The great broadband race - has BT's broadband infrastructure spend been overtaken by that on 4G?

Bill Broadband pointed out that “spending over three billion pounds on SFBB is a lot of money” when I retweeted a BBC article on the extra £billion that BT has just committed to its content operations . The top and bottom rated comments in response to Robert Peston’s analysis on whether BT overpaid for the rights to the Champions and Europe Leagues and on the consequences for other players, including the BBC, make for interesting reading. But are they correct?

This caused me to look at who is currently spending what on broadband infrastructure and content.

In September BT issued a series of press releases which talked about its “£2.5 billion commercial roll out of broadband”. Presumably the  difference between that and “over three billion” is “non-commercial”, i.e. the £500 million of state from BDUK and the additonal contibutions from local government. Meanwhile BTs new partner , EE (currently owned by France Telecom and Deutsche Telekom) is spending £1.5 billion to upgrade its infrastructures and claims to be on track to get 4G to 98% of the population by the end of 2014. 

For comparison, Vodafone is spending over a £billion this year in the UK (up from £600 million last year) on infrastructure to handle 4G and on upgrades to the Cable and Wireless network. To this should proably be added the £3 billion of “Project Spring“, although it is unclear how much of that will be spent in the UK. That is a timely reminder for politicians and regulators that the UK is competing with other nations for investment funding in this, as in other  industries.

Vodafone’s UK infrastructure sharing partner Telefonica (O2) is currently  £1.5 million a day (over £500 million a year)  on upgrading its infrastuctures and has just won a £1.5 billion contract for the Smart Metering communications infrastructure over central and southern England.

We also need to add the spend of “pure infrastructure” players,like Arqiva, who not only provide the masts used by most others for trunking, as well as for the emergency services and terrestrial broadcasters but have just won a £600 million contract to provide the communications infrastructrure across the North of England and Scotland.

The press cover that I collated in about an hour of Googling appears to indicate that BT is investing a £billion a year of its own funds in broadband upgrades while its mobile competitors and partners and “pureplay infrastructure operators” are spending somewhere over twice that.

Meanwhile BT is spending over £500 million year (£1.6 million over three years) on the Football (Premier, Champions and Europa Leagues) alone. It is unclear quite how much it has committed in total to its content operations – or how much of that it will get back under cross licensing deals. The total does, however, look akin to that which has committed to broadband infrastructure. BT appears to believe it is a better use of shareholders funds. We will see how investors as well as competitors and, most importantly, customers react.

The test will be whether BT continues to win new customers at the rate it has over the past quarter (150,000) and whether this is more that just that which one would expect from roll-out for BT Infinity.

One consequence of recent deals is that Sky is putting the money it no longer spends on Sport into original content (The Tunnel, Dracula etc.), thus increasing the pressure on ITV and further weakening the BBC position vis a vis those attacking the license fee.

This raises the question of whether the BBC should be seen as a public service broadcaster or a would be global commercial (e.g. BBC Worldwide) and Internet (iPlayer) player. Its global competitors no longer give it the benefit of the doubt when it comes to intellectual property rights and cross-licensing content deals. Thus not all that is transmitted by the BBC is available over the Internet on iplayer and iplayer itself will not initially be available on the new XBOX – presumably for the same reason it is not available outside the UK . It would appear that the BBC has not yet been able to persuade Microsoft that this will lose sufficient UK customers for it to be worth segmenting its global offering. If (big IF) Microsoft is correct, that says something profound about the nature of the BBCs audience as a shrinking subset of the UK population – and about the success, or otherwise, of its attempts to reverse that decline.

This is turn, raises the question of how far we can look at any of the issues related to broadband (infrastructure or content) as though the laws of physics (or economics, or copyight) change when you cross the English Channel (e.g. Dutch community broadband services), North Sea (e.g. Swedish mutuals like Stokab) or Atlantic (expensive local monopolies interspersed with cut throat competition between rival utilities).  

We live in interesting times.

One thing is certain – the UK has the potential to be a globally competitive digital market. Whether it has the will, is a different question. 

P.S. Daily Mail readers comments show a clear pattern on the sports deal 

while Guardian readers are split