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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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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