Rural areas will get broadband subsidies first

Review to call for rural communities to benefit from taxpayer-backed connectivity programme

Some of the most isolated communities in swathes of rural Britain will be first in line for subsidised broadband upgrades under proposals due to be unveiled by the Government today, following a review finding that taxpayer funding will be required to install faster and reliable fibre-optics.

SOME of Britain’s most isolated communities would be first in line for subsidised broadband upgrades under proposals due to be unveiled by the Government today.

It is understood a review of internet infrastructure will find that BT and other commercial investors are unlikely to fund faster and more reliable fibre-optic lines for swathes of rural Britain and that taxpayer funding will be required.

The Government is expected to suggest so-called “outside in” subsidies. The most remote and therefore least attractive to commercial investors would be at the head of the queue.

It represents a shift from a previous broadband upgrade scheme in which subsidies were aimed at a third of the country from the outset. It was later discovered that many of the homes covered were in fact commercially viable due to stronger-than-expected demand for faster internet access.

Meanwhile, some of the most remote communities never benefited.

Ministers hope that competition to build ultrafast fibre-optics will push BT’S Openreach subsidiary and others including Talktalk, Gigaclear and Cityfibre to go further. Commercial rollout would meet “outside in” subsidies at somewhere between 60pc and 80pc coverage.

Around a million homes are currently unable to access a broadband service capable of connecting to the internet at 10 megabits per second, the minimum required for basic activities such as video streaming on Youtube.

Fibre-optics deliver connections at least 100 times faster that are unaffected by weather and other sources of electrical interference. The shift to new networks over the next decade is expected by telecoms executives to make broadband a much more reliable utility, needing minimal maintenance.

As well as consulting on new subsidy policies, the Government aims to speed up the transformation by stimulating competition where investments are commercially viable by forcing Openreach to publish its roll-out plans. The idea is designed to allay fears the former state monopoly will squash smaller rivals with “predatory overbuild”, in which would match their coverage to protects its existing dominance.

While companies have lined up install new networks, few have begun large scale work amid uncertainty over costs and the structure of the market. Just 3pc of homes are connected with fibre optics, compared with more than a third in Spain.

Openreach is in line for a boost from proposals to allow it to remove its copper telephone lines when it installs fibre-optics, however, delivering potentially massive cost savings.

Philip Hammond, the Chancellor, last week confirmed Government support for removing the old network as fibre-optics are rolled out.

There will also be a range of measures designed to reduce the cost installing fibre-optics, including reform of landowner rights and licences for street works.

Officials have stopped short of proposing radical market reform to help Britain catch up with rival economies where ultrafast broadband is much more widely available. They had considered revisiting the question of whether BT should be forced to split with Openreach or a system of exclusive regional franchising.

Both BT and its rivals rejected franchising as unworkable as new broadband infrastructure would still have to compete with existing services based on copper telephone lines.