UK Gov is the biggest hurdle to infrastructure rollout - report

A report from law firm Herbert Smith Freehills has highlighted industry concerns that the UK Government is proving to be more hindrance than assistance for the rollout of future-proofed infrastructure.

While it might come as little surprise to some, the government is proving to be a clunky machine, with policy frameworks and regulations the main reason for the stuttering rollout of full-fibre and 5G networks across the UK. And this is not just the opinion of a bureaucracy-bashing hater, 50% of the audience at a recent Herbert Smith Freehills event agreed with the statement. There are other factors which are slowing down progress, but the government is the biggest hurdle.

“When you look at what happens in other countries they have taken much bolder decisions about regulation,” said Emily Clark, Chief Economist at BT. “In countries like Spain and Portugal – where there is a lot more FTTP – they’ve tended to step back from regulation like VULA in order to really drive incentives for rivals to invest.

“And in other countries they’ve actually stepped back from competition and said what we’ll do is create a very stable and predictable regulatory framework around the single national provider and that has also worked very well.”

The problem which the UK is facing is few positive decisions have actually been made. Policy frameworks and regulation have seemingly followed a similar path to the decisions of yesteryear. This is a huge issue as there is very little to compare the communications market of the 90s to what the beast has evolved to today. There are new modes of communication, software is arguably more important than hardware, the ecosystem has expanded and the role of digital in our lives is becoming increasingly more prominent. The game has changed, therefore the rules have to.

While this adaptation is a point which has been discussed for many years, the difference between preaching and action has been quite profound.

“There’s been somewhat of a mismatch between Government’s enthusiastic rhetoric to get as much infrastructure based competition as possible in to the UK market and some of the policy decisions we’ve seen emerge,” said Dan Butler, Head of Public Affairs and Policy at Virgin Media.

Specifically, Butler is referring to increases in business rates, wholesale price controls on superfast broadband and also the rejection by government of BT’s offer to voluntarily invest up to £600 million to deliver 10 Mbps broadband to 99% of the UK by 2020. These policies are not necessarily consistent with the government position on assisting the development of the industry, but it wouldn’t be the first time PR appeasement pleas are flouted to the press promising progress and reform, only for the public sector machine to continue on the same mundane box ticking mission.

“We hope that the DCMS (Department for Digital, Culture, Media & Sport) Future Telecoms Infrastructure Review will be a vehicle for more policy consistency and to solve some of the genuine supply-side barriers to build, which are wayleaves and getting broadband in to new developments,” said Butler. “And Government should implement policy which stimulates demand for ultrafast broadband – through voucher models, and encouraging people for whom there might be an economic barrier to move to high speed broadband.”

The Future Telecoms Infrastructure Review has been in the works for a couple of months now, as part of the wider Industrial Strategy, though there don’t seem to be many indications it will come to an end any time soon. The aim is to assess whether any additional policy interventions are needed to create the conditions for long term investment in world-class digital connectivity, though many in the industry are seemingly calling for a more light touch approach.

With the UK about to leave the single market, there is bound to be bigger changes on the horizon. Secretary of State Matt Hancock seems to be indicating there will be greater intervention in the post-Brexit world, while Labour Leader Jeremy Corbyn has pointed towards renationalisation of Openreach as a wholesale, open-access provider. Whether the right approach is currently under consideration remains to be seen, but one thing is clear from the feedback; something needs to change.