BDUK Reveal Benefits and Impacts of UK Superfast Broadband Rollout

The Government’s Building Digital UK (BDUK) agency has posted a final evaluation of the previous ‘Superfast Broadband Programme’ (UK National Broadband Scheme), which reveals the various “economic, social, and environmental benefits” from the previous project to extend “superfast” (30Mbps+) coverage – run between 2016 and 2022.

The SFBB programme – managed by BDUK – was first setup back in 2010 to help extend superfast broadband connectivity to areas that were not expected to benefit from commercial rollouts, which ended up playing a key role in helping to extend the reach of 30Mbps+ broadband (download) to over 98% of UK premises today.

The programme was split into three phases (see below) and has since been superseded by the government’s new £5bn rural-focused Project Gigabit scheme, which lifts the performance target to 1000Mbps (gigabit). We should add that the final phase (3) of the SFBB programme also involved a lot more Fibre-to-the-Premises (FTTP) lines, while most of Phase 1 and 2 were dominated by slower Fibre-to-the-Cabinet (FTTC / VDSL2) and some fixed wireless networks.

BDUK Phases One (Finished Spring 2016)
Supported by £530m of public money via the Government (mostly extracted from a small slice of the BBC TV Licence fee), as well as significant match funding from local authorities and the EU. The public funding was then roughly matched by BT’s private investment. Overall it helped to extend “superfast broadband” (24Mbps+) services to cover 90% of premises in the United Kingdom.

BDUK Phase Two
Supported by £250m of public money via the Government, as well as match funding from local authorities, Local Growth Deals and private investment from suppliers (e.g. BT, Gigaclear, Airband, Call Flow etc.). This phase extended superfast broadband services to 95% of premises in time for the end of 2017.

BDUK Phase Three
Similar to Phase Two, albeit without a solid coverage target, and funded under a new state aid judgement covering contracts awarded after 2016 (State aid SA. 40720 (2016/N)). Contracts awarded under Phase 3 by early-2022 have involved over £1bn in public funding (various sources) and mostly focused on extending FTTP coverage. These went to various operators including Openreach, Gigaclear, Airband, Quickline, Truespeed, Wessex Internet and Fibrus etc.

The BDUK agency has previously published several evaluation reports on this scheme (examples here and here), but the data they had was often incomplete (partly because the programme was still ongoing, until very recently) and only extended up to 2018. The latest report represents the “final round of evaluations for the Superfast program” and uses data up to late 2021 (covering all phases and also phase 3, but some contracts were still ongoing at the time).

The full report can be read here, including lots of additional data, but we’ve attempted to summarise some of the key points below. Take note that evaluation of BDUK’s large scale subsidies for fixed broadband will continue with Project Gigabit and be available via the BDUK research portal.

Key Impacts – BDUK Superfast Broadband Programme

➤ The estimated Benefit to Cost Ratio (BCR) was between £1.76 and £4.57 per £1 of net lifetime public sector spending. This includes benefits from increased productivity and social benefits. Allowing for future benefits to 2030, the BCR is estimated to rise to £1.87 to £4.70 per £1 of net public sector spending.

➤ Estimated environmental benefits range from £0 to £959 million for Phase 3. Due to the range of benefits it has been excluded from the overall BCR, but if included the environmental benefits could drive the BCR to be as high as £8.01 for every £1 of public expenditure.

➤ Employment: Subsidised coverage was estimated to have increased employment in the areas benefitting from the Programme, leading to the creation of approximately 23,700 local jobs by the end of 2021.

➤Turnover: Subsidised coverage also increased the turnover of firms located in the areas benefitting from Phase 3 of the Programme by 1.6% , increasing the annual turnover of local businesses in Phase 3 areas by £827 per annum, and for the whole programme by 1.4%, approximately £2.6 billion per annum by 2021.

➤Elasticity of output: A 1% increase in broadband speed led to a 0.019% increase in GVA (Gross Value Added). For small and medium-sized enterprises, the elasticity was slightly higher at 0.26%, meaning that each 1% increase in broadband speed had a larger increase in gross value added.

Speed category before upgrade	Elasticity of output to broadband availability
2Mbit/s	0.018%
5Mbit/s	0.016%
10Mbit/s	0.035%
30Mbit/s	0.014%
80Mbit/s	0.007%

➤ Under Phase 3 of the Superfast Broadband Programme, 292,618 premises received subsidised coverage by September 2021. Subsidised coverage increased the share of premises in the programme area able to access superfast speeds by between 41 and 47 percentage points, and the share of premises with gigabit capable coverage by between 43 and 56 percentage points.

➤ Superfast take-up: Subsidised coverage led to a significant increase in the maximum download speeds of connections taken by households and/or businesses by September 2021 (34 to 60 Mbit/s). However, the impacts of the programme on average download speeds were relatively small. This indicates that ‘early adopters’ have taken advantage of the enhanced broadband connectivity enabled by the Programme. However, the Programme had not led to widespread take-up of faster broadband services by September 2021. 

It should be noted that most subsidised coverage was delivered in 2019 and 2020. As take-up will lag deployment, it is premature to draw any firm conclusions on the impact of the programme on take-up of faster internet services.

➤ House prices: Findings suggested that the programme led to an average increase in house prices of between £1,900 and £4,900, suggesting that buyers were willing to pay a premium to obtain houses benefitting from subsidised upgrades. This can potentially be interpreted as a measure of the average gain in social welfare associated with access to superfast and gigabit capable broadband networks (i.e. on the basis that the maximum households are willing to pay should reflect the marginal gain in wellbeing derived from access to the technology).

➤ Change in energy consumption: Energy consumption data for areas that have benefitted from the Superfast Broadband Programme was provided by the BEIS sub-national energy consumption statistics. The results suggest that receiving superfast broadband led to an increase in energy consumption.

For domestic energy consumption, the results suggest that:

• Each additional connection in a postcode leads to an increase in domestic electricity consumption of 0.1% for an urban property; the equivalent to 0.36kWh per connection per year, and 0.04% for a rural property; equivalent to 1.27kWh per connection per year
• Each additional connection results in a 0.02% increase in domestic gas consumption, for an urban property, equating to an additional 2.5kWh of gas consumption and 0.05% increase in domestic gas consumption, for a rural property, this is equivalent to an additional 7.3kWh 

➤ Economic value of environmental benefits: The Superfast Broadband Programme yielded an estimated value in environmental benefits totalling £3,477 million (£1,728 million – £4,554 million) over the evaluation period. This was primarily driven through reduced greenhouse gas emissions through reduced commuting, enabled by increased working from home (noting the uncertainty in the estimated impacts). 

It is important to note that key environmental impacts (e.g. land use change and associated biodiversity impacts, embedded carbon in the fibre network, etc.) have not been estimated, nor monetised and so the estimated benefits present a partial view of the economic value of the associated environmental impacts.

➤ Comparisons with prior findings: The net cost per additional premises passed was by 2022/23 estimated at £1,270 for Phase 3, versus £217 for all Phases of the programme. This increase in cost was driven by a change in technical focus to gigabit capable technologies (which are more costly to deploy) and a change in spatial focus to areas that are harder to reach. Contracts awarded under Phase 3 are also expected to generate substantially lower levels of implementation and take-up clawback than contracts awarded under Phase 1 (which were often commercially viable without subsidy). Even with this being a higher cost than for previous Phases of the Superfast Broadband Programme, Phase 3 of the Programme still appears to be one of the most efficient Programmes supporting broadband deployment in the EU.

Overall, the SFBB programme largely achieved its targets, often on time (except for Phase 3 that was less target focused), and appears to represent good value for money. But we should caveat that some figures, such as around the estimate impact on house prices, should be taken with a big pinch of salt (broadband is not the only factor in house pricing). Ultimately the decision about how much you pay for a house will always come down to a matter of personal choice, which is of course different for everybody.

Similarly, trying to accurately gauge the economic impact of deploying faster broadband is notoriously difficult, not least since most premises won’t be starting from a point of zero connectivity. Likewise, we’re all very different in our consumption requirements, and not all homes and businesses get the same benefit from having access to significantly faster broadband speeds than are currently available.