The changed working patterns and increased social isolation triggered by the Covid-19 pandemic have made even starker the digital divide that exists in the UK between urban and rural populations.
Whatever form the ‘new normal’ takes, access to affordable high-speed internet will remain essential for working, learning and socialising, as well as for providing many of the basic functions of government.
The disparity between the broadband urban haves and rural have nots was recognised in the UK government’s 2019 manifesto pledge to roll-out gigabit broadband connectivity across the entire country by 2025. Disappointingly, this target was quietly scaled back in November 2020 to 85% of the country, with the Government’s progress condemned by the Public Account Committee (PAC) for a “litany” of errors and a target that was “unachievable”.
The committee’s assessment will no doubt become true if the government fails to change its approach, and if operators see the PAC’s report as representing an industry consensus that itself encourages them to take pressure off Government.
State of the divide
Ofcom’s Connected Nations 2020 report found that gigabit broadband is available to 27% of homes, full-fibre to 18%, and superfast to 96%. These figures continue to rise each year, with fibre now in more homes than ever before. However, there is a long way to go, especially in rural areas. An estimated 608,000 homes still do not have access to a decent or reliable broadband connection (10Mbps+) and this is heavily concentrated to certain regions. In rural parts of Wales, for example, we estimate that as much as 30% of the population have only minimally functional broadband.
Digital inequality affects people in all age groups and makes social inequalities worse. To put things into perspective, the likelihood of having access to the internet from home increases with income. Figures from the Office of National Statistics show that only 51% of households earning between £6,000-£10,000 per annum had internet access, compared with 99% of households with an income of over £40,000. Everything must be done to close this gap, and to fulfil the Government’s pledge to ‘build back better’.
Turning the tide
The UK Government’s 2025 target is as achievable as national and local governments want it to be. Most of the pieces are in place to make it happen.
First, there’s affordability. The public debate around the UK’s future digital infrastructure requirements has to be less centred on the incumbent provider and its costs, and more realistic about the actual, far lower costs of delivery by smaller, more nimble providers.
Second, regulation. Since publication of the Government’s Future Telecoms Infrastructure Review in 2018, policy and regulatory decisions have taken a clear pro-competitive direction, supported by barrier-busting initiatives with regard to planning regulations, land and property access rights, increased access to affordable radio spectrum, and so on.
Third, financing. While the Government has said it will initially only make available 25% of the £5 billion it had committed to support the roll-out of gigabit-capable broadband to the hardest-to-reach areas, the balance of funding is still available if industry demand for it emerges. In addition, there remains largely untapped funding pools available to Local Government, which is after all the major beneficiary of the more efficient delivery of public services that fibre and 5G promise. And of course, institutional investor appetite for UK fibre assets is very strong, reflecting the significant catch-up work to be done in the UK and the predictable returns available.
The final piece of the puzzle is the role of Government itself. The UK has not been well served in the last 10 years by traditional models of public procurement that have been both protracted and costly, and have served merely to strengthen the position of the incumbent operator as well as to stifle innovation. Post-Brexit, Government has an opportunity to redefine its role in favour of more innovative engagement models, following the lead of some of the more forward-looking and innovative local governments.
Activating altnets
The boom in the altnet sector promises an acceleration in the rate of fibre roll-out over the next five years. Early in 2020, the Independent Networks Co-operative Association (INCA) estimated that 15.73m or 50% of homes could be reached via alternative FTTP networks by the end of 2025. Another report by the same trade body revealed that a record £1.76bn of private funding was announced in 2019, taking total investment in the sector to over £7bn.
So why the buzz? By comparison with the incumbent providers, altnets are nimbler, lower cost and more focused and, importantly, eager to occupy the space. With Virgin Media and BT under fire for above inflation price hikes at the start of the year, and BT executives saying Welsh full fibre is cost prohibitive, there is clear opportunity to seize on proven consumer demand for affordable gigabit services.
Activating this sector will therefore be key to achieving the Government’s 2025 target. The delivery of fibre over the coming years should be about reaching every premises in the country, and the more hands-on deck the better. However, it relies on a number of factors coming together. The regulator, operators, investors and most important, government must all work together to make it happen.
Achieving the government’s target is ambitious, but it is vital for driving equality between rural and urban areas, and ultimately improving the lives of people who have been left behind. It will be the energy, focus and drive of the altnets that make the difference.
