Richard Watts 03 May 2018

Go with Gigabit

Go with Gigabit image

Earlier this year, the UK Govt named the first recipients of its new £190m fund to support local full-fibre broadband projects. In his March Spring Statement, the UK chancellor awarded a £95m portion of the £190m Local Full-Fibre Network (LFFN) Challenge Fund to 13 (FTTP) broadband projects around the UK.

The 13 successful projects across Britain and Northern Ireland are each set to receive between £2.23m and £15.1m of funding to help fund local and commercial investment in their FTTP broadband.

Those local authorities whose projects weren’t chosen for the LFFN fund will of course be disappointed. However, they shouldn’t give up hope: a pioneering new approach developed in Sweden to roll out fibre connectivity and then monetise it has the potential to empower local authorities to take an active role in installing fibre and rolling out high-speed broadband services at a local level for themselves.

The UK is falling behind in the global connectivity race

Despite initiatives like the LFFN Challenge Fund, the UK is already at risk of being left behind by mainland Europe. The UK has been focused on a superfast fibre programme that delivers only 30 Mbit/s, whereas in contrast, Europe is now focused on deploying full-fibre Gigabit-speed FTTH networks.

Gigabit networks are capable of download speeds more than 30 times that of superfast fibre and a staggering 100 times faster in upload speed (source: The FTTH Council). In the UK, this type of Gigabit FTTH connectivity reaches just three percent of UK households currently.

For the UK, this problem will only worsen in the future, as IP-based digital services evolve and networks have to carry more traffic. UK local authorities therefore need to focus on Gigabit-speed fibre connectivity instead.

But why should local authorities invest money and time in installing and lighting up fibre networks? Why not leave it to telecom operators and service providers instead?

Fibre roll-out is too slow

The painfully slow rate of fibre roll-out in the UK shows that local authorities can’t rely on major incumbent operators and service providers for their essential connectivity. These companies are driven first and foremost by profit and ROI in their fibre roll-out plans. If a town or region doesn’t meet their criteria in terms of projected subscribers and revenue forecasts, the providers will focus their efforts elsewhere.

Confronted with this inertia by the major service providers, there’s no reason why local authorities can’t install, own and manage their own local digital infrastructure. After all, they’re already responsible for other essential local infrastructure such as roads, tunnels, drains and pipes. And in today’s digital world, high-speed, high capacity broadband is definitely essential infrastructure.

Go with Gigabit fibre

In financial terms, Gigabit fibre is an ideal infrastructure asset for a local authority to invest in, since it has a useful life of at least 25-30 years. In this sense, local authorities can finance it over similar time frames to other public infrastructure works like roads, tunnels and bridges.

However, unlike roads and bridges, Gigabit fibre can generate extra revenue and repay the debt accumulated to finance it. The local authority can monetise its Gigabit network itself - either by launching its own services or leasing it to third-party service providers and network operators. The debt shouldn’t burden the authority’s other financial obligations.

The benefits of 'open access'

But for this approach to work, it’s essential that the local authority’s new Gigabit is 'open access' – that is, it separates out the different layers of the infrastructure: the passive layer- namely, the fibre itself: the active layer - the all-important network management systems and tools: and the service layer – the actual features and services provided to business and residential customers.

The multi-layered 'open access' approach to building and managing network infrastructure has multiple advantages over relying on a single telecoms operator or ISP like Openreach or Virgin Media, who’ll control every layer.

Firstly, it lowers the barriers to entry for new and local broadband service providers, allowing for proper competition in the market. It also introduces greater transparency into the cost and quality of different providers’ service offerings. It removes barriers for providers to launch new services, thereby encouraging innovation and economic development. Finally, customers are able to easily switch providers, and also try new services as they come online

The return on your fibre investment

Investing in and rolling out an open access Gigabit fibre creates multiple opportunities for a local authority. It can lease its new fibre assets directly to network operators and service providers at a healthy return rate. Alternatively, the Authority can monetise its new fibre assets directly by working with specialist partners to launch its own services, such as broadband for residential and business customers, as well as eGovernment features for its residents.

Gigabit fibre is also a means for local authorities to obtain a bigger and better ROI from residential or commercial developments or regeneration schemes. The authority can charge developers more by making high-speed Gigabit connectivity already available at the site of their proposed project.

Following the Swedish model

In Sweden, this public-private collaboration, in which the local Government supplies the fibre and private sector companies light it up with services, is delivering results. Sweden is well on its way to achieving 98 percent nationwide Gigabit-speed connectivity.

By following this Swedish model, regional development teams can take advantage of the value of Gigabit-speed fibre connectivity as an integral part of their economic and social development and growth initiatives. By installing Gigabit instead of superfast fibre, these teams can future-proof these initiatives for ongoing expansion and improvement.

Take control of your 'Digital Destiny'

At a time when local Government spending is under sustained pressure, local authorities can still take control of their own 'digital destiny' in a way that supports and encourages social and economic development at a regional level, for the short and long-term.

Richard Watts is head of business development at VXFIBER, the Swedish provider of Fibre-to-the-Home (FTTH) Open Access solutions.

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