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Wednesday, November 17, 2010

Why UK Superfast Broadband Plan is Underfunded

Delegates at the recent Westminster e-Forum were warned by Point Topic that the £530 million allocated to the planned broadband infrastructure development across the UK is inadequate funding.

The warning came from Point Topic Chief Analyst, Tim Johnson. Speaking to an audience of top broadband executives and politicians, Mr Johnson said, "The Coalition says it aims to provide the UK with the best superfast broadband in Europe, with a minimum 2 megabits per second connection speed for every household. To hit that they will have to find a lot more money from somewhere."

For example, Point Topic estimates that about 6.3 million homes and businesses will need some degree of subsidy to get superfast broadband services at an affordable price. But the whole amount proposed in the Spending Review would be needed just for the 900,000 or so who would require the biggest subsidy, leaving 5.4 million without up-to-date broadband services.

Johnson pointed out that the French are now proposing to spend €660 million (£570 million) of public money per year between now and 2025 to achieve their broadband aims, more than the UK is budgeting for over the whole Spending Review period.

Another €200 million (£170 million) per year is due to come from local government and European funds. "If anything, the French objectives are less ambitious than ours are supposed to be," according to Johnson. "They are also working on a more realistic timescale."

The French program will be funded mainly by a tax on fixed and mobile phone connections, very similar to that proposed for the UK by the previous government. "But that's water under the bridge now," said Johnson. "I’m sure the Coalition won't want to raise the money that way."

Johnson suggests instead that the money could be found by changing the priorities of the Coalition's £40 billion infrastructure investment program.

"Broadband helps more people, provides more benefits per pound and is greener than even the most modern railway," he said. "George Osborne needs to shave another billion or so out of other investment program to give us a truly modern economy."