{"id":25731,"date":"2021-01-29T11:55:37","date_gmt":"2021-01-29T11:55:37","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=25731"},"modified":"2021-02-02T12:31:32","modified_gmt":"2021-02-02T12:31:32","slug":"bduk-study-shows-benefits-of-uk-superfast-broadband-project","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2021\/01\/bduk-study-shows-benefits-of-uk-superfast-broadband-project.html","title":{"rendered":"BDUK Study Shows Benefits of UK Superfast Broadband Project UPDATE"},"content":{"rendered":"<p>The Government has posted a useful State Aid evaluation of the UK National Broadband Scheme (Superfast Broadband Programme), which identifies a number of strong benefits from the \u00a31.9bn (public) programme that has so far helped to extend &#8220;<em>superfast broadband<\/em>&#8221; (30Mbps+) connectivity to <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/2021\/01\/2020-h2-uk-coverage-of-gigabit-broadband-reaches-37-4.html\">nearly 97%<\/a> of premises.<!--more--><\/p>\n<p>The SFBB programme, which is being managed by the <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/bduk\" target=\"_blank\">Building Digital UK<\/a> team, was first setup back in 2010 to help extend high-speed broadband connectivity to areas that were not expected to benefit from commercial rollouts (commercial coverage of &#8220;<em>superfast<\/em>&#8221; lines reaches c.76% and SFBB has helped to go beyond that toward 97%).<\/p>\n<div class=\"bq2\"><strong>NOTE:<\/strong> Older BDUK contracts defined &#8220;<em>superfast<\/em>&#8221; as offering download speeds of 24Mbps+, while recent (Phase 3) ones increased this to 30Mbps+ (aligning with the EU and <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/ofcom\" target=\"_blank\">Ofcom<\/a> definitions).<\/div>\n<p>The programme is technically split into three phases (see below) and remains on-going today, albeit at a much lower level of build than the earlier phases. Indeed, we expect the government&#8217;s new \u00a35bn <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/2020\/12\/draft-strategy-for-5bn-uk-gigabit-broadband-rollout-published.html\"><strong>Gigabit Broadband Programme<\/strong><\/a> (F20) to start doing most of the heavy lifting from around early 2022, after contracts have been signed (assuming no delays).<\/p>\n<p>Crucially, the latest evaluation report on this programme, which was commissioned by DCMS and carried out by Ipsos MORI, largely focuses upon the most recent Phase 3 of the project (they&#8217;ve already done past evaluations on the earlier phases). Most of the build under this started in 2018 and is often much more &#8220;<em>full fibre<\/em>&#8221; centric than earlier contracts.<\/p>\n<blockquote><p><span style=\"color: #339966;\"><strong>BDUK Phases One (Finished Spring 2016)<\/strong><\/span><br \/>\nSupported by \u00a3530m of public money via the Government (mostly extracted from a small slice of the <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/bbc\" target=\"_blank\">BBC<\/a> TV Licence fee), as well as significant match funding from local authorities and the EU. The public funding is then roughly matched by <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/go\/britishtelecom\" rel=\"nofollow\" target=\"_blank\">BT<\/a>&#8217;s private investment. Overall it helped to extend &#8220;<em>superfast broadband<\/em>&#8221; (24Mbps+) services to cover 90% of premises in the United Kingdom.<\/p><\/blockquote>\n<blockquote><p><span style=\"color: #339966;\"><strong>BDUK Phase Two<\/strong><\/span><br \/>\nSupported by \u00a3250m of public money via the Government, as well as match funding from local authorities, Local Growth Deals and private investment from suppliers (e.g. <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/go\/britishtelecom\" rel=\"nofollow\" target=\"_blank\">BT<\/a>, <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/go\/gigaclear\" rel=\"nofollow\" target=\"_blank\">Gigaclear<\/a>, <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/airband\" rel=\"nofollow\" target=\"_blank\">Airband<\/a>, Call Flow etc.). This phase extended superfast broadband services to 95% of premises in time for the end of 2017, but some newer contracts are on-going (e.g. the <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/welshgov\" target=\"_blank\">Welsh Government<\/a>&#8217;s new programme).<\/p><\/blockquote>\n<blockquote><p><span style=\"color: #339966;\"><strong>BDUK Phase Three<\/strong><\/span><br \/>\nSimilar to Phase Two, albeit without a solid coverage target, and funded under a new state aid judgement covering contracts awarded between 2016 and 2020 (State aid SA. 40720 (2016\/N)). So far, contracts awarded under Phase 3 by mid-2020 have involved \u00a3391m in public funding and mostly focused on extending <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/fttp\">FTTP<\/a> coverage.<\/p>\n<p><img decoding=\"async\" class=\"ngg-singlepic ngg-none\" style=\"width: 100%; padding: 0px;\" src=\"https:\/\/www.ispreview.co.uk\/wp-content\/gallery\/2021-uk-internet-statistics\/BDUK_Phases_and_contracts_2021.png\" alt=\"BDUK_Phases_and_contracts_2021\"><\/p><\/blockquote>\n<p>So far phase 3 contracts appear to have increased the number of premises with superfast coverage by 10,800 to 29,300, and the number of premises with <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/fttp\">FTTP<\/a> coverage by 19,000 to 30,300. We recall that, overall, the SFBB programme &#8211; across all its phases &#8211; has added about 400,000 <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/fttp\">FTTP<\/a> premises (the rest was done via <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/fttc\">FTTC<\/a> instead, with a little via FWA \/ wireless).<\/p>\n<p>Phase 3 contracts also increased the average upload speeds of connections (by 0.9Mbps to 3.9Mbps) and the maximum download speeds of connections by 6.2Mbps to 16.9Mbps, although the context for how this was calculated wasn&#8217;t immediately clear (we assume it&#8217;s looking across the intervention area and so take-up of the new networks will play a role).<\/p>\n<p>We should point out that take-up grows organically over time (slowly over several years) and in Phase 3, which is much younger, it&#8217;s now edging toward the 20% mark. As a rough comparison, the older Phase 1 in this report goes past 60% and Phase 3 seems to be following a similar trajectory (one catch here is that the take-up chart below starts at a much later year than Phase 1\/2 actually began).<\/p>\n<p><img decoding=\"async\" class=\"ngg-singlepic ngg-none\" style=\"width: 100%; padding: 0px;\" src=\"https:\/\/www.ispreview.co.uk\/wp-content\/gallery\/2021-uk-internet-statistics\/bduk_phase_3_premises_passed_rural_vs_urban.png\" alt=\"bduk_phase_3_premises_passed_rural_vs_urban\"><\/p>\n<p><img decoding=\"async\" class=\"ngg-singlepic ngg-none\" style=\"width: 100%; padding: 0px;\" src=\"https:\/\/www.ispreview.co.uk\/wp-content\/gallery\/2021-uk-internet-statistics\/BDUK_Takeup_2021.png\" alt=\"BDUK_Takeup_2021\"><\/p>\n<p>The measure of take-up is also important for another reason because the contracts use it to gauge clawback (gainshare). If take-up proved to be higher than anticipated at the tendering stage, network providers were required to return a share of the excess revenues generated from additional take-up to the investment fund, which local authorities can then use to reinvest into future broadband improvements (a chunk of the Phase 3 funding will thus come from earlier contracts).<\/p>\n<p>Overall, the SFBB programme is now forecast to return <strong>\u00a3860m<\/strong> of tax payers&#8217; money for reinvestment. The gross public sector cost (i.e. before clawback) per additional covered premises over three years was \u00a3890 for Phase 3 contracts (in 2019 prices). However, the public sector savings from the clawback mechanism is expected to reduce the net cost per additional covered premises from \u00a3890 to \u00a3790 for Phase 3 contracts (given the early stage of delivery, these estimates are highly uncertain).<\/p>\n<p>We should add that there is a substantial difference between the gross value of public spending associated with the contracts awarded (overall total of \u00a31.9bn) and forecast public spending before clawback (\u00a31.7bn in 2019 prices and \u00a31.5bn in nominal terms). This is largely driven by underspending on Phase 1 contracts. The gross value of the public spending associated with contracts at the point they were awarded was \u00a31.2bn. However, final claims were only made for \u00a3689m of public funding. You can see how all of this has affected the phases below.<\/p>\n<p><img decoding=\"async\" class=\"ngg-singlepic ngg-none\" style=\"width: 100%; padding: 0px;\" src=\"https:\/\/www.ispreview.co.uk\/wp-content\/gallery\/2021-uk-internet-statistics\/BDUK_SFBB_expenditure_by_phase.png\" alt=\"BDUK_SFBB_expenditure_by_phase\"><\/p>\n<p><img decoding=\"async\" class=\"ngg-singlepic ngg-none\" style=\"width: 100%; padding: 0px;\" src=\"https:\/\/www.ispreview.co.uk\/wp-content\/gallery\/2021-uk-internet-statistics\/BDUK_cost_per_premises_passed_2021.png\" alt=\"BDUK_cost_per_premises_passed_2021\"><\/p>\n<p>Finally, the report also attempts to summarise some of the other positive economic impacts from the SFBB programme (some of this data has been published before). Otherwise you can read the <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/956797\/Gov.uk_upload_-_Superfast_Broadband_State_Aid_Evaluation_main_report_redacted_for_publication_with_alt_text_v1.pdf\" target=\"_blank\" rel=\"noopener\">FULL REPORT<\/a> on the Government&#8217;s website and there&#8217;s also a useful <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/956739\/DCMS_Superfast_Findings_Briefing_v1.pdf\" target=\"_blank\" rel=\"noopener\">SUMMARY OF KEY IMPACTS<\/a>.<\/p>\n<blockquote><p><span style=\"color: #339966;\"><strong>Economic Impacts of the SFBB Programme<\/strong><\/span><\/p>\n<p><em>The findings of the evaluation indicate that the programme has led to a range of economic and social benefits in the areas benefitting from subsidised coverage between 2012 and 2018. The key results included:<\/em><\/p>\n<p><strong>\u2022 Local employment impacts:<\/strong> Subsidised coverage was estimated to have increased employment in the areas benefitting from the programme by 0.6 percent, leading to the creation of 17,600 local jobs by the end of 2018.<\/p>\n<p><strong>\u2022 Turnover:<\/strong> Subsidised coverage also increased the turnover of firms located in the areas benefitting from the programme by almost 1.0 percent by 2018, increasing the annual turnover of local businesses by \u00a31.9bn per annum.<\/p>\n<p><strong>\u2022 Number of firms:<\/strong> The evidence indicated that a share of these local economic impacts were driven by the relocation of firms to the programme area. The evidence indicated that subsidised coverage increased the number of businesses located in the areas benefitting by around 0.5 percent \u2013 suggesting the programme may have encouraged the relocation of economic activity to rural areas.<\/p>\n<p><strong>\u2022 Turnover per worker:<\/strong> There were also signals of efficiency gains &#8211; turnover per worker of firms in the areas benefitting rose by 0.4 percent in response to subsidised coverage. This was not solely driven by more productive businesses moving into areas with improved broadband infrastructure. Firms that did not relocate over the period also saw their turnover per worker rise by 0.7 percent by 2018, indicating that subsidised coverage has also raised the efficiency of firms. However, the strength of these gains appeared to decay with time because these firms employed more workers as time passed.<\/p>\n<p><strong>\u2022 Wages:<\/strong> The impacts of the programme were also visible in wages. Employees working for firms located in the areas benefitting from subsidised coverage saw their hourly earnings increase by 0.7 percent in response to the upgrade. This gives greater confidence that the programme led to an increase in productivity.<\/p>\n<p><strong>\u2022 Unemployment:<\/strong> Local job creation also appeared to translate into reductions in unemployment, with the number of unemployed claimants falling by 32 for every 10,000 premises upgraded by 2018.<\/p>\n<p><strong>\u2022 House prices:<\/strong> The programme led to an increase in house prices (of between \u00a31,700 and \u00a33,500) suggesting that buyers valued the technology.<\/p>\n<p><em>It is important to note that while most of these findings account for the possibility that businesses benefitting from the programme may have claimed market share from local competitors, they should not be interpreted as net economic impacts at the national level. At the national level, the programme is estimated to have resulted in:<\/em><\/p>\n<p><strong>\u2022 Economic benefits:<\/strong> The programme is estimated to have led to a cumulative total of \u00a31.1bn in productivity gains between 2012 and 2019. This rises to between \u00a31.6bn and \u00a31.8bn over the 2012 to 2030 period.<\/p>\n<p><strong>\u2022 Social benefits:<\/strong> Based on its impacts on house prices between 2012 and 2019, the programme is estimated to have led to social benefits valued at between \u00a30.7bn and \u00a31.5bn. The estimated Benefit to Cost Ratio (BCR) was \u00a32.70 to \u00a33.80 per \u00a31 of net public sector spending based on its impacts between 2012 and 2019. Allowing for future economic benefits to 2030, the BCR is estimated to rise to \u00a33.6 to \u00a35.1 per \u00a31 of net public sector spending.<\/p><\/blockquote>\n<p><strong>UPDATE 2nd Feb 2021<\/strong><\/p>\n<p>We&#8217;ve been informed that, since the report was completed, a further \u00a3640 million of contracts have been taken forward as part of the SFBB programme, thus bringing the total spent on the programme from \u00a31.9bn (as published above) to \u00a32.6bn.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Government has posted a useful State Aid evaluation of the UK National Broadband Scheme (Superfast Broadband Programme), which identifies a number of strong benefits from the \u00a31.9bn (public) programme that has so far helped to extend &#8220;superfast broadband&#8221; (30Mbps+) connectivity to nearly 97% of premises.<\/p>\n","protected":false},"author":1,"featured_media":25740,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[474,471,56,416,69,38,34],"class_list":["post-25731","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-bt","tag-bduk","tag-fttp","tag-gigaclear","tag-bt-openreach","tag-politics","tag-statistics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - 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