Enet Blog

Jul 18, 2017

Doctors differs and patients die – incumbent behaviour when States intervene in superfast broadband networks

If there is one growth area that might benefit from a less constrictive set of EU regulations, it is state-funding of a superfast broadband rollout.

Believe me, I do not want to become embroiled in the internal debate about the rights and wrongs of Brexit, but this point about state intervention was one that was in the air during the UK-wide Infrastructure Investment Showcase and Debates I attended this month (June) in Milton Keynes.

I was on a panel looking at how we can obtain next-generation broadband and I’m afraid it turned out to be BT versus everyone else. As we discussed the very few merits of G.fast, BT’s “cutting-edge” pilot technology that it is claimed, delivers speeds over existing copper lines of up to 330Mbps, the problems of incumbency became ever more apparent. Essentially, there is little incentive for the dominant telecoms companies in any country to rip out their vast copper networks and replace them with fibre, which is the only way you can obtain super-fast broadband consistently. By fibre, we mean fibre all the way – not a fibre connection to a copper network or a copper connection to a fibre network.

This brings me back to the point about EU regulations. Quite rightly, the EU is concerned to keep things fair and prevent state funding that skews the market. It is a fact, however, that where you have big incumbent operators, it will in most cases take state intervention to ensure that everyone has access to consistently fast broadband. Using all kinds of technologies in conjunction with copper is fine enough and means the monolithic incumbent does not have to spend money on fibre. But is never consistently fast enough to create the super-fast broadband infrastructure that is as vital to this age as electricity was to the development of industrial societies in the early years of the last century.

For the time being, the majority of domestic subscribers may be content enough with the broadband speed they receive. It may be enough to watch Netflix or Amazon Prime Video. Yet already there is a minority who have more sophisticated uses in mind and are unhappy with current speeds. Their numbers will grow as, for instance, in-home health care, home entertainment systems and gaming become more complex and take up more bandwidth. The exponential growth in business technologies, artificial intelligence, driverless cars and interconnected industrial devices means copper is bound to fall short, as is increasingly recognised in the commercial world.

If a company like BT was really committed to meeting future demand and ensuring fair access to super-fast broadband everywhere, it would not be spending vast amounts of money on football rights and pundits’ fees. Instead, it would concentrate on installing a fibre network, because this is the only reliable way to provide consistently fast connectivity.

The conference discussion in Milton Keynes confirmed that if remote, rural areas or smaller towns are to be fully connected to the 21st century, then the state will probably have to intervene in one way or another. Big incumbent providers have little incentive to invest in connecting small and dispersed populations. This state intervention may be through the stimulation of competition between existing telecoms providers or it may be through other forms of more direct intervention that include state subsidy.

It is here that the labyrinthine nature of EU regulation can act as a deterrent. Not necessarily in that, the regulations ban all intervention, but through what it takes to obtain permission for some kind of state investment. One cannot help noticing the advantages that South Korea has brought itself on the back of government-funded development of broadband infrastructure. This is a country that did not have to ask permission or jump through regulatory hoops to make these gains.

Clearly, running fibre into every home and premises is very disruptive and may for domestic customers, not always be immediately welcome, but it is what all nations now need if they are to sustain economic growth in the mid-21st century. It is also an investment that will only have to be undertaken once. Just once to ensure a real chance of future prosperity. The problem is, there is too little incentive for the big incumbents to do it.

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