Communities need to contribute to rural broadband fund

Residents of rural areas lacking broadband will have to add to government and telecoms cash pots to get connected

Rural areas will need to help finance broadband roll-outs if UK schemes for better connectivity are to succeed.

This was the conclusion of Conservative MP Rory Stewart, who spoke at the House of Lords’ communications select committee hearing yesterday on superfast broadband delivery.

Broadband infrastructure providers, such as BT, continue to say the business case is not strong enough for them to invest millions into building out fibre to rural communities for a small number of residents. As a result, government money is needed to cover some of the cost if it is to achieve its goal of the best broadband in Europe by 2015 – a pledge made by culture secretary Jeremy Hunt in 2010.

Stewart claimed, however, that money from these two parties is not enough and it will take extra funding from the communities themselves to make the roll-out work.

“The government isn’t good at working with communities,” he told the select committee, citing the broadband trial in Cornwall, which used a central procurement process from local councils and traditional providers and cost millions of pounds to deliver.

Stewart believes these schemes would be too expensive to replicate across the UK in a bid to get broadband to every front door.

“The assessments vary, but it costs between £10bn and £40bn for centralised procurement to deliver fibre to every home,” he said. “The government has decided to spend £550m.”

Instead, the MP supports local schemes such as Great Asby Broadband, which has managed to deliver a fixed line of 10Mbps to the village hall and provide wireless connections to the small number of residents in the area for a relatively small £60,000.

To work with communities you have to take a risk and put in public money

Miles Mandelson, chairman, Great Asby Broadband

Miles Mandelson, chairman of Great Asby Broadband, also addressed the select committee. He said although Great Asby Broadband was a lot cheaper than the central procurement process, it was still tough to get funding from the government.

“Before you can claim a penny, you have to have spent the penny,” he said, “and it is not easy for small communities to address those hurdles.”

Stewart suggested the government should examine “soft loans” to allow communities to fund their own broadband projects, but get the cash upfront from Westminster.

“To work with communities you have to take a risk…and put in public money. You have to get to a point where you are willing to lose public money,” he added.

“I think the best way to do this is a soft loan. It works out as £600 a home over 20 years, at a low interest rate costing [residents] roughly £25 a year. It puts the risks onto communities…that already don’t have broadband, so the [worst case] is they will still have no broadband at the end.”

Both Stewart and Mandelson believed the communities would be willing to pay to get the service, and this would mean residents weren’t dependent on a single infrastructure provider such as BT or other commercial internet service providers (ISPs) to deliver the services over the top.  

“I believe in the ability of communities to get the fibre deeper and further, [and] the key element to these schemes is the community contribution that allows them to get broadband that wouldn’t have been thinkable [a few] years ago,” said Stewart.

The MP concluded that, although he wished for more money from government or greater commitment from BT, this was the only option he saw for getting broadband to the most remote parts of the UK.

“I am not confident [of the business case] yet,” he said. “The proposals of serving rural communities are still not attractive…without some degree of public money…and it won’t ever be sufficient. Communities will have to put in time and effort and money to plug the gap.”

Photo: Creatas Images/Thinkstock

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