Quarkside

01/03/2011

Bureaucracy Blocks Broadband Bonanza

Britain wants the best broadband in Europe.  But bureaucracy may beat our best endeavours is a message that could be gleaned from a recent Eurim meeting.

The keynote speaker was regulator, but now works for an equipment supplier.  Apparently the predicted demand from mobile devices with Internet features is going to fill the available capacity remarkably quickly.  Mobile data traffic is expected to increase 30-fold between 2010 and 2015, with smartphone densities of 12,800 per km2.  This needs investment in backhaul capacity and the wholesale suppliers of bandwidth do not see a clear financial case.  They do not think that £30 per month at the retail end can be sustained.

The simple truth is that running competing fibre infrastructure (and mobile masts) is inefficient.  A single national infrastructure is the most efficient.  Some parts of the world, such as Brazil, China, Russia and Australia, have a policy to create such an infrastructure.  They are now advancing quicker than the EU countries and showing benefits to their economies.  This is a cause for concern in Europe and innovative ways of financing are being promoted.  France is doing it via local authority projects.  Most départments are creating joint ventures, partnerships, which include an element of public funding, as much as 50% in some areas.  The private sector are being given a reasonable return on a 10 year investment.  Have UK Local authorities got the energy to create such local partnerships?

Rural areas present special problems.  80% of the cost of the infrastructure is digging holes and civil works.  Farmers have tractors capable of doing the trenching at a lower cost than most contractors – in some countries as much as one third is done by local land owners.  Then you find out that, in the UK, there are arcane regulations about removal of telegraph poles.  Suffice to say, they belong to BT and there is a bureaucratic blockage.  Shared wayleave will also create much entertainment for lawyers.  The UK non-domestic rates are the biggest barrier to investment in rural areas.  In one example, <1,000  lines  >1km  from  exchange, rates are 86% of the operating costs.  Even in urban areas 30% is not untypical.  It needs some rapid legislation to amend the current rules that were developed when there was no concept of the growth in demand for broadband and how essential it is in developing the economy.  Who is going to take the lead?

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