UK Gov Reviews the Barriers to Full Fibre Broadband and 5G Investment

The Government has today launched a new review that will examine what changes need to be made (e.g. planning, copper switch-off) in order to make the United Kingdom attractive for investment to support the rollout of new “full fibre” broadband (FTTP/H) and future 5G Mobile networks.

Over the past few years we’ve had a veritable mountain of reviews into the country’s future digital connectivity needs, many of which appear to cover the same subjects and as such we’re starting to grow a little weary of all the repetitive paper work. Nevertheless we today have the launch of yet another review (‘Future Telecoms Infrastructure Review‘), but at least this one appears to be well targeted.

Purpose and Scope of the Review

The Review will assess:

● The barriers to investment in digital infrastructure and next-generation digital connectivity, now and over the coming decades including cost, levels of demand, market structures and regulation;

● How investment incentives vary between different areas of the UK and across different parts of the telecoms market;

● What policy changes government should consider to encourage greater investment in new digital infrastructure. These may include encouraging greater competition, other measures that can increase the attractiveness of investment through changes in the relative risks and returns, or direct government intervention.

As part of its work the the Review will seek to address key questions that could affect the evolution of the UK’s digital infrastructure such as the ongoing convergence between fixed and mobile technologies and the transition from copper to full fibre networks.

Process

This is a cross-government Review led by the Department for Digital, Culture, Media and Sport. The Review will seek a wide range of evidence, including from industry, academia and other stakeholders. The evidence base will also include economic analysis, international and cross-industry comparators and analysis of competitive dynamics.

The new review is clearly designed to support the Government’s recent investment into full fibre broadband and 5G mobile technologies (Autumn 2017 Budget Summary), which has seen them commit around £1bn of public funding toward fostering future deployments.

However a number of separate consultations, such as Openreach’s proposal for a “large-scale” rollout of 1Gbps capable Fibre-to-the-Premises (FTTP/H) broadband to 10 million UK premises by around 2025 (here) and the Broadband Stakeholder Group‘s examination of how to make it easier and cheaper to deploy related networks (here), have all shown that there’s still plenty of room for improvement.

As such it sounds as if the new review will consider everything from the challenge of switching off old copper line networks (and migrating users on to FTTP) to the difficulty of moulding regulation around the changing market conditions. The latter of which is particularly interesting since Ofcom had an opportunity to consider many of these factors as part of their recent Strategic Review, although their chosen direction hasn’t always mirrored that of the Government’s (example).

Matt Hancock, UK Minister of State for Digital, said:

“Government has already committed more than £1 billion to supporting a business case for investment in full fibre and 5G networks through investment programmes and initiatives like our Barrier Busting Task Force.

We’d like to build on what has been achieved so far, by removing future barriers before they arise, and ensuring that market and policy conditions are as good as they can be to maximise investment in new technologies.”

The market and its increasing focus on “full fibre” appears to be in a state of rapid change, which with the right tweaks could be something that the Government are able to foster. However some of those potential changes could be painful (e.g. encouraging Sky Broadband and TalkTalk to leave their unbundled copper networks behind) and may even attract legal challenges, which might hinder instead of help progress.

Finding a good balance in all of this will be incredibly difficult, although we’re certain that there are some areas where most parties would probably agree. For example, the Government ideally needs to set down a clear strategy and targets that can work over a couple of decades (necessary for FTTP/H because the rollout is going to be much slower), which isn’t easy when politicians tend to focus on parliamentary terms of 5 years.

Similarly the 5 year business rates holiday for new fibre optic deployments is all well and good, although in our view it needs to last for considerably longer in order to reflect the time that it will take to deploy such full fibre networks. Further public investment may also be required further down the line, although going beyond around half of the UK will require considerably more than a few hundred million being dabbled here or there.

The Government hope to publish a report during next Summer 2018, which should reflect the outcome from this review and identify their options for incentivising investment in the UK’s future digital infrastructure. Mind you, there’s a good chance that will be followed by yet more reports and consultations before we actually arrive at a tangible policy.