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Report: Broadband costs could spark digital divide in UK

Posted: 10 Sep 2008 ?? ?Print Version ?Bookmark and Share

Keywords:UK broadband service? network costs? fiber-to-the-home? wireless technology?

An influential lobby group warns that Britain is in danger of having a two-tier superfast broadband network. The Broadband Stakeholder Group (BSG) suggests the cost of connecting the country to a 1Gbit/s network could be as much as 29 billion pounds ($52 billion) and that such a level of investment may deter operators from rolling out the network to rural areas, focusing on urban infrastructure only.

In a report published Sept. 9, produced by Analysis Mason, it stated that the cost of deploying a fiber-based network would be between 5.1 and 28.8 billion pounds ($8.9 and $50.5 billion), depending on the technology used.

The model used by the analysts indicates that national deployment of fiber-to-the-cabinet (FTTC), the cheapest technology option, would cost 5.1 billion pounds ($8.9 billion)three or four times more than the telecoms sector spent deploying today's broadband services. Taking fiber to every UK home (using point to point fiber, the most expensive technology option) would cost as much as 28.8 billion ($50.5 billion), but would offer data rates of up to 1Gbit/s.

"The scale of the costs looks daunting but the report does shed light on how some of these costs can be reduced and what the likely extent of commercial rollout will be. It should focus minds of commercial players, policy makers and regulators on the potential solutions to these challenges," noted Antony Walker CEO of the BSG.

The report suggests that deployment costs will be relatively constant across higher density areas. This implies that, if a commercial case for deployment exists, the market should be able to deliver to approximately two thirds of the UK population.

However, the costs of deploying in more sparsely populated areas will be significantly higher, making the commercial deployment to the last third of UK households much more difficult.

"If rural areas are to be served in a reasonable timeframe, thinking needs to start now about creative solutions for making them more attractive to investment," suggests Walker.

Available alternatives
The short-term option of pushing new cable to roadside cabinets (FTTC), allowing for downstream speeds of between 30Mbit/s and 100Mbit/s using VDSL over existing copper lines, would cost about 5.1billion pounds ($8.9 billion) according to the report. That compares to the average download speeds promised by telecoms companies in the first quarter of this year of 5.9Mbit/s.

The report suggests that the high civil infrastructure costs involved in the fiber-to-the-home (FTTH) option could be significantly reduced by the re-use of existing telecommunications ducts; the sharing of alternative infrastructure owned by other utilities, such as water companies; and the use of overhead fiber distribution in some areas. This is the kind of approach already used in countries such as France, and UK regulator Ofcom is reviewing the option.

Another option is using Gigabit passive optical network (GPON) technology could deliver FTTH via a 2.5Gbit/s link shared between 32 premises, the report suggests. The BSG estimates GPON would bring the cost down to 25.5 billion pounds ($4437 billion).

Two months ago, BT revealed plans for a 1.5 billion pound ($2.6 billion) superfast broadband network that involves a FTTC solution that will be offered to 9 million homes. The plans, which contain a much more limited FTTH solution, are conditional on regulators letting BT secure an adequate investment return.

The BSG's analysis has been given as evidence to Francesco Caio, the government's advisor on next generation broadband, who is expected to report later this month. Ciao has already indicated that he doesn't believe the UK's lack of a coherent next generation Internet strategy is causing it to lag behind competitor nations.

Caio also signaled he will likely advise against state subsidies for fiber, suggesting rural areas might be served by wireless technologies.

In a report issued last week, Ofcom noted that rural areas were neglected during ADSL deployment and should not be left behind again.

- John Walko
EE Times Europe





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