An independent review of the coalition-era Superfast Broadband programme published by the Department for Digital, Culture, Media and Sport (DCMS) today argues Britain received value for money, although some rural areas are still waiting for the cable guy.
The Superfast programme aimed to improve connectivity to 5.5 million premises, which would otherwise languish on slow ADSL or dial-up. Readers with a CCNA cert to their name perhaps know "superfast" isn't a technical term, but rather was conjured to refer to connections with download speeds between 30Mbps and 300Mbps. During the lifetime of the programme, £815m from the public purse was spent, which was significantly lower than the estimated total cost of £1.9bn.
In determining the wider economic benefits, the review, written by Ipsos MORI, looked at employment and market trends in the postcodes targeted for subsidised access in the period between 2012 and 2018. It estimates employment levels increased by 0.6 per cent, or by 17,600, thanks to improved network access, with improved per-worker productivity rising by 0.4 per cent, and hourly wages going up 0.7 per cent as a result. Unemployment dropped at a similar rate, with 32 fewer claimants for every 10,000 premises upgraded.
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Subsidised connections also helped boost the most Daily Mail of metrics, with house prices in the target areas improving between £1,700 and £3,500. The report said this suggests "buyers valued the technology," which feels a bit like a truism, given the widespread reliance on the internet for all aspects of normal life. Still, this ain't exactly chump change, with a cumulative rise in equity of £1.52bn.
Overall, the programme is believed to have created £1.1bn in productivity gains in the period spanning 2012 and 2019. Benefits between £1.6bn and £1.8bn are expected between 2012 and 2030, although this is largely indicative of the changing priorities to ultrafast gigabit-capable connections, as well as increasing network demands.
Market distortion isn't a concern either, at least when it comes to the fears of possible entrenched dominance. Although Openreach maintains its overall dominant market position, it lost market share in areas where contracts were issued to rivals, like AirBand and Gigaclear. That said, it would be disingenuous to ignore the fact that Openreach received the lion's share of Superfast contracts.
In total, the Superfast programme is believed to have resulted in between £2.70 to £3.80 of benefits for each £1 prised from the public purse. These lessons have sadly arrived too late for the ongoing gigabit programme, which saw expenditure slashed in the last spending review as the government wrestles with the cost of the pandemic.
Still, it isn't all good news. The report paid a lot of focus on so-called "Phase 3 areas". These are the mostly rural areas deemed unlikely to receive a commercial broadband upgrade in the years following 2016, characterised by "substantially lower" population densities, with premises located further from exchanges than the national average. Phase 3 properties also tended to be more expensive to upgrade, with a unit cost for FTTC estimated at £324 in 2013, compared to just £179 per unit for the rest of the country.
Since these were among the last premises to receive upgrades, it's harder to determine the success of the Superfast Broadband programme here. Although Ipsos MORI noted that superfast and FTTP coverage has improved by almost a third, there is "no conclusive evidence" the government subsidies helped improve speeds.
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That's not to say speeds didn't improve in those areas – they did, with average upload speeds going up from 0.9Mbps to 3.9Mbps, while download speed increased from 6.2Mpbs to 16.9Mbps. However, these improvements may be a result of network upgrades that occurred independently of the Superfast programme, with the report suggesting wider FTTP deployments may be responsible for skewing the results.
The report also noted the Phase 3 deployments suffered delays, which may have depressed performance further. With punters unable to wait for the OpenReach van (or effigy) to park outside their door, they may be inclined to look elsewhere, including towards wireless connections.
Despite that, the rural investments appeared to be sustainable, with no providers withdrawing service due to lack of demand. During the lifetime of the Phase 3 project, only five contracts have been terminated, the report noted. These were all issued by the same local authority, to the same provider, and all hinged on the provider's inability to complete the build-out to standard by a set deadline.
"Analysis of Phase 3 contracts shows that take-up is currently below the expected level of take-up at the start of the projects, and in some cases this is significantly lower than expectations," the report said. "However, the lower level of take-up is expected, given that the delivery of Phase 3 contracts is behind schedule."
Hard to take up broadband that's not there yet, right, rural Britain? ®