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Give me a (tax) break: UK broadband plumber Openreach to almost double the number of rural premises to receive FTTP

Amazing how being able to write off 130% of infrastructure deployment focuses minds

BT-owned Openreach threw rural Britain a bone today, announcing it would double the number of country premises expected to receive FTTP access by the end of 2026.

The pipe layer committed to connect over 6.2 million homes and businesses in rural and semi-rural locations to its gigabit-capable full-fibre network.

Openreach had originally planned to upgrade just 3.2 million rural premises by the mid-to-late 2020s. The previous plans targeted around 250 areas Ofcom had deemed to be underserved by fixed-line providers.

Known as “Area 3,” these towns included Blyth in the North East, Ballymoney in Northern Ireland, Llandudno in North Wales, and Peebles in Scotland.

The additional premises announced today will be clustered in similarly hard-to-reach and underserved regions.

These include Kirkwall in the Orkney Islands, Cardigan in Wales, Keswick in Cumbria and Allhallows in Kent.

Openreach promised to fund these upgrades itself, thus limiting the need for direct government subsidies.

The move follows a commitment by BT to “build like fury” following the publication of Ofcom’s Wholesale Fixed Telecoms Market Review in March.

BT was heartened by Ofcom’s decision to limit pricing controls on full-fibre broadband and telephony products for the duration of the gigabit rollout.

Ofcom has said it does not expect to introduce price controls before 2031. It has also committed to regulate full-fibre products “in a way that supports the continued development of competition and investment.”

Helping matters, BT is set to benefit from a mammoth tax break introduced by Rishi Sunak in the 2021 budget.

Dubbed the “Super Deduction,” this will allow BT to write off up to 130 per cent of its infrastructure deployment costs. Simon Lowth, the company’s CFO, has said it will allow the company to pay “minimal” corporation tax for multiple years.

BT had previously paid around £200m to £300m each year.

The company is also investigating the possibility of creating a joint venture with an external partner to further fund the gigabit rollout.

To help scale its upgrade plans, Openreach intends to create 1,000 new jobs, in addition to the 2,500 positions added last December. The infrastructure provider has committed to increasing its deployment speed from 3m premises each year to 4m.

In a statement, Openreach CEO Clive Selley described the FTTP upgrade project as “second only to HS2 in terms of investment.”

“Building a new broadband network across the UK is a massive challenge and some parts of the country will inevitably require public funding. But our expanded build plan means taxpayer subsidies can be limited to only the hardest to connect homes and businesses - and we hope to see other companies step forward to build in the most rural areas too,” he added.

Oliver Dowden, Digital Secretary, said: "I welcome Openreach’s ambitious plans to connect millions more rural homes to gigabit speeds. It means our funding can go even further to help those in need and will create thousands more high-skilled engineering jobs as we build back better from the pandemic”

The news may well be a filip to those living in tiny market towns and farming villages, where dismal broadband is an unavoidable fact of life. High latencies go hand-in-hand with land rovers, narrow country lanes, and church fêtes, where pensioners try to buy a new lead roof one handmade quiche at a time.

Those working in the van effigy business are less pleased, however. ®

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