may have an impact on this aspect of connectivity.

According to Javid, the review will pay close attention to “the whole issue of leased lines and the role they play in the market” (there’s an extra word or two about these needing to be “competitively priced“) and in that respect we’re told that Ofcom are to publish their own review of leased lines next week (this is most likely their on-going BCMR2016 work).

Otherwise the statement doesn’t give us any detail about time-scale and that may be because they’re waiting to see what Ofcom says before setting down anything specific.

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33 Responses
  1. Avatar Patrick Cosgrove

    There may be good reason for this review in the context of business parks in urban areas. For rural areas it’s irrelevant as commonly the percentage of homes where there is some fiorm of rural enterprise frequently exceeds 50%. The issue is the same for all the premises: BDUK, BT and (most) local authorities have failed their rural constituents.

    • Avatar DTMark

      Perhaps. Where we are, there’s a large business park of office and industrial units to let, which are always to let (Mill Lane, Alton IIRC). Perhaps because there’s only ADSL broadband there, and so anyone taking residence there needs to factor in hundreds of pounds a month just to get an internet connection.

      But then separately you’d have to wonder how we can have got to where we have with no modern connectivity to speak of at a major business park when so much money has been thrown at BT.

      Approaching essentially the identical project from a variety of different voices and actors over and over again isn’t going to work.

  2. Avatar fastman

    DT mark they are not value for money from a commercial return too small premises on each cabinet and as park of BDUK they are expensive for the the number of premises that can be covered so they don’t get picked up by BDUK as they are poor vslue for public money when you look at how many premises the county could cover for that amount of money

    • Avatar DTMark

      I haven’t checked but I’d be willing to venture that the two or more phone cabinets in that business park service many more than the VDSL one in our village does.

      It simply comes down to scarcity. You elevate prices by maintaining scarcity of supply, which appears to be the focus of this report; if another company wired up the business park, BT would pop along with FTTP within days or weeks – or (per the report) massively drop the prices, rather than lose the revenue from expensive private circuits people have been forced into ordering.

      And quite how a local authority can oversee a project in which a major business park is left out of the deployment plans needs explaining.

    • Avatar Steve Jones

      The enablement of business parks via FTTC is the market Warwicknet are in. Their business cases work as they are not constrained by national pricing (for which read they charge rather more than would bt the case on OR’s network, but a lot less than a leased line albeit less capable. There are ways and means of enabling business parks, even if it doesn’t payback on the OR wholesaling model. It just requires landlords to involve the right companies and come to a deal. Expecting businesses to work off networks primarily aimed at residential use and have them enabled regardless of costs is not appropriate in my view.

    • Avatar fastman

      steve warwick recoup there costa as they are an SLU so you get no choice so you pay over the odds for a FTTc service from them — no choice ever

      DT mark — there are expensive at a price per prem — so Cab Cost X and there are fifty line on X and Village has 100 line and Cost X what do you do — you do the village — county is all abou the coverage for X amount — most counties also have prce per prem threshold as well — its not about the num ber of lines at a premise its about the number of premises that are connected to a cab

    • Avatar DTMark

      “cab”?

      FTTP doesn’t need “cabs”.

      Nobody is seriously going to deploy VDSL to a large business park in 2016, surely. It will be out of date already and need too many cabs thanks to the distance limitations. The technology is inappropriate, it is too limited.

      Thankfully this one is less than 1km from the exchange so we’re talking a few pennies to drag fibre through a few ducts (a day’s work?), put in some connection points, and then wait for people to sign up to wire up the buildings (like cable).

      Dead easy, cheap stuff.

      The government’s problem all along was to conflate what is “commercially viable” in most scenarios, with what is commercially viable for BT with a monopoly. They are not the same.

      Another company could indeed plumb in the connectivity only to find BT walking along behind them (perhaps literally) deploying FTTP.

      Until there’s a basic understanding of that, these seemingly endless little projects to attack a particular piece today be it rural, business, urban, will go on and on and serve to accomplish little, and in the case of BDUK, wreak real damage and inflate longer term costs.

    • Avatar Steve Jones

      @dtmark

      I’m sure a network engineer can disabuse of the notion that installing fibre down an existing phone ducts costs pennies and is a day’s work. In any event, enabling cabs in business parks is what Warwicknet do, and I’m sure they consider themselves to be a serious company. In any event, their target market is for the sort of small/medium business that needs decent, but not stellar performance. Something good enough for office automation, ordering, tele-conferncing and so on. For more intensive businesses, leased linescare always possible. If a business park owner wants a fibre network, there are network suppliers that will do that.The sort of thing that Gigaclear do. It needn’t be BT.

  3. I hate the way the government (and EEF) conflate broadband with leased lines. They did it with BDUK Connection Vouchers and now Wales Ultrafast Connectivity Voucher Scheme. They could not be more different.

    Broadband
    • Available where someone else has paid for the infrastructure
    • Asymmetric & contended
    • National pricing but speed determined by copper line length
    • Lead time a couple of weeks
    • Cost typically £60 p.m. or less

    Leased Line
    • Private fibre available everywhere
    • Symmetric & uncontended with SLA
    • Speed ordered is speed delivered but pricing varies by location
    • Lead time 3-4 months so usually ordered on multi-year contract
    • Cost £250 p.m. upwards with provisioning cost zero – silly money

    As for competitively priced leased lines – it is what we, as a broker, do for a living. We find the best deal linking back into existing infrastructure. The infrastructure will only get extended if the network shareholders or the government put up the money.

    • Avatar Steve Jones

      One important question. Given BDUK has provided many aggregation points deeper into the OR network, are these available for leased lines thereby reducing build-out costs, or is there some constraint due to state funding rules? At the moment, I guess this means only “lit” circuits from OR using this infrastructure, but that could change if Ofcom carry through the proposal for OR to provide dark fibre broadband in some areas.

      Nb. One little point is BT can’t use excess construction costs in their asset base as used for calculating regulated returns. Same for BDUK grants of course.

    • I think the simple answer is no.

      BT Wholesale is one of the big 4 (the others being TalkTalk, Vodafone & Virgin Media Business). There are also loads of national and regional networks. None of these, including BT Wholesale, has access to the Openreach broadband infrastructure.

      A small anecdote. Had a customer wanting to upgrade from FTTC to leased line. His FTTC cab was right outside his office but the survey came back with ECC (Excess Construction Charges) of several £,000. Customer could not believe leased line would not be delivered via the street cab. He would not accept that the private fibre had to run between his premises and the nearest POP. Threw toys out of pram and cancelled order (as he is entitled to do when ECC’s are presented).

      The only additional services that use the FTTC cab are GEA (using alternative backhaul from the exchange) and FoD (if it is ever commercially released).

    • Avatar Steve Jones

      Of course FTTC cabinets aren’t really relevant. It’s fibre aggregation points that matter which might not be that near the cabinet. If there’s some state aid rule that any aggregation node built for BDUK has to be bypassed (or that no spare fibre capacity was built in for this eventuality), then it’s clearly bonkers. However, state aid rules are often very rigid that way.

      nb. if the cabinet in question wasn’t BDUK funded then any local aggregation node will not be constrained by any state aid rules.

    • Avatar fastman

      Steve FODF will not use the cab it wil go back to nearest Agg node as well

    • I am not a BT insider so have little understanding of the networking structure inboard of the BT exchanges. However, my understanding is that the exchanges themselves are all fibre linked but in a hirachical structure with minor exchanges linking to major exchanges that are on the core network. These maybe the aggregation nodes to which you refer.

      All of this has no relevance to the non-BTW networks who have their own POP’s that may or may not be housed in a BT Exchange. I guess they buy dark fibre from multiple players.

    • Avatar fastman

      the aggregation Node wil be in the network but not in the exchange so you can imagea a motorway network (which is core exchanges, then and A road Network , then a B Road , the aggregation node will be likely where the A Road, joins the B road . you if you cabs is 3 miles up a b road you mind find you aggregation node costs will b e high because it not where the cab is which is important its where the aggregation node is because that is where a FOD cct will come from — it will not use any of the Fibre set apart for the FTTC cab

    • Avatar MikeW

      What I’ve seen of aggregation nodes suggests that space is set aside within for two types of fibre spine: NGA and P2P BAU.

      What is “P2P BAU” if not for leased line purposes?

      As I understood FTTPoD originally, it was a deployment of an NGA GPON circuit – so would make use of NGA spine fibre, but would deploy splitter nodes as necessary, and a fibre DP.

      FoD2 might yet change that, but the architectures seen so far suggest it is designed the same way at the aggregation node, differing only in the way splitters and drop cables are deployed.

  4. Avatar FibreFred

    BT are just one supplier in the UK, if other Telco’s can supply high speed broadband cheaper I’m sure they’ll step up?

    • Avatar DTMark

      The chances of that would be significantly increased if the government handed them a billion pounds.

      Which is what seems most extraordinary. We hand over that money and a business park about 1km or less from an exchange in a town remains with no modern connectivity.

      SMEs cannot sensibly set up there. The connectivity is too expensive and would take weeks or months waiting for the council, I mean, Openreach, to put some wires in.

      Were it, say, 1996, that might not be surprising.

      Why are there any business parks of any size and/or close proximity to towns without modern connectivity in 2016? Er, BDUK.

    • Avatar FibreFred

      Connectivity costs what connectivity costs, some businesses can afford it, some can’t.

      If other providers can do it cheaper where are they?

      Business parks can and do get modern connectivity at the price it costs to provide it.

    • Avatar FibreFred

      I just don’t understand this, “we deserve this and we deserve it damn cheap” mentality

    • Avatar DTMark

      I’m hearing the Communist Party Worker versus Evil Business argument..

    • Avatar FibreFred

      What has changed DTMark?

      The costs to provide services business want haven’t hugely increased have they?

      I’m pretty sure they’ve always been this price or thereabouts

      What has changed is SME’s they want what bigger businesses get but can’t / don’t budget in / don’t want to pay the price.

      It sounds like they expect to be able to set-up wherever they want and have everything they need

    • Avatar DTMark

      To simply quote someone from the comments section of another article..

      In our offices London – EC1 (just down the road from Silicon Roundabout) we are denied Super Fast Broadband because BT have so many copper broadband ‘leased lines’ serving the larger corporations in the area (EC1 abuts the City of London).
      There being no other practical option in our area. The cost however, is prohibitive. A minimum cost of £350.00 pcm for a 2mbps – 10 mbps, which is laughable in the centre of ‘tech city’ where hundreds of small and start up businesses are encouraged to cluster.

      This. In the UK. In 2016, still trying to run broadband services over a phone network.

    • Avatar FibreFred

      No other providers in London? Why?

    • Avatar Jonny

      You’re on Old Street so you instantly have access to Optimity’s wireless network (nothing Openreach about that), and can probably have a gig circuit from Venus for £600.

      If business premise landlords aren’t considering connectivity at all and leaving it all to the tenants then they deserve to have vacant units.

  5. Avatar 3G Infinity

    Interesting that stats still show only 1 in 4 take up of superfast broadband in central London.

  6. Avatar fastman

    unless your at edges of exchanges you will probably have a reasonable copper service in double figures unless you are end of exchanges or in coverted waterfront flats

    • Avatar DTMark

      We have a 3680m line to the exchange which could only ever manage 1.7/0.5 on ADSL and wouldn’t be likely to fare much if any better with ADSL2+.

      An average length line. Nowhere near the “edges”. Really quite near the exchange. But then it is probably getting on for 100 years old.

      Is that a “reasonable” broadband service for an SME? How long would it take to upload, say, a 5GB file-set.. do get real.

  7. Avatar fastman

    So DT so which business park ate actually you on – because your not on the altone for sure

    • Avatar DTMark

      When we only had ADSL here I looked at leasing an office in Alton, Hants.

      Mill Lane serves the largest variety, is a large industrial/office park, and the most suitable.

      There isn’t any broadband there unless you count ADSL which I wouldn’t.

      That was then. Now, there is still no broadband there.

      In the interim, the commercial sector delivered for us here at home first with 3G and then 4G, and so now, from my house where I work about six miles from there, I have upstream speeds VDSL users could only dream of unless three very good lines were bonded together, so poor is the copper at transmitting the data, and downstream that’s workable.

      For around £90 per month without the need to lease an office. The problem “solved itself”.

      Indeed I actually found it might be cheaper to rent a residential flat in a cabled area in the next town and work out of there, than to rent an office in Alton and pay for a leased line, so backward is the BT infrastructure.

      Admittedly some commercial parts of Alton have been upgraded for VDSL, but for some reason the largest business district has not.

    • Avatar Chris P

      @DTMark,

      BT infrastructure is not backward, that’s just the cost of the access infrastructure needed to deliver the service you need.
      All the companies you see either in business parks or retail, that either have private WAN links or leased line internet pay thousands per month for their connections at slower speeds than recent A/VDSL services can provide. The costs cover the cost of provisioning the line including amortisation charges for digging streets and blowing fibre, costs of equipment at the exchange and on your premises, costs for manageing the line and then network access charges.
      Leased lines are very different to A/VDSL technology, use different technology and are vastly cheaper to provide, hence why they are much cheaper per month.

    • Avatar GNewton

      @Chris P: “Leased lines are very different to A/VDSL technology, use different technology and are vastly cheaper to provide, hence why they are much cheaper per month.”

      I think it’s the other way round: A/VDSL is a lot cheaper than a leased line. Leased lines usually are way too expensive for small to medium sized businesses. Hence I’d agree with DTMark that it often makes more sense to rent an office elsewhere which has connectivity, usually from someone other than BT.

    • Avatar FibreFred

      “I’d agree with DTMark that it often makes more sense to rent an office elsewhere which has connectivity”

      Yes it makes sense to ensure your business premise has everything you need before you move in.

      It’s pretty much common sense?

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