{"id":18606,"date":"2019-05-14T02:10:01","date_gmt":"2019-05-14T01:10:01","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=18606"},"modified":"2019-05-14T06:52:44","modified_gmt":"2019-05-14T05:52:44","slug":"welsh-gov-admit-subsidised-rural-fttp-broadband-coming-to-an-end","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2019\/05\/welsh-gov-admit-subsidised-rural-fttp-broadband-coming-to-an-end.html","title":{"rendered":"Welsh Gov Admit Subsidised Rural FTTP Broadband Coming to an End"},"content":{"rendered":"

The Welsh Government<\/a>’s Deputy Minister for Economy and Transport, Lee Waters AM, finally said something last week that has been becoming increasingly obvious over the past few years, “we need to confront the fact that the market’s appetite, even with subsidy, for reaching premises with [FTTP<\/a>] broadband is coming to an end<\/em>.”<\/p>\n

Historically the biggest obstacles to the deployment of Gigabit capable “full fibre<\/em>” networks have always tended to centre around issues of cost, regulation and time-scale (it takes a long.. time to build, due to the level of civil engineering involved). All of these tend to be disproportionately magnified when asking ISPs to cater for increasingly remote rural parts of the United Kingdom, where communities are often both small and sparse.<\/p>\n

The Government has gone someway to improving this situation via their Future Telecoms Infrastructure Review<\/strong><\/a> (FTIR) and an ambition to achieve “nationwide<\/em>” coverage by 2033, although tackling regulation and providing incentives (vouchers etc.) will still only get you so far.<\/p>\n

Like it or not commercial operators still have to make a viable long-term business model for Fibre-to-the-Premises<\/strong> (FTTP<\/a>) networks and at a certain point these become so stretched as to be almost unworkable. Over the past couple of years we’ve seen an increasing number of subsidised Government projects running into similar trouble, particularly as FTTC<\/a> (VDSL2<\/a>) dominated builds are no longer being approved (the focus is now FTTP<\/a>).<\/p>\n

One of the most recent examples was of course the Welsh Government<\/a>’s Superfast Cymru<\/strong><\/a> Phase 2 successor scheme, which started out with a funding pot of around \u00a380m and a much bigger ambition. But when it came down to it, the contract agreed with Openreach<\/a> (BT<\/a>) would only use \u00a322.5m of that and cover just 26,000 additional premises with FTTP by March 2021 (here<\/a>, here<\/a>, and here<\/a>). Nobody else bid.<\/p>\n

The situation has left the Welsh Government<\/a> with a difficult problem to resolve. They have public money to throw at the problem, albeit not a lot, but the economics and time-scales are so challenging that traditional commercial operators are struggling to make the model work. Scotland’s on-going R100 project will most likely face a similar issue, which may partly help to explain the delay in awarding a contract (here<\/a>), but they have \u00a3600m to throw at it.<\/p>\n

Lee Waters AM said:<\/strong><\/p>\n

“Now, we did put on the table a further \u00a380 million in what is known to Members who correspond regularly as lot 2. We said there was \u00a380 million for the market to bid for, to reach those properties that had not been reached under the Superfast project. And of the \u00a380 million we made available to be bid into, only \u00a326 million has been bid for by Openreach<\/a>, able to spend by 2021. So, the market itself is not interested in getting public subsidy to reach those premises they\u2019ve yet to reach under the previous programme that we funded.<\/p>\n

So, we have a problem. It\u2019s not that the money isn\u2019t there or that we\u2019re not willing to spend it, even though it\u2019s not devolved. It is there. We\u2019ve made that choice, but we simply don\u2019t have the private sector partners willing to spend and reach deep into the areas that we want to reach. Paul Davies has mentioned that, even though Pembrokeshire under Superfast has the third highest level of spending the whole of Wales, with \u00a315 million in Pembrokeshire alone, under the next scheme, only 300 or so premises are going to be included in lot 2, and that is deeply disappointing. It\u2019s certainly not a situation that we want to see.<\/p>\n

But I think that we need to confront the fact that the market\u2019s appetite, even with subsidy, for reaching premises with fibre-to-the-premises broadband is coming to an end. And many of these premises\u2014let\u2019s bear in mind, 20 per cent of premises in Wales don\u2019t have a gas connection, and yet we are expecting them to have fibre-to-the-premises superfast broadband, and it\u2019s simply not going to happen in the short-term. Now, if the UK Government is willing to step in and have a genuine universal service obligation, then that could be done, but the Welsh Government alone cannot do that, and I think we need to be honest about that and confront it.”<\/p><\/blockquote>\n

As we’ve said above, this is not only an issue for Wales. Other parts of the UK are facing the same challenge. Some operators, such as Gigaclear<\/a>, are trying to find workable commercial solutions to this problem but they’ve already struggled to up-scale their operations (leading to big delays across some of their state aid supported contracts) and will also have limits on the model.<\/p>\n

The 10Mbps+ Universal Service Obligation<\/strong> (USO) may help a little but it’s not mandating FTTP and indeed if it did then the cost to industry, and thus consumers, would be much more significant (noticeable price rises) and may also risk distorting some of the existing market (only BT<\/a> and KCOM<\/a> were fully willing to take on and could deliver the full responsibility for a USO).<\/p>\n

Social orientated operators, such as B4RN<\/a>, that involve the community in their physical network builds, are another approach for rural areas but they don’t operate at the kind of scale that would be easily able to adapt to a huge national roll-out. Equally there may be some eligibility issues with their model for major Government contracts. The Government’s forthcoming rural Gigabit vouchers could help but it’s not the same as a contracted general roll-out and will only go so far toward the 2033 goal.<\/p>\n

So far the Welsh Government’s initial approach has been to boost the value of Gigabit Broadband Vouchers<\/strong> (mostly aimed at businesses and some related homes) in Wales to \u00a35,500 (here<\/a>), although once again this has its limits and Lee Waters admits that they’re instead “looking now at non-conventional interventions<\/em>.”<\/p>\n

Lee Waters AM said:<\/strong><\/p>\n

“We are looking now at non-conventional interventions, as I say, because we do think that fibre to the premises is reaching the limits of what the market is willing to provide. There’s a very interesting project in Nick Ramsay’s constituency, in Monmouth, where they’re using what’s called tv white space to deliver speeds of up to 10 Mbps. This is using the old analogue tv signal where gaps were left between the channels to allow for interference, and in that white space they’re able to transmit broadband signals up to 10 Mbps.<\/p>\n

I’ve been to visit the village scheme that Monmouthshire council are doing a very good job in running, and it looks very promising. The advantage of using the tv signal is that it is able to reach across hills and into valleys in a way that fibre to the premises is clearly going to find very expensive and very difficult to do. So, a project like that, I think, does have significant potential.”<\/p><\/blockquote>\n

A number of TVWS deployments have already taken place across the UK, although with the UK Government’s focus now being on FTTP then this doesn’t really solve the underlying future issue of how nationwide full fibre coverage can actually be achieved.<\/p>\n

Lee also talked about future 4G<\/a> and 5G<\/a> networks. Indeed we think 5G<\/a> has a lot of as yet unproven potential to push ultrafast broadband into rural areas, but it’ll be years before coverage matures enough to reach the sort of locations, en-mass, that we’re talking about today, and no doubt gaps will remain. Likewise, 5G<\/a> is not FTTP.<\/p>\n

Lee Waters AM added:<\/strong><\/p>\n

“So, I think there are things that we can do, but simply bemoaning the failure of the Welsh Government to reach communities in an area that is not devolved, in an area that the market has decided it isn’t able to serve, when we have spent over \u00a3200 million already, and put more money on the table that the market isn’t interested in accessing \u2014 I think it’s only fair to give that account, too. But we are trying our best.”<\/p><\/blockquote>\n

As we’ve said before, at present the 2033 ambition is really more of an unfunded aspiration. The challenge, as has become increasingly evident, is that even if you have the public money to spend (billions are needed across the UK) then building a viable model and attracting the necessary network operators to do it at-scale is not an easy problem to solve.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Welsh Government’s Deputy Minister for Economy and Transport, Lee Waters AM, finally said something last week that has been becoming increasingly obvious over the past few years, “we need to confront the fact that the market’s appetite, even with subsidy, for reaching premises with [FTTP] broadband is coming to an end.”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[474,471,55,56,69,38,71],"class_list":["post-18606","post","type-post","status-publish","format-standard","hentry","category-uk_isp_news","tag-bt","tag-bduk","tag-fttc","tag-fttp","tag-bt-openreach","tag-politics","tag-wales"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nWelsh Gov Admit Subsidised Rural FTTP Broadband Coming to an End - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The Welsh Government's Deputy Minister for Economy and Transport, Lee Waters AM, finally said something last week that has been becoming increasingly\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2019\/05\/welsh-gov-admit-subsidised-rural-fttp-broadband-coming-to-an-end.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Welsh Gov Admit Subsidised Rural FTTP Broadband Coming to an End - 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