Local funding for rural projects means nothing without industry support

In recent years, in a bid to meet the Digital Britain mandate, thousands of pounds continue to be invested in local connectivity projects, particularly as BDUK funding continues to be allocated. Whereas this should be good news for affected regions, the reality is that uptake figures are low in many regions and this has left many local councils struggling to support and, therefore, justify the investment.

The notion that there are vast swathes of the UK without usable broadband remains true. Ofcom’s recently published UK broadband map shows not only that mountainous areas in Scotland and Wales lack a decent service but that large areas of the Home Counties, including Essex and Kent, don’t fare much better.

It’s not true to say, however, that the groundwork hasn’t already begun all over the country. A slew of new local broadband projects, mainly driven by BDUK funding, have been commissioned but, despite the development of these networks in some cases projects are struggling to gain traction.

As reported by Telecoms.com recently, a salient warning came from the Yorkshire Post when highlighting the fact that low take-up for the Digital Region project in South Yorkshire was threatening funding to complete the final 17 per cent of the roll-out; originally intended to be funded via profits from the first 80 per cent of the roll-out.

Amongst the factors listed for this slow adoption were the lack of a big household name to offer the service, a general lack of awareness (and confusion around similarly named Digital Switchover) and difficulty in finding information for consumers. In short, councils don’t have enough marketing and sales muscle to drive awareness within local communities for the type of services being offered.

The experience working with County Councils supports this assertion. They are looking to make these investments to keep their communities competitive in the UK market, enable businesses to flourish and people to work from home. They’re trying to persuade customers to listen and buy from a range of options and want their residents to truly appreciate the benefits of high speed internet – a tough message to disseminate. Councils are also challenged with building business connections which requires a completely different discourse – a huge challenge.

The networks are incredibly different, too, from a technology and service point of view. Many look at one contractor to build their network but many choose alternative methods; resulting with a wide variety of networks, service levels and support. This complexity doesn’t make them attractive to ISPs and so support in working with these networks is less than expected.

In fact, there’s little incentive for ISPs who, generally, like to be very automated in the way they serve their customers; keeping costs low – very important if you are only making a few pence per month profit. Each integration means using expensive developers who may take months to enable one network. If this network then only creates interest for 1,000 or so potential customers the costs don’t stack up.

So what’s the solution?

In August in the US, six US telecoms companies, including AT&T and Verizon came together to submit proposals to the Federal Communications Commission (FCC) on how to extend broadband services to 4 million rural end users. The proposals would change the country’s $4.5bn Universal Service Fund (USF) over a period of five years into one with an exclusive focus on rolling out broadband networks, called the Connect America Fund (CAF). The CAF would identify areas where it is more costly to deploy broadband networks and where there is no business case for offering services, and provide support to a single telco in each area.

Whilst not the same, this unified, industry-led approach has a distinct benefit: the benefit of having big marketing and sales budgets behind it. We’ll see this industry-led approach emerging throughout this year in Britain with a number of forthcoming initiatives that could give meaningful access to the most rural regions to the ISP community, bringing marketing budgets and know-how to stagnating areas.

A soon-to-be announced joint venture will see ISPs able to access remote areas for the first time via a wholesale network without the significant costs associated with enabling an exchange or building to an area. The cost to an ISP of building a last-mile network or connecting to one across the country can be significant, dramatically reducing take up and hence limiting choice of provider to the end user. ISPs will be able to use an existing network (Fluidata’s network); removing that cost and sharing between the providers already using the platform for more standard DSL services.

This kind of model, if widely adopted, would allow the flow of sales and marketing investment from the ISPs to gain subscriptions and will open rural areas to ISPs to offer consumers real choice; supporting heavily subsidised government backed initiatives which could falter if take up by customers is not significant.

When ISPs see a real opportunity to penetrate hard-to-reach areas, for little up-front investment, the benefits are clear. And it’s the ISP community, not the government, which has the power to transform already burgeoning local network projects into revenue-generating businesses. The government has already pushed its deadline for universal access to broadband in the UK by three years and, in the meantime, we remain disconnected; industrial intervention is the only way to resolve this ongoing challenge.

By bringing ISPs back into this space we are ensuring that the rural deployments become commercial networks as soon as possible; removing the need for council and government support. It is important to be able to prove demand from consumers and businesses alike in these areas in order to build back a level of confidence in affected regions. A model like the one described above allows all ISPs large and small to test the water and deliver services on a national level without the need to redevelop every time.

Piers Daniell is MD of service provider Fluidata