Broadband Delivery UK

BDUK has been created within BIS as a delivery vehicle for the 2 Mbit/s Universal Service Commitment (USC) and for increasing access to super-fast broadband.  On July 15th, BDUK hosted an Industry Day which was potentially of great significance to the development of super-fast broadband in the UK.  The press disappointingly focussed on Jeremy Hunt’s announcement that fulfillment of the 2 Mbit/s Universal Service Commitment will be pushed back from 2012 to 2015.  But this missed the bigger picture, which is much more interesting.  This government has rejected a top-down approach to filling the gaps in next generation access.  Instead, they will encourage and enable local initiatives by removing barriers to investment.  For example, they are considering utilising the networks of telecoms providers and other utilities for the installation of fibre networks; exploring the re-use of public sector networks (such as those of local authorities and the national education network); reforming the process for granting wayleaves; and obtaining clarity from the EU on State Aid rules.

Only the “irreducible core” of the hardest to reach 160,00 or so premises will be served by the minimum 2 Mbit/s USC.  The remainder of the “final third” of the country will, it is intended, be served by superfast broadband.  This will be done with the oversight of BDUK, but with regional and local involvement. 

In order to understand potential commercial models in detail, BDUK are undertaking a “USC Theoretical Exercise”.  Suppliers will be invited to propose complete solutions for three real rural locations (one in the Highlands of Scotland, one near Lancaster and one in South Wales) and they will be provided with details of existing infrastructure and assets to assist them.  From this work, BDUK will develop preferred commercial models by the end of 2010, from which they will begin a procurement process to fulfill the  Universal Service Commitment, using 2 Mbit/s as a minimum but by no means maximum.

In terms of superfast broadband deployment, BDUK are, with the help of local authorities, Regional Development Agencies and the Devolved Assemblies, creating a short list of three locations where BDUK will initiate real superfast broadband pilots in rural and/or hard to reach areas.  (The Government are clear that superfast means symmetric speeds of at least 20 Mbit/s today, probably at least 50 Mbit/s by 2015 and up to 200 Mbit/s after that.)  These pilot projects will be subsidised to the tune of £5m to £10 m each, for initial capital expenditure, not for ongoing operational expenses.  Additional funds, such as from the EU, will also be utilised.  Importantly, the Government intend these projects to really test the boundaries of consumer demand, to be future-proof and to provide a lasting legacy for those local communities.   It is expected that the Government will go out to tender for the chosen locations this winter and that the pilot projects will be delivered in the second half of 2011. 

Once the lessons have been learned from the pilot projects, it is envisaged that further funding will be in the form of public sector investment as part of commercially viable schemes.  It is good to see that the Government is thinking outside the box, and not expecting all the answers to come from BT and Virgin Media.  By seeking community and public sector involvement and by encouraging partnerships and cooperation, we are likely to see networks which cost less to deploy and which deliver more of what consumers want and need. 

Also on July 15th, BIS published a discussion paper which seeks to prompt a discussion about the merits of using existing infrastructure networks, including telecoms, electricity and the sewers, to facilitate deployment of next generation access networks.   Ofcom’s recent review of the wholesale local access market proposed that BT should be obliged to offer access to its ducts and poles where it has market power, i.e. in the access market.  But the new EU framework directive allows regulators to impose infrastructure sharing obligations on operators regardless of market power.  This could mean opening up Virgin’s network and also BT’s network outside of the access network, eg between main switching exchanges.  Such a suggestion is likely to prove controversial…


About Ayres End Consulting
Telecoms consultant specialising in interconnect, regulation & public policy.

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