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Budget 2020 Reiterates £5bn Pledge for UK Gigabit Broadband UPDATE

Wednesday, March 11th, 2020 (1:59 pm) - Score 6,294
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The Government’s Chancellor of the Exchequer, Rishi Sunak MP, has today issued his first 2020 budget and reiterated their plan to invest £5bn of public money to help spread “gigabit-capable” broadband ISP networks across the UK by the end of 2025, as well as to push it into new build homes.

Due to Brexit and leadership changes, this is also the first budget since October 2018. But we should add that this budget replaces the usual spring statement, so we’ll get another Budget later this year. One advantage of having a General Election just before the budget is that there were never going to be any huge surprises and indeed all of the major funding or policy plans for broadband or mobile connectivity have already been unveiled.

NOTE: At present a little over 14% of the UK (c.4.3 million premises) can access a 1000Mbps+ capable fixed broadband network (here).

In short, this means investing £5bn (focused on helping those in the final 20% of hardest to reach premises) to ensure that “gigabit-capable broadband” (via full fibre, cable / DOCSIS, 5G etc.) is able to reach every UK home by the end of 2025 (here). Admittedly the focus was previously centred on “full fibre” until that was watered-down (here), although it’s still going to be a very difficult target to hit.

The government’s existing superfast broadband programme has shifted its focus to delivering gigabit-capable broadband and has already delivered full fibre to over 370,000 premises,” said the Budget 2020 document. We assume this is a reference to premises that have benefited from existing funding through various on-going Building Digital UK (BDUK) contracts and voucher schemes etc.

On top of that they’ve also promised to extend geographic 4G mobile cover to 95% of the UK by the end of 2025 (this may help the 5G roll-out too), which forms part of a £1bn industry-led Shared Rural Network (SRN) deal that is being supported by £500m from the Government (here). But we should point out that, at the 2017 election, the Government originally promised to achieve this by the end of 2022. Oops.

The aforementioned effort is being supported by various regulatory and legislative changes, most of which were set out in mid-2018 as part of the Future Telecoms Infrastructure Review (FTIR) and Ofcom’s related consultations (example).

Despite this we always keep an eye on the budget to see if it offers any new information or pledges. In particular we were keen to see if there would be a funding boost for the £67m Gigabit Broadband Voucher Scheme (GBVS), which is nearly out of money, or an extension to the current 5 year relief on business rates for new fibre (this period is far too short and Scotland has already opted for 10 years). Sadly neither were mentioned.

Budget Info. for Broadband and Mobile

In the end the Government largely reiterated the aforementioned proposals and offered, although it did reveal the next seven areas that have successfully bid for funding from the third wave of the Local Full Fibre Networks (LFFN) Challenge Fund.

Next 7 LFFN Bid Winners (Wave 3)
North of Tyne (£12 million)
South Wales (£12 million)
Tay Cities (£6.7 million)
Pembrokeshire (£4 million)
Plymouth (£3 million)
Essex and Hertfordshire (£2.1 million)
East Riding of Yorkshire (£1 million)

We also got a brief update on the somewhat delayed plan to try and ensure that all new build homes are gigabit-broadband ready when constructed. “The Budget announces that DCMS will shortly publish a consultation response which will confirm the government’s intention to legislate to ensure that new build homes are built with gigabit-capable broadband,” said the document without clarifying what “shortly” meant.

The lack of any extra funding for the GBVS voucher scheme could, at this point, become an issue because it’s expected to take until the end of 2021 before all of the necessary framework and legislative policy is in place for the new £5bn gigabit programme (here), which is almost certain to be helmed by the Building Digital UK team.

The BDUK team will of course be keen to keep the roll-out pace going during this period, particularly in rural areas, in order to avoid operators redirecting resources back to their urban builds. Such an outcome would risk damaging the current outside-in build strategy, which is intended to tackle rural areas at the same time as urban ones. Luckily, unlike the GBVS, the £200m Rural Gigabit (RGC) project has plenty of funding left (here).

Meanwhile commercial operators often need to plan their builds around a 15-20 year payback period, which is likely to hit problems unless the existing business rates relief on new fibre is extended. We find it surprising that the UK Government has yet to acknowledge this obstacle and deal with. Failing to do so will be causing some long-term uncertainty (in their models) for network builders.

Otherwise perhaps one of the biggest challenges for that new pot of £5bn will be in ensuring a fair distribution of the funding, not only between devolved regions (Scotland, Wales etc.) but also network operators. The original Phase 1 BDUK programme (2010-2015) was criticised for favouring BT too much but back then there weren’t many alternatives.

By comparison today’s market is chocked full of new alternative networks (AltNets) for FTTP and those won’t want to see their future roll-out plans being scuppered by rivals using public investment. Balancing all of this could be difficult, but admittedly with the watered-down 2025 target there’s still a big question mark over how long it will now take before “full fibre” networks reach every home, if ever (the original target was 2033).

Finally, it’s worth noting that the Government had originally been expected to publish their related National Infrastructure Strategy (NIS) today, which was set to underpin their future ambitions. Unfortunately there has been no announcement about this and recent reports claim that it has suffered another delay until later in the spring.

Before we go, here is a brief recap of what the UK Government has already pledged for broadband infrastructure since 2010 (note: between 2010 and 2015 it was a coalition Government of the Conservatives and Liberal Democrats).

Summary of Previous UK Broadband Developments

* The £1.8bn Broadband Delivery UK programme is working to put fixed line “superfast broadband” (24Mbps+) networks within reach of around 97-98% of premises by the end of 2020 (currently more than 96%). Openreach (BT) hold most of the contracts but a few AltNets are also involved in the later stages (Gigaclear, Call Flow, Airband etc.). Recent contracts target a slightly faster speed of 30Mbps+.

* £200m has been put toward a Rural Gigabit Connectivity (RGC) programme until March 2021, which aims to encourage an “outside-in” approach to building new ultrafast broadband ISP networks by focusing on helping to connect rural areas via vouchers and other schemes (here). Some 100 rural schools are being upgraded to full fibre through this and local homes can get gigabit vouchers.

* The Government is working to make it easier for “gigabit-capable” broadband ISPs and mobile network operators to access buildings – usually big apartment blocks (Multi-Dwelling Units) – where “rogue landlords” fail to respond (here). As part of this they were also working to mandate Gigabit capable broadband connections for new build homes (here), but we’re still awaiting an outcome on that.

* The legally-binding and industry-funded Universal Service Obligation (USO) for broadband, which will offer a 10Mbps minimum download speed to all – upon request – from 20th March 2020 (1Mbps upload). Most of this is expected to be delivered via EE / BT’s 4G network, with only a little from fibre (FTTC/P).

* £400m has been provided via the Digital Infrastructure Investment Fund (here), which must be matched by private finance, to help invest in new “full fibre” (FTTP/B) networks until late 2021 (focused on helping to boost altnet providers). It’s hoped that this could foster FTTH/P capable connections for an extra 2 million premises by the end of 2020.

* £294m was set aside to support the Local Full Fibre Networks (LFFN) scheme (details, here, here and here), which is funding a programme of local projects to test ways to accelerate market delivery of new “full fibre” broadband networks (e.g. connection vouchers for businesses, aggregated demand schemes, opening access to existing public sector infrastructure).

* 100% business rates relief for new full-fibre infrastructure, backdated for a 5 year period from 1st April 2017 (in 2019 Scotland independently implemented a 10 year period of relief).

* £200m to support a programme of 5G mobile / wireless technology trials and spectrum (here).

* Various local voucher / subsidy schemes are still on-going to help those areas that suffer slow broadband speeds.

* Ofcom’s regulatory changes are attempting to boost competition by making Openreach more independent from BT and giving rivals greater access to the operators national network of fibre optic cables and cable ducts/poles. Not to mention improving the overall quality of service (here).

* The Government and Ofcom are also supporting various other broadband related measures, such as automatic compensation from ISPs for service faults, improved / cheaper access to build new infrastructure on private land and more enhancements for consumer switching (adding support for FTTP etc.) and phone number portability (making it easier to adopt VoIP etc.).

* £75m has been assigned to help improve broadband connectivity in hard to reach areas via the RDPE’s Rural Broadband Infrastructure Scheme (here).

* Part of the new £3.6bn Towns Fund is due to be used to help “improved broadband connectivity” cover selected towns (here). Exactly how much of this will go toward broadband remains unclear. Each town/city looks set to receive up to £25 million and most of that will probably be eaten up by improvements to local transport infrastructure.

UPDATE 2:01pm

The first comments are coming in..

Greg Mesch, CEO of CityFibre, said:

“We are in full support of the Prime Minister’s commitment to level-up the country with a full fibre network by 2025.

Britain is a service-based economy that runs off the internet, and the internet works best on full fibre. This technology is creating a digital infrastructure that will enable more 5G network services, smart cities, and will establish a platform the country needs to thrive in the future.

However, in order to fully achieve this, we need competition to ensure the full fibre rollout in cities and towns across the country continues at speed and no place is left behind.”

Evan Wienburg, co-founder and CEO of Truespeed, said:

“We’re pleased to see the government stick to its election pledge and confirm the £5bn in funding for gigabit-capable broadband rollout to harder to reach areas in today’s budget, supported by a further £510m to boost mobile coverage in these regions. Today’s announcement is a welcome recognition of just how essential future-proofed broadband infrastructure is, and will be, to ensuring the prosperity of communities nationwide, and the continued growth of UK plc.

With the latest statistics showing that just 14% of UK homes and businesses have access to full fibre infrastructure, there’s no time to waste in allocating this new pot of funding, especially if we’re to meet the goal of nationwide full fibre accessibility by 2025. The new investment is set to benefit 5 million homes and businesses in harder to reach areas which is laudable, but will still leave many postcodes unaccounted for.

The government must take note of the numerous providers up and down the country who are already doing the legwork in equipping these harder to reach cities and communities with gigabit-capable, future-proofed infrastructure. It is crucial the government avoids wasting taxpayers’ money on overbuilding projects in communities that are already catered for. Instead, we urge the government and Ofcom to work closely with smaller providers who have delivered large areas of full fibre gigabit connectivity, to ensure government intervention continues to encourage private investment across the nation. By ensuring a fair and level playing field for providers, and encouraging healthy competition within the market, we can ensure that everyone – no matter their postcode – is included in the ‘levelling up’ of our digital economy.”

Tristia Harrison, CEO of TalkTalk, said:

“Investment in levelling up and Britain’s full fibre future is vital, so today’s Budget measures are hugely welcome, particularly getting to harder to reach areas that have been left behind for too long.

But for Government to reach its full fibre rollout target, three things are vital: the consumer – so prices are fair; competition – so the £5bn rural subsidy doesn’t end in one company’s hands; co-operation within industry to deliver for the whole country.

As the only major telco to have relocated our whole business to the North of England – we congratulate Government on today’s investment and say to other businesses, ‘come on up’.”

UPDATE 5:34pm

We’ve been positively spammed with comments from ISPs this afternoon and now you can enjoy the same.. yay. Feel free to skip these if you too suffer from the condition of “comment fatigue“, although some of them do go beyond the all too generic reactions and actually offer a few useful opinions.

Broadly speaking almost everybody welcomes the £5bn investment but most are saddened to see that business rates on new fibre have been ignored, again. The current relief is due to end on 31st March 2022 (except in Scotland where they have introduced a 10 year rates relief on fibre!) and a failure to extend this would be very damaging to future plans.

Giles Phelps, Founder and CSO of Spectrum Internet, said:

“We welcome the confirmation of the £5Bn extra funding for the final 20% and we look forward to working with BDUK in helping to deliver gigabit-capable services throughout South Wales. In particular, we welcome the news of £12M being awarded specifically to South Wales as part of the Wave three LFFN bids. This latest round of funding should compliment our initiative to build full-fibre to 150,000 properties throughout South Wales over the next four to five years.”

ISPA Chair, Andrew Glover, said:

“The £5bn promised for gigabit capable broadband within the Chancellor’s Budget was a welcome first step, but increased funding alone will not allow the industry to get the job done.

Broadband rollout is largely privately funded and in order to provide industry with a chance to meet the Government’s 2025 ambition, today’s announcements needs to be backed up with further reform on wayleaves, new build legislation, action on street works and further investment into digital and engineering skills.

The broadband industry is ready to get the job done, but needs the full support from Government to do so.”

Lloyd Felton, CEO of County Broadband, said:

“We welcome the news that the government’s plan to bring gigabit capable broadband to every home and business in Britain by 2025 has taken another step forward today.

County Broadband is one of many Independent Network Providers already committed to building and delivering fibre-to-the-property (FTTP) networks across the East of England, backed by a combined private investment commitment that is already in excess of £1.5 billion.

The Chancellor’s announcement that the sector is to receive a £5bn boost to support upgrading rural digital connectivity, together with the news that more private investment in the sector is planned this year, means Independent Networks will have a central part to play in enabling tens of thousands of premises to receive future-ready, full-fibre connections.

Upgrading the UK’s underlying outdated digital infrastructure is essential to unlock the country’s economic growth potential and will enable households, businesses and communities to move out of the digital slow lane and compete with the rest of the world post-Brexit.”

MD & CEO of Hyperoptic, Dana Tobak CBE, said:

“Today’s Budget marked an important step forward in delivering full fibre coverage across the whole of the UK. However, as the Government has consistently recognised, private investors will deliver the significant majority of full fibre rollout in parallel to this investment of public funds. It is disappointing that Government missed this opportunity to support commercial rollout by extending the Full Fibre Business Rates exemption.

The clock is ticking on the ambition to deliver full fibre coverage to all in less than five years. With the public element of this policy now secured, Government has a narrow window to secure the right conditions for privately funded rollout – the next Budget will be the final one before the current full fibre business rates exemption expires.”

MD of Grain, Rich Robinson, said:

“It’s really positive to see today’s budget announcement, in which £5 billion has been allocated to roll out super-fast broadband across rural areas of the UK. At Grain, we are focused on bringing full-fibre broadband to all regions of the UK. Currently, over 80 per cent of our sites are outside of the South East, supporting the Government’s levelling up agenda. We’re looking to expand further in the future, providing both housebuilders and homeowners with hyperfast, full-fibre, gigabit broadband.”

An Openreach Spokesperson said:

“It is great to see it (£5bn) confirmed for rural communities, but the process is just as important as the funding.

Given the Government’s really ambitious target, the procurement process needs to be simple, fast, and dovetail with commercial investment.

The whole industry will also be disappointed to see a lack of movement on business rates. The rates on building full fibre create an additional £1bn liability for us over 20 years, which is equivalent to the cost of building to three million homes.”

Daren Baythorpe, CEO of ITS, said:

“We welcome the budget’s commitment to connectivity, giving it the recognition that it is as important as rail and road in terms of our country’s economic future. Achieving 100% full fibre by 2025 was always a tall order, so the shift to gigabit allows for other solutions such as fixed wireless to transition to full fibre while giving the consumer a capable, fit for purpose connection in the meantime. However, it shouldn’t be an excuse to not build full fibre where we can.

With the race to gigabit well and truly on, we know that the final 20 percent is going to be the most challenging, though a number of altnets including ourselves are working hard to tackle this with great success. The ‘outside in’ approach goes a long way to providing support; and while rural is a big focus, we still shouldn’t underestimate the overlooked areas in plain sight in urban areas. Universal coverage is going to take a lot of collaboration – in our sector and across sectors. For example, stronger links between the telecoms and property sectors to build connectivity into planning from the earliest opportunity – not as an afterthought – just as any other utility or infrastructure would be.

Legislative change is also very supportive of barrier busting to help build where it’s needed and at pace. On a final note, the success of the voucher schemes (GBVS and RGC) have played a huge role in stimulating demand, helping the funding get to the right places. For these reasons, we urge the government to continue with them and review the business rates relief on full fibre too.”

Right, that’s enough comments for today, no more are needed 🙂 .

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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11 Responses
  1. Avatar 5G_Infinity says:

    Mark

    National Infrastructure Strategy is pending the arrival of new NIC CEO, James Heath, who is coming across from DCMS where he was Director for 5G, etc.

  2. Avatar JamesW says:

    I personally thought the budget was quite good.

    I do feel that more could’ve been done for FTTP/Gigabit Broadband roll out.

    It seems that FTTP/FTTH suppliers are over building in certain areas. Which leaves out the suburban/rural areas which are crying out for these services.

    It would be better instead of Company X installing into a building where Company Y already has FTTP/FTTH. But moving onto areas where they would be the first to install. Be able to claw back there investment quicker.

    A few people would slate Virgin as not being Full Fibre. But as they can provide a gigabit connection over there current infrastructure. Why so much negativity?

    They can switch on huge areas relatively quickly. Helping jump the gigabit capable premises up much quicker and most likely at a lesser cost.

    Roll forward a few years when Virgin, Openreach, Cityfibre, Hyperoptic etc, have hopefully got near the 80-90% coverage of gigabit broadband. Then they should look at installing into properties/buildings where another supplier is already there. This will ensure that the vast population has access before it comes down to multiple suppliers in an individual building.

    1. Avatar Phil says:

      Would agree James – also a little birdy told me that Virgin Media are ‘very’ close to ‘switching’ on gigabit services in a large area. VM was down yesterday for me, box at end of street was been upgraded for DOCSIS 3.1

  3. Avatar joe says:

    The lack of longer relief on business rates is puzzling. Its not that expensive and so obviously promotes investment at the marginal end esp. Not sure when they are hosing money about thats been ignored again.

  4. Avatar Sam says:

    I’m not holding my breath.. it’s taken so long to even roll out FTTC..

    1. Avatar AnotherTim says:

      Some have still not even got FTTC. I’d have liked some priority given to areas without any superfast options, but as the priority is as much FTTP coverage as possible as soon as possible the easy areas will be upgraded first (as usual).

    2. Avatar Andy says:

      12mbps is the very best I get and it averages at 4/5mbps

  5. Avatar Jamie Simm says:

    As others have mentioned it is very frustrating in the current market place with the lack of full fibre when you have companies over building each other and going head to head . Coventry being a prime example with Openreach and City Fibre doing the same areas which already has Virgin Media yet there are other housing areas that have just FTTC

  6. Avatar Captain Full-Fibre says:

    Some comment about the speed of delivery of FTTC and that FTTP will take just as long or longer. However the difference now is that we have Alternative Network providers in the market.

    When BDUK started pushing for FTTC there was only BT in the market. Virgin were happy with their network build plans. There was simply a lack of desire from the network providers to build.

    Roll forward 10 years and there are more Altnets than you count. They seem to be popping up almost weekly. Now the main players such as Openreach and Virgin are having to compete their building plans have accelerated.

    I think we will see massive growth in the availability of FTTP. Sure there will be a lot of overbuild but there are also Altnets targeting plenty of areas that have no current FTTP plans.

    The extra £5Bn will only serve to increase competition.

    I think 2025 is ambitious but I bet we build FTTP faster than it took to build FTTC.

    1. Avatar Andy says:

      I sure do hope so, I have been told for the last 2 years I am in the plan for fibre whether it be FTTC or FTTP.

      The latest I heard in Jan was the end of this month although I spoke to openreach chat and they said June next year….

  7. Avatar CJ says:

    Is the £2.1m LFFN wave 3 funding for Essex & Hertfordshire the same £2.1m that was reported here 9 months ago?

    https://www.ispreview.co.uk/index.php/2019/06/faster-broadband-for-113-gps-and-680-homes-in-essex-and-hertfordshire.html

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