Competition fuels BT's rural broadband commitment
BT’s announcement that is will deliver superfast fiber services to 90% of homes in the UK raise a few questions. It seems too good to be true. Why would BT upgrade the network, unless there’s a hard commercial incentive? I doubt many home users will be prepared to pay much more than they do currently for their broadband service; it’s still bought predominantly on price, not speed.
But, of course, BT has a great commercial incentive. It has its own TV subscription service, BT Vision, which needs high speed connections to work. My guess is it will prioritize the areas where it can up-sell BT vision – selling into areas where Virgin Media already has a presence, for example, to compete on price where there’s already a demand.
Superfast fiber broadband is to be commended, of course – but a commitment to selling additional services isn’t much of a sacrifice, really, for BT.
There’s still a huge proportion of the UK that can’t get a decent 2Mbps line at the moment (2.7 million according to Lord Carter’s Digital Britain report), let alone a superfast 100Mbps connection. There are also 683,000 households that can’t receive broadband at all. Whether BT’s vision (excuse the pun) extends to these more remote areas – who desperately need it -, remains to be seen.
In theory, BT and Fujitsu have committed to providing rural broadband access. But their commitment depends on government funding, through the Broadband Delivery UK (BDUK) scheme. This month, Chancellor George Osborne was criticized for his £150 million (€178 million) commitment to extending mobile coverage, while a larger (£530 million) commitment to getting superfast broadband to the UK's rural communities probably won’t be enough without the support of the big carriers.
The cost to access a remote location is significant. Opening a new exchange in a rural area can cost internet service providers (ISPs) in the region of £20,000 which, in relatively sparsely populated regions, doesn’t give ISPs the return on investment they require to sanction the investment; and rugged terrain makes it difficult and very expensive to tunnel fiber into some areas.
If there’s such a need for broadband in rural areas, there must be a way to deliver it, and the solution lies with business, not just government.
The way forward is to make all the networks available via a single, carrier-independent platform, providing access to any of the disparate networks across the UK. That way, the cost of the infrastructure is shared between all the networks, and carriers and ISP’s can make returns on their investment in multiple locations - making rural access commercial attractive for the first time. The first trials are underway, with around 40 ISPs in the UK committing to the scheme. Suddenly, areas that have had no carrier offering broadband, have a choice of ISPs.
We know why BT is interested in fiber. No wonder it’s suddenly coming round to the idea of rural services. If it doesn’t, someone else is going to get there first.
Piers Daniell is managing director of network optimization firm Fluidata