Public investment in fibre – a lesson for the UK government

BT has announced plans for a fibre project ‘to tranform the Cornish economy‘ under which next generation fibre-based network infrastructure will be rolled out to up to 90% of local businesses and homes in Cornwall (and including the Scilly Isles).

The investment is on top of BT’s existing £2.5bn national fibre investment programme and BT believes (although without citing evidence other than the sorts of new services that fibre investment will help deliver) that it will create up to 4,000 jobs and protect a further 2,000 in a largely rural economy which does not otherwise have a great deal else for local people once all the tourists have gone home.

Particularly interesting is that 50% of homes and businesses are expected to be hooked up to fibre to the premises solutions, delivering faster speeds and delivering some future proofing of the investment – nationwide (or, perhaps, outside the Cornish nation), the investment in fibre is expected to be much less, BT having estimated that one in four homes and businesses within its investment programme would have fibre to the premises (i.e. about 17% of the country).

Excitingly, the £132m investment programme (final costs dependent on demand) is split approximately 60:40 on a private-public basis, with BT being partnered not by UK public sources of finance but by the European Regional Development Fund, which is contributing £58.5m of the finance. This is the largest investment in England backed by EU regional funds, which the ERDF clearly sees predominantly in terms of its role in encouraging a lower carbon economy (according to Johannes Hahn, European Commissioner for Regional Policy). With the population of Cornwall being just over half a million people, the scope of the public investment is about £100 per head.

This looks a good deal to me – providing fibre to a large region on this cost basis illustrates what can be done when the public sector gets involved: a lesson for the ConDems that fibre needs more than just warm words and crossed fingers. The trouble is that only Wales otherwise has the requisite development status [possible paywall] triggering the ERDF investment: so the wider applicability of this particular project is scant (while the few areas of the UK that thus qualify on this basis is disappointingly small).

So, it seems we may reasonably expect a similar investment for Wales reasonably soon but, otherwise, a gap which will continue to remain outside the two-thirds which will receive fibre investment on a competitive basis while the ConDems – well, while they wait to see what happens. Actually, after they have finished their programme of public spending cuts, in the process winding up the regional development agencies which facilitate this sort of deal, there may not many public institutions left to broker such deals in the future. Shame.

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