This weekend saw two big developments in the bid to create a Broadband Universal Service Obligation (USO) with the Government launching its consultation on the design of a USO and BT making a voluntary offer to deliver this service.
The £400 million Digital Infrastructure Investment Fund to boost full-fibre broadband deployment is now formally launchedsamiragazzane
In November 2016, Chancellor Philip Hammond announced the creation of a new Digital Infrastructure Investment Fund (DIIF) of £400 million, matched by private finance to invest in new full fibre networks over the next 4 years. After being announced again in the March 2017 Budget alongside other measures to boost investment in digital infrastructure, the Fund was formally launched yesterday.
Chancellor Philip Hammond delivered his Budget 2017 speech today, reiterating the Government’s objective to put the UK “at the forefront of the global technology revolution”. The Chancellor announced further details on the £23 billion National Productivity Investment Fund (NPIF) presented in the Autumn Statement and on the new Government 5G Strategy launched today.
Born from the need to address the UK’s productivity gap and provide a plan for the UK post-Brexit, Government issued yesterday its proposed Modern Industrial Strategy outlining its vision to “improve living standards and economic growth by increasing productivity and driving growth”. Government will be consulting on these proposals until 17 April 2017.
Ofcom today published their technical advice to Government on the design of a broadband Universal Service Obligation. Ofcom were instructed to deliver its “views, evidence-based analysis and…recommendations” by John Whittingdale, then Secretary of State for DCMS, in March 2016. It has certainly delivered on the first two although in making clear that designing a USO is complex, it only offers a few recommendations. It will now be up to Government to make some of the thornier policy choices.
The National Infrastructure Commission today reported back to Government on how to ensure that the UK can become a leader in the deployment of 5G and take early advantage of the applications that it may enable.
The core finding of the NIC is that mobile connectivity is essential and that the market, as currently structured, will struggle to meet these two objectives on its own and that the whole of Government must work with industry to deliver on them.
Chancellor Philip Hammond reaffirmed today the need for the UK to level-up its ambition for world class connectivity in an Autumn Statement placing digital communications infrastructure as a priority area of investment, critical to boosting UK productivity. The Chancellor confirmed the Government’s plans to invest over £1billion in the roll-out of full-fibre connections and future 5G communication.
The Government has briefed that it will be unveiling two new programmes in tomorrow’s Autumn Statement to make good on its view that the future is fibre (to the premise variety) and 5G. The BSG welcomes this focus on digital connectivity. All BSG members believe that good quality broadband underpins, drives and improves our society and economy.
It’s fair to say that the UK’s experience of community led broadband schemes has not been evenly distributed. The work of B4RN and others is nothing sort of transformational but there have been other examples of networks collapsing under financial strain or more often simply never getting off the ground. Their reputation was further tarnished by the unsuccessful Rural Community Broadband Fund. One of the complaints from communities was that there were few easily accessible case studies and tutorials. BDUK have now rectified this with a good portal containing case studies and guidance.
The first lines of Matt Hancock’s speech to Broadband World Forum last week weren’t shy in setting out the general theme. Hancock’s previous speeches had shown that more than most, he ‘gets’ the role that technology can, does and may play in all of our lives. So did his predecessor Ed Vaisey. But what marked this speech out was an unapologetic focus on fibre; as he described it, the future.
The Valuation Office Agency (VOA) announced last week a fourfold rise in business rates (taxes on the value of real estates) on some major infrastructure providers’ bills. The revaluation was judged “excessive” by BT, whose Bill increases from £165m to £743m per annum, who added that the increase in rates will likely lead to higher prices for consumers and businesses. Virgin Media echoed BT’s concerns on the likely negative impact of the increase on future investment decision in telecoms infrastructure.
A recent study (h/t Computer Weekly) on the economic impact of London’s superfast broadband connection voucher scheme shows that it could bring a £3bn boost to London SMEs within two years. Carried out by Adriot Economics, and supported by Point Topic, The Fifth Sector and Manchester University, the evidence comes from around 500 of the 12,000 London businesses who benefited from the scheme.
The SME Connection scheme was launched in late 2013 as part of the Super Connected Cities scheme. Despite some initial teething problems it quickly picked up speed, benefiting from an advertising push and a streamlined application process that included the ability to aggregate vouchers. When it closed in October 2015 55,000 vouchers – a one-off grant of up to £3000 – had been issued to SMEs in over 50 cities with over 700 suppliers taking part.
This report is the first to attempt to undertake an economic analysis of the scheme – something which the BSG called for in our Small Business Connectivity Requirements Report last year. London’s scheme allocated £18m over the two years with an average cost of £1,500. This resulted in an average speed increase from 15.9 Mbit/s to 86.6 Mbit/s. The range of services delivered can be seen in the graph:
In the short to medium term this resulted in increased efficiency and sales. It also resulted in productivity gains from staff time savings and increased ability for home and mobile workers. The report also identified longer term gains in terms of using this time to increase skills – and having better access to online courses.
On a conservative basis this should provide a boost of £3bn in the first two years and an additional £4bn over five years if the latent productivity gains are realised. In terms of Gross Value Added, the economic benefit is estimated to be £430m for Greater London and an additional 8,118 jobs. That’s an extremely impressive £23 GVA per £1 invested and a cost per job of £2,200.
The report doesn’t cover additional economic benefits such as those delivered to the suppliers, nor the extent to which it stimulated the market to deliver superfast broadband services (in fairness a non-trivial task).
Whilst the report was just focused on London and, by the author’s admission, survey results are still coming in – it does seem to beg the question of should Government have stopped the scheme when it did?
In fairness, Ed Vaizey made clear to the CMS Select Committee’s Inquiry into World-Class Connectivity he wanted the scheme to carry on – he was just unable to get the Treasury to agree. That’s not to say the scheme was perfect – whilst it was born out of the Super Connected Cities Programme, SMEs in rural areas would arguably benefit even more from such a scheme. But it was still a scheme that seems to be delivering economic benefits, popular amongst SMEs and broadly welcomed by the telecoms industry. With loud noises of industrial strategy and regions pushing the message that they are open for business, don’t be surprised if we see this revived in some form…
Urban Connectivity: The Demand and the Challenges
12 October 2016 10.00-17.00
techUK, 10 St Bride St, London, EC4A 4AD
The UK’s cities are determining factors in our economic well-being, helping to drive growth and create jobs. By their nature they require resilient, high capacity and high quality infrastructure. This applies to digital communication networks as much as it does to transport infrastructure. Indeed, it may shortly matter more.