Governments worldwide are supplementing private sector investment in next-generation access (NGA) networks and ‘superfast broadband’. One of the most recent is the announcement by the UK government on 16 August 2011, which confirmed the allocation of most of its GBP530 million (EUR600 million) commitment for superfast broadband, which will largely serve rural areas of the UK.1
However, for the UK’s local authorities charged with project delivery, as well as for the operators expected to contribute additional investment, there is uncertainty over what can be achieved with the funding. Unfortunately, it is likely that the funding allocated will be insufficient to meet the objectives of many local authorities. Therefore, both local authorities and operators will need to refine their strategies to balance the requirements of coverage and performance by considering the costs of various technologies that offer different levels of performance.
Analysys Mason has recently helped two local authorities in the UK to prepare a successful joint funding application to the government. It was necessary to assess various coverage and technology options to determine the funding requirements that could meet their objectives.2 As the basis of funding has changed from a bidding process to one of fixed allocation, many local authorities will need to reassess what NGA coverage is achievable with their allocation.
NGA coverage is sensitive to both the technology selected and the funding available. Figure 1 shows the cost of deploying NGA for various technology mixes (represented by solid lines), such as different combinations of fibre to the premises (FTTP) and fibre to the cabinet (FTTC), and funding scenarios (represented by dotted lines). In this chart, two scenarios for funding availability have been considered: a base case and a more optimistic case that assumes increased private sector investment. The figure demonstrates that if, for example, the NGA coverage target is 90%, it can only be achieved by using ‘Technology mix 1’ if base case funding is assumed.
Figure 1: NGA coverage and funding: technology implications for an example UK local authority [Source: Analysys Mason, 2011]
![Figure 1: NGA coverage and funding: technology implications for an example UK local authority [Source: Analysys Mason, 2011]](/PageFiles/18997/Figure1_web.png)
It is evident that there are implications for local, regional and national objectives if estimates of funding availability, such as private sector contribution, do not use carefully determined assumptions. The cost of NGA deployment is also a fundamental variable that should be analysed carefully.
Analysys Mason has extensive experience of the economics of NGA networks from assisting operators, regulators and public sector organisations worldwide. Our analysis of coverage and cost modelling for a UK local authority that received early funding demonstrated that local and national coverage objectives can still be achieved by selecting an appropriate technology strategy, and with only minor modifications to local objectives. Similar analyses should be undertaken by local authorities and other organisations responsible for the delivery of local, regional and national NGA and broadband objectives, as part of any NGA planning.
For further information about how Analysys Mason could support your NGA and broadband ambitions, please contact Matt Yardley (matt.yardley@analysysmason.com) or Ian Adkins (ian.adkins@analysysmason.com).
1 Broadband Delivery UK (BDUK) funding allocation announcement: http://www.culture.gov.uk/news/news_stories/8389.aspx.
2 For delivery, a technology-neutral approach is employed, which complies with European Commission State aid rules.