Thursday, July 15, 2010

Openreach: NGA for UK will cost £2bn - a challenge to Jeremy Hunt?

The BBC reported earlier this evening that "Steve Robertson, chief executive of BT Openreach, told BBC Radio 5 Live that the goal (of rolling out next generation access for the UK) cannot be achieved without public funds of around £2bn."

The timing is interesting - the evening before Broadband Delivery UK's eagerly awaited industry day, at which Jeremy Hunt will challenge industry to address both universal service and next generation access for the UK. In Robertson's view, the money could come from local authorities, central government or the European Union. Openreach is spending £2.5bn installing fast broadband services to around two-thirds of UK homes - more information about their intentions here.

To date the coalition government's plans have include much more modest funding in support of broadband; this is from the coalition agreement published on 20 May 2010:
"We will introduce measures to ensure the rapid roll-out of superfast broadband across the country. We will ensure that BT and other infrastructure providers allow the use of their assets to deliver such broadband, and we will seek to introduce superfast broadband in remote areas at the same time as in more populated areas. If necessary, we will consider using the part of the TV licence fee that is supporting the digital switchover to fund broadband in areas that the market alone will not reach."
More in this previous post. The governments of other countries are putting much more public money into broadband provision - Australia and the USA are just two examples. Whilst I'm sure Robertson's remarks are based in part on self-interest, as Openreach clearly are a (the?) major player in delivering NGA across the UK, I think they're also a simple acknowledgement that building out a new infrastructure is expensive and complex.

Is the coalition government simply being naive in thinking we can get to where we need to be without public investment of the scale Robertson describes? My own view is that existing public sector broadband infrastructure has a big part to play in facilitating the roll out of NGA across the country, as I've discussed previously here, but even this won't come cheap. Significant additional investment will be required to consolidate and extend the networks currently serving schools, libraries and other public sector institutions to support homes and businesses not currently provided for by the marketplace.

This provides an ideal vehicle for public monies, as they would be used to support an existing public asset. The private sector would clearly get much of any committed funds (it would be similarly naive to imagine otherwise), but via an informed, hands-on commissioning approach through which I believe everyone wins:
  • individuals and businesses currently lacking service gain access to broadband;
  • schools, libraries and other public sector bodies benefit from an improved broadband infrastructure, providing them with better service and a broader range of functionality;
  • government demonstrates prudence and insight in delivering its policy objectives for broadband in a way that exploits local knowledge and opportunities while clearly demonstrating value for money;
  • the private sector receives the funding to support investment in NGA services it's long been clamouring for.
What, as they say, is not to like in such an approach? Tomorrow looks set to be a very interesting day; let's hope it's for the right reasons.

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