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Budget 2018: No great leap forward for broadband, but no need to panic

The chancellor set aside £1.6bn for digital technology in the Budget, but broadband services did not draw much attention. Is this a surprise, or a reflection of growing commercial investment in full-fibre, and what should the role of government be?

With £1.6bn set aside for digital technology, major investments in quantum computing and artificial intelligence (AI), new measures to support skills development, and a planned digital services tax on web giants such as Amazon and Apple, nobody can accuse chancellor Philip Hammond of ignoring the technology industry in the 2018 Budget.

However, one area where virtually nothing was said during Hammond’s statement to the House of Commons, and little was added in the Budget book, was around the deployment of ultrafast full-fibre – or fibre-to-the-premises (FTTP) broadband services.

At first glance, given the criticality of network connectivity to the UK economy, this might strike observers as unusual. But perhaps it should come as no surprise, given the government set out detailed proposals on how to reach its targets of having a nationwide full-fibre broadband network in place by 2033 back in July 2018.

In the Future Telecoms Infrastructure Review (FTIR), the government set out 10 core proposals to support the development of network connectivity – both broadband and mobile – in the UK.

These include regulatory reform to encourage full-fibre deployment, legislation to guarantee fibre in new-build homes and rental properties, a BDUK-style publicly funded full-fibre roll-out, and better access to radio spectrum to support future mobile communications, such as 5G.

Furthermore, as we have seen this year, ongoing developments on the commercial side – with full-fibre network builders flooded by private equity money, roll-outs advancing around the UK, and Openreach’s Damascene Road conversion to the full-fibre agenda – one could even make the argument that the UK’s broadband sector is in rude health.

So three months on from the FTIR, Hammond focused what little time he had for broadband on two highly targeted announcements.

First, the Budget allocated £200m from the expanded National Productivity Investment Fund (NPIF) to pilot new approaches to full-fibre in rural locations, beginning in primary schools, and expanding a voucher scheme for homes and businesses nearby. This will focus on the Borders, Cornwall and the Welsh Valleys.

Second, the first £5.9m slice of £95m that remains in the Local Full Fibre Networks (LFFN) challenge fund has been released to Suffolk County Council to upgrade full-fibre connections at public sector sites.

Alongside the Budget, two new consultations have been opened to mandate gigabit-capable full-fibre services for tenants of private rental properties and buyers of new-build homes.

Good intentions, limited actions?

While welcoming what news the chancellor did have for the broadband industry, sector observers were as usual quick to note that it is easy to propose such measures, but the putting them into practice required ongoing, continuous focus and investment, not just headline announcements at Budget time, as pointed out by Paul Stobart, CEO of network builder and communications services provider Zen Internet.

“The government can’t stop here if it wants to fulfil its pledge of making access to high-speed broadband a legal right for everyone. In order for the country to use new technologies to grow and prosper, we need to continually invest in the areas that will enable this and broadband is at the top of that list,” he said.

Community Fibre head Jeremy Chelot, one of many businesses to have received government-backed funding to expand full-fibre access, said: “The chancellor has thankfully recognised that basic internet access is simply no longer enough. However, as the majority of the connections in the UK are still copper-based, it is evident that the UK is not yet fully prepared for the digital future…. Adequate fibre broadband is swiftly becoming vital.

“It is therefore not enough to measure success by simple internet connections – the number of true full-fibre connections is the only measure policymakers should be interested in.

“To keep up with these demands, quality true full-fibre broadband must continue to be a key priority for the government. With a greater number of vital services going online and demanding a high-speed connection, strong and decisive action will be required sooner than many anticipate. The chancellor’s announcement is therefore welcome, however it must represent the beginning of a sustained campaign, and not be forgotten about in a few months’ time.”

TrueSpeed CEO Evan Wienburg raised the prospect of government-backed roll-outs coming into conflict with commercial ones, something that was frequently a source of angst for smaller altnet suppliers during the early days of BDUK, when more than once people digging small-scale private network builds suddenly found Openreach taking an interest in the same location.

“Delivering full fibre networks worthy of modern day demands requires enormous  investment. We’re hoping the government understands that whatever intervention they choose in the roll-out, it does not conflict with private investment already pledged to build full fibre networks and doesn’t discourage further private investment,” said Wienburg.

“The announcement should be applauded for backing the roll-out of a full-fibre Britain, which is so desperately needed.”

Finally, EY telecoms lead analyst Adrian Baschnonga called on the government to adopt a more holistic approach to connectivity, and not to rely solely on full-fibre.

“New measures announced in today’s Budget to accelerate the roll-out of full fibre in rural areas are welcome. However, mobile networks, including soon-to-be-launched 5G technology, will also play an important role in boosting connectivity in under-served areas. Going forward, a holistic approach to digital infrastructure upgrades will be vital,” he said.

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