U.K. Fiber Failures Hinder Economic Growth

U.K. should follow France's model of public-private investment in broadband infrastructure to bolster its economy, telecom consultants say.

Gary Flood, Contributor

May 31, 2013

3 Min Read

A major consulting firm has warned that Britain risks falling seriously behind its European neighbors in terms of serious uptake of fiber broadband technology.

"The U.K. is one of the least-penetrated economies in Europe," Karim Taga, managing partner and global practice leader of Arthur D. Little's TIME (telecommunications, information, media and electronics) practice told InformationWeek.

As a result, the country may need a "tremendous amount of investment" if it wants to catch up, he added -- and may need to copy the lead of France, which has gone back to the drawing board in terms of trying to implement a national fiber network.

Taga's warning comes as part of a new study he and his team have produced on the state of fiber network markets in Europe. In its view, "failures" in local telecom policy and regulation could hamper overall European economic growth.

[ Some big U.K. projects might bring unexpected benefits. Read Why Build A New U.K. Railway? Better Broadband! ]

The group said Europe's telecom industry, governments and regulators need to move "decisively" to fiber to support future economic growth, pointing to economic benefits for improving broadband infrastructure such as job creation and national GDP. The problem: It's no longer possible to modernize and upgrade the copper-based network, it claimed, so whole fiber or mainly fiber networks are now needed not only for the fastest fixed access services but also to underpin the micro-layer of the latest mobile backhaul networks.

But to get there, someone has to write some very big checks: rewiring European consumer and business networks will cost hundreds of billions of euros.

"The challenge of how to attain the clear national economic benefits of the latest fiber infrastructure while managing the considerable investment required is still unclear in many markets," commented Andrea Faggiano, principal in Arthur D. Little's TIME practice.

What is bedeviling Europe, as opposed to North America and Asia, the team suggested, is a market liberalization that has introduced strong price pressure in the EU -- but left most markets either with too much infrastructure or scarce resources to sustain real infrastructure competition (as opposed to the United States).

In the U.K.'s case, for instance, Taga said that cable is really the only option for any sort of high-speed broadband in the 50 to 100 Mbps range, effectively granting firms like Virgin a near monopoly at the higher end.

The best way forward for Europe, said the study, is for national policy makers to go back to the drawing board and rethink their infrastructure strategies to catch up with global best practice examples.

The most promising fiber strategy models, said the advisory firm, may involve things like hybrid approaches, such as a combination of free-market competition, government coordination and geographically targeted public investment open to competitive bid.

Taga said the U.K.'s best bet may be to follow France's approach and look for a much more imaginative mix of state backing and partial financial support, or private telcos like BT won't make the level of financial commitment that may be needed to create the range of fiber-based options users deserve.

Not only deserve -- will soon be demanding, he warned. "Hulu traffic already consumes 30% of Internet bandwidth in the U.S. every night. And Hulu is coming to Britain. Very soon, on-demand video services will be drawing on bandwidth capacity that copper and ADSL simply cannot cope with," he said.

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