In July, everyone watched with bated breath as Ofcom ripped into BT. The media watchdog proposed that Openreach – which maintains our nation’s broadband infrastructure – be established as a separate firm. This would mean giving Openreach its own board and control over its budget.
Ofcom’s calls for BT to divest its broadband subsidiary intensified following the publication of a report commissioned by a coalition of MPs. It was suggested that BT was “significantly under investing” in the arm – and concluded the shortfall of investment was millions of pounds a year.
But a talk with Paul Evans, CEO of Boosty, offered up some unique insight – no matter who is tasked with modernising Britain’s broadband landscape, numerous hurdles will need to be overcome.
“The report fails to consider the technical, logistical and economic challenges facing nationwide broadband rollout,” he said. “Regardless of which public organisation or private enterprise is tasked with modernising the UK’s broadband network, it will soon find a raft of issues affecting service rollout. This is not just in the well-publicised rural areas but also inner cities.”
The UK’s broadband network is built on a backbone of green cabinets, he explained, which can be found at the end of most streets in towns and cities throughout the country.
These lovely cabinets have been fodder for much debate, with the latest discussions centring around Openreach falsely advertising itself as being a fibre optic service. Experts claimed that while fibre cables ran to the cabinets, copper wires were then used to provide Internet to homes.
Whatever your inclination on what the description of fibre may be, these cabinets play a critical role in channeling fibre optic broadband into homes and places of work. But here’s the clincher: “They are restricted in the number of phone lines and broadband connections they can support, due to limited space and power,” Evans explained.
“Once they have reached capacity, they can no longer serve the local population and the service provider is left with no other choice but to replace the unit with a larger cabinet, leading to further disruption and spiraling costs.”
It gives rise to quite an important question. Given the role of managing broadband infrastructure, how can a company maintain the delicate balance of costs versus demand?
Of course, Evans had a few tips to offer, suggesting there a few options open to the industry and the regulator; “nationalise the service altogether to ensure public accountability or implement a subsidised model in a similar vein to the railways or pass the costs on to the customer.
“This could include charging premiums to customers in poorly connected rural and urban areas, or increasing the overall costs for broadband access so that all customers subsidise those in the worst affected areas. There is no easy solution.
“Running a broadband network is a business and decisions have to be made based on practicality and cost. Currently, BT Openreach, with the support of government subsidies, is directing investment in areas that provide the biggest return.”
Regardless of whether Openreach remains part of BT broadband or is spun out as a private entity, the same principles will apply. The company given the responsibility of supporting broadband infrastructure in the UK, will have to make difficult business decisions and find ways of targeting investment where it can generate return, while still servicing the greatest number of people.
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