Digital Britain – Two tier broadband remains inevitable
Today’s government report into the development of the digital economy in Britain is wide ranging. But I’m going to focus on one area, broadband.
There are two key initiatives, plus lots and lots of talk:
A universal service obligation of 2Mbps for all by 2012. An USO for broadband is long overdue. But for those living in rural areas unserved or poorly served today, this speed will prove unsatisfactory. Already, average broadband speeds are over 3Mbps in the UK. By 2012, speeds will have risen again. The best that 2Mbps will do is reduce the height from which people fall when they live outside the peaks of urban broadband excellence. Nothing more. 2Mbps by 2012 is yesterday’s speed tomorrow.
A tax of 50p a month on all fixed line telephones to support rural broadband development. This is controversial and in my view will prove ineffective. The argument in the report is that fibre roll-outs to one third of the UK are uneconomic and this tax will deliver a subsidy that will hasten fibre infrastructure builds nationally. I see several flaws:
1. BT aims to spend £1.5bn to reach 40 percent ish of the population that live in relatively cheap and easy to reach urban areas. By comparison, the total return on £6 per annum for each of the 34m or so fixed telephone lines will not go far given the scale of costs for fibre indicated by BT’s plans.
2. Fibre deployment has barely started in the UK’s cities. BT’s network kicks off early 2010. It’s far too early for anyone to make significant deployments in rural areas where the number of people that would benefit are far less. I suspect either the £6s in tax will stockpile somewhere in the interim, or the monies will be used to support the more modest target of 2Mbps rural broadband (ie the universal service obligation).
3. Given the best will in the world, it will take much time to install fibre networks. Roads must be dug. New equipment must be given to consumers for their homes. New network links must connect exchanges and central offices to central national backhaul infrastructure. It’s inevitable that the initial deployments will be in the cities, even with this additional economic sweetener. And, fibre will take years and years to do.
For the forseeable future, cities will enjoy markedly faster broadband than rural areas. The advent of fibre, regardless of this government initiative, will increase that speed difference. Two tier broadband is coming whether or not this government likes it.
