I welcomed George Osborne’s announcement that £100 million has been earmarked to bring ultra-fast broadband to ten UK cities, with an additional £50million earmarked for “smaller cities” and rural areas. However, I believe that fibre to the premises for business services has been overlooked in this year’s Budget.
The £150 million Broadband Budget could and should be spent much more wisely, by connecting businesses that are clustered in city centres and metropolitan areas, rather than expending large chunks of it to connect up far fewer businesses in rural areas.
My customers are typically media businesses, film-makers and TV production companies and many of the smaller post production and graphic design companies struggle with the initial costs of fibre installation.
Media companies need, high speed connections. When your business has to stream high definition video to a newswire, ahead of your competitors, connecting services of 100 Megabits per second (Mbps) up to 1 Gigabit per second is a requirement, not a vanity project.
I sympathise with business owners located in rural areas, who are struggling with miserable connections of 2Mbps or slower. However, there are very good reasons why one sets up digital businesses in certain places. For example, to connect a company just outside Chelmsford to an ultra-fast fibre network would cost about £30,000.
The bang for buck is hugely disproportionate if £50million of the budget is going to be spent on connecting rural areas.
The UK economy will get much better revenue if the government focuses its investment on providing fibre connections to business located in cities and in shared buildings. There is still much to do in connecting fibre to business premises in our cities and metropolitan areas.
As Ofcom pointed out in its latest International Communications Market Report, the cost of providing ultra-fast broadband for smaller companies can be substantially reduced by running fibre to multi-tenant buildings. The government’s investment of £10 million for London could provide fibre to around 3000 shared offices in the capital, serving up to 15,000 businesses. Compare that to 333 rural businesses connected for the same investment.
It’s possible to build a network without necessarily digging up the roads and offer low-cost, high-speed fibre connections. However, some customers are still faced with so-called Excess Construction Costs: Openreach’s charges for running fibre to buildings that have no existing service. For some of my customers alone this has already amounted to more than £40,000 in the first three months of 2012.
I believe that the £10million fund for London should be used to provide a central pot to cover Excess Construction Charges and subsidise high-speed broadband connections to London businesses. £10 million would cover civil engineering costs for around 5000 smaller media companies in London. I also believe that the remaining £140 million budget should be used to provide grants to build networks in the designated cities
So while I applaud the government’s focus on bringing ultra-fast broadband to Britain, the Chancellor needs to look at the relative return on investment from rural and metropolitan areas.