Analyst firm spots funding gap in UK broadband plan

Analyst firm Analysys Mason has hit back at a suggestion by the House of Lords, the UK parliament’s upper house, that the government’s broadband plan should demand every community in the country be within reach of an open-access, fibre-optic hub.

Earlier this week, the House of Lords released a new broadband report that criticized aspects of the government’s broadband plan, saying there was too much focus on speed and not enough on providing universal broadband access.

Analyst firm Analysys Mason has hit back at a suggestion by the House of Lords, the UK parliament’s upper house, that the government’s broadband plan should demand every community in the country be within reach of an open-access, fibre-optic hub.

Earlier this week, the House of Lords released a new broadband report that criticized aspects of the government’s broadband plan, saying there was too much focus on speed and not enough on providing universal broadband access.

The report also expressed concern about the growing power of BT in the country’s fixed-line broadband market. The former state-owned monopoly has won the lion’s share of government contracts to provide broadband services in underserved communities.

Since then, the House of Lords report has itself come under attack for being impractical and lacking detail. According to Analysys Mason, the cost of building fibre-optic hubs in underserved communities would easily outstrip the funding commitments announced by the government.

Doing some “back of the envelope” calculations, the company has worked out that it would cost about £1 billion ($1.56 million) to cover the most rural 10% of the UK alone. The government has made only £750 million available for broadband schemes in the so-called “final third” (the 33% of the population living in communities where the private sector sees little or no commercial incentive to roll out high-speed services).

Obviously, says Analysys Mason, the £250 million shortfall would be even greater if the public sector were expected to provide fibre-optic hubs to more than the most rural 10%.

“Some additional funding may be available at the European Union level, but it seems unlikely that the operators themselves would contribute to the construction of a new open-access dark fibre network, as they would risk damaging the value of their own existing networks,” the company goes on to say in a research note.

Another flaw in the House of Lords plan, according to Analysys Mason, is that it might convince private-sector operators to delay the rollout of their networks as they wait to see where planned infrastructure may be duplicated.