PM Boris Johnson has promised “full fibre” to the UK by 2025, calling current plans committing to the same goal by 2033 as “laughably unambitious”.
Laughable it may be, but the UK still has a long way to go to reach its full-fibre goal. In January 2019, fibre coverage was around 7%, according to government statistics, with Openreach extending this by approximately 80,000 homes a month. However, they would need to build out at five times this speed to meet Johnson’s target. Currently, they’re on track to pass four million doors by March 2021 and 15 million “by the mid 2020s”. The caveat being “if the conditions are right to invest”.
And herein lies the problem. A letter sent to Johnson by the Internet Services Providers Association, the Federation of Communication Services and the Independent Networks Co-operative Association (INCA), whose members include Google, BT, Sky, Gigaclear, CityFibre, Hyperoptic, Virgin and Vodafone, notes that fibre is currently taxed as if it were business premises, raising the cost of investment.
There’s also a massive assumption that the £33 billion estimated cost of providing full fibre will be largely funded by the industry. The hardest 10% of areas will be subsidised via the Rural Gigabit Voucher Scheme, but the government assumes the remaining 90% is economically viable for operators. However, approximately 20-25% of the country are in the grey area of being ‘economically uninteresting’ because of likely low returns. While some areas struggle to attract a single provider, others have multiple providers and suffer from “overbuilding”, where too many providers race to add fibre in the same area. This is equally inefficient, and although some argue it boosts competition, competing on infrastructure rather than services drains CAPEX out of the industry. Co-ordinating a national build out would require the government to intervene and agree rules that preserve competition and promote choice.
The letter also raises the spectre of wayleaves, saying that landlords are often unresponsive and urging the government to force landlords to provide access. Currently about 4 in 10 MDUs are inaccessible due to absent landlords, according to Openreach.
The letter points out that government delays in making critical decision means that newbuilds continue to be constructed without fibre being built in, increasing inefficiency and making targets harder to meet.
“Work needs to start now, and 100% fibre coverage requires a 100% commitment from government,” the letter notes.
Meanwhile that 7% coverage figure is having an economic drag on the UK’s economy, with other economies benefitting far faster. In comparison, France has around 28% coverage, Spain 71% and Portugal 89%. While Asian tigers such as Japan (97%) and South Korea (99%) are significantly ahead of their European rivals.
Plans for UK fibre:
- Gigaclear plans to reach 500,000 rural homes by 2025
- Hyperoptic will reach five million homes by 2024
- Openreach is building out fibre at a rate of 80,000 homes a month
- Virgin Media’s $3 billion Project Lightning will see it reach 2 million premises with FTTP by the end of 2019, and expand its HFC network to reach an additional 2 million premises
- City Fibre aims to deliver a £2.5 billion 1Gbit/s FTTH broadband network to a 1 million homes in 12 of their existing cities and towns by 2021, saying it might extend this to 5 million
- TalkTalk plans to invest £1.5 billion to bring 1Gbit/s fibre to 3 million premises
- INCA says that by 2025, full fibre infrastructure supplied by altnets will cover up to 14.25 million homes and business.