CEO of ISP 4th Utility Calls for HS2 Funding to be Spent on Broadband

The CEO of UK ISP 4th Utility, Tony Hughes, has today said that access to reliable broadband should be a basic human right and that now is the time for the Government to “rethink” their investment in the High Speed 2 (HS2) rail project. Instead, Tony believes that such funding should be diverted to upgrade broadband infrastructure.

The HS2 project is currently estimated to cost between £72bn and £98bn (at 2019 prices) – and along the way more than a few people have suggested that such money could have been better spent on improving gigabit broadband and road connectivity, among other things. The project itself did also pledge to bring some broadband benefits of its own but, as we’ve explained in detail before (here), there are doubts about the impact of that.

However, Tony Hughes believes that the tens of billions of pounds being invested into HS2 would be better spent digitally connecting the UK. Hughes also claims that the Government has put the crucial task of providing fast broadband for all “on the backburner“, which comes after recent Ofcom figures revealed that just 33% of the UK currently has access to full fibre (here). But in fairness, that’s still up sharply from 21% a year earlier – the build is currently quite rapid.

At present commercial broadband operators are doing most of the leg work to deploy Fibre-to-the-Premises (FTTP) technology, which is expected to help push national coverage to around 80% over the next three years. After that, the Government has pledged a further £5bn to help reach those in the final 20% of premises with gigabit-capable broadband via their Project Gigabit scheme, which is getting close to awarding its first contracts.

Tony Hughes said:

“The pandemic showed us the importance of having fast and reliable broadband – and it’s now something everyone should demand, regardless of where they live or what they earn. But inequality is deepening and digital inclusion is something that needs to be much higher on the economic agenda.

Good connectivity should be a basic human right, but sadly the UK faces a mammoth task to connect every home.

In reality, Ofcom’s latest Connected Nations report shows just 28% of homes have access to full fibre, and around 120,000 UK homes are still without any internet access whatsoever. And although there’s been some improvement over the last few years, there’s a huge amount of work to do and we’re already falling behind other nations around the world.”

In terms of full fibre, the UK isn’t so much “falling behind other nations” as it is playing a long game of catch-up with them, since most of Europe has had significantly stronger FTTP coverage than the UK for the best part of a decade (here). On the other hand, coverage of slower “superfast broadband” (30Mbps+) networks is much stronger in the UK than other parts of Europe (here).

Tony Hughes said:

“The Government is spending these billions on a train that gets you to the north 30 minutes faster. Although I back the efforts to better connect the UK, I think investing that money into digital infrastructure would deliver a significantly better economic impact than spending the time and money on a train from Manchester to London.

The way we work is changing. Big infrastructure projects like that are not necessarily the way forward anymore. We must recognise that and rethink.”

On the one hand, we can appreciate where Tony is coming from here, and agree with some of his points. But on the other hand, it’s unclear whether a sudden injection of new public investment – beyond that which has already been pledged – could be converted into a magic fix. Indeed, if we consider the huge level of private investment currently flooding into the telecoms sector, funding may already no longer be the obstacle that it once was.

The government and Ofcom have somewhat succeeded in fostering an aggressively competitive market of network builds, which has in turn forced the biggest players of Openreach and Virgin Media (VMO2) to up their game. But you can only build these things so fast, and it looks like we’re already on course to achieve c.99% coverage of gigabit-capable broadband networks by around 2030.

None of this is to say that the Government couldn’t do more, or that gaining access to even a bit of HS2’s funding wouldn’t help, but it might not all need to go on the rollout side. For example, the decision not to extend the previous relief on business rates for new fibre (this came to an end in April 2022) was a backward step, which is a mistake that Scotland wisely avoided making (their relief runs for a lot longer).

Likewise, more could still be done to help train up new fibre engineers, which is another area where demand is outstripping supply. The Project Gigabit programme could also benefit from more resources, to ensure that it’s able to put its programme into action much faster than it has been doing so far.

At the same time, we shouldn’t forget that HS2 is trying to solve a different challenge from broadband, which isn’t just about moving people at a faster pace between points – it will also enable the rail network to move more people and freight (greater capacity) at the same time.

For its part, the 4th Utility is currently ramping up their own commercial rollout of a gigabit-capable FTTP broadband network, which will include more homes (SDU) and large residential blocks (MDU). The operator expects to cover 94,000 homes by the end of December 2022, which complements their earlier ambition to reach 300,000 premises by around autumn 2023 (here).