Quarkside

18/02/2011

Broadband bags half a billion. Market failure

Filed under: Assets,Education,Local Government,Standards — lenand @ 11:53 am
Tags: , , , , , , , ,

DCMS have taken over from BIS, for delivery of “the best superfast broadband network in Europe by 2015”.  Or so were told the Local Government Delivery Council at a meeting in London recently.  They have a budget of £530 million to oil the market machinery.  It’s supposed to be new money – but in practice it is a TV licence fee top slice, which we are paying anyway.  More maudlin repeats are the true cost.

Apparently we are megabits behind Europe already, judging from comments from the audience reaction.

  • We are ten times the cost of some countries
  • Neither BT, nor anybody else in the market, is going to supply fibre to the home.   This is essential in some definitions of superfast”.
  • Fixed lines are not the only problem.  Local authorities need much broader reach of Wimax to deliver savings from the mobile work force.

The main publicity is about reaching the final third of the population without broadband, who are deemed to be non-profitable to the private sector suppliers.  Broadband Delivery UK (BDUK) have been set up to catalyse the market and ‘de-risk’ final third.  BDUK are seek EU funding and hope to extract more from Local Government.  Market failure means public subsidy has to prop up uneconomic networks.  The carrot is the chance for local authorities to bid for some of the central funding.  But one wonders which services have to disappear to release the additional matched funding.

Fortunately, there are some opportunities for using existing public sector network services.  Is the final third more reachable by using police, health and schools network?  The answer is, YES.

The ‘best in Europe’?   Quarkside thinks, NO.  Just read Eurim’s learned “Making Broadband Investment Markets Work – Draft Paper” .

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