BDUK has £200m to kick-start rural full-fibre network build

In its Future telecoms infrastructure review, published today, the government set out a plan to meet its ambitious goal of having a full-fibre broadband connection available to every home in the UK, and indicated that when it comes to addressing the needs of rural areas – where a full commercial deployment makes no financial sense – things will be done differently this time.

The later phases of BDUK are looking to address superfast broadband coverage across the remaining 5% of the country as widely as possible, and as part of this, full-fibre has already been pressed into service in some areas where contracts have been awarded to providers other than BT, such as Gigaclear. As of March 2018, it is estimated that BDUK has already made full-fibre broadband services available to 200,000 premises.

The additional money exists at least in part thanks to the gain share mechanisms built into the original BDUK contracts with Openreach, which stipulated that the organisation would pay back some of the cash it received if take-up exceeded a certain threshold. BDUK is known to have recovered more than £600m in this way in the past three years.

Looking beyond BDUK, the government said it recognised that just as it was with FTTC, areas of the country deemed commercially unviable for full-fibre deployment would need extra support. This is likely to encompass 10% of properties in the UK, and to address their needs would require an investment of between £3bn and £5bn – taken as 10% of the approximate £30bn cost of nationwide full-fibre.

The government’s report acknowledged that given the criticality of digital infrastructure to all homes and businesses – which, it can be argued, did not exist to the same extent when BDUK was planned – these areas could not be expected to wait while the commercial roll-out addresses the needs of towns and cities.

Therefore, said the report, the government will pursue an “outside in” strategy, which means that while the likes of CityFibre, Openreach and TalkTalk address urban areas, the government will support rural areas at the same time, not later.

“This strategy would enable these premises to receive gigabit-capable connectivity within the same timeframe as commercial areas, with all areas covered by 2033,” wrote the report’s authors. “This would be substantially faster than if these areas were left to the market to deliver.’

The £200m already in the BDUK funding pot will serve as a jumping-off point for this, but moving forward, tenders will also go to market to award rural contracts to commercial operators, to minimise the need to resort to public funds.

“Investment in these areas will be phased, starting with areas that currently do not have superfast and for which the productivity gains would be maximised given the low baseline of existing connectivity,” said the report.

“A staged programme of investment would allow for testing and developing different technologies and implementation approaches before deploying them more widely. The government sees advantages in a reverse auction-style model, in which operators would bid competitively for funds to roll out to the maximum number of premises in an area by a certain date.

“We will build on current interventions so that investment in fibre networks starts now.”