George Osborne, Chancellor of the coalition UK government, confirmed yesterday that Wednesday's (20th October 2010) spending cuts announcement will not affect its weak commitment to bring a minimum broadband internet download speed of 2Mbps (Megabits per second) to every household in the country by 2015.

The feared Spending Review will seek to eliminate the country's £109bn structural deficit within just 4 years, which requires Osborne to make some dramatic cuts (total £83bn) right across all government departments.

The 2Mbps Universal Service Commitment (USC) and future "super-fast" Next Generation Access (NGA) broadband telecoms projects appear to have been largely unaffected. However Ofcom will have its wings clipped, albeit mostly in the broadcasting (TV, radio and media) department; telecoms and internet regulation were deemed too important and thus remain intact.

Osborne also confirmed on Sunday that £230m had been set aside to help 2 Million UK homes in rural areas get access to faster broadband speeds by 2015, which appears to include both NGA spending and USC plans.

By contrast the previous Labour government set aside £200m just for the USC. However the new governments communications minister, Ed Vaizey, recently warned that the USC's cost would be "at least double" the previous administrations best estimate (here).


This suggests that the governments plan will continue to be seriously underfunded, at least for the USC. Most of that cash is already being eaten up by reviews, papers and general administration instead of being put into practical projects.

Thankfully £230m should not be the end of the governments broadband spending. From 2012 it will, if it so wishes, also be able to use part of the BBC’s TV Licence fee (3.5% - Digital Switchover Budget) to help fund the rollout of superfast services into rural areas. A more detailed plan should emerge before Christmas.

Previous estimates have suggested that £2bn to £3bn might be enough to help "super-fast" fibre optic based and wireless (WiMAX, Wi-Fi, FiWi) broadband services reach up to 90% of the country by 2020, depending on how the money is spent. However this would still leave the remaining 10% feeling fairly untouched. Ten years is also a very long time for some to wait.

Sadly those hoping to see everybody in the country get access to a true 100Mbps Fibre-to-the-Home ( FTTH ) service will be left feeling deeply disappointed. Such a plan would require significantly more cash than is currently available (£15bn - £20bn up to £29bn [Caio Report]). In the meantime the private sector alone should be able to cover about 70% of the country with NGA Compatible services.

BT's CEO, Ian Livingston, and 35 other business leaders have already given their support to Osborne's Spending Review. Overall though, nothing has changed. We should find out more about how the government plans to spend what little cash it has within the next two months. Most UK ISPs would just be happy if the government reduced or cut the controversial Fibre Tax to help foster development. At present this tax unfairly penalises smaller operators.