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UK Government Consult on Extending “Local Full Fibre” Broadband Coverage

Thursday, December 29th, 2016 (11:36 am) - Score 2,463

The Government has today launched a new ‘Call for Evidence’, which seeks to gather feedback on the “best use of public funding” to encourage further and faster UK deployment of “full fibre” (FTTP/H) style ultrafast / Gigabit-capable broadband networks in partnership with local areas.

The new consultation is linked to the recent Autumn Statement 2016 announcement, which among other things saw the Chancellor (Philip Hammond) commit an additional £400 million of public funding towards a new Digital Infrastructure Fund (DIF) that must be at least matched by private investment and is being setup to help foster the deployment of “full fibre” networks over the next 4 years (full details).

Matt Hancock MP, UK Digital Minister, said:

“This Call for Evidence sets out a number of approaches we can take to stimulate the market to extend full fibre networks in areas across the UK, including full fibre business vouchers, public sector data aggregation and supply side approaches”

At present it’s estimated that 91% of premises within the United Kingdom are within reach of a “superfast broadband” (24Mbps+) connection and the on-going Broadband Delivery UK programme is aiming to extend this to 95% by the end of 2017 and then 97% by 2020.

However the new DIF is separate from the BDUK programme and has been designed to help foster the new ultrafast (1Gbps+) generation of pure fibre optic based alternative network (AltNet) providers (e.g. Cityfibre, Hyperoptic, Gigaclear etc.).

As a result the Government are keen to know more about any local approaches that have been taken to the deployment of full fibre networks, as well as what lessons were learnt and how such networks might be extended (reflecting both urban and rural deployments). All related ISPs may wish to contribute to this.

Various approaches to distribution of the funding are also being considered, such as direct funding in uneconomic areas, public sector demand aggregation or a voucher scheme for private sector demand aggregation. The ‘Call for Evidence’ also examines what options might exist for making more public sector assets available (e.g. street furniture) to network operators, which is something that we’ve already seen used quite a bit for public WiFi and 4G deployments.

Finally, the document suggests the possibility of a pilot that would focus on “replacing all existing copper connections to premises with full fibre connections, with customers migrating to services on new full fibre networks in an area.” The Government thinks that this would effectively aggregate all of the existing demand from the existing operator and thus “improve the commercial case for full fibre deployment.”

Mind you Openreach (BT) has already done something similar to the above in Deddington (here) via their Fibre-Only Exchange (FOX) trial in 2012/13, but expanding this to other areas may risk complications and competition concerns from unbundled (LLU) ISPs like TalkTalk and Sky Broadband. Not to mention that the DIF isn’t fully intended for BT’s use, while AltNet’s don’t generally have copper networks that need replacing.

Extract from the Consultation

“This would improve the commercial case for full fibre deployment. Nevertheless, the consequences for consumers and businesses would be significant and pilot projects may be a suitable next step to investigate the impacts on customers relative to the impact on the economics of fibre deployment.

This would require agreement from the existing operator for an intention to pilot the switch off of the copper network in an area. This call for evidence therefore focuses on the case for pilots rather than for full copper switch off on a national basis.”

At this stage it’s only a ‘Call for Evidence’, which means that the Government are merely sounding out a number of potential approaches, as well as still remaining open to the consideration of different methods and suggestions from the wider industry.

Responses to this ‘Call for Evidence’ must be submitted by Tuesday 31st January 2017 and further details can be found in the following PDF document.

Extending Local Full Fibre Networks Call for Evidence
https://www.gov.uk/uploads/../Extending_Local_Full_Fibre_Networks.pdf

Leave a Comment
32 Responses
  1. Avatar MikeW says:

    You would have thought that this whole subject ought to have been part of Ofcom’s DCR.

    The element of turning off copper also plays into the USO consultation. Ironically, allowing BT to turn copper off makes their own business case for fibre better, even if the government’s thinking is to enable altnets.

    So … more evidence of a lack of joined-up thinking from government and regulator.

    1. Mark Jackson Mark Jackson says:

      The Government has already covered many of the same areas before in past reviews, consultations and so forth. I’m not sure why they need to do it all again, but perhaps it’s more a matter of normal process after any new fund is announced than a lack of joined-up thinking. Mind you the latter is equally possible 🙂 .

    2. Avatar NGA for all says:

      INdeed. The DCR just rushed to a conclusion about separation. Furthermore anybody subsidising small cabinets ( <50 premises) for in-fill in urban exchanges will be at a distinct dis-advantage.

    3. Avatar Steve Jones says:

      In areas with FTTC and cable coverage, it’s going to be extremely difficult to find a way of encouraging FTTP rollout. Those investments are sunk costs and can, if necessary, be priced at marginal cost levels (which is what happened for cable when all the original operators effectively went bankrupt and much investment was written off). Unless the UK suddenly has an appetite for paying a premium for FTTP, the business case for other than “cherry picking” sites in urban areas is difficult to make. If that cherry picking is to be encouraged then they’ll be even more of a patchwork with new network infrastructure operators (presumably) without any USO or wholesaling responsibilities.

      If substantial amounts of public money was involved or discriminatory subsidies for particular technologies then expect to see VM & BT legal departments taking an interest.

      It was also OFCOM and the government that more firmly embedded the copper side through their promotion of LLU and MPF. Those LLU operators could also be left with stranded assets, although it might be that the timescale of this will make that a moot point.

      In any event, it’s difficult to see any way that the government can incentivise OR (and, more particularly, investors and bankers) to a truly enormous capital investment when their approach it essentially to undermine the business case for doing so by tight regulation, unbundling at ever lower levels of the infrastructure and embedding obsolete products.

    4. Avatar New_Londoner says:

      Steve
      Good points!

      There are so many contradictions in government policy, ministerial statements, Ofcom pronouncements etc. They don’t appear to realise that this lack of consistency is a major disincentive to any serious investment. In some ways it would be good to see this end up in court, with politicians, civil servants and regulators finally held to account for their various idiotic policy decisions.

    5. Avatar NGA for all says:

      Steve, BT is sitting on huge capital deferrals owed to Government, which will continue to grow where FTTP GPON on demand could be developed to offer remote areas a chance to migrate to Fibre access, offering BT the chance to reduce the number of rural exchanges.
      LRIC for fibre is currently treated the same as copper in the cost recovery regime. So what additional incentives do you think are needed? Do we need to acknowledge a £500 per customer one off cost of change? Do we need to allow for a further £200-£300m a year investment in fibre – reducing the investment in legacy assets? Nothing in the DCR on this matter which is disappointing.

    6. Avatar Steve Jones says:

      @NGA

      I have no idea where you come up with these bizarre ideas. First is this astonishing statement :-

      “BT is sitting on huge capital deferrals owed to Government”

      What huge capital deferrals that are owed to the Government? If you refer to BDUK gainshare/claw-back, then this is not owed to the government but is returned to local BDUK projects for reinvestment (if that’s what they choose to do). The amounts are substantial, but by no means “huge” when compared to the tens of billions full FTTP requires. In any event, that is not money which BT can invest for the very good reason that it isn’t their money.

      It may be that you are talking of some other form of huge capital deferral owed the the government, but I’ve no idea what that can be unless it’s just another of your beliefs that, somehow, there is some contractual requirement for BT to spend a fixed amount of capex under the BDUK schemes which has not been done. There is not the faintest evidence that this exists at all.

      As for fibre-on-demand, then that is being re-introduced having been suspended, apparently due to lack of resources to deliver it reliably (probably due to competition for resourcs for BDUK). However, it’s not cheap for obvious reasons and it’s really only businesses or very wealthy households that could afford it.

      In any event, I was primarily addressing the situation in urban areas where BDUK played little part.

      As for the amount of investment for full (GPON) fibre is concerned, a figure of something over £1k per household is an accurate enough starting point (and in line with the BSG study). Even if it’s at little as £20bn, at £200m a year as you suggest, that would take 100 years. Even a 20 year programme would require £1bn a year.

      In the medium term, that extra investment would considerably increase depreciation, financing and operation costs as there would be a long period of running dual-networks and the depreciation on the existing network would have to work its way out of the system. Unless the government made changes, then there would be an increase in business rates too.

      In time these factors would drop out and, maybe, an full fibre network will be less expensive to run, but that’s decades in the future, and the problem is dealing with the issues in the

      Also, as far as LRIC is concerned, then if you think that OR will just be allowed to dump FTTP costs into the same baucket used to calculate MPF costs, then think again. Ofcom are not going to allow the financing of an FTTP network by dumping the costs into increased MPF wholesale pricing. The LLU operators would go ballistic. There is also no legal means by which OR can even enforce a move to FTTP unless BT were given the power to withdraw MPF.

    7. Avatar GNewton says:

      @Steve Jones: We repeatedly hear comments from from as to why fibre can’t be done by BT, and why the government consultation on ‘local full fibre’ has issues. For a change, would you be so kind to come up with a better proposal of achieving widespread fibre deployment? Are you using fibre broadband at all?

    8. Avatar TheFacts says:

      @GN – why do you ask if Steve is using ‘fibre broadband’?

      There are no problems with installing FTTP, other than the cost v. revenue, the wholesaling situation and sorting out making people pay a premium for something that would work in a similiar way (to them) to what they have now.

    9. Avatar Steve Jones says:

      @GNewton

      First I might question why full FTTP is a priority if there isn’t a market to actually pay for it. I use FTTC and it’s more than fast enough for my needs and I don’t see anything on the horizon which will attract me to pay a premium for something faster.

      I would certainly change building regulation to mandate FTTP for new builds of any size.

      But ultimately, it’s not my job. Ofcom and the government have produced the policies that have lead where we are now and to anybody who cared to look at the whole LLU saga, then it was inevitably going to end up in this position. Ofcom delayed FTTC deployment by two years and the constant changing of rules and ever more intrusive regulation and the deliberate undermining of the OR revenue base (with the latest being PIA+ promotion) means that nobody in their right mind would advance the £20bn+ OR would need to borrow for that comprehensive FTTP coverage that people seem to be demanding.

      So, if the answer is to be introducing dozens of altnets to do a patchwork job (which is what government/Ofcom policy is heading things), then that’s what they’ll end up. I Ofcom & the government want to hold a grown-up conversation with OR one what would be required for an evolutionary change to that target, then some progress could be made. However, they aren’t interested. They have this dream that (somehow) increased competition and a fragmentation of the network infrastructure is the way to do it. It’s idiocy.

    10. Avatar GNewton says:

      @Steve Jones:

      “But ultimately, it’s not my job”
      No, it isn’t, but you are the one constantly defending BT because you are a shareholder.

      “LLU saga” “deliberate undermining of the OR revenue base (with the latest being PIA+ promotion)”
      You don’t seem to understand that BT has a long history of misusing its leading market position, forcing the government and Ofcom to act in the way they did!

      “introducing dozens of altnets”
      In view of the situation with BT having altnets building fibre is a good thing, a win-win situation for veryone except BT shareholders 🙂

    11. Avatar AndyH says:

      @ Gnewton

      Other posters here are saying there is no need for a full fibre network in the UK at present, yet you seem to always ask for them for their ideas to a full fibre network. I don’t follow this one bit…

      If you are the one advocating the full fibre network, it should be you telling us the plans about how to achieve this, rather than those saying a full fibre network is not necessary presently.

    12. Avatar Steve Jones says:

      @GNewton

      The point is that Altnets will not produce anything approaching the comprehensive FTTP solution you appear to be advocating. It will produce a patchwork. As I’m not claiming that there is an overwhelming economic need to do this, then that’s your problem to resolve.

      I’m also saying that the way that the industry is regulated by Ofcom makes it impossible to make a viable business case for OR to implement a comprehensive FTTP network. Even if OR made a decision to do so, there is no possibility in the current environment that investors (whether equity investors, bond investors or banks) will advance the enormous sums required. Nothing that Ofcom has said so far is going to change that – indeed, their current policies make it less likely.

      Hence OR’s current strategy, which will be to selectively roll-out faster speeds using hybrid technology where it is most cost-effective along with some FTTP (like new-builds) where it makes sense. We might see some low-cost FTTP areas being done (like the North Swindon trial), but the conditions which permit that will be limited as it depends on the nature of the local passive infrastructure.

    13. Avatar MikeW says:

      @GNewton
      You asked Steve to propose a way to get widespread [full-]fibre deployment.

      I ask you: Why is that a worthwhile thing to propose? What problem is it an attempt to solve?

      Places which have significant fibre deployment were solving a problem they had: how to get speeds of 100Mbps. Well before we attempted to solve that problem. And sufficiently early that the only possible solution was fibre. Neither copper nor wireless were advanced enough at the time.

      Now, we are trying to solve the same problem (and not trying to solve a gigabit problem), but there are more potential answers available to us now than existed back then. Docsis 3.1, G.fast, G.now and wireless all offer better capabilities, and are more viable.

      Even companies/countries that went for FTTP as an early-adopter solution are now considering & installing the enhanced copper technologies.

      Widespread [full-]fibre deployment is but one solution. But it (still) isn’t the only solution to the problems currently being posed.

    14. Avatar GNewton says:

      @MikeW: Your are highlighting some valid points here, there are some technologies now available which can help to postpone the inevitable log term fibre by a few years.

      As regards my question to Steve Jones: He’s the one who keeps lamenting over how bad BT is being treated with all the government and Ofcom regulations and restrictions, while at the same time he won’t acknowledge that BT has been responsible to a large degree for this and that it has all too often misused its significant market power, having held back the country in the past. It is simply not acceptable with the special situation BT is in, and also in view of the fact that it unnecessarily received Millions of taxpayer’s money, to be so overly concerned about the welfare of its shareholders, to the detriment of Millions of end users in this country who have no choice but to use this network.

    15. Avatar AndyH says:

      Do you actually have any evidence that they have abused their position or held back in the past? You’re aware both of which are under OFCOM’s control?

      The biggest problem of all of this is the UK government. In the last 20, there has been a complete failure to invest in infrastructure across the board. Governments have been reactive rather than proactive – just look at the railway networks, the roads, the electricity and gas networks.

  2. Avatar John says:

    They just want to be seen to be doing something about it and spending taxpayers money on their “investigations” but when it comes to it nothing will get spent on us and nothing will get done by them.

  3. Avatar Slow Caerphilly says:

    I’ve not heard of pubic wifi before

  4. Avatar dragoneast says:

    Government Christmas presents this year: the gift of the gab.

  5. Avatar GNewton says:

    Ever so inventive with new terminologies:

    superfast broadband (not really)
    fibre broadband (not really, it’s usually VDSL)
    local full fibre (why not call it FTTP?)

  6. Avatar Optimist says:

    Government ministers spending taxpayers’ money by employing civil servants to produce reports hardly anyone will read and which will end up in the shredder. Meanwhile the time to get an appointment to see a GP gets longer and longer.

  7. Avatar Patrick Cosgrove says:

    One potentially thorny issue might be rural areas commercially supplied by fixed wireless. Where’s the incentive for them to change? Think Airband in Exmoor.

    Having said that, there’s an opportunity for CPRE, national parks and AONBs to get behind this as a way of ridding their areas of telegraph poles. Before anyone points out that getting rid of telegraph poles is not actually an economic necessity, I concede that straight away, but having photoshopped all the poles from a photograph of my village taken from the church tower, it makes one hell of a difference. An idler’s dream, maybe.

    1. Avatar Patrick Cosgrove says:

      Correction, that’s a bad example as it’s subsidised, but thinking about it, the principle still applies having installed brand new kit, whether commercially or state-aided.

    2. Avatar New_Londoner says:

      Patrick
      Fixed wireless needs masts, a power supply, aerials on every connected property, backhaul etc. The aesthetic benefit of swapping telegraph poles for much higher masts and possibly power pylons across the moors seems marginal at best.

      The evidence of takeup of Airband suggests there is little / no appetite for it either, much like satellite.

    3. Avatar Patrick Cosgrove says:

      What I meant was swapping wireless for mole-ploughed or ducted fibre.

    4. Avatar Steve Jones says:

      Given that a lot of properties in rural areas have their power delivered overhead, then it wouldn’t just need the telecoms to be buried. In any event, this all costs money, so who is to pay? Those in urban areas already cross-subsidies utility services in rural areas.

    5. Avatar Patrick Cosgrove says:

      To me that’s rather like saying I don’t want to pay taxes that support education because I don’t have children. And I’m not even sure it’s true. I pay the same Council tax and income tax rate as the nearest large town, which is seventeen miles away, but I have no bus service, I pay for my septic tank to be emptied, street lighting is largely absent, roads and footpaths are not maintained, etc, etc. I also pay a lot more tax through the purchase of petrol. This is an argument that creates unhelpful divisions between urban and rural area which, in reality, are interdependent and need to recognise that.

  8. Avatar fastman says:

    Gnewton more mis in formation as ever

    You don’t seem to understand that BT has a long history of misusing its leading market position, forcing the government and Ofcom to act in the way they did!
    “introducing dozens of altnets”

    In view of the situation with BT having altnets building fibre is a good thing, a win-win situation for veryone except BT shareholders

    biggest issue is altnet don’t really want to build networks as that costs money / you get little return and the payback time is massive– — so now the new “minister” has called their bluff at INCA conference it will be interesting to see how many them actually build anything”

  9. Avatar fastman says:

    also gigaclear has a interesting conundrum its gone for pluckly little gigaclear banking on the door of BT to a a major recipient of BDUK funding that will be watched like a hawk to ensure that premises actually get what they have been promised – also Gigaclear will have its investors “itching for a major return on their investment – so dot be surprised in next months or so Gigaclear ends up being floated

  10. Avatar Martin says:

    It seems to me reading the above arguments that the dreams of full fttp is doomed by the ancient argument of townies vs country folk. townies think country folk are mad to live miles from nowhere, with no shops, no lights, no internet, no mobile. country folk hate the town noise, with too many people, too bright , no peace. but we need internet for both types. bt backing side with their “I have enough with fttc” attitude. bt blaming side still waiting for a working connection.  will they ever agree?

    1. Avatar Ignition says:

      Proportionally ‘townies’ have less FTTP than ‘country folk’, with most of the FTTP ‘townies’ have funded entirely by the private sector and most of the FTTP serving ‘country folk’ subsidised by taxpayers.

      Coverage overall is a different matter but in terms of FTTP ‘country folk’ are quite some way ahead.

  11. Avatar Jacko says:

    I welcome any improvements which will substantially improve my download speed from the present 1 Mbit / sec that I currently have on good day
    You talk about copper I just have corroding aluminium
    Who is going to upgrade the servers around the world ? And at what cost?

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