With so much at stake, including UK competitiveness and the delivery of public services, we need to look at the next-generation broadband problem from more than just a commercial investor's point of view, says Malcolm Corbett.
In February, 3,000 people gathered in Milan to discuss next-generation broadband at the annual Fibre to the Home (FTTH) Council conference. This is a prestigious event backed by many of the big cable and equipment manufacturers.
European commissioner Neelie Kroes spoke about how access to super-fast broadband is at the heart of the European Digital Agenda and central to our economic future. To back up this policy agenda, the European Investment Bank is making a solid financial commitment of €2.5 to €4bn (£2.1bn to £3.4bn) per year — and seeking projects to co-finance.
Projects there are aplenty — with speakers from Denmark, Sweden, the Netherlands, Russia, Iceland, Italy and Turkey. Even tiny Andorra is deploying a 100Mbps, symmetric, fibre network to all its households and businesses. Business cases were promoted and dissected, regulators challenged and vendors showed off their latest gizmos. None of the projects presented was British.
Global rankings of fibre-to-the-premises deployment
Each year the FTTH Council presents the global rankings of fibre-to-the-premises (FTTP) deployment — a benchmark for how well different countries are doing. This year, for the first time, Turkey joined the global elite, ranked 26th after the world leaders like Korea, Japan, Hong Kong, Scandinavia, the USA and Russia. The UK is not ranked at all since we do not reach the minimum level of one percent of premises connected to fibre.
Fibre-to-the-cabinet is described by some as the last throw of the dice for the copper phone network. Photo credit: David Meyer
Should we care? According the European Commission and our own government, the answer is yes. Super-fast broadband is growing in political significance. In 2010, the government published its strategy, Britain's Superfast Broadband Future, and confirmed a commitment to spend £530m from the BBC licence fee to assist rural deployment until 2015. After that they expect to add another £300m.
A big question is how much of this funding will go towards deploying fully future-proofed FTTP — supplemented with wireless? Or will we instead find ourselves financing mainly fibre-to-street cabinets (FTTC), described by some as the last throw of the dice for the copper phone network?
The government's ambition is to have "the best super-fast broadband in Europe", but what will this ambition mean in rural areas? Some are arguing that it could mean speeds of just 5Mbps.
FTTP wireless fix
Ideally, we should fix the next-generation broadband problem once and for all and go for predominantly FTTP-wireless technology wherever possible. The issue of course is finance.
The combined resources of BT, Virgin Media and the government are not enough to give us a fully future-proofed network. Therefore, we need to get more creative. Arguably, with the right demand profile and the right regulatory framework, installing fibre should be a pretty safe, long-term investment. But it's a hard stretch in rural areas.
We need to look at the issue from more than just a commercial investor's point of view. With the public sector involved, other factors should come into play. In terms of local economic development, fibre provides an affordable communications infrastructure for innovative small firms and thus can help regions be more competitive.
That's why Manchester is investing in a fibre network in the centre of the city. They want the creative, digital sector to benefit from the same high-speed, symmetric, low-cost services as their counterparts in Amsterdam and other parts of Europe. Other cities, such as Gateshead, have come to similar conclusions. The same argument can be made for firms in rural areas.
Why should people in rural areas have to move to cities to get decent broadband? What about those who can't move?
Economic development and competitiveness
Why should they have to move to cities to get decent broadband, and what about those who can't move? Whether we are looking at urban or rural areas, we need to factor arguments about economic development and competitiveness into the equation.
On top of those factors are benefits to public services, which could be huge in terms of improved contact with citizens, home-based telehealth and better access to educational resources — and reduced costs. In these times of economic stringency, combining cost savings with improved services is surely the primary goal for public service.
Finally there are all of us, citizens and consumers in our communities. Connecting our homes and businesses to fibre will cost...
...an average of about £1,000 per building, according to some estimates. In more rural areas the average goes up, but as some rural projects are demonstrating, getting local people involved can reduce the costs dramatically.
As well as aggregating demand and looking for ways of reducing costs, we could boost the investment case by coming up with ways to guarantee payment of our fibre line rental for the next few years, or encourage us to invest directly in our local fibre scheme.
Big Society approach
If we combine all three elements — private, public and community — we have a Big Society approach to tackling the problem. This approach has the added bonus of being the sort of positive agenda that should be very popular with the government right now.
None of this is easy, but we have an opportunity to experiment. Four government-backed pilot projects — plus a fifth in north Wales — have been funded to test assumptions and try out different approaches. Each is being allocated between £5m and £10m through the county councils and will soon go out to procurement. Meanwhile, the next wave of projects is getting into the starting blocks.
The problem is that when you start talking with local government officers about innovative alternative private sector providers, community-led solutions, or factoring in other sources of public and private capital, it all sounds very interesting, but hard.
The government wants them to develop wide-ranging broadband plans and get local buy-in before bidding for money. Some will be creative and build the right local coalitions and put in place ambitious plans. But for many, it will seem much easier to go for the lowest common denominator, provide some gap funding and perhaps get some spin-off benefits for the local public services network.
Risk of wasted resources and time
That is the real challenge. The end destination is clear. The problems with getting there are well understood. But if we get it wrong, we risk having to spend the same amount of money — perhaps more — fixing the problem again in a few years.
If we get it wrong, we risk having to spend the same amount of money fixing the problem again in a few years.
A bigger danger is that, in the process, we damage the competitive position of the UK and undermine an opportunity to improve public service delivery.
On the other hand, getting it right will put the UK right up at the top of the global leadership board. More importantly, in a world increasingly competing on the ability to generate, manipulate and communicate knowledge, we will be able to face the future with confidence, knowing that the network we are building to underpin this knowledge economy is truly world class.
We need to be bold. We need to go for the difficult options. Britain needs the world-class network.
Malcolm Corbett is chief executive of the Independent Networks Co-operative Association, which represents organisations building and operating independent next-generation broadband networks in the UK.
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