Rural broadband is necessary, but doesn't need to be government funded

In a debate today in the Commons, Rory Stewart MP will argue that the government target for rural broadband deployment needs to expand to include an additional 2 million people. The motion that will be introduced says, "rural businesses and rural communities across the UK are isolated and undermined by slow broadband … (we) urge Ofcom to increase the coverage obligation attached to the 800MHz spectrum license to 98%".

Rural broadband rollout – both fixed and wireless – is a priority of the Coalition Government. They are committed to supporting and funding the rollout out by investing £530 million. £300 million of this will come from TV license fees while the rest will be made up from the government’s own purse.

Access to broadband is an absolute necessity to ensure growth, innovation, and economic success in this country. The Government, however does not need to pay for rural broadband. By creating a competitive market environment in which broadband operators can compete, broadband rollout would come through private sector investment.

There are three key factors for private sector investment in broadband rollout. First, the government needs to lift the burdensome fibre tax. As I discussed in a previous post tax is collected for the laying for fibre and for the ‘lighting’ of dark fibre. Considering the taxes that these firms are paying to operate in the UK, it would seem a simple solution to remove the fibre tax in order to allow for more fixed line broadband access. Second, coupled with this issue, the access to ducts and poles owned by BT should be offered for a low or no cost to other Internet Service Providers (ISPs). Currently ISPs and BT are in discussion to set a market price for this access. To date the discussions have been unsuccessful and Ofcom is set to intervene and set the price itself. Ed Richards of Ofcom said recently that if this happens then access to ducts and poles would be delayed because Ofcom would be required to manage the entire process. This delay is something the UK economy can’t afford.

Third, access to next year’s mobile spectrum auction should not be limited to four major companies, but should be open to all who want to operate mobile broadband. Ofcom is attempting to deal with many various and complex issues around the spectrum auction and in doing so they are trying to correct distortions from previous spectrum allocations. In doing this, though, they have set spectrum caps which may limit the rollout to certain areas. The opening up of this auction and licenses provided in it could improve competition and speed up mobile broadband rollout.

I have only touched the surface of the complexity of fixed and broadband rollout in the UK. There are many other factors impacting the rollout. However, it is clear that if competition increases in the fixed and mobile broadband market we would not need government to pay for new broadband. Private sector companies from the UK and abroad have the technology and the investment needed and they are ready to participate only if and when the Coalition Government makes the environment more business friendly.

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