{"id":4221,"date":"2013-12-09T03:47:38","date_gmt":"2013-12-09T03:47:38","guid":{"rendered":"http:\/\/www.ispreview.co.uk\/?p=4221"},"modified":"2013-12-09T06:56:01","modified_gmt":"2013-12-09T06:56:01","slug":"point-topic-backs-smaller-isps-fix-uk-rural-superfast-broadband-woes","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2013\/12\/point-topic-backs-smaller-isps-fix-uk-rural-superfast-broadband-woes.html","title":{"rendered":"Point Topic Backs Smaller ISPs to Fix UK Rural Superfast Broadband Woes"},"content":{"rendered":"

London-based broadband analyst firm Point Topic<\/a> has told ISPreview.co.uk, as part of our exclusive interview, that hybrid fibre optic (FTTC<\/a>, DOCSIS<\/a> etc.) services are the best way of getting affordable superfast Internet access to 95% of the country by 2017 and that smaller (altnets) ISPs should play a “major role<\/em>” in connecting the final 5%.<\/p>\n

<\/p>\n

According to the influential firm, which was first established in 1998 and whose data is now used by governments and industry right across Europe, the general public would much rather gain access to a superfast connection (30Mbps+<\/strong>) now that could be upgraded later than wait until the 2020’s for a pure ultrafast fibre optic (FTTH<\/a>\/P) solution due to significant budget problems.<\/p>\n

But Point Topic<\/a> acknowledged that “in the long term a direct transfer to an end-to-end fibre solution would be cheaper<\/em>“. The firm also offered us some useful insights into Europe’s less than impressed opinion of the UK government’s broadband policy and suggested that altnets should play a “major role<\/em>” in helping to connect “remote areas with low population density<\/em>“, which they said have the ability to make “the best use of local conditions to run fibre \u2013 or possibly a wireless connection<\/em>“.<\/p>\n

Please take note that the following interview is comprised of remarks from Point Topic<\/a>’s Chief Executive, Oliver Johnson<\/strong> and their Director of Operations, Laura Kell<\/strong>. The firms other Director, Tim Johnson<\/strong>, also helped out.<\/p>\n

The Interview<\/strong><\/span><\/h3>\n

Q1. The government\u2019s Broadband Delivery UK<\/a> office recently confirmed that its original target, which aimed to make fixed line superfast broadband (25-30Mbps+) services available to 90% of the country by the end of 2015, would be missed; albeit only by a couple of percentage points.<\/strong><\/p>\n

General administrative slowness, legal challenges from BT<\/a>\/Virgin Media<\/a> and complex competition delays with EU approval are often listed as being among the key reasons for this hold-up. What are your thoughts on these delays and how significant are they for the overall project?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

Gossip in Brussels can be scathing about how the UK managed the EU approval issues. This undoubtedly caused delay and uncertainty for BDUK. Are our civil servants really so slow to learn how Brussels works or were they under instruction not to be too Euro-friendly?<\/em><\/p>\n

The primary difficulty, although not often overtly referred to, was satisfying the conditions on state aid being used to support\/fund one particular organisation. Caught in a way between a rock and a hard place the UK has on the one hand to try and deploy and manage a network which is usually most efficient when centrally managed versus producing a competitive enough market to comply with EU regulation. The fact that Fujitsu, that had been blacklisted from further government projects following delivery issues with a number of implementations, was the only other serious option for widespread deployment in the UK meant a level of scepticism in the commission that the UK failed to address quickly enough. The DCMS tied itself in knots trying to come up with a framework that allowed state intervention and in the process compromised the efficiency of allocations and ultimately deployment.<\/em><\/p>\n

Coupled with a lack of open information, where BT<\/a> quite properly in the eyes of its shareholders and management try to protect their competitive advantages, meant that many potential bidders were discouraged when they were unable to generate solid business plans and we were left with a lengthy process that resulted in an outcome that could have been achieved more straightforwardly.<\/em><\/p><\/blockquote>\n

<\/p>\n

Q2. The government has also revised its target and now aims to reach 95% of the country with a fixed line superfast broadband service by 2017 (99% by 2018 when mobile broadband and other wireless services are considered). <\/strong><\/p>\n

Meanwhile Europe\u2019s Digital Agenda still wants 100% to have access to superfast connectivity by 2020. Do you think the UK\u2019s new 2017 target will be achievable or is it just a pre-election gimmick?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

95% by 2017 should certainly be achievable and is also desirable. If it\u2019s not achieved those in power will need a good excuse. Yes, it\u2019s a distraction from not achieving 90% by 2015.<\/em><\/p>\n

In fact, with the inclusion of FWA, mobile and satellite<\/a> in the metrics the targets can in some senses said to have already been achieved. However satellite<\/a> is currently suffering from capacity issues, the 4G<\/a> roll-out is slower than the government would like and with no meaningful service level agreement can not yet be said to provide a reasonable option and local operators are only now able to access enough capital to make realistic plans, The edges of the UK are likely to achieve the stated objectives but by that time they will be significantly behind the services on offer in more commercially attractive parts of the UK.<\/em><\/p><\/blockquote>\n

Q3. The UK has repeatedly said that it wants us to have the \u201cbest superfast broadband network in Europe by 2015\u201d (general reference to speed as well as affordability etc.), which is arguably more of a comparison between the UK and other major EU markets like Germany, France and Spain than the whole of Europe. But just what can we expect \u201cbest\u201d to actually mean?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

There are endless ways of saying what\u2019s best in something as complex as broadband; greatest coverage, lowest price, best quality (which is a minefield in itself) etc. In fact the UK is a lot better placed in broadband than most people realise, soaked as they are by the \u201cain\u2019t it awful\u201d propaganda which our media spew out. So it shouldn\u2019t have any difficulty in beating France, Spain and Italy. <\/em><\/p>\n

Germany will probably have better coverage and quality than us but then it may be possible to beat them on price \u2013 particularly if direct comparisons are used rather than purchasing power parity. If the competition is opened up to smaller countries the picture is different. We should easily beat Poland and Romania too \u2013 although the FTTH<\/a> Council wouldn\u2019t say so \u2013 but the Netherlands, eighth biggest country in the EU, already has virtually 100% superfast coverage, a wide choice of technologies etc etc.<\/em><\/p><\/blockquote>\n

Q4. So far most of the approach to deploying faster broadband in the UK has focused on hybrid-fibre services like BT<\/a>\u2019s FTTC<\/a> (VDSL2<\/a>) and improving Virgin Media<\/a>\u2019s cable (DOCSIS<\/a>\/EuroDOCSIS) platform.<\/strong><\/p>\n

Many regard the above as being the most affordable and quickest way to deploy faster connectivity (i.e. reusing some of the existing infrastructure). Future advancements like G.Fast<\/a>, Vectoring, FTTdp and DOCSIS3.1 could also extend the performance even further.<\/strong><\/p>\n

But others maintain that we should instead be looking further towards the future, with an eye on a longer term investment, by bringing true fibre optic lines to every home and business (FTTH<\/a>\/P). What are your thoughts on this solution?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

\u201cMany regard the above as being the most affordable and quickest way to deploy faster connectivity.\u201d You\u2019re darn right it is. For a simple comparison, the FTTH Council reckons it will take \u20ac200bn to complete the coverage of Europe with superfast broadband using FTTH (which is often FTTP<\/a> actually). Point Topic reckons it will take \u20ac80bn using an FTTC<\/a> (VDSL2<\/a>) led approach. FTTC is well adequate for the needs of the teens, specially with the enhancements you mention. Which do you think the public will prefer \u2013 waiting until the twenties to get a super-duper connection because the budget has run out or getting something they need now? Which can be upgraded to super-duper in the twenties anyhow? What are the politicians bound to back in the end, with good reason?<\/em><\/p>\n

In the long term a direct transfer to an end to end fibre solution would be cheaper. However given the cycle of political and C level directors lives it is unlikely that such a decision would be taken. In light of the significant reduction in the Connecting Europe Fund in the upcoming EU budget (2014-2020) and the wariness that accompanies political interference in carefully constructed competitive markets the signals from elected officials are that they expect the privatised telcos throughout Europe to run their companies with their shareholders interest in mind. Those interests are best served by balancing medium to long term returns against short term expenditure in a collection of capital poor organisations. The cost of borrowing is too high to allow any other course than the gradual upgrade of the networks.<\/em><\/p><\/blockquote>\n

Q5. Similarly BT recently started deploying a new FTTP<\/a>-on-Demand (FoD) service, which will soon be made available to any FTTC capable line and effectively replaces this with an ultrafast fibre optic connection. But, unlike a normal FTTP<\/a>\/H service, FoD requires the end-user to pay for the fibre line to be dug and in some areas that could run into thousands of pounds. How important is this product to the wider market and do you expect it to have a big impact?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

This is a good move by BT but we wouldn\u2019t classify as broadband which we define as a product at a mass-market price point (among other things of course). We don\u2019t see it as gaining much take-up but it will give BT useful experience and help to finance some of the infrastructure for mass market FTTH eventually.<\/em><\/p>\n

It\u2019s also a way of measuring demand. If businesses (and in a few years the consumer) really want the bandwidth they\u2019ll eventually pay for it. Once the recovery tipping point is seen as being passed we will see lower prices for connections. This is a common \u2018demand dam\u2019 seen in many broadband markets around the world over the years.<\/em><\/p><\/blockquote>\n

<\/p>\n

Q6. One of the biggest problems for smaller rural ISPs (altnets) this year has been the struggle to get funding grants released from the \u00a320m Rural Community Broadband Fund, which is partly because BT and local authorities have preferred not to reveal which areas they intend to cover as part of the BDUK scheme (at least not all at once).<\/strong><\/p>\n

Thankfully pressure from the central government has nudged local authorities to engage on this issue. Do you think this will be the end of the problem and, given that the EU still expects 100% superfast coverage by 2020, what more could be done to help the final 5-10%?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

Point Topic believes strongly that transparency and good information is vital to a healthy broadband market and we think regulators should be pursuing this more vigorously than they do.<\/em><\/p>\n

But if we look at the last 5% or so then it is hard to see these homes being upgraded to superfast at a cost which the taxpayer would or should accept if it is left to BT and the other big players. Instead we expect that the job will be done by many small-scale local projects, each making the best use of local conditions to run fibre \u2013 or possibly a wireless connection \u2013 to small and isolated communities. They will use everything from free wayleaves and free digs across friendly land to rich residents who are prepared to put their hands in their pockets. To ease that process we suggest that a flat subsidy, averaging say \u20ac2,000 (\u00a31,700) per household, should be provided. We think that lots of small projects will spring up with that incentive and most of the last few % will get covered that way.<\/em><\/p><\/blockquote>\n

Q7. Realistically, how big of a role do altnets (i.e. smaller ISPs that build their own local infrastructure) currently play in bringing superfast broadband to more people and is their impact likely to grow significantly in the future or will it always remain somewhat niche?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

See above \u2013 mini-ISPs could have a major role in remote areas with low population density. But their biggest role is that they offer a real alternative to the big players. Consider for example how the fixed-wireless minnows provoked BT to enable even the smallest local exchanges. I think with superfast the small players may end up with a bigger and more attractive niche than fixed wireless, but most mini-networks will end up being adopted by a bigger player.<\/em><\/p><\/blockquote>\n

Q8. During February this year the EU\u2019s proposed Connecting Europe Facility (CEF), which planned to spend an extra \u00a37bn or so on broadband infrastructure development, was wiped out by budget cuts. What are your thoughts on this decision and do you think it would have had a significant impact on the UK? <\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

The main effect is likely to be in the eastern-EU countries I think. Gap-filling projects will be significantly harder to finance and other sources are harder to find there. Which is why the UK played a big role in achieving the cut and why we\u2019ve been reluctant to rely much on EU money in any case. Meanwhile people in the Commission think that much of the money will still find its way into broadband investment through other channels \u2013 regional funds etc. The cust also serves as a signal as to where the funding is expected to come from as well as an indication of how cautious the EU is in potentially disrupting the balance of a market.<\/em><\/p><\/blockquote>\n

Q9. Finally, the government was recently forced by EU competition concerns to scrap the broadband infrastructure aspect of its \u00a3150m Urban Broadband Fund for 22 cities around the UK. Instead this has been replaced by a voucher scheme that helps businesses connect to superfast broadband by covering the installation cost. Do you think this is the best use for that money?<\/strong><\/p>\n

ANSWER:<\/span><\/p>\n

Well, it\u2019s one step towards the idea discussed above for a subsidy per premises for broadband in rural areas. It should stimulate broadband provision in the 22 cities. The missing bit is whether the vouchers will be used in any coordinated way to help finance specific improvements or will just be distributed at random. It would be nice to see an option by which vouchers could be pooled to help finance additional investment.<\/em><\/p>\n

We discussed this with someone in the Commission recently. They said that the hold up on approval for the Superfast Cities scheme came about because BT and Virgin Media<\/a> both appealed against the approval granted for Birmingham so all the applications have to wait until that issue is cleared. They believe that BT\u2019s legal team will be able to drag out the process for long enough (two years) so that the approvals expire anyway. Meanwhile the Ministry is resorting to vouchers on the argument that the value per voucher is too small to require EU approval. But the Commission does not see vouchers as a good solution because they don\u2019t create any of the coordination and focus that is one of the main advantages of state funding.<\/em><\/p><\/blockquote>\n

End.<\/p>\n

A huge thanks from ISPreview.co.uk to Oliver, Laura and\u00a0Tim for being so kind has to help us out this year.<\/p>\n","protected":false},"excerpt":{"rendered":"

London-based broadband analyst firm Point Topic has told ISPreview.co.uk, as part of our exclusive interview, that hybrid fibre optic (FTTC, DOCSIS etc.) services are the best way of getting affordable superfast Internet access to 95% of the country by 2017 and that smaller (altnets) ISPs should play a “major role” in connecting the final 5%.<\/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":[6],"tags":[471,85,39,38],"class_list":["post-4221","post","type-post","status-publish","format-standard","hentry","category-editorial_article","tag-bduk","tag-europe","tag-point-topic","tag-politics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nPoint Topic Backs Smaller ISPs to Fix UK Rural Superfast Broadband Woes - ISPreview UK<\/title>\n<meta name=\"description\" content=\"London-based broadband analyst firm Point Topic has told ISPreview.co.uk, as part of our exclusive interview, that hybrid fibre optic (FTTC, DOCSIS etc.)\" \/>\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\/2013\/12\/point-topic-backs-smaller-isps-fix-uk-rural-superfast-broadband-woes.html\" \/>\n<link rel=\"next\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2013\/12\/point-topic-backs-smaller-isps-fix-uk-rural-superfast-broadband-woes.html\/2\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Point Topic Backs Smaller ISPs to Fix UK Rural Superfast Broadband Woes - 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