£830m to give 24% of UK superfast broadband. Really?

Well, someone may have been economical with the truth. Either that or building a national broadband network has suddenly got a lot cheaper.
The Financial Times interviewed BT CEO Ian Livingston about the largest UK telco’s latest half year results. Buried in the story was this statement: “The government is considering taking £830m from the BBC licence fee during the next seven years to help finance superfast broadband in rural areas. Mr Livingston says that this money, if secured in large part by BT, could enable it to extend its networks to 90 per cent of UK homes.”
So far we know it will cost BT £2.5bn to get fibre to the cabinets that serve 66% of homes, pretty much all of them urban. Now Livingston appears to be suggesting that BT can supply broadband to 24% of UK homes that are even more expensive to reach, for only £830m of public money.
So that’s a total of £3.33bn to provide fibre to the home for 90% of UK homes, just two years after the Broadband Stakeholder Group, of which BT is a member, said it would cost around £29bn!?
If that’s not good news, I don’t know what is. And with Livingston predicting BT’s free cash flow to hit £2bn a year, he doesn’t really need state aid to do it, some would have said.
Hang on a bit. Let’s remember what Francesco Caio reported as input to the Digital Britain report. He said “The BSG report indicates that the costs of deploying fibre access using FTTH/P2P (i.e. a single fibre to each home) on a national basis is almost £29 billion. A GPON configuration (in which a fibre connection is shared between several homes) would cost around £24.5 billion. If fibre was deployed only to street cabinets (FTTC), the cost would be around £5 billion. FTTC would though deliver a lower level of performance.” (ie, not “superfast”.)
Of course, the FT may have misquoted Livingston, or taken his words out of context, or perhaps didn’t really understand what he was saying, or even that Livingston was not being explicit enough. But so far there appears to have been no correction, and BT is usually pretty hot on making sure Computer Weekly gets things right.
So please can somebody explain how the numbers really add up?.

UPDATE 16/11/2010 (and posted as comment below)

BT has clarified Ian Livingston’s comments. It says Livingston meant (and was reported in another FT story as saying) that BT would match the public sector’s £830m with £830m from its own resources. This plus the £2.5bn already budgeted would bring to £4.1bn the total available to bring “high-speed broadband infrastructure (NOTE NOT SUPERFAST) to reach more than 90% of UK homes. We think we could get to over 90% per cent of the UK…2017 is not an unrealistic timescale,” BT said.

 
BT went on to say that this figure might creep up to £4.5bn, which it claimed is not too far from the BSG’s estimate of £5bn for an FTTC network.

 
An FTTC network cannot now deliver more than 40Mbps to the home, but who knows what advances in copper technology may bring, even as competitor countries are building 100Mbps and even 1Gbps FTTH networks.

Clear?

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close