Government Readies New Broadband Investment

The Coalition government is expected to announce this week a new infrastructure building programme for the UK.

This multi-year programme, thought to be worth a total of £30bn, is aimed at boosting the slowing economy amid signs of a new global recession.

One of the areas that Chancellor George Osborne is expected to announce new government money and investment is more funding for rolling out high-speed broadband (read fibre) into the UK. Other investment areas are said to include schools, roads and high speed rail services.

Small Investment

So far in the UK, the government has in reality invested a relatively small sum of money (£530m) into the national rollout of fibre in the UK. Indeed, most of this money has already been allocated, and a further £300 million of government money should be available between 2015 and 2017.

The government has preferred to allow the private sector to do most of the heavy lifting, despite its ambitious goal of making sure that the majority of UK homes get 25Mbps by 2015, and the fact that superfast broadband is (according to the government) vital for ‘economic growth’.

BT for its part has pledged to spend £2.5 billion to roll out fibre-based broadband to two thirds of UK premises by the end of 2015. The company said that already more than five million premises have fibre access and tens of thousands are being added each week.

However it has become increasingly clear that the current funding will only benefit two thirds of the UK at best, and there exists a funding gap in the UK to achieve a full national fibre rollout.

Indeed, one third of the UK, which is thought to include an estimated 9 million homes and premises located in semi-rural and rural areas, are set to be consigned to the broadband slow lane for the foreseeable future.

Limited Resources

Any further government funds are therefore likely to be made available to Broadband Delivery UK (BDUK), which will then allocate the funds to the underserved regions in the UK.

However it is also clear that the government does not have, at this time, the financial muscle in this current economic climate to embark on a national fibre investment program.

In order to get the existing funds to finance this infrastructure building scheme, Osborne is to undertake a £5bn cost cutting exercise for Whitehall and will also take approximately £20bn from the Government’s pension pot.