Access to superfast broadband has a return on investment 10 times that of HS2

In December 2014 the House of Commons Library producing a briefing for MPs which showed the current state of broadband availability by constituency  and in January 2015 the National Audit Office produced an update report  to aid the recent Public Account Committee review. Meanwhile the draft Ofcom Annual Plan  indicates that the new regime (with Dame Patricia Hodgson as Chairman and Sharon White as CEO) is likely to take a rather more robust approach to measuring broadband performance (in every sense of the word) and competition, particularly with regard to services to business (large and small, urban as well as rural).

According to the analyses at the back of the House of Commons Briefing “superfast”, i.e. over 30 mbps, is available to only 31% of properties in the Cities of London and Westminster (putting the constituency 591st) while 32% have it in West Dorset (587th). BT has told Westminster Council and the Corporation of London that this is because Central London is “uneconomic” because of the high proportion of business properties. Hence the widespread welcome for the news that Ofcom is finally going to investigate the way that BT is protecting its shrinking revenues from business, including public sector users 
 
I am grateful to Patrick Cosgrave for drawing my attention to the comments of Richard Bacon (Con. Norfolk South and Vice Chairman of Public Accounts Committee) during their recent hearing on Rural Broadband : “You’ve [i.e. BDUK] got £1.7 bn to spend and your cost benefit ratio is 20. HS2 has £42.6bn (in fact more as this figure excludes the rolling stock) but its cost benefit ratio is only somewhere between 1.75 and 2 . Your cost benefit ratio is 10 times more yet HS2 is getting 25 times more money. When I asked Philip Rutman, Permanent Secretary for  the Department of Transport,  if they’d considered putting broadband everywhere (admittedly I had to ask him eight times) he finally said No, they hadn’t. The fact is they’ve got 25 times more money but your cbr is 10 times more than theirs. This is a policy issue and shouldn’t you [BDUK] be doing a better job negotiating more money from the Treasury?”
 
In his newsletter on Shropshire Broadband, Patrick summarisef the following discussion as “Sue Owen of BDUK then agreed that this would be a topic of discussion in advance of the March budget. BDUK’s CEO, Chris Townsend, sitting beside her, smiled wryly at this but did not comment. As he had described with some enthusiasm earlier in the meeting that the solution for excluded rural areas will be satellite broadband, perhaps it should be a focus of broadband campaigns across the country to make it an election issue to press for a better deal now that this outcome is likely, and the comparison of pound for pound benefits between two major infrastructure projects is known.”  I am also grateful to Patrick for his summary of the other points made during the discussion and for drawing my attention to a review by Mark Jackson which put the discussions into context – making this blog much easier.

Patrick was disappointed at the news that satellite provision is likely to be the method of meeting the 2 Mb guarantee by the end of 2015. Given the availability of deals like that between the NFU and Avonline for 15 – 22 mbps to farmers I happen to belive that was a sensible and long overdue decision. I am told, however, that there are now issues, however, with regard to service in areas where demand for satellite services threatens to exceed current capacity. The implication appears to be that this should be reserved for areas where there is no realistic alternative. I hope that the meeting being planned for later this month by the Digital Policy Alliance and All-Party Space Committee will provide an opportunity to brief those MPs and candidates for whom this topic is important – including on the need to support investment in increased satellite capacity.
 
Patrick’s summary of the other issues addressed during the PAC meeting included:    
*    large numbers of rural pockets completely left out
*    rural small businesses largely by-passed
*    all farmers having to be online by April this year
*    alleged cherry-picking by BT of areas that are most profitable for them
*    upload speeds rather neglected
*    allegations that BT is by-passing rural industrial estates because leased lines are more profitable.
*    still no competition in Phase 2 contracting despite assurances from BDUK last January that this would not be the case
*    BT not prepared to disclose all costs local authorities  not permitted by BT’s gagging clauses to compare costs
*    BT not overcharging so much for cost of green cabinets in Phase 2 (at least some good news) and £92m of savings have been identified to plough back into projects
*    no real potential for BT to work working in partnership with alternative providers to create tailored solutions
*    BDUK can provide PAC details of exactly who will not be upgraded (we will pursue this via an FOI if necessary)
*    how/why did BDUK let BT get away with all this in the first place, leaving local authorities at the mercy of BT’s immensely superior commercial acumen?
*    is BT abusing its monopoly situation?

Patrick was particularly interested by the question of how many so-called “upgraded” premises will actually benefit from superfast (24 Mb+) broadband?  The BT representative couldn’t provide that figure, but said he would take the question away with him and get back to the chair.

I am personally interested by the how the estimates of the cost of national broadband rollout keep rising while the cost of building and upgrading networks to serve specifc communities falls month on month – as competition grows from players using internet age technologies and architectures. Before criticising the original BDUK/BT cost estimates we should remember they were based on extending a network that was planned in the 1980s to bring broadcast quality video to the home by 2002 – before the changes in communications technology brought about with the rise of the mass market internet. Those changes are now accellerating as we move into a world where everything is inter-connected

Today the largest component in network upgrade costs appears to be wayleave and access charges, followed by management overheads. Even civil engineering costs come a poor third.  Hence my immediate focus on bringing property owners and network operators together to test the practicality of agreeing win-win shared solutions to take 80% (and sometime even more) out of the cost of addressing not spots. This week we have the first meeting of what I hope will develop into a neutral umbrell a for co-operation wherever players are more concerned with getting a share of the revenues from economic growth and job creation than defending past the business models of the past. We know the problems we will face. Hence the strategy of beginning with those who stand to gain most from success, whether or not others choose to join or copy them. I have asked the Digital Policy Alliance to provide a neutral umbrella. Those wishing to participate who have not already received an invitation should join the DPA and state that this is one of their priority areas. My own contributation on via DPA advisory board is uncharged but I cannot ask them to do work which is not supported by paying members who want to achieve practical results,     
 

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