UK Government Targets 98% Superfast Broadband Coverage via £645m Clawback

The Government’s £1.6bn+ Broadband Delivery UK project has today confirmed that a total of £645m in public funding (i.e. clawback and efficiency savings) will be returned to help expand the reach of “superfast broadband” (24Mbps+) to 98% of premises in the United Kingdom by around 2020.

At present the BDUK scheme hopes to help put “superfast” capable fixed line (or in some cases fixed wireless networks) within reach of 95% of UK homes and businesses by the end of 2017 (they’re currently at around 93-94%), although it’s hoped that a combination of clawback linked reinvestment and efficiency savings could now push this to 98% by 2020. The proposed 10Mbps USO is then expected to handle the final 2% (here).

Last month BDUK revealed that their £1.6bn+ public investment (i.e. government and local authorities) had so far helped to put “superfast” connectivity within reach of nearly an additional 4.6 million premises (here), which is on top of the c.70%+ of premises that have already been upgraded by purely commercial deployments. The latest data shows how this progress splits down via the different regions.

Average take-up by consumers in related areas is also known to be running at 38% (here), which is very strong. Once again BDUK has kindly provided a regional split and we hope to publish a more detail take-up report for each project area later today or tomorrow.

Understanding take-up is vital because it links into the clawback (gainshare) mechanism of BDUK’s local contracts, which requires suppliers (i.e. predominantly Openreach (BT)) to return part of the public investment when customer adoption of the new service passes beyond the 20% mark in related areas. This can then be further boosted by any efficiency savings made during the roll-out.

The returned funding is intended to be reinvested towards further coverage improvements via future contracts. BT alone recently indicated that they had deferred £465 million (here), which could potentially be harnessed in this way.

On top of that BDUK has today revealed that this will be combined with project efficiencies of £180 million, which they say have resulted from “successful management and delivery of the programme.” Some of that may have also come from the greater use of cheaper FTTC instead of FTTP during the first roll-out phase.

An estimate of the combined reinvestment can be seen below and this may increase further as contracts complete.

The Government predicts that this reinvestment of £645.8 million should be enough to go from 95% to 98% coverage by around 2020, which they say would benefit an additional 900,000 premises beyond the original plan. Apparently £200m of this £645.8m has already been committed to related projects.

Matt Hancock MP, Government Minister for Digital, said:

“We have now brought superfast broadband to almost 94 per cent of UK homes and businesses, and we are reaching thousands more every week. We are on track to reach 95 per cent by the end of the year, but we know there’s still more to do.

The money that is now being returned to the programme for reinvestment will help us reach that final 5 per cent, and is all part of our commitment to make sure that 100 per cent of the UK can get affordable, fast and reliable broadband by 2020.”

The Government often takes a lot of flak for their programme, usually from the most remote rural communities that are being left until last to benefit (somebody always has to wait longer), although in fairness we can’t think of many major public sector contracts that have actually managed to hit their targets. At present fixed line “superfast” coverage sits at around 93-94% and thus the next 95% goal does look set to be achieved.

On the other hand it’s worth remembering that 95% is a national average and so some areas, such as the Scottish Highlands, as well as some of the more rural counties in Wales, Northern Ireland and England, may struggle to reach that level. Likewise the figure of 95% is an estimate and one that can’t always account for complicated problems with local capacity or poor home wiring etc., which may impact real-world service performance.

However it’s long been clear that BDUK won’t finish at 95% and they clearly intend to carry on for the next few years (as above), which will reach ever more rural and isolated communities.