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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So how do you move freight using broadband?

Why do countries such as Korea with super fast broadband invest far more than us on high speed rail?

Why not suggest canceling Crossrail (1 or 2) that have huge costs, why focus on HS2?

Why only oppose the first major investment in the railway in the north in over a century whilst ignoring the vast sums spent on Thameslink, Crossrail, HS1, Blackfriars, London Bridge etc?

Like many you've fallen into trap of ignoring why HS2 is planned and only consider investment in southern railway to be worthy.

This was not an attack on HS2,

I merely quoted its lousy ROI compared to broadband.

That RoI is, however, also lousy compared to alternative rail projects. If the objective of investing in rail is to move freight - then we should be upgrading the lines from Felixstowe, Tilbury, Bristol and Southampton to Birmingham and North and from Liverpool to Hull via Manchester and Leeds, with spurs to Leeds, Glasgow and Newcastle. I happen to agree with you regarding the pointless disruption at London Bridge but the RoI on Thameslink and Cross Rail are impressive. So too is that on Cross Rail 2 - especially if you include the positive effect on property prices.

P.S. The RoI on plans for a rail freight link crossing the Thames east of London and linking the North to a second Channel Tunnel (reducing the current vulnerability) also looks so good that I am told it does not need Government funding - only permission.

Philip, In spite of my criticism of BDUK's satellite solution, I agree that if satellite gets farmers out of a hole, it's a good stop-gap. My fear is that once deployed it will become a permanent solution. I wonder what Tessa Munt thinks about this. her All Party Group on Democracy will be discussing this in a few days. from the link below she seems rather keen on it.



The ROI for HS2 is identical to Crossrail, odd you chose to ignore that.

Why not compare broadband to a London project?

The WCML is full, no room for more freight, given this, if you hope to move more freight between our largest cities to Hull, Folkstone etc and don't plan to invest in HS2 what's the alternative? Send it all down the busy motorways.

How do you suggest additional commuter services into Manchester, Leeds and Brum are EVER going to be possible without HS2? They won't, truth be told such issues tend not to worry anyone down south.

Love how those in the south always ignore the vast sums spent on their area then kick up a right stink when it's suggested money is spent to improve capacity on the north railway.

If there are better ways to create that capacity for freight and commuter services in the north then please share them, after 5 years those opposed to the scheme have offered nothing, hence the strong political backing, there are no credible alternatives.

The figure quoted in the Public Accounts Committee was for HS2. The RoI for improving broadband in London is also much higher than the national average. I accept that the West Coast Main Line, like Heathrow, is full and needs to be bypassed. Hence my support for upgrading the alternative routes from Tilbury and Felixstowe and the new East of London freight crossing linking them to the Channel tunnel. It is the cost of driving a new line from King's Cross through the Chilterns to Digbeth which drags down the HS2 RoI. I do not understand why new commuter services into Manchester, Leeds and Brum depend on HS2.

P.S. I am on record, in another forum, in support of a high speed circuit serving the Northern Do'nut (Manchester, Stoek, Derby, Nottingham, Sheffield, Leeds, Bradford, Huddersfield) with spokes to the rest of the UK - in preference to HS2 - which would merely suck ever more vitality out of the rest of the UK into London. I am a Londoner, born and bred, hence my concern over London's broadband compared to that of its overseas rivals, but the current imbalance is unhealthy and serves no-one except our overseas competitors who merely want branch lines (fibre or rail) on the periphery of Europe.

Indeed, you seemingly don't know much about HS2.

So you accept the tracks are full yet offer no credible alternative to how to create that capacity? If HS2 isn't a WCML bypass what is it?

Your comments about not understanding how commuter services into Manc, Brum and Leeds are massively helped by HS2 seems to sum up your problem.

Tell me, if the existing tracks are full, how do you suggest new freight and commuter services are ran into these cities? On broadband?

Also, if the line will harm the north economy, why do ALL north chambers of commerce support the scheme? I guess you're another southerner who understands the north economy better than those that run companies up here?

Out of interest, how many mayors in France, Germany, Spain etc ate campaigning for their high speed connections to be slowed down given the harm it brings to their economies?

Did you oppose the WCML upgrade on the basis that faster, more frequent services harm the north?

We need more capacity, for freight, for commuters and for intercity travel, HS2 is the best and only credible option, like many southerners you seemingly detest the idea of investment in the north, ignoring the benefits and inventing negatives.

By the way, you didn't say why you didn't oppose Crossrail when it has same cost / benefit calculation? Is it in a more favorable part of the country for your liking?

I do not claim to know the detail of the latest case for HS2 . I did, however, read and support the Department for Transport "Longer term Vision" for the Strategic Freight Network and the planned investments to remove traffic from the bottleneck of the WCML. I have also seen proposals for upgraded commuter services into the Northern Cities, as well as upgrades to transpennine services, from lobby groups which argue these should have priority over HS2. I have also seen proposals that HS2 should begin with the links from the North to Birmingham.

I should perhaps add that I do not oppose investment to address the bottleneck of the WCML. I "merely" quoted the Vice Chairman of the Public Accounts Committee in saying that the RoI for Broadband is ten times better than that for HS2.

It may also be worth noting that thanks to investment in broadband to serve Manchester we have media companies moving from Soho to Salford to join the BBC and to Trafford to join Granada in what is set to become a global (not just UK or EU) multi-media hub served by the UK's only other twin-runway airport.

I did not say that I opposed HS2 or the need to releave pressure on WCML. I quoted the Vice Chairman of the Public Accounts Committee on its RoI compared to that of Broadband. I would, however, be interested in the sources you used for comparing the RoI on Cross Rail with that for HS2 as currenlty proposed. I cannot find comparable figures (i.e. using similar bases). The sources I recollect for Cross Rail, when it was a matter of debate, appear to have vanished from the web, amidst a fog of competing claims for Cross Rail 2.

Cancel section 6.2 - CRB of 2.3, the Crossrail scheme is 2.1

So yes, if you want to be picky, Crossrail is LESS value for money than HS2 but we do not see many southerners complaining about the vast sums spent on Crossrail do we? Suggesting that money should be spent on broadband instead? No cause not, only investment in the north should be called into question if it benefits the rest of the nation.

Have a read of what the Northern priorities are with regards HS2 and HS3 -

'Building HS2 early – extending Phase 1 of HS2 to Crewe as envisaged

in ‘HS2 Plus’ and bringing forward delivery of HS2 between Leeds

and Sheffield. HS2 services start in the North in 2026 and the work of

the Lord Deighton Growth Task Force illustrated the scope for early

development and regeneration around stations with HS2 services. HS2

is a key catalyst for northern city regeneration, and not simply a means

to shorten journey times. All of the city regions have plans to be ready

for HS2 and are committed to its success.'

You say you support extra commuter and freight services into Manc, Leeds and Brum then do not support the only credible option to create that capacity into those cities - HS2. So what option do you support to create that capacity? Remember, the tracks are full.

You do not oppose solving the bottle necks on the WCML, so please elaborate, how exactly do you propose this is achieved? Do not tell me, you don't know. Guess what, those who have looked at it came up with HS2 as the best option, it seems most like yourself would rather imagine that those experts in Network Rail are clueless and you somehow know more about railway provision.

Why not suggest we cut the money going to transport in the south east >£2,000 per person / year compared to £5 / person / year in the north east, use that money to invest in broadband?

Seems you are advocating cutting investment in a scheme that ALL northern chambers of commerce and ALL (bar Wakefield) northern councils support. Odd that, but alas very common in this divided nation.