Rural broadband – funding and BT’s pay-to-upgrade false economy

April 26, 2013

I’m a huge advocate for doing rural broadband right. Mainly because I live out in the sticks, but also because I believe in building infrastructure properly and doing things right. When it comes to digital infrastructure, rural communities have a problem – they’re not economically viable to maintain. So, first, an overview of the situation for small communities like mine.

BT put in basic service years ago to the entire country and are only now starting to look at upgrading areas outside of cities and larger towns, thanks to a large (£530 million£830 milion, after £300 million from the BBC license fee from 2015-17 got reallocated, grumble) handout from the government – under the auspices of Broadband Development UK. This pot of money is for connecting “90%” of the country at at least 2Mbps.

There’s (obviously) some issues here. One, that 90% of the country doesn’t actually require BT to sort out the people on smaller exchanges – exactly the people the government should be funding. There’s a competitiveness issue, too – all the BDUK contracts are open competitive tenders but BT are the only people applying any more (after over-specification ruled out other vendors). Apparently the National Audit Office are looking into this now.

But hope is not lost – there’s an EU sourced pot of money available through Defra, the Rural Community Broadband Fund. This is for “superfast” broadband – 24Mbps or better advertised headline rate – and allows for about £300 per property. The total pot is around £26 million. This is aimed at the last 10%. As you’d expect, it’s hideously complex to apply for – it can only be awarded on completion of spending (meaning you only get compensated once you’ve spent it, so you need cashflow to cover it), it can’t go direct to a supplier, the suppliers must be tendered, etc. Plus the organization that managed the funds must exist for at least 7 years after completion to allow for auditing. This means that as of right now I am not aware of any money from this pot being allocated, at all, anywhere in the UK. As a member of a team trying to get some money allocated to our project in our village, it’s a nightmare, and after months of trying we’re getting close – but as you’d expect in a village of 120 properties there’s not many people willing to get their hands dirty and deal with EU paperwork in their spare time!

So where does this leave the 10%? Mostly screwed, basically. Even larger communities are having serious issues with any of these pots of money, and mostly these are turning to companies who do demand-based rollout of networks but very few exist, and getting 30% or more of a community to commit to a new non-BT service is hard. Groups like B4RN are an exception and a great model if you can make it work, but it’s incredibly hard to do so. My hats off to them for managing it.

Recently I’ve seen a couple of communities paying BT directly to upgrade their communities to FTTC. This makes absolutely no sense.

The cost of deploying a real, next-generation, high-quality, fully-active point to point Fibre to the Premises (FTTP) network to a community like ours is around £1.2k a house, in round terms.

BT charge as much as £40,000 per cabinet to upgrade a cabinet to FTTC (VDSL2). This means they put fibre in alongside their old copper to the cabinet, replace the innards with a VDSL2 DSLAM, and there you go – up to 50Mbps or so on current technology, maybe up to 80Mbps in future with line bonding and so on. Very nice.

So for us, we’d need to upgrade three cabinets. We’re a fairly standard linear community – we have a cabinet at one end of the village, a cabinet for a large group of properties on one of the turnings to the village along a main road, and another cabinet that serves some properties at another turning into the village. If we assume a conservative £30,000 a cabinet, we’re talking £90,000 to upgrade all three. That’s assuming BT don’t charge for excess construction if things are broken in their network, such as crushed conduits/ducts, survey fees, and so on. And even then we reckon only a handful of properties would get over 40Mbps, mostly people getting 10-20Mbps in the main village and outlying houses being lucky to get up to 10Mbps. This can’t be an uncommon situation for villages that aren’t so bunched up – as it pretty typical for most outlying villages that need new networks.

If we’ve now paid BT £90,000 out of our own pockets – assuming we raise that locally within the village (not much more than that raised by the residents of Binfield Heath, who paid £59,325 to BT for their upgrade of two cabinets) – realistically we’re not going to get residents subsidizing any upgrade works for a long time, and BT won’t be doing any more upgrades off their own bat (not that they ever do in rural areas) for an even longer period of time.

Meanwhile, our shiny future-proof 1/10/40/100/?Gbps capable FTTP network is sat on a shelf, now utterly unfundable. But if we’d gotten another £60,000 together we could’ve paid for it outright, practically.

Offering this kind of community subsidy to a network operator like Gigaclear should surely be sufficient incentive for them to come in and do a proper FTTP network installation. Active FTTP installations can be easily upgraded piece by piece, as demand requires; a welcome change from the typical BT model of passive networks terminated on large, aggregate and expensive pieces of kit. They also don’t rely on the ageing copper and aluminium cables that have been buried for decades now – which in some areas, including parts of my home village, mean you can’t get any internet.

As communities we have a responsibility not to squander our investment power in short-term fixes, and we have a duty to ensure that the networks we pay for are going to be good enough for the next 50 years, and upgradeable to cope with the rapid pace of change in the world of telecommunications. Last week I sat in a room with the people who are building these networks at the UK Network Operator’s Forum, and BT talked about their ‘solution’ for rural broadband (‘whitespace’ networks, up to 16Mbps with ~5 subscribers in their pilot if memory serves). Later, Brocade talked about their expectations for upgrade paths to 400Gbps optics and even 1Tbps optics modules for core switching. As ever, BT appear to be living in a different era.

Bodge-jobs over congested and changeable radio spectrum or bolting on improvements to a slowly rotting copper/aluminium network is not future-proof. Good single-mode fibre in the ground is. Communities must make sure that they invest wisely in technology that will last, because small rural communities cannot afford to invest often at this scale, and there is no sign of the government stepping in to help.