08 Jan Gigabit subsidies are a waste of taxpayer dosh | Light Reading
Boris Johnson cuts an even more dishevelled figure than usual these days. The UK’s scruffy-haired prime minister has become a proverbial punching bag for people at either end of the political spectrum as the center ground empties. Hesitancy to return the country to a full lockdown has cost lives, declaims the left. Restrictions risk a future economic collapse, responds the right.
There is little sympathy from the Public Accounts Committee (PAC), a government spending watchdog, which today slammed Johnson’s intervention in the UK’s broadband sector. Weeks before he became prime minister, Johnson envisaged a universal fiber service by 2025. Downgraded from this “future-proof” technology to a gigabit-for-all pledge when he took office, the target was lowered again in November. Gigabit services for at least 85% of the population would do, said authorities. The rest might have to wait a bit longer. But 5 billion ($6.8 billion) worth of taxpayer money was earmarked for connecting the hardest-to-reach 20% of homes.
The PAC is seemingly aghast. Among its criticisms is that authorities have failed to remove several obstacles to fiber buildout, including high taxes and cumbersome planning regulations. It is also upset the government is not prioritizing consumers in rural areas and worried they could end up with a lack of broadband alternatives. The promise of gigabit for all by 2025 has proven “unachievable,” it grandly proclaims.
Things can only get better
What The PAC fails to have noticed is that UK broadband is in better shape than it has been for years. In its 2020 report (published last September), communications watchdog Ofcom wrote that 69% of residential lines are now “superfast” (meaning at least 30 Mbit/s), up ten percentage points since 2018. When Johnson became prime minister in July 2019, full-fiber networks were available to just 8% of homes. Some 18 months later, including ten months of a pandemic, they reach 18% of homes, according to one estimate.
Despite coronavirus, BT, the UK’s telecom incumbent, now covers 4 million premises and is on track for its target of 4.5 million by March. Thanks to regulatory largesse on pricing, it is likely to reach between 65% and 70% of properties by 2025. Nor is it the only investor. Led by Virgin Media and CityFibre, numerous other broadband companies are building gigabit-speed networks.
No doubt, there is still a gap with some of Europe’s most advanced fiber nations, such as Portugal and Spain. But that is gradually shrinking. And despite the UK’s heavy reliance on part-fiber networks, its broadband infrastructure has coped admirably with the deluge of Internet traffic generated during the long months of lockdown.
Whatever the PAC thinks, the 2025 target for universal gigabit has not proven “unachievable” because of any government failure. From the outset, it was no more realistic than expecting Johnson to outrun his Jack Russell. Anyone in telecom could have told that to the committee back in June 2019, when he first wrote about his broadband vision.
Moreover, with nearly everyone either working or studying from home, it is perfectly reasonable to prioritize urban over remote areas. Far more important than funds for the countryside is removing some of those obstacles that prevent broadband services from being deployed in the towns where most people live. Even with enormous subsidies, rural places will never enjoy the same quality of broadband as big cities, or have as much choice, for the same economic reasons the countryside lacks supermarkets and nightlife.
This has been obscured by the crazy notion that high-speed connectivity is a basic human need, much like running water or central heating. It does not require a gigabit connection, or even a superfast one, to order food on Ocado, send emails, read an online news story or do most jobs.
In fact, it does not require a fixed line at all. Two articles for Light Reading were recently uploaded to its content management system from the Tatras Mountains in northern Slovakia, using a 4G smartphone tethered to a laptop. Including that mobile technology, superfast services are now available to 96% of UK premises, according to Ofcom. Subsidizing gigabit rollout so the owners of expensive cottages in the Peak District can binge on Netflix in high definition is not a worthy use of taxpayers’ dosh.
Who needs a gig?
This is all terribly short-sighted, gigabit enthusiasts will say. Countries that invest in higher-speed connectivity have always reaped the economic dividend and more advanced applications will eventually need full-fiber networks. But that does not mean there needs to be some kind of universal service obligation for gigabit. Even where it is available, there is little evidence of pent-up demand for a gigabit service, despite affordable rates. In September, when BT’s full-fiber rollout had reached about 3.5 million homes, just 655,000 of those lines were being used.
Promising universal fiber or gigabit was a rookie mistake by Johnson in 2019. Besides ignoring the logistical challenges and costs, it assumed there was a pressing need for ultrafast connectivity in the most remote places. A handful of business owners in the sticks might crave a gigabit connection. But if gigabit is so critical to operations, relocating those businesses is probably more economical than a rural rollout funded by coronavirus-hit taxpayers. After all, businesses are used to finding areas that tick the important boxes. No one would set up a boatyard in the Scottish Highlands, or head to London for low-cost labor.
Johnson’s top gigabit priority should be to clear the way for the private sector. The PAC is probably right to criticize the government over planning regulations and a fiber tax, which have been sore points for BT and CityFibre in recent years. The private sector has already shown it can satisfy the majority’s needs. Improve the conditions for investors, and it could do even better. For the rural minority, subsidies for connectivity should certainly be available. Just drop the gigabit mandate.
Iain Morris, International Editor, Light Reading