Fast broadband access has long been regarded as the fourth utility and one that it is increasingly hard to live without. For both professional and personal interactions we are increasing dependent upon it and with the governments musings around creating a legal right to fast broadband it is only going to become more of a ‘hot button’ and emotive topic. But the solution perused at present – offering supersized BDUK grants to fund the enhancement and expansion of largely existing infrastructure networks (and largely granted to that of the incumbent BT), is not the solution.
Underlying this debate is the fact that large scale infrastructure upgrades are, and always will be expensive. BT themselves said it would not be commercially viable to improve their network in some areas without the intervention of government support. However by subsidising this through grants the true cost of this is masked and the free market, that should encourage and stimulate smaller, innovative firms to compete, is damaged. Consumer broadband costs largely do not reflect the cost of creating this infrastructure and the ‘bundle sale’, whereby the cost of broadband is made negligible by grouping it in with other services such as calls, TV and line rental, acts only to muddle the position further.
Encouraging large scale, nationwide infrastructure is not always cheaper or more efficient either. Under the present scheme millions of pounds have been allocated to BT / OpenReach to roll out a high speed network, yet the results have been variable and have by no means provided universal coverage in targeted areas. Furthermore access to this infrastructure for competing enterprises is woefully limited and bureaucratic, stifling competition – an issue key to the debate on BT / OpenReach’s joint or separated future. Whist it can be argued that these superseded infrastructure projects and matching grants are keeping prices down for consumers it can equally be argued that completion would have a similar effect. Whilst grants may be necessary to make connecting some areas commercially viable, reducing the size of these and allowing firms to bit for smaller parts of them is likely to encourage the emergence of competitive, innovative and lower cost solitons.
Smaller networks are also often more efficient, more customer focused and more in tune with the genuine needs and requirements of the communities they serve. Customer service for these smaller and micro providers is key and, as the BT rollout continues to storm on, a primary area by which they compete. Where there is an alternative for customers they can, and do, demand a better all round service. Smaller providers are often far better and more agile at delivering this.
The drive to focus on ultrafast (100Mbps to 300Mbps) is also questionable. Much is made of this offering, yet recent statistics show take up of these services to be comparatively low (the official statistics can be found here http://media.ofcom.org.uk/facts/). Ultrafast speeds may make infrastructure improvements look and sound impressive, but at present, are largely surplice to the requirements of the average consumer. Highly reliability and low contention would be a better focus in the medium term. Agile providers often will focus on this model but in a market where consumer education is heavily focused on the ‘faster equals better’ model competing with these high budget marketing campaigns is a hard sell.
It is also easy to forget that a large number of people are still lacking even the basic usable broadband service (10 or 24Mbps) that the grants system was established to resolve. The much discussed ‘remaining five percent’ is a big number (over a million house holds). With the trend towards more remote working and the apparent overcrowding of many of our cities this problem is only going to become more apparent. This five percent is also not only in the rural country side – pockets of London and other major cities suffer from poor broadband speeds. Supersized grants have so far failed to make a significant enough impact on these numbers.
Furthermore the scale and administration of these grants makes it harder still for competition in the market to become more prominent. The size and clout of the incumbent makes them the obvious choice for government and local councils to turn too to meet their obligations in providing superfast connectivity, and deters them from looking to assess and trial alternative methods for the delivery. Equally these smaller firms may lack the resources to build a pitch of the size and quality of the large providers. For farmers, the very definition of the rural 5%, the NFU has long supported satellite as the solution as it is both fast, and low cost to install. Perhaps therefore the answer lies not only in removing or further dividing the grants, but in putting more of the money directly into the hands of the consumer. By doing so all providers would be forced to compete in a local market, helping to level the field. Further roll out of the connection voucher scheme would quickly and efficiently encourage this.
Through the current grants provision the tax payer is primarily funding the long term network improvement of a privately owned company and in doing so is support the monopolisation of an increasingly key national infrastructure. Providing high speed connectivity to all is an admirable idea but is not, through the current method, being delivered.