AUS
NZ
UK
CA
USA
IND
Summary
- The UK this year is placed 47th among 221 countries and territories in an annual survey that ranks them in terms of speed of broadband internet. Incidentally, this rank is 13 points lower than its previous year rank of 34th.
- Within Europe, it is ranked at 8th, which is much lower than other major nations like Germany, France, and Spain.
- The UK has been relatively slower in the roll-out of its pure fibre network, which has been the reason for this fall in ranking.
An annual study of broadband speeds among 221 countries in the world has placed the United Kingdom at the 47th place, much lower than many of the countries in Europe, Asia, and the Americas. The ranking of the country which has slipped 13 points this year compared to last year, is based on the mean download speed of 37.8 Mbps, and the time taken to download 5 GB of streaming data which in UK’s case takes around 18.03 minutes. In terms of Broadband penetration, also the country is faring very poorly. While about 10 per cent of households in the country have access to broadband, other advanced countries have an average penetration level close to 80 per cent.
What is the current state of fibre broadband in the UK and how Ofcom plans to deal with it?
Currently, only 3 million or 10 per cent of British homes are able to connect to the fibre-optic broadband network which is far below several Asian and European countries like Spain, Sweden, Portugal, France, and Singapore. With the kind of shortcomings being pointed out, the regulator (Ofcom) has come out with several pathbreaking measures to speedily develop a high-speed all-fibre broadband network. The government already has a proposal to provide £5 billion worth of subsidy to build this network infrastructure. Second, it would partially deregulate BT (British Telecom) in at least a third of the country where it is highly likely to maintain the monopoly in terms of network infrastructure. But for that government would require the company to give a firm commitment to replace existing copper wire-based broadband infrastructure with an optic fibre infrastructure. In this regard Ofcom on 8 January 2020 announced its plans to roll out high-speed fibre internet service in the rural United Kingdom in order to bring the country at par with several European countries and Asian countries which have a far greater penetration of high-speed fibre broad bank connectivity than the United Kingdom.
Governments promise to connect every British home with gigabit-speed broadband by 2025
The plan which was part of Prime minister Boris Johnson's poll planks to connect all British homes with Gigabit speed broadband internet by the year 2025 is among his larger ambitions to extend the benefits of commerce and trade made possible through the digital age to far-flung areas of United Kingdom. BT, the old workhorse of the country’s telecom industry, has been envisaged to play a central role if this plan has to see successful implementation. BT which owns the most extensive telecommunication infrastructure in the United Kingdom is also the sole provider of telecommunication services in many far-flung parts of the country, is not as financially strong as is required to take up this project, despite its size. The regulator in order to address this issue is not only assuring subsidy assistance of £2 billion but has also indicated that it will increase the basic charges on the basic 40 Mbps broadband packages offered through a full-fibre network by between £1.50 and £1.85 per month, compared to the equivalent copper wire infrastructure-based service. Jonathan Oxley, acting chief executive of Ofcom while commenting on the issue had said that this increase in prices will not only provide an adequate return on investment for BT to implement. However, this plan augurs well for consumers, who would now be getting a faster and more reliable broadband connection than what they were getting previously. The increase in prices, however, could be limited to urban areas as an increase in prices in rural areas could, however, hamper the growth of broadband services in those areas.
Would the current state of government finances allow it to push forward with the project?
The Boris Johnson government, however, has at more than one occasions stated that it would significantly increase its development spending. Its first budget presented by the present government on 11 March 2020, saw a massive expenditure plan being rolled out by the government over the next few years. These expenditure plans which involve rebuilding the infrastructure of the country could bring about so much growth to the country as to put it in the league of some of the emerging economies, which are at present witnessing such growth. It does not seem the government is worried about the present debt levels as several of the party MP’s have already stated that the government would rather go for the high growth path for mitigating its debt rather than the austerity actions that many are suggesting. Thus, there does not seem the government will let funding shortage come in the way of timely implementation of the Ofcom’s project.
BT Group Plc (LON: BT.A) was trading at GBX 101.75, up by 1.75% from its previous closing of GBX 100. The beta of the stock stood at around 0.98, while it has given a YTD return of -49%.
Conclusion
The massive stimulus measures that the government has rolled out in the past two and half months are far beyond the government's means and have necessitated very high levels of borrowings. The public debt levels of the country which is set to cross £360 billion by the end of this year are one of the highest then it has witnessed.
High-speed broadband internet has now become an essential requirement for the economic development of any country. The United Kingdom cannot afford to lag in keeping itself ahead of the others if it has to fulfil the objectives that Boris Johnson has promised at the time of election campaigning. Thus, there is a tight rope walk ahead for the government to bring its fibre- broadband project live as soon as possible.
