UK broadband funds carry risk

UK service providers may not back cities that opt to spend government superfast broadband funds on alternative technology providers, a leading Informa Telecoms & Media analyst warns.
Principal analyst Rob Gallagher says firms including Sky and TalkTalk have already warned the ten cities receiving a share of a £114 million (€142 million) government pot that they risk becoming digital islands if they choose alternative providers over BT.
“During the first wave of broadband rollouts, much of the government and EU funding to aid the spread of coverage ended up, one way or another, in the pockets of BT. Many local authorities and community bodies that chose alternative options ended up with networks based on technologies that failed to keep pace with the wider market, or devoid of popular service providers such as TalkTalk and Sky,” Gallagher notes.
The UK government last week named the ten cities that will share the latest round of funding in high-speed broadband networks, as it bids to offer the fastest connections in Europe by 2015. The cash is to be used to develop networks capable of offering 100-Mbps data rates, the BBC reports.
Gallagher says alternative providers may compete against former incumbent BT with “business models and technologies that promise consumers, businesses and service providers more flexibility in speeds, costs and other features.” However, he adds that similar projects across the world have “struggled to attract major service providers, which see working with these outfits as an unnecessary source of cost and complexity,” compared to the services offered by incumbents.
Indeed, BT seems to have much going for it, including a well-established wholesale business and associated list of service providers. However, Gallagher points out firms including Sky and TalkTalk “are not exactly over the moon about the limitations and compromises that BT’s next-generation access network will impose on their costs and the features they can offer.”