Broadband for every home could cost £30bn

Installing high speed broadband in every home in the UK could cost almost £30bn, an industry report said today.

The figure comes in a report by the Broadband Stakeholder Group (BSG) - the Government's advisory group on broadband - on the costs of fibre-based next generation broadband in the UK.

And it reveals a big difference in the cost of supplying superfast internet between built-up and rural areas.

The report says supplying every home with next generation broadband could cost between £5.1bn and £28.8bn, depending on the technology used, and that the costs of deploying in rural areas will far exceed the costs in towns and cities.

Antony Walker, chief executive of the BSG, said: "This is the most comprehensive analysis produced to date on the costs of deploying fibre in the UK.

"The scale of the costs looks daunting but the report does shed light on how some of these costs can be reduced and what the likely extent of commercial rollout will be.

"It should focus minds of commercial players, policymakers and regulators on the potential solutions to these challenges."

The model demonstrates that national deployment of fibre to street-level boxes, the cheapest technology option, would cost £5.1bn. This is three or four times more than the telecoms sector spent deploying today's broadband services.

Taking fibre to every UK home using point-to-point fibre, the most expensive option, would cost as much as £28.8bn.

Superfast broadband will allow speeds of up to 100 Mbps (megabits per second), up to four times faster than current speeds.

A report by Ofcom last week said communities that have missed out on broadband should be the first to get even faster services.

According to the Office of National Statistics, 35 per cent of UK households do not have internet access.

Some 1.48 million (9 per cent) of UK households which have net access use a dial-up connection despite the fact that most could get broadband if they wanted to.

The BSG estimates that getting fibre to the cabinets near the first 58 per cent of households could cost about £1.9bn. The next 26 per cent would cost about £1.4bn and the final 16 per cent would cost £1.8bn.

The largest single cost in supplying new broadband is the "civil infrastructure", which is the cost of deploying and installing the fibre in new or existing ducts.

The report says costs can be reduced by using existing communication ducts or sharing infrastructure owned by other utilities, such as water companies; and the use of overhead fibre distribution in some areas.

The disparity in costs between urban and rural areas meant the UK faced some tough choices, said Mr Walker.

Each technology has a high proportion of fixed costs that are incurred regardless of how many users take the service.

This means that the cost per home connected (and therefore the commercial viability of the service) is highly dependent on the level of take-up.

Mr Walker said: "If rural areas are to be served in a reasonable time frame, thinking needs to start now about creative solutions for making them more attractive to investment.

"If operators could achieve a higher than expected level of take-up in rural areas, then the business case for deployment in those areas could improve significantly."

Matt Yardley of Analysys (correct) Mason, who directed the report, said: "The magnitude of the costs, and how the costs differ between urban and rural areas, will be important for operators, media players and public sector organisations looking to develop their future broadband strategies."