Government accused of underfunding UK broadband rollout

News 3 May, 2012

New study claims UK-wide superfast broadband will not happen without a further £1 billion investment.

The Government must urgently reconsider the amount of money its investing in the rollout of superfast broadband, claims a damning report from the London School of Economics (LSE).

The document, commissioned by customer management software vendor Convergys, claims a £1.1 billion shortfall in infrastructure funding could derail Government plans to deliver superfast broadband to 90 per cent of the UK by 2015.

The Cost and Benefits of Superfast Broadband in the UK report said the Government is on course to meet its targets for “basic broadband” services to be widely available across the UK by 2015.

The social and economic benefits of investing in broadband are hard to argue with.

However, the £1.3 billion that has been set aside by the private and public sector to fund broadband deployments may not stretch to superfast networks, it added.

“Meeting the Government targets of 100 per cent fast broadband coverage and 90 per cent superfast broadband coverage in 2015 will absorb not only the funding from public sources but also roughly equal funding from private sources,” said the report.

“This calculation assumes that Government funding is matched by funding from local authorities and devolved administration to give a total of about an additional £1.1bn.”

It also claimed the £50 million the Government said it will invest in project during the 2012 Budget will do little to close the £1.1 billion spending gap.

Speaking to IT Pro, Morag Lucey, global senior vice president of marketing at Convergys, said the onus should be on the public sector to make up the shortfall.

“Pressure is growing on private companies, like Virgin and BT, to invest even more in superfast broadband. This is wrong because the social and economic benefits of this project will be so wide ranging.” said Lucey.

"It is not just service providers that stand to gain from making superfast broadband more readily available across the UK."

Without further investment, the UK economy could start to lag behind its European counterparts," she warned.

“There are many parts of the UK that are behind in e-skills and that knowledge gap will increase without proper funding,” added Lucey.

To emphasis this point, the report cites figures from a study by University of Munich’s Institute for Economic Research into the impact broadband access has on the GDP of countries within the Organisation for Economic Co-operation and Development (OECD).

Its findings showed that, for every 10 per cent increase in broadband penetration, OECD countries enjoyed a 0.9 per cent to 1.5 per cent increase in per capita GDP.

The LSE report was co-authored by Paolo Dini, senior research fellow at LSE. He told IT Pro the funding the UK Government has set aside pales in comparison to what other countries have invested in superfast broadband.

“The social and economic benefits of investing in broadband are hard to argue with,” he told IT Pro.

“When you look at the £200 billion the Government is investing in energy and transport infrastructure, the £1.1 billion spending gap for broadband is comparatively small," he added.