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LSE identifies £1.1bn broadband rollout shortfall

The UK's fast broadband rollout needs an extra billion pounds in private investment if government targets are to be met, academics from the London School of Economics have calculated.The government wants 90 percent of the country to have access to super-fast broadband by 2015, with everyone getting at least some broadband access by that date.
Written by David Meyer, Contributor on

The UK's fast broadband rollout needs an extra billion pounds in private investment if government targets are to be met, academics from the London School of Economics have calculated.

The government wants 90 percent of the country to have access to super-fast broadband by 2015, with everyone getting at least some broadband access by that date. However, an LSE report (PDF) on Thursday, which was prepared for analysts Convergys, suggested that the money is not yet there to achieve these aims.

"[Our] calculations suggest that the overall cost of reaching both targets could be £2.4bn," the paper's authors, Paolo Dini, Claire Milne and Robert Milne, wrote. "By the end of 2015 about £1.3bn of public funding… will have been spent."

"This is unlikely to be enough to ensure both 100-percent fast broadband coverage and 90-percent super-fast broadband coverage: on the basis of these figures, to reach both targets by then there has to be an extra £1.1bn, which is the funding gap that the private sector needs to fill," the authors wrote.

BT has pledged £2.5bn for its fibre rollout, but that will only take coverage up to 68 percent. The LSE team was looking at the money needed to take that up to 90-percent coverage, which means covering the rural areas not included in BT's scheme.

The academics noted that their figures focused on deployment costs, and warned that "the public sector would incur associated costs, such as those for procurement, programme management and demand stimulation".

Demand was another issue they identified, certainly when it comes to super-fast broadband speeds in excess of 24Mbps. "Early adopters have been prepared to pay a small premium for super-fast broadband. However, though they have changed how much they use some existing applications, they have not as yet found any compelling new applications," the authors said.

They added that mass take-up might depend on "large-scale adoption" of internet video, but also pointed out that the government was not putting money into getting non-users online.

"Funding for broadband infrastructure in turn hugely outweighs money available for getting non-users online," Milne wrote in an article on Friday.

Milne pointed out that, while the government has lent its support to initiatives such as Race Online 2012 and its successor, Go-On-UK, it has not actually provided any money for the schemes.

"Could this be the most productive use yet for public broadband funds?" Milne asked.

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