Budget brings broadband cash for 'smaller' cities

The government will spend £50m improving the maximum broadband speeds of people living in 'smaller cities' in the UK, George Osborne has said.

Chancellor George Osborne has put aside £50m in the UK Budget to improve broadband and Wi-Fi infrastructure in smaller UK cities. Image credit: The Prime Minister's Office/Crown copyright

Osborne announced the plans to improve national broadband infrastructure, which include setting aside £50m for 10 smaller cities such as Brighton, as part of the 2012 Budget. 

"To be Europe's technology centre we also need the best technology infrastructure," Osborne said on Wednesday. "Two years ago Britain had some of the slowest broadband speeds in Europe; today our plans will deliver some of the fastest — with 90 percent of the population having access to super-fast broadband, and improved mobile phone coverage for rural areas and along key roads across the UK."

However, Osborne made it clear that being the best in Europe is not a lofty enough ambition for the UK's broadband services.

"But we should not be complacent by saying it is enough to be the best in Europe when countries like Korea and Singapore do even better," Osborne said.

In February, a report from the Fiber-to-the-home (FTTH) Council showed that the UK was still absent from global fibre broadband rankings. Meanwhile the United Arab Emirates and Japan topped the list.

Osborne reaffirmed a government pledge to bring super-fast broadband to 90 percent of the country by 2015, and said that the government would improve mobile coverage in rural areas and alongside major roads.

In addition to pledging £50m for broadband infrastructure in smaller cities, the government also revealed the 10 cities that will share £100m to improve their broadband connectivity as part of the National Infrastructure Plan (PDF), originally outlined in November 2011. The money will also be spent on improving Wi-Fi connectivity in the cities, said Osborne. The 10 cities are: Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, Manchester, Newcastle and London.

Impact on business

Despite the pledge of extra cash to bring broadband infrastructure to smaller cities, Morag Lucey, global senior vice president of smart revenue at networking company Convergys, said the plans were a 'half-hearted' approach to broadband infrastructure.

"We are £1.1bn short of reaching 'super-fast' broadband for the UK, let alone 'ultra-fast'. That will not make us competitive in Europe, let alone the rest of the world," Lucey said. "What's more, it expects telecommunications providers to bridge this £1.1bn broadband funding gap. This half-hearted approach to funding broadband infrastructure short-changes the British economy and British society."

Convergys's figures are based on a report carried out in conjunction with the London School of Economics due to be published in April.

Lucey also added that, considering the potential value of super-fast connectivity to UK businesses, the amount of money required is not expensive in comparison with other government schemes.

"Against the backdrop of the £200bn being invested in energy and transport infrastructure, funding from all public sources for broadband up to 2015 is likely to be smaller than government revenue from the digital dividend spectrum auction. It's time the government stopped short-changing the British economy and society and started investing for the future," Lucey said.

"In a tough economic climate, it's unjustifiable to expect UK telecommunications providers to invest £1.1bn to meet the government's commitments. Indeed, it betrays the government's serious lack of understanding of the revenue potential from broadband in the UK," she added.