Updated: Government "shouldn't pay for fibre"

 

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By Barry Collins

Posted on 12 Sep 2008 at 09:33

A Government review into next-generation broadband has recommended that the Government doesn't invest in Britain's fibre rollout.

Click here to read Barry Collins' view on the Government's spending cop-out.

The report, commissioned by The Department for Business Enterprise and Regulatory Reform (BERR) and written by former Cable and Wireless chief Francesco Caio, says the case for public investment is "weak".

"The high costs of NGA [next-generation access], and high expectations of what it can deliver, tend to raise expectations in some quarters that the Government should make a major intervention - such as a large subsidy or structural change to regulation - to support the market," the report states.

"However, it is the conclusion of this review that the case for such a major intervention is weak at best."

The report concludes that "although demand for bandwidth and internet traffic continues to exhibit strong growth, there is little evidence that, in the short term, UK consumers will experience a detriment due to the lack of an extensive NGA network."

However, the report states that the Government and Ofcom can't merely sit on the sidelines. "The Government and Ofcom, as the two principal entities involved in determining the efficient and effective deployment of NGA, need to play an active leadership role in shaping broadband policies," it states.

"This does not translate into subsidies or structural changes in regulation, but rather a set of initiatives that could support and inform the activity of regulators and industry players in their journey to NGA.

"The Government should seek to remove obstacles that could potentially delay or compromise the development of the new network."

The review was launched in February this year, after increasing concern that Britain's broadband network was lagging behind other leading countries.

A report published last week by the Broadband Stakeholders Group - whose members include BT - concluded that it would cost £28.8bn to bring fibre to every home in the UK, or £5.1bn for a nationwide fibre-to-the-cabinet (FTTC) rollout.

BT has so far pledged to spend only £1.5bn to bring mostly FTTC to ten million homes across the country, highlighting the huge spending gap.