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UK broadband industry ‘confused’ by government funding claims

National broadband suppliers and trade bodies express surprise and lack of enthusiasm for Spending Review claims of providing positive outcome for gigabit roll-out across the country

The UK government’s Spending Review on 25 November has cast a pall over many industries in terms of future cutbacks, but in making its announcement, the government called out broadband and mobile infrastructure as areas of added investment going forward.

But as the dust settles, trade bodies and service suppliers in the communications industry have expressed concern that the review has basically repeated previous commitments and actually given notice of forthcoming cuts.

As he announced the Spending Review, chancellor Rishi Sunak promised to build a “stronger future” and transform the country’s infrastructure. With public borrowing having increased to £372bn during the Covid-19 pandemic, the economic forecast has changed dramatically from what was envisioned in the March 2020 Budget, weeks before the pandemic took full effect. Since then, the economy has experienced the sharpest contraction since the Great Frost of 1709.

And within minutes of Sunak delivering his statement, the Department for Digital, Culture, Media and Sport took to social media to emphasise that the chancellor had promised to get gigabit to homes and businesses, investing $5bn to support the roll-out of gigabit-capable broadband across the UK by 2025 and would invest £250m on 5G supply chain diversification as well as ensure that 95% of the country could receive 4G mobile by 2025.

However, the 4G and broadband commitments were really confirmations of previous announcements. In March 2020, the government confirmed that, working with the UK’s mobile operators, it would introduce the £1bn Shared Rural Network project, which aims to take 4G coverage to 95% of the UK landmass by the end of 2025, with coverage increasing in some areas by more than one-third.

Two days later, Sunak’s March Budget statement confirmed the government’s commitment to invest a total of £5bn to roll out full-fibre broadband across the country.

Industry reaction to the Spending Review statement has been less than effusive. The Independent Networks Cooperative Association (INCA) said it was “surprised” by the statement, adding that confusion reigned over whether the government’s self-imposed target for delivering gigabit broadband to 100% of the country had changed and the original commitment to provide £5bn of public funding for hard-to-reach areas had been watered down to £1.2bn.

INCA noted that the target date of 2025 for 100% coverage across the UK was set by the prime minister originally as full-fibre coverage, but was later changed to include Virgin Media’s cable network and some wireless broadband services. But INCA pointed out that the National Infrastructure Strategy, published as part of the Spending Review, had changed the target and that the chancellor allocating just £1.2bn in the 2021-25 period came as a surprise to all in the industry.

“Reaching 100% by the end of 2025 was always going to be difficult,” said INCA chief executive Malcolm Corbett. “The government has recognised that completing a full commercial build and tackling the subsidised harder-to-reach areas at the same time is very challenging. Our understanding is that the £5bn of funding committed in the National Infrastructure Strategy is ring-fenced and if more of that funding can be brought forward into the Spending Review period, that will happen.

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“INCA estimates that investment in the challenger firms will reach £7.7bn by 2025/6, taking the total private investment to around £25bn, including BT/Openreach and Virgin Media. This investment is based on the expectation that government will play its part, too.”

One company that specialises in, and has shown success in providing fibre broadband to so-called hard-to-reach areas has been West Country ISP Truespeed. Assessing the impact of the Spending Review, CEO Evan Wienburg said that although the chancellor had not focused on additional full-fibre infrastructure funding, levelling up the UK’s digital divide remained a priority.

Wienburg added that the pandemic had amplified the digital divide, with many households forced to work and study from home and struggling with substandard broadband.

“Levelling up in terms of broadband infrastructure is not a case of north versus south, but rather harder-to-connect communities versus major conurbations where the build economics look far more impressive,” he said. “We’re making great inroads in getting the full-fibre show on the road, but we – and other infrastructure providers – still have more to do to be ready for the government’s ‘gigabit for everyone’ grand opening in 2025.”

London-based full-fibre internet provider Community Fibre, which weeks ago claimed a new speed standard for UK broadband by launching what it said was the UK capital’s first 3 Gigabit home broadband service, said the latest announcement indicated that the government would be relying more heavily on private investment into the country’s full-fibre infrastructure over the next few years.

Community Fibre CEO Graeme Oxby said that irrespective of the government’s plans, the private sector investment is already in place for London’s properties to be 100% full-fibre-enabled by 2025. But he warned that this target was only achievable if London’s landlords granted the necessary permissions to bring full fibre to their properties.

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