{"id":24153,"date":"2020-09-28T11:46:39","date_gmt":"2020-09-28T10:46:39","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=24153"},"modified":"2020-09-28T13:59:19","modified_gmt":"2020-09-28T12:59:19","slug":"bt-predicts-gigabit-broadband-for-all-uk-by-2027-with-9bn-in-cuts","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2020\/09\/bt-predicts-gigabit-broadband-for-all-uk-by-2027-with-9bn-in-cuts.html","title":{"rendered":"BT Predicts Gigabit Broadband for All UK by 2027 with \u00a39bn in Cuts"},"content":{"rendered":"

The CEO of BT<\/a> Group, Philip Jansen, has warned MPs that at the current pace it will take until 2033 to achieve universal UK coverage of gigabit-capable broadband, or 2027 if some \u00a39bn worth of cuts in tax (e.g. business rates) and red tape can be found. Considerably later than PM Boris Johnson’s target for 2025.<\/p>\n

The Government currently plans to invest \u00a35 billion<\/strong> – focused on helping those in the final 20% of hardest to reach premises – to ensure that “gigabit-capable broadband<\/em>” (via FTTP<\/a>, HFC DOCSIS<\/a> 3.1, 5G<\/a> or fixed wireless etc.) reaches every UK home by the end of 2025 (here<\/a>). The final strategy for this is expected to surface alongside the Autumn 2020 Spending Review<\/strong>.<\/p>\n

NOTE:<\/strong> 2033 was also the date that Theresa May’s government set for achieving universal “full fibre<\/em>” (FTTP<\/a>) coverage.<\/div>\n

We already have some idea how this will work (here<\/a>) and the latest position from BT<\/a> largely echoes what they were saying more privately last year, which may help to explain why the Government has recently watered-down their language to “go as far as we possibly can by 2025<\/em>” (here<\/a>). The time-scale was always somewhat overly optimistic.<\/p>\n

At present more than 25% of premises can already access a gigabit service and it’s not unreasonable to assume that commercial deployments alone will take this to around 70% of premises by the end of 2025, although aspects like overbuild between rival networks and uncertainty over long-term rollout plans make it difficult to be exact (official reports tend to talk of 70-80% as an expectation).<\/p>\n

The final 20-30% though is a tough nut to crack by 2025, leaving very little time for actual build. On the other hand, we have to remember that BT<\/a> (Openreach<\/a>) has its own agenda here and painting an overly negative outlook helps to sell their position, which as the largest fixed line network operator is not something that the Government can easily ignore.<\/p>\n

Meanwhile DCMS are keen to foster alternative networks (AltNets) so as to avoid a repeat of the early BDUK Superfast Broadband programme, which saw BT scoop-up all of the contracts in Phase One due to a lack of viable competition in the bidding process (this improved in later phases). Today’s market has changed a lot and there are now quite a lot of alternatives<\/a>, albeit only a few with real scale on their side (e.g. Cityfibre<\/a>, KCOM<\/a> etc.).<\/p>\n

What are the operator’s demands?<\/strong><\/span><\/h3>\n

Sadly, the Sunday Telegraph<\/a>‘s article doesn’t do much to set out BT’s wider demands, but they do mention one area that the entire industry can agree on – business rates<\/strong> (Fibre Tax). Operator’s often have to plan their investment strategy and payback for deployments some 10-20 years in advance, which is difficult when the current business rates holiday on new fibre is due to end in 2022.<\/p>\n

One estimate suggests that BT alone could save \u00a31bn if the rates holiday was extended by c.20 years (Scotland recently implemented a 10-year relief), but the above report claims that the Government won’t reconsider this until 2023.<\/p>\n

Alex Towers, BT’s Director of Policy, said:<\/strong><\/p>\n

“We must end the situation where BT and Virgin Media<\/a> are actively penalised for investing in fibre, because they have to pay higher business rates on a fibre connection than they do on an older, much slower, copper one.”<\/p><\/blockquote>\n

Speaking of Virgin Media<\/a>, the DCMS Select Committee inquiry into the Government’s gigabit broadband and 5G<\/a> strategy has recently published some new responses from the Liberty Global sibling. One of those from VM sets out some of the fiscal, legislative and regulatory barriers that they say must be “addressed urgently in order to facilitate build in these harder to reach areas.<\/em>”<\/p>\n

Naturally Virgin Media<\/a>’s position is perhaps a bit coloured by their own vested interests (e.g. they’d like any future gigabit voucher schemes to help foster deployments in commercial areas – like older schemes, not only rural ones), although they still make some good points.<\/p>\n

Changes Required by Virgin Media<\/a>
\n<\/strong><\/span><\/p>\n

Business rates<\/strong><\/span><\/p>\n

Business rates cost major network builders hundreds of millions each year. The Government should avoid taxing productivity-enhancing technologies and consider removing business rates from all gigabit capable connections. To help meet its 2025 target, government could also consider tying this relief to build in certain geographic areas.<\/p>\n

The 380% increase in Virgin Media\u2019s business rates liability since 2016 [applies to existing infrastructure] affects rollout decisions in three ways. Firstly, it diverts substantial cash which could otherwise be spent on network expansion. Secondly, it acts as a deterrent to inward investors who will not find a more burdensome property tax regime in any major Western market.<\/p>\n

Thirdly, it directly affects future rollout economics by increasing the cost of each new premise passed. The relief regime, introduced by the Government in 2018 to mitigate the impact of the rise in rates, looks negligible compared to the scale of the Government\u2019s ambition for gigabit rollout.<\/p>\n

Moreover, it does not apply to all gigabit capable technologies or infrastructures and is due to expire in 2022. Scotland, by contrast, has a relief regime that extends to 2029.<\/p>\n

Workforce<\/strong><\/span><\/p>\n

To achieve the Government\u2019s 2025 target, network builders will need to access talent easily and cost-effectively. The Government should add roles engaged in network build to the Shortage Occupation List as part of the new immigration system, enabling those with the right skills to enter the workforce at a time when they are most needed. The Government should also publish a roadmap on how it intends to up skill UK-based workers to support its rollout target and reform the apprenticeship system, so that operators can confidently access the domestic talent base.<\/p>\n

Virgin Media currently employs around 3,000 permanent engineering\/field staff and has access to up to a further 3,500 through contract partners.<\/p>\n

Legislation<\/strong><\/span><\/p>\n

We support recent Government legislation on multiple dwelling units (MDUs) and New Build Developments (NBDs), but both need to be strengthened. Granting operators with a right of access to leasehold and council-owned properties, business parks and office blocks, to install gigabit capable networks would considerably benefit the end-user. Ending the non-competitive practice of exclusivity agreements in new-build properties would also be beneficial.<\/p>\n

Streetworks<\/strong><\/span><\/p>\n

Better collaboration across Government departments with responsibility for streetworks is overdue. The Government also needs to provide updated and clear guidance to Local Authorities (LAs) on a number of key issues delaying streetworks (e.g. the reinstatement of highways and permit schemes) to encourage more cooperation from difficult LAs.<\/p>\n

Consumer regulation<\/strong><\/span><\/p>\n

Government to ensure that future consumer telecoms regulation remains proportionate and targeted at the most vulnerable, to avoid impacting adversely on the incentive to invest.<\/p><\/blockquote>\n

The Government and Ofcom<\/a> would perhaps argue that they are already working to resolve many of the remaining issues of red tape, such as through changes to the existing Building Regulations (pushing gigabit broadband into new builds) and the Telecommunications Infrastructure (Leasehold Property) Bill (pushing gigabit broadband into high rise buildings \/ apartment blocks).<\/p>\n

Meanwhile various changes are being developed by Ofcom<\/a> and the Government to update Permitted Development (PD) rights and the Electronic Communications Code<\/strong> (ECC). In short, these will make it easier to install taller masts, share network information and promote competition in order to support the roll-out of future mobile and gigabit broadband networks (here<\/a>).<\/p>\n

A review of the Access to Infrastructure (ATI) Regulations 2016 has also been started, which could enable gigabit operators to expand their networks by more easily being able to harness existing electricity, gas, water and sewer networks via infrastructure sharing (here<\/a>).<\/p>\n

In the end we’re fairly confident that quite a few premises will still be waiting for gigabit-capable broadband come the end of 2025, but at the same time a large chunk of the problem should have been solved by then, we just don’t know how much will be left. Equally it’s worth remembering that there will be some flexibility in how Building Digital UK<\/a> ends up defining “gigabit-capable.<\/em>”<\/p>\n

In one recent example BDUK appeared to be shooting for a “normally available<\/em>” download speed of at least 500Mbps and upload speeds of 200Mbps, which in “limited circumstances<\/em>” may fall to at least 50Mbps and 20Mbps upload (here<\/a>); some of this is necessary to account for the fact that data capacity on residential lines is shared (some variability in performance is to be expected).<\/p>\n

UPDATE 1:57pm<\/strong><\/p>\n

The boss of Broadway Partners, which delivers both fixed wireless and fibre optic networks, has offered a different take on BT’s viewpoint.<\/p>\n

Michael Armitage, CEO of Broadway Partners, said:<\/strong><\/p>\n

“We do not share BT\u2019s pessimism about the speed of fibre rollout across the UK. The Prime Minister\u2019s target of delivering gigabit-capable connectivity to 100% of the UK by 2025 is certainly an ambitious goal, but it is definitely achievable, assuming a flexible and pragmatic approach to the technology, business models and interventions that are employed. <\/p>\n

This is not about an extension to the moratorium on fibre rates, but about harnessing the power of fibre and 5G<\/a> in combination, about harnessing the energy and creativity of multiple smaller suppliers, and about engaging the public and private sectors in risk-sharing, non-market-distorting partnerships.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

The CEO of BT Group, Philip Jansen, has warned MPs that at the current pace it will take until 2033 to achieve universal UK coverage of gigabit-capable broadband, or 2027 if some \u00a39bn worth of cuts in tax (e.g. business rates) and red tape can be found. Considerably later than PM Boris Johnson’s target for […]<\/p>\n","protected":false},"author":1,"featured_media":22578,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[406,471,419,56,60,38,475,476],"class_list":["post-24153","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-5g","tag-bduk","tag-docsis3-1","tag-fttp","tag-mobile-broadband","tag-politics","tag-virgin-media","tag-wifi"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nBT Predicts Gigabit Broadband for All UK by 2027 with \u00a39bn in Cuts - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The CEO of BT Group, Philip Jansen, has warned MPs that at the current pace it will take until 2033 to achieve universal UK coverage of gigabit-capable\" \/>\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\/2020\/09\/bt-predicts-gigabit-broadband-for-all-uk-by-2027-with-9bn-in-cuts.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BT Predicts Gigabit Broadband for All UK by 2027 with \u00a39bn in Cuts - 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