So, the two key areas for telecoms in this budget are:
- "Full-fibre" broadband, aka fibre to the home (FTTH) or premises (FTTP)
- 5G, the next big thing in cell phone technology
The Government says it wants to "support the market roll out of fast and reliable full-fibre communications for consumers and businesses", which is on one hand excellent news as it's now on the national agenda, but on the other hand.. what does "support the market rollout" actually mean?
The budget statement refers to making "£200m available to fund a programme of local projects to test ways to accelerate market delivery of new full-fibre broadband networks." Full-fibre broadband is where the optical fibres terminate at the customer's premises - which means much faster speeds can be delivered on a more consistent basis to everyone, regardless of where they live.
So who should get this £200m? Should BT? Well, they've just spent £1.2Bn on football instead of investing in their network, so maybe they shouldn't qualify. In any case, their fibre to the home technology, where they provide it, is quite different and slower (300Mbps/30Mbps) than other companies' services but I believe they have plans to change this.
The remarkable community broadband project B4RN could do an awful lot with just £1m, as they quietly go about delivering 1000Mbps or 10,000Mbps (count the zeros - there's no typo) symmetrical services in the rural North West of England. Similar groups such as B4YS and B4RDS using a cookie-cutter style model could also benefit.
Of the more traditional service providers there's Gigaclear, that focusses on rural fibre optic broadband, Gigler based in Portsmouth, and Hyperoptic that focusses on upmarket MDUs, and Cityfibre that's not so much of a service provider but more of an "open access" infrastructure provider for other service providers.
All of these have skin in the game and would be deserving of assistance.
Instead, the budget is suggesting building on public sector assets to reduce risk and costs - shared infrastructure. It's not immediately clear how this will help national rollout of fibre to the home, and we've been in the shared infrastructure space before with PIA (Physical Infrastructure Access) which didn't work out too well.
5G is often touted as the panacea for all telecoms ills. It promises much, but so did 4G and we haven't really got 4G yet either. 5G uses higher frequencies to deliver faster bandwidth but those pesky laws of physics mean that the signals go less distance and have less building penetration capability. So more towers have to be built with more base stations so the signalling system has a chance to deliver its asymmetric 100Mbps/50Mbps service.
This will require a lot more fibre optic "backhaul" to cope with the increase in bandwidth, and all of this won't come cheap as there will need to be tens of thousands of more base stations around the country. Given that our "4G" services already deliver 30Mbps to 50Mbps speeds - is the cost really worth it?
The budget refers to investing up to £16m (why is everything to do with broadband always described as "up to"?) in "a cutting edge 5G facility with the technology to run the trials, delivered through cooperation between leading 5G research institutions." We already have one of these at a research institution, at Surrey University, and it's well worth visiting.
Personally I'd have liked to see something much more adventurous - assistance to deliver Universal Service Obligation (USO) of say 100Mbps symmetrical and inducement to base broadband tariffs not on a hypothetical speed at the exchange or cabinet, but on real world speeds as they are delivered and experienced by the customer. Oh - and something about fibre tax too - there's a playing playing field that definitely needs levelling.
Anyway, the relevant bits (see what I did there?) from the budget are below - draw your own conclusions.
National Productivity Investment Fund (NPIF)
4.15 At Autumn Statement 2016, the government established the NPIF to provide over £23 billion of high-value investment between 2017-18 and 2021-22, with a focus on priority areas that are critical for improving productivity: economic infrastructure, housing and R&D. This built on existing plans for major investment over this Parliament, including resurfacing 80% of the strategic road network and the largest investment in the railways since Victorian times.
4.16 The NPIF provides the financial backbone to the government’s Industrial Strategy, and will:
- support market roll-out of the fast and reliable full-fibre connections that will help businesses to grow
- tackle congestion and ensure the UK’s transport networks are fit for the future
- enhance the UK’s position at the forefront of technological progress globally
- accelerate new housing supply
4.17 This will provide a signifcant boost to the UK’s productivity in the long term. The Budget sets out further detail of how NPIF funds will be invested in priority transport, digital communications and R&D programmes.
4.18 Digital infrastructure – The NPIF will invest £740 million in digital infrastructure by 2020-21, to support the next generation of fast and reliable mobile and broadband communications for consumers and businesses. The Budget announces the first steps towards this ambition.
4.19 5G – The government’s 5G Strategy, published today, sets out steps for the UK to become a world leader in the next wave of mobile technology and services. This includes:
- a new National 5G Innovation Network to trial and demonstrate 5G applications. The first phase will invest up to £16 million in a cutting edge 5G facility with the technology to run the trials, delivered through cooperation between leading 5G research institutions. A new centre of 5G expertise within government will oversee this programme, working with public and private sector partners. Funding for future trials will be awarded on a competitive basis
- the government’s response to the National Infrastructure Commission’s Connected Future report and recommendations on 5G. This will include developing commercial options for improving coverage on roads and rail, and working with Ofcom to ensure the UK has a regulatory environment fit for 5G
4.20 Full-fibre broadband – Starting in 2017, the government will invest £200 million to fund a programme of local projects to test ways to accelerate market delivery of new full-fibre broadband networks. These will combine the following approaches:
- bringing together local public sector customers, to create enough broadband demand to reduce the financial risk of building new full-fibre networks
- offering full-fibre broadband connection vouchers for businesses, to increase take-up of services where new networks are built through the programme
- directly connecting public sector buildings, such as schools and hospitals. This will bring fibre closer to more homes and businesses, allowing them to be connected
- opening up public sector assets, such as existing ducts, to allow fibre to be laid more cheaply
4.21 Complementing the NPIF programmes, the new Digital Infrastructure Investment Fund will be launched in spring 2017. Government investment of £400 million will be at least matched by private sector investors, and will accelerate the deployment of full- bre networks by providing developers with greater access to commercial finance.