Government Report Reveals Fibre Rollout Limitations

The Government in a new report has warned that one in three houses will miss out on super-fast broadband if there is no public funding or Government intervention in a fibre rollout.

The Government has two aims with its broadband strategy. The first is to ensure a universal 2Mbps broadband speed minimum to all parts of the UK by 2012. For example, it is thought that more than two million people in rural areas currently do not have adequate broadband.

The second part of the Government’s strategy was to roll out super-fast broadband (i.e. fibre) to 90 percent of UK households by 2017.

Broadband Tax criticised as “unfair”

All this would be funded through a tax of 50 pence a month (known as the Next Generation Levy) on all landlines in the UK. However MPs from all political parties have recently slated the government’s proposed 50p ‘broadband tax’, labelling it ‘unfair’ and saying that most of the people who would pay the tax would not benefit from it.

The Government is hoping that its broadband tax will push coverage to 90 percent, but the tax is only expected to raise around £175 million a year, and has attracted much criticism from the industry, some of whom say the fund will fall a long way short of the amount needed to provide super-fast fibre services to every UK home. BT has already warned that the government’s Digital Britain plans may need rethinking, estimating that the cost of the roll-out will be closer to £5 billion.

To make matters worse, the Conservative Party has already said that it would scrap the scheme, but it has promised speeds of 100 Mbps for the “majority” of homes by 2017 by using money from private investors.

But the Government is hoping that its own report on next generation access (NGA) will make the case for its ‘broadband tax’. That said, the Government’s levy would only result in a coverage increase of just 20 percent, over what the free market would provide anyway.

The research for the NGA report was conducted by Analysys Mason Group, which looked at the rollout of coverage if the Government proceeded with its plans, as well as what would happen if it left to market players such as BT, Virgin Media and TalkTalk alone to invest in fibre networks.

Its looked at the scenario of the levy from the broadband tax being unavailable. In that case it predicted only a 45 percent coverage by the end of 2012, which would rise to 70 percent by 2017.

Meanwhile the Government has formed a new fibre optic broadband body. Broadband Delivery UK (BDUK) is set to be responsible for driving ahead with launching universal 2Mbps services by 2012, as well as the introduction of next generation internet services for 90 per cent of the UK by 2017.