B4RN Fear 10Mbps UK Broadband USO May Hamper Rural FTTH Rollout

The boss of rural ISP B4RN, which is rolling out a 1Gbps community-built and funded fibre optic (FTTH) broadband network to homes in Lancashire, Cumbria, Yorkshire, Norfolk and Suffolk, has warned that the UK Gov’s proposed 10Mbps USO may force them to “retrench within our current boundaries.”

B4RN has been a wonderful success story. The Fibre-to-the-Home (FTTH) network, which encourages local volunteers to help build their network (often in exchange for shares instead of cash) and thus fosters strong take-up, has connected 3,800 live properties in some of England’s most isolated rural communities. At this rate (c.150 new connections per month) the operator could reach around 5,000 connections by next summer 2018 and their total coverage area is already about 2,000Km2.

Overall the operator has either finished or has civil engineering work underway in 75 parishes, which is largely funded by around £4.5 million in shares and £2.5 million via loans from community members (build costs average about £700/property). B4RN has also hired 24 members of staff, including its own civil engineering team, and more are expected to be added over the coming year.

In fact 2017/2018 is expected to be first year where they are cash flow positive and as a result 2018-2019 could mark the start of their ability to return cash to the community, as well as repaying investors and loans.

Going forwards, B4RN’s recent expansion into Norfolk and Suffolk (here) could also help to pave the way for them to reach 300 new connections per month next year. However the operator’s CEO, Barry Ford, has warned that this is very dependent upon what the Government decides with respect to the proposed 10Mbps minimum broadband speed via a new Universal Service Obligation (USO).

Speaking at INCA’s recent conference, Barry noted that “many more” parishes were “waiting in the wings” to join their network but he added that B4RN were “holding back to see how USO plays out … if badly then we will retrench within our current boundaries” (i.e. reducing costs or spending on their future deployment plans).

We have ask Barry whether he could clarify what, in B4RN’s view, would be a good or bad outcome to the USO and are awaiting his reply. At present it’s widely expected that the USO would, outside of Hull (KCOM’s domain), need to be implemented across the UK by Openreach (BT) and this will focus on the final 2% of premises that are not due to benefit from the current rollout of “superfast broadband” (24Mbps+) networks via Broadband Delivery UK.

The exact technology and funding measure will depend upon the final agreement and regulatory stance, although some of the proposed solutions could deliver speeds that are nearly or a little better than “superfast“. This seems unlikely to drive people off B4RN’s existing network but it could make their proposition harder to sell into new areas, although we suspect that many would still go for a cheap 1Gbps service rather than a dated hybrid fibre option with significantly slower speeds.

Customers of B4RN’s service typically pay just £30 inc. VAT per month (plus a £150 one-off connection fee) in order to access an unlimited symmetrical connection that runs at speeds of up to 1000Mbps on a monthly contract term, which is just about the most affordable 1Gbps service in market (short of TalkTalk’s 940Mbps package on the Cityfibre built FTTH network in York).

Competition concerns over the proposed USO are of course nothing new, although so far we’ve mostly only heard back from larger providers (here). Now for a few more details on B4RN’s current network (extracted from Barry’s recent INCA speech)..