Author - bsg

12 Sep 2008

BSG comments on Caio Review

The Caio Report on Next Generation Broadband is a key step towards UK consumers getting superfast broadband, according to the Broadband Stakeholder Group, the government’s advisory body on broadband.

Kip Meek, Chairman of the Broadband Stakeholder Group, says, “Importantly, this report states that although there is no government money on the table, there is a key leadership role for both government and Ofcom, and that everyone involved in the provision of broadband must work more closely together if we are to address the challenges of deployment of next generation, super-fast, broadband in the UK.???

BSG believes that the report is important for three reasons:

  • Firstly it is saying that government needs to come off the fence and recognise that next generation broadband will be of fundamental importance to the UK economy

BSG agrees and believes that government and Ofcom together must show leadership in creating the right environment for investment to take place.

  • Secondly, it is saying that we shouldn’t expect a single entity to deploy a single fibre network universally across the UK. Instead we are likely to see different networks, being deployed in different areas, by different organisations using a mix of fibre and wireless technologies.

This is borne out by the BSG’s recent cost modelling work which concluded that universal Fibre to the Home (FTTH) would cost £28.8bn

  • Thirdly while it rejects the need for blanket subsidies, it is saying that local innovative projects, involving the public and private sector and local communities should be encouraged and supported both as a stimulus to competition and as a way of extending coverage into more rural areas.

BSG research earlier this year demonstrated that if built on international best practice, such projects can be both efficient and effective. But coordination is required at national level.

The BSG is committed to assisting government and the regulator in implementing the recommendations from the Caio Review.

Caio Review final report

BSG response to Caio Review – full press release

Caio Reveiw – Full BERR press release

By Read more...
05 Sep 2008

BSG publishes costs of deploying fibre based superfast broadband

The Broadband Stakeholder Group (BSG) – the government’s advisory group on broadband – will today publish a report on the costs of deploying fibre based next generation broadband in the UK.

The report, produced by Analysys Mason for the BSG, sets out the costs of the various technology options in detail and explains how those costs mount up as fibre is pushed out across the country. It suggests that rolling out fibre nationwide would cost between £5.1bn and £28.8bn (depending on the technology used) and that the costs of deploying in rural areas will far exceed the costs in urban areas.

“This is the most comprehensive analysis produced to date on the costs of deploying fibre in the UK???, said Antony Walker Chief Executive of the BSG. “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.???

The model demonstrates that national deployment of fibre to the cabinet (the cheapest technology option) would cost £5.1bn – this is three or four times more than the telecoms sector spent deploying today’s broadband services. Taking fibre to every UK home (using point to point fibre – the most expensive technology option) would cost as much as £28.8 bn.

The largest single cost component is the civil infrastructure (the cost of deploying and installing the fibre in new or existing ducts). The report suggests that these high civil infrastructure costs 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 fibre distribution in some areas.

The report also 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 time frame, thinking needs to start now about creative solutions for making them more attractive to investment???, said Walker.

The BSG’s earlier research on public sector interventions showed that there are many models for how this can be done that stop far short of large-scale subsidy, but do require the private sector to work closely with public bodies and local communities. In particular, demand stimulation initiatives, such as pre-registration schemes, localised to the level of individual streets or cabinets could prove highly effective in extending the reach of these networks.

Each technology has a high proportion of fixed costs that are incurred regardless of how many users take the service. This means that the cost per home connected (and therefore the commercial viability of the service) is highly dependent on the level of take-up. “If operators could achieve a higher than expected level of take-up in rural areas, then the business case for deployment in those areas could improve significantly???, said Walker.

“The magnitude of the costs, and how the costs differ between urban and rural areas, will be important for operators, media players and public sector organisations looking to develop their future broadband strategies” said Matt Yardley, Partner at Analysys Mason, who directed the work.

BSG Report – The costs of deploying fibre-based next-generation broadband infrastructure

BSG publishes costs of deploying fibre based superfast broadband – full press release

By Read more...
01 Sep 2008

Home broadband improves GCSE results

According to the latest UK Internet Access Report from the Office of National Statistics those students with home broadband access are likely to do better in their GCSEs.

This is not really surprising. Broadband provides students with access to a wealth of resources that previously were simply unavailable. It can aid independent learning by encouraging independent research and discovery, and increase collaboration not just within schools, but across schools, countries and continents. At its most effective, it can completely transform the learning experience.

In 2003 the BSG published a report highlighting the opportunities that broadband presented to the education sector in the UK, and the barriers against wider take-up and use within the education system. It is good to see that broadband is having an effect, and we hope that this will continue as schools and teachers continue to understand how broadband can be utilised to enhance their students’ experiences.

There is still a long way to go, however. There is a big difference between those that do make effective use of broadband, and those that don’t, and particularly between students with access and students without. Progress is continuing in the right direction, with the Home Access To Technology programme within DCSF, and it is important that all concerned continue to work towards realising the full benefits that broadband access can offer education in the UK.

Peter Shearman, Policy Manager, BSG

By Read more...
18 Aug 2008

Through the looking glass? What lies within Ofcom’s Comms Market Report?

Last week saw the publication of what has become a bit of a bible in the TMT sector – Ofcom’s Communications Market Report for 2008.

Perhaps some of you who are more diligent than me and have worked through the 2inch thick report by now, may have more detailed views, which I would certainly be interested in hearing.

However, even the headline themes and stats make for initial interesting reading.

Working for the Broadband Stakeholder Group, it is no surprise that my attention immediately went to observations about the development of the broadband market.

There are no great surprises in here. However, the findings set out by Ofcom do confirm some of the trends various pundits have observed over the last 12 months or so.

Firstly, the number of consumers buying bundles of three of more services is on the rise. Whilst the number of households taking a bundled communications service in 2007 remained the same as the 2006 figure – 4 in 10, the nature of these bundles has changed.

Triple-play bundles now account for 32% of bundles taken in 2007. This increase perhaps reflects both the efforts providers such as Virgin Media and BSkyB to market these packages, and the value consumers now put on certain services. Have we reached the stage where multichannel on-demand TV is now seen as a core service people will pay for, alongside their phone and broadband?

Mobile broadband is another key development identified in the Ofcom study. Much has been said about the success of the dongle in recent months, and here are some stats to back up that assumption. Ofcom’s research shows that between February and June this year, monthly sales of these devices rose from 69,000 to 133,000 a month. Furthermore, 1.5 million people state that they use them at home as well as outside, giving credence to the perception that mobile broadband is beginning to put a real competitive pressure on fixed-line providers.

This trend is particularly important in the context of the UK’s move to next generation broadband (discussed briefly at page 303). Mobile broadband could prove to be popular as we move to faster, fixed-line broadband speeds. However, the role that it could play in a next generation environment is harder to predict.

We, like many others, look forward to Ofcom’s regulatory statement on NGA, for clarity on the regulatory framework that will underpin and support this important transition.

Pamela Learmonth, Policy Manager, BSG

By Read more...
08 Aug 2008

One small step from BT, one giant leap from Virgin Media?

Virgin Media’s statement today that it could be offering broadband speeds of 200Mbps by 2012 certainly puts the cats amongst the pidgeons in the ever noisier debate surrounding next generation broadband.

Last month, BT announced that it would invest £1.5bn to bring next generation broadband to 10 million homes by 2012. The speeds that would be available were quoted in BT’s release as 40Mbps to 60 Mbps for those homes serviced by a Fibre to the Cabinet (FTTC) deployment. Fibre to the Premises (FTTP) could, it said, offer speeds up to 100Mbps.

Although BT stated that the exact split of FTTC and FTTP was still to be determined, it did state that FTTP would be primarily focused on new build sites, whilst FTTC would be more “prevalent” elsewhere.

However, even in the unlikely scenario that it pursued a 100% FTTP deployment, delivering speeds of 100Mbps, the 200Mbps speed quoted by Virgin Media today knocks that straight out of the water.

The potential next generation broadband speeds that can be delivered depend on the technology being used. I could take this opportunity to harp on about the different potential capabilities of BT’s network as oppposed to the cable network owned by Virgin. I could point to the fact that the technology Virgin Media is deploying to deliver faster speeds, DOCSIS 3.0, uses channel bonding technology to (as the name suggests) bond channels together to achieve these super-fast speeds.

Yet a discussion purely on the technical capabilities doesn’t tell the full story. Indeed focus on these headline speeds alone misses the main reason why these announcements are interesting to the next generation broadband debate as it stands now.

The point is, the fact that such announcements are being made is exciting in itself.

Next month we expect to see the publication of a range of documents that will move the debate forward – the independent review on next generation networks being led by Francesco Caio, Ofcom’s regulatory statement on next generation access and the European Commission’s recommendation on the regulatory framework for a next generation environment.

Operators and investors need clarity about the regulatory framework before they can really get going on deployment.

The signals from both BT and Virgin Media are significant and welcome.

They and the rest of the industry now need regulatory clarity to make next generation access in the UK a reality, and not just a pipe dream.

By Read more...
04 Aug 2008

BSG response to EC consultation on cross-media rating, age verification, social networking sites

The BSG today responded to the European Commission’s consultation on cross-media rating, age verification and classification, and social networking sites.

The purpose of the public consultation is to gather the knowledge and views of all relevant stakeholders, such as public bodies, child safety and consumer organisations and industry on these issues.

The gathered information will be fed into this year’s Safer Intermet Forum 2008 which will be dedicated to the above mentioned topics. This is taking place on the 25 and 26 September in Luxembourg and the BSG will be speaking at this event.

BSG response to EC consultation on cross-media rating, age verification, social networking sites

By Read more...
25 Jul 2008

KPN to open its FTTH network to competitors

Rather under the radar this week, KPN, the Dutch incumbent, announced that it would be opening its FTTH networks to its competitors, in order to maximise the utilisation of their network.

In a deal with Reggefiber (a fibre network construction specialist) KPN will take a share in existing local FTTH projects and build on these as they deploy their FTTH network.

This is an interesting development in the EU context. The majority of incumbents within the EU are less than enthusiastic about opening up their networks having made such a large investment, but KPN have positioned this as an appropriate way to share the risk and ensure utilisation of the network. It moves KPN closer towards a civil utility-type of model, with many providers offering services over the network, owned by a single operator.

The local/community projects are also an interesting aspect of this development, as it shows that these can play an important role in demonstrating that these networks can be efficiently deployed – Reggefiber’s assets in the local networks they have built out are included in the joint venture with KPN.

By Read more...
24 Jul 2008

BERR launches consultation on illegal file-sharing

BERR today launched a consultation on approaches for tackling illegal file-sharing.

The consultation is seeking views on the proposed co-regulatory approach put forward by BERR for working with industry and the regulator to address the issue of illegal peer-to-peer file sharing.

Alongside the consultation, a memorandum of understanding has been signed by the major ISPs and representatives of the content industry that sets out an objective to achieve ‘a significant reduction in the incidence of copyright infringement as a result of peer to peer file-sharing’ within the next two to three years.

This will begin with a three month trial where ISPs will notify 1,000 subscribers per week, who have been identified as being engaged in illegal file sharing, that their account is being used for illegal activity. The results from this trial will be assessed by the signatories before deciding on further action.

These developments come five months on from the government’s announcement, when it launched the ‘Creative Britain’ strategy paper, that it would consult in 2008 on legislation requiring rights holders and ISPs to work together to address illegal file-sharing.

At that time, government set a deadline of Spring 2009 for this issue to be addressed before legislation would be introduced, and today’s announcement is a significant step to finding a solution agreeable to ISPs, the content industries and government within that timescale.

BERR consultation on illicit P2P file-sharing

By Read more...
23 Jul 2008

KPN announcement

On Wednesday KPN, the Dutch incumbent, announced that they would be opening up their FTTH deployments to their competitors, in order to maximise utilisation of the network.

This announcement builds on KPN’s announcement in May that they were setting up a joint venture with Reggefiber, a fibre network construction specialist, to build out their FTTH networks. KPN will hold a minority 41% share of the JV, and both KPN and Reggefiber will add their existing FTTH assets to the venture.

Reggefiber were responsible for building the network in Nuenen, and own 5% of the Nuenen network along with other local networks.

This approach is very different to those of other European incumbents. It is also interesting to note the process by which they have arrived at this announcement, as it builds on a number of local projects that have already been deployed, and moves KPN towards a civil utility-type arrangement.

For more information on this announcement see http://uk.reuters.com/article/rbssTechMediaTelecomNews/idUKL2334840820080723

By Read more...
22 Jul 2008

BSG response to EC consultation on cross-media rating, age verification, social networking sites

The BSG today responded to the European Commission’s consultation on cross-media rating, age verification and classification, and social networking sites.

The purpose of the public consultation is to gather the knowledge and views of all relevant stakeholders, such as public bodies, child safety and consumer organisations and industry on these issues.

The gathered information will be fed into this year’ Safer Intermet Forum 2008 which will be dedicated to the above mentioned topics. This is taking place on the 25 and 26 September in Luxembourg and the BSG will be speaking at this event.

View the BSG’s response

By Read more...
15 Jul 2008

BT announce £1.5bn fibre deployment

BT today announced that they plan to spend £1.5bn to provide superfast broadband to around 10m homes by 2012. The BT press release can be found here.

The BSG has issued a statement welcoming this development, which can be found here.

By Read more...
15 Jul 2008

BSG welcomes BT announcement on next generation broadband

The BSG welcomes today’s announcement from BT that it plans to invest £1.5 billion in making next generation broadband available to up to 10 million homes by 2012.

In April 2007, the BSG, – the UK’s leading independent advisory group on broadband – published its Pipe Dreams Report that stated that there was a two-year window to create the right environment for next generation broadband deployment in the UK.

Commenting on the announcement, Antony Walker, CEO of the BSG said “There has been a question mark hanging over the UK telecoms sector for the last 18 months about how we move to next generation broadband. Today’s announcement is by no means the whole answer, there are still questions about the regulatory framework and how we extend services to more rural areas, but it is a very significant step forward???.

BT’s announcement comes in response to increasing competition from cable and new mobile broadband services and growing demand for bandwidth from consumers. Walker described it as “a positive sign that the transition to next generation broadband can be market-led. The key question now will be whether Ofcom can move quickly to create a regulatory framework that both enables large-scale investment and ensures effective competition???.

The BSG believes that the move to next generation broadband will be at least as important as the move from narrowband to broadband. “It will bring about a revolution in the capability and quality of services and will enable the next big development of the internet. You could think of it as the catalyst for web 3.0???.

Full press release

By Read more...
11 Jul 2008

The broadband speed debate

uSwitch.com has collected data on the speeds received by those who visit their site, and compared them to the maximum speeds these users signed up to receive. Similar to the recent research from the BBC and thinkbroadband.com, they found that the majority of users did not receive the maximum speeds that they signed up to.

This is not a surprise, of course. The speed of a broadband connection depends on many factors, including the number of other users online at the same time, the distance of a connection from the local exchange, the tuning of the modem in the home, and even faulty electrical goods within the home, which are clearly outside of the control of ISPs (see this excellent atricle in PC Pro for tips on how to improve your broadband speed).

But is speed really the be all and end all of broadband performance? There are other aspects of a broadband service that impact on performance, as I have discussed before, and these are often overlooked.

Improvements in these factors that affect performance could make far more difference to the current broadband experience than improvements in speed alone.

By Read more...
03 Jul 2008

So what are the benefits of next generation broadband? The economic story part II

Following the earlier piece, I thought I’d briefly set out what the economic benefits are that are identified in our ‘A Framework’ report, in order to illustrate where we think value would accrue.

The largest categories of private value in the report are: doing things that we do now, but more efficiently; doing more of what we do now; and doing new things.

Each of these categories of value has the potential to be very significant. We make no attempt to quantify the last two, as it would be difficult (if not impossible) to do so.

Doing things more efficiently we have attempted to quantify. Based on 80% coverage, if 50% of broadband users saved 3% of their time, time savings worth £0.9bn per annum would be achieved (based on a value of leisure time used by government studies).

Note this is only an assumption, for indicative purposes. We would be interested in seeing any evidence that could refine this value, such as more detailed research on the activities consumers do online and how long they spend doing them.

The largest categories of wider economic value were: resilience, adaptability and policy options; and spill-over and virtual agglomeration. Again, these were not quantified as this was not appropriate, but we think these are likely to be significant in value.

The substitution possibilities created by next generation broadband would mean that the economy would be far more resilient and able to adapt to shocks, for example an oil price shock by providing alternative to travel. This also creates an additional range of options available to policy makers, which would be highly valuable in itself.

Virtual agglomeration had been identified as likely to be a big benefit from next generation broadband. Agglomeration refers to the productivity benefits of cities and clusters of activity – London, for example, has a higher productivity level than other areas in the UK. Through virtual agglomeration, next generation broadband could achieve some of the benefits of clusters and cities, and without some of the costs of cities such as congestion and pollution.

We also identified other categories of wider economic benefit, such as: an increase in competition in the economy; network effects as consumers and businesses both in the UK and across the world move to next generation broadband; reduced traffic congestion; the value created by the re-use of land and buildings no longer required by a next generation broadband network; reduced business travel; increased online backup; video distribution; and improved connectivity for SMEs. Some of these we did attempt to quantify, such as a reduction in business travel. For our estimations see section 5 of the report.

That’s the whistlestop tour of the categories of benefits we identified. We are keen to see these categories built on over time. We hope that as evidence emerges we will be able to more accurately populate this framework, to build up a more accurate quantitative picture of the benefit of next generation broadband.

Peter Shearman, Policy Manager, BSG

By Read more...
27 Jun 2008

So what are the benefits of next generation broadband? The economic story

Following the launch of our report ‘A Framework’, I thought it would be worth setting down a few pieces about the benefits highlighted in the report. I’ll start with a general view of the economic impact the report sets out, which although substantial in terms of benefits, may be difficult in practice for investors to capture.

First, a brief note on the methodology. We have taken a bottom-up approach, examining where in the economy specific value could possibly accrue, rather than making general estimations of the impact of next generation broadband on productivity or GDP. For more on this in the report, it is worth looking at the section on ‘pseudo costs and benefits’. We also broke down economic value in to two categories – private value that accrues to investors and consumers, and wider economic value.

The report sets out a wide variety of categories where value would accrue. Some of these benefits would be captured upon deployment; others would take time, require transformations and would accrue in the medium to long term. In addition some of these benefits may be impacted by various policy agendas – for example, the role for next generation broadband in reducing carbon emissions is potentially significant depending on whether a carbon tax was introduced that encouraged substitution for emission-intensive activities.

The report suggests that these benefits are potentially very large, and in the long term likely to be larger than the cost of deploying the network. Particularly, there is likely to be significant private value that will be captured by investors and consumers. This does not mean, however, that the business case is made, and in reality there are difficulties for investors in trying to capture this value.

The report highlights three key constraints on investors’ ability to capture private value. First, to the extent that next generation broadband is an experience good consumers may not be willing to pay a premium for the service until they have experienced it. Second, creating this value may require the transformation of value chains, which may take time and would be disruptive. Third, investors do not yet have accurate knowledge of how much consumers are willing to pay, meaning that there will be difficulty in setting the correct pricing structures in order to maximise how much of the value they are able to capture.

Generally, the report calls for further work that would address these and other uncertainties. Resolving these uncertainties will be key to creating a business case that is acceptable to investors. The BSG is continuing its work programme that will hopefully shed some light on these and other issues. We are keen that further evidence is put forward that can help illuminate these, and would be interested to see any evidence others have to this end.

By Read more...