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Full Fibre Broadband May Deliver £120bn Boost to 100 UK Cities and Towns

Tuesday, March 13th, 2018 (9:34 am) - Score 2,592
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A new study conducted by economic consultancy Regeneris, which was commissioned by Cityfibre, has predicted that the total economic impact of deploying “full fibre” (FTTP/H) ultrafast broadband ISP networks, across 100 distinct UK city and towns, could reach £120bn over a 15 year period.

The study examined 10 areas of the United Kingdom’s economy that were deemed “likely to benefit from full fibre roll-outs” and it also sought to quantify the impact of each of these areas in 100 distinct UK town and city economies. The results are split by businesses, households, environmental impact and so forth. The research does not consider the outcome of a nationwide rollout but this would obviously be even bigger.

The headline figure of £120bn also seems to be at least partly based on the FTTH Council’s (2014) early overarching estimate of the impact of full fibre in the US, which suggested that providing it to just half of all premises could result in a 1.1% rise in annual GDP.

Key Findings

Businesses (particularly SMEs):

* £2.2bn in productivity stimulus
* £2.3bn in innovation benefits
* £2.3bn in growth resulting from new business start-ups
* £1.9bn in flexible working benefits

Households:

* Households could benefit collectively to the sum of £7bn through increased property value
* Technological Developments
* £1.1bn from future healthcare applications
* £5bn from smart city infrastructure, services and smart energy
* £10bn from the Internet of Things/Industry 4.0
* Unlocks £28bn in 5G benefits.

Direct Economic impact from network construction

* Drive £2.1bn GVA [Gross Value Added]
* Create close to 7000 temporary jobs, predominantly in the construction and civil engineering industries.

Environmental Impact

* Saving 2.3m tonnes of CO2
* Worth £160m

The actual report is 42 pages long (quite short for such bold claims) and largely serves to summarise the predicted benefits, albeit without fleshing out many of its predictions. On top of that it conservatively assumes that take-up of full fibre amongst businesses will rise to an overall figure of 35% in those areas where it is available, which is fair given that a few mature FTTP/H networks in the UK already have average take-up of around 25%.

Greg Mesch, CEO of CityFibre, said:

“The UK economy is crying out for a shot in the arm and this report clearly demonstrates that a national full fibre roll-out would do just that. This is a discussion about far more than just broadband, it is about the digital infrastructure set to power our economy for decades to come.

CityFibre’s roll-out across our 42 towns and cities is under-way, and we are on track to deliver our goal of full fibre in 100 towns and cities. Given the size of the prize for the UK, all players, from industry, government, and Ofcom, need to focus on setting the conditions needed to deliver the maximum possible coverage in the shortest possible time. Only then will we unlock and unleash the full economic potential of full fibre, and that of the towns and cities in which it is built.”

Trying to quantify the economic improvement of widely deploying a new broadband technology, such as multi-Gigabit capable Fibre-to-the-Premises (FTTP/H), is always going to be fraught with difficulty. A big part of that stems from the challenge of demonstrating how “full fibre” could practically deliver such a significant economic boost versus existing “superfast broadband” (30Mbps+) networks that already cover 95%+ of the UK, which isn’t really reflected by this study.

Naturally faster speeds deliver greater benefits as other technologies evolve around them to take advantage, although today you can still do pretty much everything you’d need via a “superfast” connection. In the future that will change but right now going ultrafast is good for large families, improving connection reliability, bragging rights and saving time on your downloads (how much of an economic boost all that delivers is difficult to gauge).

The research itself similarly admits that it is “difficult to predict the exact scale of these effects and project the associated benefits in the future.” In order to account for that they have applied a “conservative assumption” that technological change and Metcalfe’s law will lead to a 2.5% uplift on all productivity and innovation impacts in the short term (after 5 years), a 5% uplift in the medium term (after 10 years) and a 7.5% uplift in the long term (after 15 years). As usual, take such estimates with a pinch of salt.

On the other hand, decision making around “full fibre” also has to consider that it takes a very long time to deploy and in many ways building it today is about preparing our nation for future demands. Not to mention the benefits of being able to move away from the flaky generation of copper (ADSL) and hybrid fibre (FTTC / VDSL2) services, which struggle to deliver their advertised speeds over distance and can suffer all sorts of reliability issues.

Otherwise today’s report will no doubt serve to further encourage investment toward full fibre providers. Furthermore it’s well time to coincide with the Government’s on-going review of future telecoms, which among other things has to consider what difficult changes (investment, market and regulation) might be required in order to boost the coverage of FTTP/H and 5G Mobile infrastructure across the United Kingdom.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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25 Responses
  1. h42422

    I must say I am a bit sceptical with many of these calculations. Something just does not add up.

    Now we are talking about £120 billion boost. Just a couple of days ago we learnt that openreach community projects will provide benefits in range of hundreds of millions.

    I tend to think these claims are either exaggerated, or a large part of the benefit is achieved by putting a price tag on something that does not usually carry one. For example time can be saved and a benefit can be calculated from average hourly wages, money generated by business over a certain period of time etc, but if the extra time is actually not used to do more work but for watching Netflix instead (very true in my case at least), there is no financial benefit.

    Or then these calculations are all true and everyone (government, businesses and individuals) are just utter morons.

    What is the estimate of making UK 100% full fibre? £20 billion? Even if it was in practice £30 billion, we should be all fighting to hand over the money, as few investments can provide even somewhat guaranteed 400% returns nowadays.

    Instead, no one is willing to part from their cash and they put it in bitcoin bingo instead. Consumers expect someone else to pay. Government has been notoriously parsimonious and has not supported the largest cities at all. Businesses may have been the most active of the lot but this only goes for the largest of the lot. Your local chippy is not eager to participate in this “investment” either.

    So which one is it? Are we all collectively ignoring a perfect opportunity to turn one pound to four? Or are the benefits actually not tangible, financial benefits and from investment perspective it would be more or less the same than helping a Nigerian prince to get access to his rightful millions?

  2. AnotherTim

    Even if the figure of a £120 billion boost to the economies of those 100 cities and towns is accurate, that is likely to be offset by losses elsewhere. When a business becomes more competitive, then that business’s competitors suffer. If all the businesses in those 100 cities become more competitive because of fast broadband, then companies that don’t have access to fast broadband will become less competitive. Companies will have to relocate (where possible) or face closure. Slow broadband areas will see a decrease in economic activity, which tends to be a vicious circle.
    So while a £120 billion boost sounds attractive, reality is probably closer to no net gain – just a migration of business activity into towns and cities.

  3. TheFacts

    I live in one of the towns on the list which has superfast virtually everywhere and GFast going in to many parts.

    Please explain the benefits of FTTP availability, assuming people actually take up speeds higher than currently available.

    Fibre company pays for report to justify fibre as the means of connectivity…

    • GNewton

      @TheFacts: What kind of business are you running that won’t benefit from fibre broadband?

    • TheFacts

      @GN – Please explain what applications are relevant to this and bandwidth required.

    • GNewton

      @TheFacts: You first! Why won’t your business benefit from fibre broadband?

    • TheFacts

      If my business only needs eg. 30M why does delivery method matter?

    • FibreFred

      TheFacts, He’s clearly squirming and cannot answer it.

      As you say.. if 30Mbps does the trick, what is a different delivery medium going to give you.

      This scenario will be the case for many.

      But… he’s such a fibre protagonist he doesn’t get it.

    • GNewton

      @TheFacts: Fair point, it might be sufficient for your high street shop.

      However, each business has different needs. For some, upload speeds are quite important. Having 5 or 10 bundled copper wires going into your premise can quickly turn out to be an ugly solution, if you even get that many final copper drop wires off the local telecom pole!

      Interestingly, some users, like MikeW, came up with another solution (he posted it a while ago on ISPReview): Degrade the local office PC to a remote terminal, with the main computers hosted in a remote data-centre location in another town or country where sufficient fibre links are available. Works for some, even on slow 20mbps upload speeds! As I said, the one-size-fits-all approach doesn’t work.

      BTW.: Please ignore FibreFred, he’s back to his insulting posts. This forum should be moderated.

    • CarlT

      Having relatively dumb terminals in branch offices isn’t a new thing. There are plenty of enterprises that do so. Citrix offer a popular solution.

      It’s relatively inexpensive in terms of bandwidth required per session and allows economies of scale in terms of bandwidth and compute resources.

      Indeed the move towards this alongside public and private clouds help keep me in a job.

  4. occasionally factual

    “* Households could benefit collectively to the sum of £7bn through increased property value
    * Technological Developments
    * £1.1bn from future healthcare applications
    * £5bn from smart city infrastructure, services and smart energy
    * £10bn from the Internet of Things/Industry 4.0
    * Unlocks £28bn in 5G benefits.”

    1. So if every house in the 100 most populated urban conurbations have FTTP, why would any house value increase? It makes no difference to the price as it becomes like water, an expected feature. And the bulk of the UK population lives in those 100 areas (85%+).

    2. £28bn in 5G benefits ? I guess with the extra £7Bn on house prices we can spent it all on 5G connections which we don’t need as we have FTTP!

    3. £10bn IOT? Is that how much householders spend on new light bulbs which Russian hackers can then turn off and on in a UK wide DoS? (Other countries are available too)

    And just where is this new money coming from to buy these new toys?

    Utter rubbish.

    • NE555

      “Households could benefit collectively to the sum of £7bn through increased property value”

      Shh… they will expect all householders to pay the full cost up front!

      In any case, I would say that increasing house prices are themselves generally a negative thing: pricing young people out of the housing market, increasing the brain drain to other countries.

      I suppose there could be a positive economic effect if people borrow more money against their properties and then spend it.

    • TheFacts

      @NE555 – does the word ‘timer’ mean anything to you?

    • Gadget

      perhaps he is an “old timer”, like myself?

  5. John Miles

    Most broadband traffic is video. So full fibre delivering more video at higher quality will lead to £120b benefit. Something doesn’t compute

    • Spurple

      Even the mere production and distribution of video is economic activity.

      Faster connections also sell faster hardware, both infrastructure and consumer hardware.

      Entertainment may seem like a waste of time for the consumer but the industry around it is immense,sustaining writers, actors, producers and technology around it. I fritter away many a weekend on Netflix, but I’m almost certain some of the money Netflix spends making sure I can do this comes back into my pocket via the heavily interconnected web of goods and services that Netflix buys.

  6. FibreFred

    “I must say I am a bit sceptical with many of these calculations. Something just does not add up”

    Well… they are commissioned by a company who has an active interest in pushing fibre 🙂

  7. Insider

    £120bn benefit? Pull the other one. If people save money because they no longer have to travel, then that is an economic detriment as lower fuel spending, lower spend on train travel, less fast food and food on the go bought.

    Business becomes more competitive. Then that is business that has lost custom. And as the business has become more competitive that less the business has injected into the economy for fixed costs and the customer has paid less for the service/product.

    And is £120bn the net affect? Has the disbenefit from the many and numerous road works been factored in to this £120bn cost?

    • Spurple

      Less spent on commuting means more spent on energy and entertainment, including Internet based entertainment, meaning USPs need to buy more gear to deliver more bits etc.

      I made that up with minimal effort of imagination. Reality is maybe not far off from that.

  8. JamesMJohnson

    I can quite believe it actually… my biggest drawback for my side venture is the reliability of my FTTC connection (35/10).
    A stable, high bandwidth connection is what I require when deploying applications to US servers.
    Not a connection that takes 2 hours to upload a project and regularly drops during (meaning I have to restart).
    Suitable connectivity allow businesses to compete on the global markets… for a lot of businesses that a whole new market for them.

  9. Nathan

    Maybe I could have some of the funds for my street, where we only get 2.7Mbps tops. The adjacent streets are all FTTC, and living in a busy area of a pretty large city (Plymouth) I find this absurd

  10. Craig

    I would kill for even 5 mb!! I live in leeds on a cul de sac and it isn’t financially viable apparently to bring fibre down our street so we’re stuck with appalling internet speeds. This is unfair when we’re now seeing speeds of 300mb being available in some areas!!

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