News & Insight

Broadband speeds may go up ... but so will bills

Oliver Jones

Openreach are floating the idea of a major upgrade to the UK's digital infrastructure

Openreach are floating the idea of a major upgrade to the UK’s digital infrastructure – but warn that it would have to come at a cost to the consumer.

The next step in improving Britain’s connectivity would be to lay down a fibre-to-the-premises (FTTP) network, which would provide fibre to millions of new premises.

Openreach and backers maintain that the new network would help Britain maintain its digital economy, and there’s some evidence for that: an Ericsson survey in 2011 found that doubling broadband speed in a developed economy increased GDP by 0.3%. That equates to an increase in average growth of about one seventh.

That said, it also found that the biggest gains were to be made, not by speeding up already well-connected regions, but by developing the least-connected parts of the country - a job that Openreach is notoriously struggling with.

On Guy Fawkes night, the effigy of a BT Openreach van was burnt in rural Devon in protest against slow broadband speeds in the area.

Who’ll pay?

The estimated cost of an FTTP rollout to 10 million customers is between £3 and £6 billion, so there’s a big question over who would bear the cost of investment.

Openreach have a preferred answer: they’ve made it clear that they’d seek to recoup their investment through higher wholesale prices, passed on to customers.

Their rationale? Faster broadband would benefit a broad range of customers, so the cost should be spread over a broad customer base.

However, this does mean people living in rural areas will likely take an unfair share: a wholesale price increase will increase the broadband bills of some customers unlikely to see the benefits of improved service.

The race is on

There are currently 327,000 premises connected to the FTTP network, and the race is on to see who will expand that market.

Openreach aren’t the only company looking to carve out Britain’s digital future, as Vodafone, in partnership with CityFibre, have also unveiled plans to deploy FTTP across the UK by 2025.

Either way, two things are likely: connection speeds are likely to increase in the future, but so will the prices we pay for them.