Industry must bankroll high-speed broadband rollout

There is no need for the Government to provide finance for the deployment of next-generation broadband.

Following a six-month review into the barriers to investment in next-generation broadband (NGB) in the UK, Francesco Caio, who led the review, said any case calling for Government intervention and use of public money is “weak” at the moment.

In his report, The next phase of broadband UK; action now for long-term success, Mr Caio said the UK’s telecoms market was in a competitive enough position to deliver access without requiring funding from Government.

High-speed broadband is expected to be able to deliver speeds of up to 100Mbits/sec. The costs to install the infrastructure needed, however, are expected to be immense. This week the Broadband Stakeholders Group said these could be as high as £28bn, depending on the technologies used.

Caio, who is vice-chairman of Lehman Brothers Europe, said there were already “promising signs of investment” that the telecoms industry could deliver the access. He cited internet service providers (ISPs) BT and Virgin Media, which have been running trials of high-speed broadband services.

He said Government and the regulator Ofcom are best placed to monitor the rollout of NGB and ensure that the regulatory regime was conducive to encouraging ISPs to invest.

“The UK's competitive telecoms market can deliver the next-generation access (NGA) in broadband, and maintain the country's position as a leading online economy,” he said.

However, the conclusions in the report have already been heavily criticised as being short sighted.

Neil Hawkins, broadband analyst at broadband price comparison site ChooseISP.co.uk said it would lead to a “skewed and haphazard broadband infrastructure”.

He said leaving it to private enterprise would mean areas where there would be a lower return for the investment, would lose out.

“It’s disappointing to see Government holding back on any commitment to lay the infrastructure for a robust and largely future-proof, nationwide high-speed broadband network.”

“Considering the whopping estimated £5bn-£28bn costs, it’s not surprising that Government is willing to sit back and let private enterprise take care of the high-speed deployment, especially since BT and Virgin Media are already pledging huge sums to upgrade their own networks.”

“However, imagine if the same hands-off approach had been applied to, say, sewerage systems or water mains in the past? Inevitably, market forces would have delivered an efficient infrastructure in areas that ensured a return of investment, while more remote areas would have been left largely ignored.”

“There is no doubt that by expecting private enterprise solely to determine the map of high-speed Britain, we’ll land up with a heavily skewed and haphazard broadband infrastructure.”

The Government will now consider the recommendations put forward in the report and report "in due course".

Business Secretary John Hutton said: "I am grateful to Francesco Ciao for conducting this review. We will consider his recommendations as we plan how to make sure the UK remains one of the world's leading internet economies. It is reassuring to have evidence of timely investment being made by a broad range of players.”