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CityFibre Claim Poor Investment Models Hold Back UK Fibre Optic Broadband

Posted: 21st Feb, 2012 By: MarkJ
fibre optic cablecityfibre holdings ukCityFibre Holdings, a provider of fibre optic infrastructure ( FTTH ), has suggested that a lack of flexible investment models could be holding back the rollout of ultrafast fibre broadband ISP services in the UK and preventing it from becoming a true alternative to "legacy incumbent infrastructure" (i.e. copper line based internet services).

CityFibre's Head of Corporate Development, James Enck, pointed to the recent global ranking of ftth deployments that didn't even list the UK. Enck claims that most of the successful FTTH countries have benefitted from "a third source of investment" (e.g. via the utilities industry or entrepreneurial investors etc.).

Enck believes that the UK, outside of a few smaller projects (e.g. Hyperoptic , Rutland Telecom etc.), has been left "lagging behind the rest of the world" because the government's "over zealous" approach to taxation and funding has left a vacuum that only incumbent (e.g. BT etc.) operators seem able to fill.

James Enck, CityFibre's Head of Corporate Development, explained:

"The most effective steps towards closing the gap between the UK and the leaders of the FTTH league table would be to remove barriers and disincentives to investment by entrepreneurial sources of capital. The asymmetry which exists in the rating system for fibre networks [Fibre Tax], which currently rewards incumbent scale and punishes investment which lights up new fibre, should also be revisited.

If the Government is serious about seeing private sector solutions to public infrastructure problems, it shouldn't be so over zealous in taxing sources of potential economic stimulus. Allowing local councils more flexibility in how they procure and fund networks would give them more self-determination in shaping connectivity options for their communities as a lever of economic development policy.

The City has a role to play in creating awareness of fibre infrastructure as an investable class of infrastructure too. In these uncertain times, investors are looking for long-term, stable financial returns and traditional infrastructure projects are a natural place to put money. Fibre infrastructure projects, executed properly, have the same qualities, but they have yet to be packaged into fund structures which can tap investor demand at scale. [Meanwhile] the UK ... once again finds itself in the role of follower."

But sadly there's no real sign that the government intends to change its current course, at least not in any truly meaningful way. Some recently proposed changes to the controversial Fibre Tax could deliver a tiny improvement (here) but that's about it.

James Enck does at least point to a more positive future and predicts that it "won't be long before 10Gbps to the home becomes a reality," although at present that simply isn't viable. Consumers today can barely manage to take full advantage of 50Mbps, let alone 10,000Mbps! But technology does move fast and in another ten years the story might be very different.

Enck also reminds us that the UK is only "in the early stages of learning as to what the wider long-term socio-economic benefits of symmetrical fibre connections might be". It could in theory have profound implications for transport, the environment, social service delivery, healthcare, education and business but you have to rollout the service out first.
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