Good news: the UK government has released a new report claiming huge economic payback from its “superfast” broadband programme. There’s only one problem: the report is a wild overstatement of the facts, and at worst a national embarrassment, says Chris Middleton.
Internet of Business says
UPDATED 21 August The UK government has released research claiming that what it calls “superfast” broadband has provided a £9 billion turnover increase for local businesses, delivering a welcome boost to the UK economy and creating new jobs.
The Department for Digital, Culture, Media, and Sport (DCMS) has today published its Evaluation of the Economic Impact and Public Value of the Superfast Broadband Programme, an assessment of the impact that the rollout had between 2012 and 2016.
Key findings include:
- A £9 billion surge in turnover for businesses benefiting from the faster connections now available.
- A £690 million net increase in Gross Value Added to the UK economy.
- A reduction of almost 9,000 individuals claiming Jobseeker’s Allowance, as well as a reduction in long-term claimants by 2,500 in programme areas, accompanied by the creation of 49,000 local jobs.
In total, the government claims that the programme has delivered £12.28 in business benefit for every £1 invested by it and local authorities: impressive.
More, DCMS claims that there is a strong indication that high take-up rates of the government’s “superfast” programme have encouraged the telecoms industry to expand its own commercial broadband projects – but more on that below.
Superfast… superfast… superfast…
Minister for Digital, Margot James said: “Our rollout of superfast broadband across the UK has been the most challenging infrastructure project in a generation, but is one of our greatest successes.
“We are reaching thousands more homes and businesses every week, that can now reap the clear and tangible benefits that superfast [it’s that word again – Ed] broadband provides. We are helping to ensure the downfall of the digital divide.”
The government also claims that new figures published today show that around five million homes and businesses who would have been stuck in the digital slow lane now have access to “superfast” [yes, we know] broadband.
The government’s rollout of “superfast” [have you got the message yet?] broadband to those areas deemed “commercially un-viable” has helped take nationwide coverage to 95.39 percent it says.
Take-up of the new technology in areas benefiting from the government programme is now running at 45 percent – more than double the expected rate. “As a result of the contracts put in place by government, those companies rolling out superfast [!] broadband will now return more than £500 million in subsidies to the public purse to be used to reach those locations not yet covered by existing plans,” said DCMS.
Whitehall estimates that “more than one million extra UK homes and businesses will gain access to superfast speeds, taking superfast coverage to 98 percent of the nation over the next few years”, boldly cramming the word twice into a single sentence.
Under new obligation
The government is introducing a Universal Service Obligation that will mean everyone in the UK has access to fast and affordable [phew] broadband by 2020, and has recently set out plans to deliver nationwide gigabit capable connectivity by 2033 as part of its new Industrial Strategy.
Openreach CEO Clive Selley, said: “It is great to see businesses across the UK reaping the benefits of faster broadband speeds and I’m proud of the leading role that Openreach has played in helping to deliver the Government’s rollout of superfast broadband – one of Britain’s great engineering achievements.”
Yes, he actually said that.
But there is one problem with the government’s announcement today: while increased business benefits, turnover, and connectivity are all welcome – as is the claimed boost to the economy – everything else in its statement is either errant nonsense or bears scant relation to the facts.
The bald facts
Superfast…. superfast…. superfast… if only endlessly repeating the word made it true.
The claim that the UK’s “superfast” broadband coverage is one of the country’s great engineering achievements is laughable and almost defies belief – especially when coming via a company, Openreach/BT, that has almost single-handedly hobbled the UK’s digital ambitions for its own short-term commercial gain.
The fact is that Britain has some of the slowest broadband in the developed world, and what BT, Openreach, and/or the government has long called “superfast” is anything but.
Indeed, it does the government no credit to be parroting BT’s marketing nonsense in this way.
The government currently defines “superfast” as 24Mbps – a step up from the 10Mbps definition that BT used not long ago. However, the global average top speed for downloads is 46.41Mbps.
Gigabit broadband connectivity can genuinely be described as “superfast” and is 41 times faster than the UK government’s preferred definition.
In many regions of the UK – including in some city centres – broadband connectivity is functional at best, but slowed by the ageing copper infrastructure.
Many customers pay for theoretical superfast speeds – by the government’s current definition – but receive much slower performance, using the ‘up to’ opt-out that most providers adopt. Despite the much slower connection speeds, they are counted as receiving a “superfast” service.
For example, Internet of Business is aware of companies in the city centre of digital hotspot Brighton that pay for 20-meg connections and receive just 3.5Mbps: roughly the average speed in Algeria, which currently has the slowest broadband in the world.
At present, the UK only has four percent full-fibre connections, according to the government’s own figures – a one percent increase on its previous assessment in March. Carried forward, a one percent rise per quarter means that, at current rates, 96 quarters need to elapse before the UK reaches 100 percent full-fibre coverage: 24 years, or the year 2042.
The government aims to reduce that timescale, but only by nine years.
The UK already lags a long way behind nearly all of its key competitors in Europe, such as Spain (71 percent full-fibre connectivity), Portugal (89 percent), and France (28 percent and increasing quickly), according to the government’s own statement on its plans last month.
Indeed, the IHS Markit Broadband Coverage in Europe 2017 study, conducted on behalf of the European Commission, ranked the UK 26th out of 28 EU member states in terms of full-fibre coverage.
That study showed that only 0.65 million UK homes had access to full-fibre broadband as of June 2017, as operators prioritised incremental upgrades to existing copper networks.
Nowhere near world leading
A more up-to-date snapshot of the UK’s telecommunications ranking comes from global broadband benchmarking service Speedtest.net, which places the UK at 30th in the world in average fixed-line broadband speeds, and a lowly 51st in mobile broadband – down from 48th in June.
However, at least the government’s recent statement of intent to force the UK out of the communications dark ages with full-fibre connectivity – brought on by BT’s intransigence, arrogance, and mismanagement, coupled with a longstanding lack of political will to force change on a deregulated market – is welcome, if years overdue.
One of the problems has long been that, even in city centres and so-called digital hotspots, broadband connections are slow, patchy, and unreliable unless businesses pay BT – a company that has been the single biggest brake on the UK’s digital ambitions – a premium. As a result, BT has had zero incentive to improve baseline connection speeds for years.
Arguably, massive underinvestment in last-mile connectivity was one of the biggest direct effects of telecoms deregulation, along with having dozens of providers competing to make those connections – a market that might be competitive, but offers few real benefits to consumers.
The mantra that the market always knows best is – demonstrably – false when applied to telecommunications. If it were true, the deregulated UK would be in the top five broadband providers worldwide, not bottom of the top 30, or outside the top 50 in mobile.
The UK is falling down the global broadband league, not climbing up it, while government ministers and BT leaders endlessly repeat the word “superfast” – a lamentable state of affairs.
Meanwhile, BT has been investing billions in sports and media coverage in an embarrassing bid to become a global media player: a national scandal, and a bid undermined by its own strategy of treating speed and quality as premium add-ons.
As a private company, BT has the right to do whatever it wishes to please its shareholders. However, having BT represent the UK in the global digital race has been – as Internet of Business said recently – like running a pig against a pack of greyhounds.
A radical approach?
The government’s new approach is aimed at driving large-scale commercial investment in the fixed and wireless networks that are vital for the UK to remain competitive, said the new secretary of state for DCMS, Jeremy Wright, last month.
“We want everyone in the UK to benefit from world-class connectivity, no matter where they live, work or travel,” he said.
“This radical new blueprint for the future of telecommunications in this country will increase competition and investment in full-fibre broadband, create more commercial opportunities and make it easier and cheaper to roll out infrastructure for 5G.”
The strategy is wise and welcome, but hardly radical – merely long overdue. At present, the government’s own analysis confirms that, without change, full-fibre broadband networks will, at best, only ever reach three-quarters of the country, and it will take more than twenty years for them to do so.
Assuming that the latest economic payback figures are accurate – and are a direct result of increased broadband speeds (which is a credibility stretch), then imagine what the payback would be if the UK’s broadband was actually superfast.
Please, DCMS: stop using the word “superfast” to describe the UK’s middling to poor broadband connectivity. Businesses aren’t idiots, and neither are consumers: customers know a con when they hear it.
Outside of the handful of people with Gigabit connections or premium broadband accounts, the population of the country is well aware that the UK’s internet access isn’t “superfast”, or even close to it. Even many of those that pay for “superfast” connections.
Just use the phrase “basic broadband services”, and acknowledge that you’re working on the “superfast” bit, but it will take time to repair the damage from years of inaction and crass profiteering.
By your own figures, minister, true national superfast coverage is 15 years away – at best.
• BT shareholders have called on the next CEO to consider splitting Openreach from the company, according to a report in the FT.
• Elements of this article have been reproduced from a previous Internet of Business report on the UK’s full-fibre and 5G ambitions.