Are Governments Over-Investing In Fibre?

Fibre optic broadband has come under a double attack in the past week.

First mobile operator Vodafone released a report, claiming that governments were investing unnecessarily in fibre optic networks, when they should be focusing on extending the reach and capability of mobile networks. The operator said that the current level of investment in fibre was unsustainable – particularly in emerging markets – due to the high cost of deployment in rural areas.

Then, at a satellite broadband event in Brussels yesterday, the managing director of the Association of Telecommunications and Value-Added Service Providers (VATM), Jürgen Grützner, criticised the public sector for pouring money into fibre deployment, claiming that this creates an uneven playing field for alternative solutions, such as satellite broadband.

While it is perhaps unsurprising that these two sectors feel hard done-by, given the apparent favouritism shown by governments towards fibre broadband, they may also have a point.

UK fibre investment

In 2010, the coalition government announced its ambition to give Britain “the best superfast broadband network in Europe”, scorning the previous government’s commitment to a “paltry 2Mbps” universal net speed. It followed this up with an investment of £530 million, and a stated ambition that 90 percent of UK citizens should have access to at least 25Mbps broadband by 2015.

“No single technology will be suitable for all circumstances, and a mix of technologies – fixed, wireless and satellite – will be needed if we are to deliver on our ambition throughout the UK,” said culture secretary Jeremy Hunt, during a speech on ‘Britain’s Superfast Broadband Future‘ in December. “But at the same time we recognise that taking high-capacity fibre deeper into the network is likely to be key – which is why our goal today is very simple: to deliver a fibre point in every community in the UK by the end of this parliament.”

While few would dispute that fibre offers significantly faster download speeds than other broadband services, it is one of the more expensive options because of the high cost of digging up the roads, and is therefore uneconomical in many remote areas of the country. Last year, the former head of research at BT, Peter Cochrane, said that the country would need to invest up to £15 billion to get all homes and businesses on a fibre broadband network.

Matthew O’Conner, chief operating officer at satellite company Avanti, suggests that the government should be subsidising broadband technology that is already in place in these remote areas, rather than than spending millions on new fibre optic networks. In the case of satellite, for example, the infrastructure is already in space – it is simply a question of turning the service on where it is needed.

“If you subsidise the digging of a trench, the laying of a duct, the blowing of a fibre, you have to hope someone is going to take the service at the end,” said O’Connor. “Alternatively, you might think about a system where someone signs a contract to say they will take and pay for this service, and then you help them with the capital cost – at which point every single penny is supporting a broadband connection. Not the hope of a broadband connection.”

Cornwall superfast broadband project

One area where a lot of money is being invested to close the digital divide is Cornwall. In September 2010, BT and the European Regional Development Fund announced a £132 million investment to roll out super-fast broadband to up to 90 percent of homes in the region.

BT revealed in March that more than 1,000 Cornish homes and businesses had been connected to its fibre optic network, with a further 14,000 customers in the pipeline, but admitted that it would not be relying solely on fibre to complete the project. The company has already said it will use Avanti’s HYLAS1 satellite to get broadband to remote parts of the county, and today announced a partnership with mobile operator Everything Everywhere to trial Long Term Evolution (LTE) 4G technology in the area.

“BT’s view is that fixed line is still the best solution in terms of delivering faster broadband speed, but in some circumstances we do see a role for satellite and wireless technologies such as LTE to bridge the gap,” said a BT spokesperson. “This is a small scale trial to test the viability of this technology in rural areas.”

Speed vs. coverage

The question is, with more than 9 million people still unable to access the Internet in Britain, should the government be focusing more of its efforts on providing universal coverage rather than superfast speeds?

The culture secretary is adamant that fast connection is of vital importance:

“Some people ask why we need these speeds when the iPlayer can manage on less than 1Mpbs. They are missing the point,” said Jeremy Hunt last year. “Superfast broadband is not simply about doing the same things faster. It’s about doing totally new things – creating a platform on which a whole generation of new businesses can thrive.”

Of course speed is important, and it would be unfair to say the government has been neglecting its responsibility to the ‘digitally deprived’. Ofcom has sought to bring down the cost of fibre deployment by forcing BT to share its fibre network with rival operators, and some MPs are starting to consider the role of 4G technologies in extending broadband provision. Europe’s digital commissioner Neelie Kroes also recently spoke of the importance of “using our investment in the EU space industry to ensure satellite plays its role in delivering broadband to remote areas”.

However, the government needs to keep reminding itself that providing universal access is the ultimate aim – even if this is a far harder task than achieving headline speeds. Rather than treating fibre as the default solution for patching so-called “not-spots”, MPs need to work out which solution is best suited to each area, so as to prevent the digital divide from growing any wider.