Potential near £70bn boost to British economy from gigabit broadband

Since the start of the year, the UK has been making progress in achieving the government’s ambition to deliver gigabit-capable broadband to the entire country, and now research commissioned by Huawei has calculated that achieving this aim could add as much as £51.4bn gross value to the economy.

Fundamentally, the study by Assembly Research said industry in the UK stands ready to deliver the government’s plans to extend broadband reach to every corner of Britain as soon as the right conditions are in place and remaining barriers are removed. The study noted that while the UK has made significant progress in both mobile and fixed connectivity, it lags behind in full-fibre coverage.

And this lag has real negative cash values attached to it. Assembly Research warned that a 12-month delay to achieving the 2025 goal of full coverage of gigabit-capable broadband would mean the UK missing out on £9.7bn of productivity benefits, while a two-year delay would see the UK miss out on £28.7bn. In addition to staying on target meaning a £51.4bn boost, the study projected that if everything remained on track over the next 10 years, the boost could total as much as £68.8bn by 2030.

Introducing a note of reality, the report offered advice as to how the UK could successfully reach the first target. It said UK policy-makers should consider six recommendations:

1. Build on the significant progress there has been with commercial roll-out and enabling regulatory environment, and maintain this momentum.
2. Ensure sufficient funding exists for non-commercial areas if the whole country is to be covered and nobody is to be left behind.
3. Commit to a technology-neutral approach to reach the hardest parts of the country on time and in a cost-effective way.
4. Support market entry and expansion by alternative network operators, recognising that competition will vary by geography.
5. Make the cost of deployment as low as possible by addressing remaining barriers, which both increase costs and cause delays.
6. Ensure the demand side is given more attention to encourage take-up and help lower investment risk.

Commenting on the report, Matthew Howett, principal analyst and founder of Assembly Research, said it was clear that access to reliable, future-proof digital infrastructure for all was not a luxury. “[It is] now accepted as a necessity, whether it’s used for work, education or play. Increasing investment in key digital infrastructure will provide the bounce-back and economic recovery the UK will desperately need in the months and years ahead,” he noted.

CityFibre has been one of the undisputed fibre broadband success stories in the UK in 2020, enjoying growth as it made strategic acquisitions and announcing a number of key wins for its services. Looking at what the research revealed, especially in light of the post-Covid-19 economy that it would be working in, Alex Blowers, director of regulation at CityFibre, said he was generally pleased with the direction of travel, but warned that issues remained to be solved, notably regulatory ones.

“The Covid-19 crisis has proven beyond doubt that the country needs world-class digital infrastructure. As we rebound from the crisis, it will be more important than ever to have a coherent plan to deliver ubiquitous full-fibre coverage,” he remarked.

“The good news is that the basic building blocks required – an increasingly competitive market structure, and the necessary funds for investment – are in place. But our investors still need to see the policy and regulatory measures put in place to support that competitive fibre investment. It is particularly important that Ofcom rapidly resumes its work to put in place a pro-competition, pro-investment regulatory strategy.”

Openreach, the UK national broadband provider on which it is incumbent to drive the majority of full fibre roll-out, noted that achieving the government’s ambitions for broadband would need a massive effort, significant investment from the private sector and a faster build rate than virtually any other country has achieved.

In her analysis on the findings and meeting the roll-out ambitions, Catherine Colloms, director of corporate affairs and brand for Openreach, said: It’s a big ask, and it needs decisive and coordinated action across government, the regulator and the wider telecoms industry to make it a reality. There has already been some progress on removing barriers, but action is needed to improve access rights for apartment blocks, make street works simpler and remove business rates on full fibre. Network builders need the right conditions to invest and the right policies to encourage a fast, efficient build.”