(updated) Who will benefit from the eye-wateringly enormous £150m for ultrafast broadband?

Under the heading of Economy and Infrastructure, the financial package agreed yesterday by the Conservatives and DUP says:

Both the UK Government and the Executive recognise the integral part digital infrastructure in particular plays in opening up new opportunities for growth and connectivity for both businesses and consumers. In Northern Ireland, despite the increase in the availability of superfast broadband and mobile services, challenges remain. The UK Government will therefore contribute £75 million per year for two years to help provide ultra-fast broadband for Northern Ireland.

How will it be spent?

£150 million over two years is somewhere between a transformational and an eye-wateringly enormous investment in NI’s broadband. However the wording of the deal only talks about ‘ultrafast’ broadband and doesn’t mention ‘superfast’. This could be an error in drafting, or a reliable indication of how the money will solely be targeted.

According to June 2016 figures, 91% of premises in Northern Ireland can get basic 10Mbit/s broadband. (UK figure is 95%.)

Superfast is a term now used to describe services with speeds of 30Mit/s or more (was previously 24Mbit/s) and generally involves either cable infrastructure from a supplier like Virgin Media or Fibre To The Cabinet (FTTC) and copper phone lines from there to the house or business. Superfast broadband is sufficient to watch HD TV/video online, quickly download films [Ed – and Windows updates], and use video conferencing etc.

The June 2016 figures say that Superfast broadband is only available to 83% of premises in NI. (UK 88%.) That dips to 52% in rural areas. Only 71% of SMEs in Northern Ireland have access to Superfast broadband.

Fixed broadband uptake at any speed in Northern Ireland was last reported to be 78% (UK 81%). Uptake of services qualifying to be called Superfast is 34% in NI (31% UK). Availability and uptake figures for Scotland and Wales are broadly similar to Northern Ireland and below the level in England. Revised figures will soon be published and are likely to show some improvement in Superfast availability.

Ofcom’s Connected Nations report for Northern Ireland was published in December 2016, It says:

Just over 24,000 premises in Northern Ireland, around 3% of the total, cannot get a download speed of more than 2Mbit/s and … 63,000 premises (8%) cannot get a download speed of 10Mbit/s, which is the level the UK Government has indicated it will set for its proposed Universal Service Obligation.

Ultrafast describes services of 300Mit/s or more and requires fibre all the way to the premises (Fibre to the Home/Premises, FTTH/FTTP). The installation is more expensive and retail products are pitched at businesses with high speed connectivity requirements and/or a lot of employees sharing the bandwidth. Availability is very low.

Given the proportion of small and medium-sized enterprises (SMEs) in Northern Ireland (employing fewer than 250 people) there is no doubt that wider availability of very high speed broadband would help businesses expand in their local geographies and compete internationally without forcing them to move to more expensive urban office and manufacturing locations. However, if the £150 money from the deal is solely targeted at Ultrafast broadband, it is unlikely to benefit ordinary homes in rural areas – often west of the Bann – which today still have poor broadband. A mix of funding is required. Otherwise, rural B&B owners will continue not to be able to send timely responses to booking enquiries and farmers will struggle to complete their online subsidy returns.

Update – Sources confirm that the scheme will use Fibre to the Remote Node (FttRN) technology to bring fibre out past the existing green cabinets and closer to the end of rural lanes, shortening the length of copper cable involved in the last stretch up to the premises (using G.fast technology), giving rural users access to Ultrafast speeds of 300Mbit/s, a step change in their fixed broadband experience. Potentially this will internet enable 100% of NI premises; alternatively it will make service available on demand. Detailed plans are not yet available.

The costly installation will be heavily subsidised. The scheme will extend into urban areas too. As speeds increase, retail broadband packages get progressively more expensive. Only 34% of premises in NI pay the premium for Superfast broadband, despite 83% availability. Whether consumers, even ones in digital notspots when the cost of fibre installation has been minimised, will pay the inflated retail monthly rental remains to be seen. And it remains to be seen how the scheme will vary between notspots and areas with superfast available, and whether the infrastructure will form the basis of meeting the planned Universal Service Obligation of 10Mbit/s.

Is £150m a lot of money? Yes, from figures available it is more than all previous government subsidies of broadband in NI over the last ten or more years. Broadband Delivery UK is the government programme aiming to provide Superfast broadband to 95% of UK premises by the end of December 2017. They’ve so far contributed £11m which has been matched locally to make a total investment of £21m, targeting just under 66,000 premises in Northern Ireland. NI’s new investment of £150m is equivalent to 20-25% of the entire investment planned by Broadband Deliver UK to boost broadband across the whole UK.

Back of envelope calculations looking at the investment and outcomes of previous schemes suggests that £150m would deliver subsidised Ultrafast fibre broadband to 50,000-80,000 premises (depending on the urban/rural mix). If Superfast alone was targeted, the cost per premises to upgrade shared infrastructure is less and up to 300,000 premises could benefit. (Though that must exceed the number of unserved premises!)

The NI Assembly’s Public Accounts Committee criticised the mismanagement of one early scheme that aimed to provide faster internet connections to homes in Belfast, Craigavon, and Armagh.

Spending plans must be scrutinised given the unexpected wording of the deal and the existing draft Programme for Government Framework measure to “improve internet connectivity so that more people have access to download speeds of 30Mbit/s and above.”

Broadband is governed by the rules of physics, and speeds decrease as the length of copper telephone cable increases. The fastest speeds are often achieved in dense urban areas where customers are physically close to the broadband infrastructure that lurks inside roadside green cabinets. Rural customers are often further away from their green cabinet and so – if copper cable is involved – their broadband speeds are lower.

Some rural customers also tend to find themselves suffering from multiple digital deprivations. Slow broadband on top of weak TV reception (perhaps getting the core Freeview channels but not the extra ones), poor mobile coverage or not all providers reducing competition (4% of premises in NI rural areas have no mobile voice coverage from any operator), and no DAB radio.

Government intervention in broadband falls into two categories. Investing in availability and allowing access providers to upgrade infrastructure that would otherwise not be commercially viable to improve. (The commercial return on investment balances the cost of installing the extra equipment with the number of homes being served and the current uptake of broadband of those premises.) Subsidising uptake through voucher schemes to defray the off-putting cost of installation of satellite and fibre installation.

Both interventions have operated in Northern Ireland.

  • The three-phase Northern Ireland Broadband Improvement Project – which has funding from the EU as well as DCMS and the local Economy and Agriculture departments – is helping rollout fibre from exchanges that serve “communities in remote areas”.
  • The Belfast Connection Vouchers Scheme (part of the SuperConnected Cities programme that targeted 22 cities across the UK) ran between December 2013 and October 2015 and spent £3.86m to provide 2,062 businesses, charities and social enterprises with grants for up to £3,000 to cover the cost of high-speed broadband installation. Anecdotally, some of the Ultrafast services ordered with the vouchers in Belfast experienced lengthy delays given the difficulty in scheduling streetworks to install fibre on busy city-centre streets.
  • The Northern Ireland Better Broadband Scheme is open until December 2017 and provides subsidised satellite or wireless broadband installation to homes and businesses that cannot access a 2Mit/s service.

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  • Maurizio Paciello

    Who was it to not have grasped the possibility to call it ULSTERFAST BROADBAND?

  • OPB58

    Why should Monaghan, Donegal and Cavan share in our money for broadband from Theresa May?

  • Brian O’Neill

    The same people who benefited the last time. BT.

  • Casper

    It’s strange you don’t have any problem with people in N.I. spending billions of English taxpayers money every year. If the DUP keep this up they will be able to afford an even larger begging bowl to take to Westminster!

  • murdockp

    However, if the £150m money from the deal is solely targeted at Ultrafast broadband, it is unlikely to benefit ordinary homes in rural areas which today still have poor broadband.

    Nonsense.

    Newry City Centre does not even have fibre, yet every home in South Armagh has.

    Basic rule of thumb for NI is it voters live in an area, they shall have broadband. If no voters live in an area such as a city centre, who cares.

  • chrisjones2

    Newry?

    We are in an industrial estate in Belfast with perhaps 60 businesses. BTs 8Mb product (ie slow) ends at a box 200m from our premises. Price to connect to it £4000 guv

  • And potentially Virgin Media, other ISPs who’ll get higher monthly rentals, mobile companies offering mobile broadband solutions, satellite BB … but mostly companies who dig up the road and lay fibre! And the tax man who hopes to get extra revenue from businesses to pay for this costly Conservative/DUP deal!

  • Jag

    Or Ultra Very Fast Broadband, as a nod to one of the organisations which endorsed Nigel Doggs, Emma Pengelly and Gavin Robinson.