Darling’s Broadband Sums Don’t Add Up

We suppose it might be an editing slip in preparing the speech, but Alistair Darling’s remarks about broadband don’t add up.

In the pre-budget report, he promised next generation super-fast broadband (which usually means 20Mbps) to 90 percent of homes by 2017, and said: “This will be funded through a duty of 50 pence a month on landlines which will be included in the Finance Bill.”

Now, 50p a month from Britain’s 34 million landlines adds up to around £200m a year – so by 2017, the levy will have raised around £1.6 billion.

This is roughly the same as the £1.5 billion BT plans to use to connect 40 percent of Britain’s homes with its next network upgrade which will take fibre to roadside cabinets in Britain’s most populous areas.

But the Government’s plans, taking super-fast broadband to the next 50 percent of the country, will take an awful lot more money, because next-generation broadband does need fibre, and the next 50 percent of people live in smaller towns and villages. The fibre has to go to much further, and reach more places to get them hooked up.

Taking fibre there will cost a great deal more. That’s why BT is stopping at the 40 percent mark, and says the rest are “not economic”. That is why – frustratingly – Virgin is offering fast broadband to the same people.

Rural Broadband

The fact is, that there is not one broadband crisis, but two. As well as a need for fast broadband, we have a need for greater broadband coverage – to get any sort of broadband to the people in rural areas.

The Digital Britain report, which first proposed the broadband tax earlier this year, tried to address both these area – and the Government promised a universal service of 2Mbps. That’s far short of any next generation broadband, but getting it to everyone in the country would be as impressive as getting super-fast service to half of us.

The Government has been very quiet on how to fund rural broadband, and it seems the silence continues in the PBR.

Fast Broadband And Downloaders

But the economics of fast broadband are even more tangled, if we take into account the government’s proposal – in the Queen’s Speech – to get tough with persistent filesharers. Threats to cut them off the net may help curb copyright violations, but they could also cut the demand for fast broadband services. Many people want faster broadband so they can download content – and this would reduce their ability to do that.

Copyright theft is not a good thing, but in the long run, the music and media industries will have to provide cheap and easy sources of honest downloads, and the net cut-off plan may allow them to delay this – thereby decreasing the demand for broadband.

Giving the media industries the punitive content-protection they asked for will discourage them from opening up to 21st century business models. That will depress the demand for fast broadband, and slow the commercial roll-out, leaving more of it to be subsidised by the broadband tax. And that will make Darling’s sums even more wrong.

Peter Judge

Peter Judge has been involved with tech B2B publishing in the UK for many years, working at Ziff-Davis, ZDNet, IDG and Reed. His main interests are networking security, mobility and cloud

View Comments

  • The proportion of broadband lines with a speed above 8 Mbits per second - the current benchmark for connection quality and sophistication - was just 10 percent in the UK, compared to 37 percent in the Netherlands and 33 percent in Sweden in 2008. The leaders of the pack, Japan and South Korea are currently providing speeds up of to 100 Mbits per second to above sixty five percent of their populations (Sources: OFCOM, IT&IF).

    History shows that close public-private partnerships have worked in the past, evidenced by ring-fenced funds at the early stages of the innovation cycle to kick-start new infrastructure, promoting a critical mass of users that will boost further demand of new services, and entice private investors to jump into the competition band wagon. New regulations should be aimed at fixing market failures and provide economic incentives to increase competition - as shown by the experience of unbundling for instance.

    The shape and scope of renewed public-private partnerships might differ slightly from the above, but the core principles of boosting demand, enticing supply, and shaping a healthy competitive environment - paramount for long term success - should remain the same.

    http://www.foresightnorth.com/node/23

Recent Posts

US Finalises Billions In Awards To Samsung, Texas Instruments

US finalises $4.7bn award to Samsung Electronics, $1.6bn to Texas Instruments to boost domestic chip…

4 hours ago

OpenAI Starts Testing New ‘Reasoning’ AI Model

OpenAI begins safety testing of new model o3 that uses 'reasoning' process to ensure reliability…

4 hours ago

US ‘Adding Sophgo’ To Blacklist Over Link To Huawei AI Chip

US Commerce Department reportedly adding China's Sophgo to trade blacklist after TSMC-manufactured part found in…

5 hours ago

Amazon Workers Go On Strike Across US

Amazon staff in seven cities across US go on strike after company fails to negotiate,…

5 hours ago

Senators Ask Biden To Extend TikTok Ban Deadline

Two US senators ask president Joe Biden to delay TikTok ban by 90 days after…

6 hours ago

Journalism Group Calls On Apple To Remove AI Feature

Reporters Without Borders calls on Apple to remove AI notification summaries feature after it generates…

6 hours ago