One thing the UK’s prime minister has done in the first few weeks of his administration is to get everyone talking about fibre. For some years now, the government has been setting targets for full fibre rollout, which have been impractical and consistently missed.
Johnson says he wants a “full fibre” ultrafast broadband nationwide by 2025. May’s government was going to deliver FTTP to 10 million premises by 2022. Oh sorry, 15 million by 2025. Or was that nationwide by 2033? (Heads up here, the first 10 million is easy. Once you get past 80% if gets much, much harder.)
Government has to stop listening to established telecoms players, and start thinking for itself. To do this it needs to get educated on one of the biggest and most significant industries in the country. You’d think given all the special advisors they have floating about, at least one would have some knowledge of the telecoms industry. It all makes you wonder.
As we pointed out in Flexible working still a huge opportunity for B2B telcos the benefits of better infrastructure to the business market, the environment and telecoms providers themselves is immense. Working from home and collaborating online saves 44 trees worth of carbon per person per year. Yet the UK is way behind rival economies in terms of its fibre penetration.
But politicians – many of whom never seem to leave London or understand the reality of life in places like the rural parts of Northern England – seem clueless about how this process is going to work in rural areas and small towns. After all, the problem is not our backbone infrastructure, but our ‘last mile’. The reality is that this is still hugely dominated by BT Openreach and, in parts, its duopoly with Virgin Media or KCOM. The industry is building out alternative infrastructure, but it has to do this in an economic way and it costs a lot of money and takes time. Are we going to undermine the Altnets that have committed to doing this, create a new cosy oligopoly/duopoly/monopoly situation, and continue to subsidise the Big Incumbent Networks?
We now read that BT has seen the opportunity to push for a copper switch off. Of course it has.
To be clear, that means that every premise has to either have fibre or 4G/5G connectivity or possibly satellite connectivity in very remote areas. Although, of course, the reportage only mentions fibre.
BT knows it is going to have to move to full fibre, and that it will save money in running costs when it switches off its legacy network. It also knows that the copper was essentially free (paid for over decades by the government-owned GPO) but is valuable today (which is why people dig it up and sell it).
Suddenly Openreach is talking to the industry and to the Department of Culture, Media and Sport for copper switch off by 2027, at least according to a report by Sky News. They have costed this at £30 billion and Philip Jansen believes that he can switch off each of six zones as FTTP/FTTH reaches 100%. Of course, we all know that we can pluck figures out of thin air and tantalise politicians with them, but the reality is somewhat different to the headlines.
The industry has obviously noticed that part of the £3.6 billion “towns fund” will be diverted into telecoms. We don’t know how much yet, but there’s a lot of lobbying to maximise what it gets. The government is already committed to spending £650 million on full fibre broadband by 2021. Clearly, certain players want that figure to go up.
But how fair is it to let BT Openreach dictate the terms, organise the industry and push its view of reality?
CityFibre’s Greg Mesch is one that thinks this is not exactly fair. He’s reported as saying that there’s too much emphasis on BT Openreach as the mechanism for moving from copper to fibre. I agree with him. Either we renationalise – yes I actually said the R word – Openreach and the government runs it, or we accept it as a private business that has to fund its own rollout. We should not overlook the fact that it has a copper mine buried beneath the ground that it did not pay for but which will appear as a nice line item on its accounts in the next five years.
I don’t think for one minute that renationalisation of the network is a sensible way forward. So the question is, why is the government shoring up Openreach’s grip on the last mile? It can’t argue against market dominance with one head, and then act to continue that dominance with another. It can’t tax the industry billions for licences, bleed it for other taxes and force prices down, and then expect it to have surplus cash to invest in networks. It can’t take from the industry as a whole but only give back to certain players. It can’t commit to working with SMEs and smaller firms at one moment and then give the biggest bites of the cherry to the biggest firms the next day.
By definition, if the taxpayer is going to subsidise some of the rollout then that cash should go to local buildouts part-owned by the taxpayer (eg councils) or built by local firms. The money should be loaned not lost. Isn’t that the principle of public-private ownership, or does that only work when industry is giving government money?
As I read about the backroom shenanigans currently going on with the DCMS, I once again rolled my eyes. Does no one in government have the measure of the industry yet? Can no-one think differently? It is very hard to believe that we are going to encourage efficiency if we continue to subsidise rollouts. It also means that the wrong technologies might be used because we do not use the most efficient, but the one that is being targeted (in this case fibre).
The industry knows that the UK will need a mix of different approaches to get everyone a fast internet connection. The priority should be to deliver that to businesses first, consumers second. It should be to set speed targets that are realistic, not define network technologies to achieve these or over-egg the speeds required. It should be to have a rolling UK network strategy for the next 20 years, rather than changing plans every time we change administration. It should be to hold the industry accountable, to reward companies delivering high levels of satisfaction, and to encourage the least amount of subsidy. We need to understand and agree the core goals for a better infrastructure. To my mind these are not primarily B2C but to make our economy more productive, competitive and environmentally-friendly. And we need metrics put in place to ensure industry players hit these goals or pay for it.