Saturday, 16 January 2021

UK government lowers gigabit target to 85%: What do the experts think?

by Harry Baldock, Total Telecom
Thursday 26 November 20

Plans to rollout gigabit-capable broadband in every home in the UK have always been ambitious, but is this target reduction to 85% the right move?

Yesterday, as part of a broader spending review, Chancellor Rishi Sunak announced that the plans for 100% coverage of gigabit broadband by 2025 have been reduced to just 85%. While the £5 billion promised for the project remains the same, these funds will be released more slowly than previously planned, with just £1.2 billion to be made available until 2024.   At this year’s Connected Britain conference, the topic of achieving the government’s gigabit targets were addressed by numerous panels, which overall displayed a sense of optimism – provided that regulations were adjusted to facilitate the operators as much as possible.   Organising this regulation is itself huge challenge, a constant back-and-forth between the operators and the regulator. However, despite progress, this target reduction could indicate that achieving the regulatory balance required is too tall an order…

Yesterday, as part of a broader spending review, Chancellor Rishi Sunak announced that the plans for 100% coverage of gigabit broadband by 2025 have been reduced to just 85%. While the £5 billion promised for the project remains the same, these funds will be released more slowly than previously planned, with just £1.2 billion to be made available until 2024.

 

At this year’s Connected Britain conference, the topic of achieving the government’s gigabit targets were addressed by numerous panels, which overall displayed a sense of optimism – provided that regulations were adjusted to facilitate the operators as much as possible.

 

Organising this regulation is itself huge challenge, a constant back-and-forth between the operators and the regulator. However, despite progress, this target reduction could indicate that achieving the regulatory balance required is too tall an order. 

 

"The original target for 2025 was always an ambitious one, but crucially one that industry felt it could deliver with the right enabling regulatory environment,” noted Matt Howett, founder of research firm Assembly. “While progress was made with that, a number of barriers still remain. To depart from the original target with four years still left to run suggests perhaps that mountains can't be moved after all."

 

It should be remembered, however, that estimates typically suggest that UK operators will reach about 70% coverage by 2025 even without government funding.

 

Much of this progress will come from Virgin Media’s ongoing upgrades to its existing network to become gigabit-capable, a process which will reach around 16 million homes, accounting for about 60% of the UK.

 

“Through continued investment, we’re cracking on to turn connectivity ambition into action for the country. We will launch gigabit speeds across our entire network by the end of next year, at a speed and scale unmatched by anyone else, meaning Virgin Media will single-handedly contribute almost two thirds of the Government’s minimum ambition, four years ahead of the target,” said a Virgin Media spokesperson

 

That said, given the ambitious nature of the governments target at the best of times, not to mention the economic pressures of the coronavirus, it will likely come as little surprise to onlookers than this target has been reduced. 

 

“Entirely as expected, I would say,” said Oliver Johnson, CEO of analyst firm Point Topic, noting one of their recent forecasts that estimated only 87.6% gigabit coverage would be reached by 2025 given the current environment. “I think most seasoned watchers were sceptical of the original total of 100% fibre coverage given the funding on offer along with all the other issues. Certainly it’s no surprise that money is being shuffled around in the circumstances.”

 

“It gets challenging and expensive in parts of the UK at least for fixed fibre solutions. That said, we expect to see more from the likes of B4RN and rural communities, where there’s growing demand for gigabit, and there is plenty of scope for 5G and wireless solutions. But there is no denying this is another blow for the UK.” 

 

This view was echoed by Dan Howdle, consumer telecoms analyst at UK mobile and broadband comparison site www.cable.co.uk, who emphasised that this would pose a real problem to rural communities, for whom supplying broadband is incredibly expensive.

 

“100% coverage was, to be perfectly frank, extremely wishful thinking. With a lot of homes in the UK in remote, hard to reach, or economically inviable locations, the greater the percentage achieved, the harder and costlier it becomes to reach what remains,” he said. “85% is still shooting for the moon. However, if achieved you can be sure that the remaining 15% will be the same 15% that already have the poorest connectivity thanks to the aforementioned factors. It is certainly not good news for those homes struggling to get workable broadband speeds as things currently stand."

 

“This isn’t merely a subtle change in wording to the Government’s pledge to provide gigabit-capable speeds to everyone by 2025, it’s a major blow to rural communities that are all too often at the back of the queue for decent broadband,” added Steve Leighton, CEO of Voneus. “It’s a safe assumption that the 15% of the population who are no longer included in the Government’s pledge will be living in the most difficult to reach – or in other words, expensive to connect – locations.”

 

For Leighton, this focus on overall coverage is itself somewhat misplaced, and the government should instead be focusing on supporting the areas that cannot achieve even basic connectivity – especially given the vital nature of that connectivity throughout the coronavirus pandemic.

 

“Instead of obsessing with gigabit-capable speeds for everyone – or now 85 percent of everyone – the Government should look first at the areas that can’t even access speeds to support the basics, like banking online. Focusing on these homes would go a long way to closing the broadband gap, and must be the Government’s top telecoms priority instead of this procession of headline-grabbing pledges,” he said.

 

If anything, this reduction in the overall broadband coverage target should actually put more pressure on Ofcom to ensure that the most digitally-deprived can receive connectivity, increasing the regulatory strain.

 

It should be remembered that the UK’s operators will continue to drive the rollout of gigabit connectivity, with or without the government’s help, over the next decade. The question, ultimately, is just how long will the final percentiles have to wait for such connectivity.

 

“We expect deployments to continue in the second half of the decade,” said Johnson. “We’re forecasting 98.4% with fixed gigabit options in 2030.”

 

 “We believe that the imperative to deliver a new generation of digital infrastructure to every part of the UK as quickly as possible is undiminished. The best guarantee of this is driving competition in the digital infrastructure market," said CityFibre CEO Greg Mesch."CityFibre remains fully committed to our target to bring full fibre to 8 million premises by 2025. We are also keen and ready to participate in any competitive process through which the Government choses to structure its rural subsidy.”

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