We have never lived in a more exciting – or connected – time. Smartphones have ensured we carry the internet with us wherever we go, providing immediate access to a wealth of information at the touch of a screen. It’s never been easier to stay connected with friends, family and colleagues, wherever their location. Put simply, broadband and mobile data have become as essential to us as water or electricity.
However, the UK lags behind the rest of the developed world in terms of being “fibre-ready”. Fibre is far superior to the copper network (through which early iterations of the internet were transmitted) and also forms the backbone of 5G connectivity, as the “backhaul” generated by fibre enables 5G signal.
With people on-the-go more than ever before and traditional offices making way for home-working, the infrastructure offered must support demand, be scalable and be future-proof to meet expectations. Not to mention, 5G is an integral element for business models based on connected devices and the Internet of Things, something that is only going to get bigger.
Shaking up the scene
So, how can the UK catch up? We are currently following an almost entirely commercial-led model, where private companies are tasked with implementing our fibre network, while simultaneously creating a financially stable model that is sustainable. Labour’s manifesto pledge to create a state-owned utility, British Broadband, is another way to roll out fibre, using a “national champion” model. As it stands, billions of pounds are being invested into fibre in the UK, with a number of companies raising large figures through a blend of debt and equity.
The big incumbents like BT’s Openreach and Virgin Media have vast networks and already own fibre in the ground and they must assess how much they are willing to spend to lay down more. As an established business, BT has a number of demands on cashflow; while private company Virgin Media will have to consider how it plans to raise the required funds to speed up fibre roll out.
Enter the challengers shaking up the scene to install fibre across the UK in different ways. Some compete with, and some complement, the incumbents. Each of these companies has configured a niche for themselves: Cityfibre is building fibre networks in so-called second-tier cities, with Edinburgh, Aberdeen, Inverness and Stirling falling under this category; Hyperoptic focuses on fibre for flats; and Gigaclear is a rural fibre specialist. There are many others building out fibre in different ways including G.Network and Community Fibre, and we can expect more to enter the market.
Serious sums are being invested into fibre. It is a complex build where costs are incurred ahead of sales and there is no clear indication of when, or how much, consumers will be willing to pay for the service. It will be a fine balancing act to strike an offering that is attractive to people without undermining the amount of money being invested into the network in the first place.
A necessary step forward
On top of this, there are the issues surrounding logistics. It’s not just a question of digging up a road and putting a cable down. Companies need to be granted planning permission, hire people to dig the holes and employ engineers and technicians to connect everything.
Scotland is an interesting proposition in its own right, with its geography and low population density not lending itself to headache-free roll out. Fibre has been a success in countries that are small or densely populated like the Netherlands and Japan. Not only is Scotland vast with a huge number of rural areas, it also has one of the lowest population densities in Europe.
Furthermore, connectivity problems aren’t limited to remote areas as issues can arise in urban areas like Edinburgh – pulling up and repaving cobbled streets won’t be cheap. This is not a straightforward project and these companies have a big job on their hands.
Despite the logistical difficulties, this is an exciting time for the country and consumers will be the winners, so long as they are prepared to pay the price tag that comes along with full-fibre broadband.
This investment in the county’s infrastructure is a necessary step forward. As technology becomes more sophisticated and even more integral to the smooth-running of our daily lives, we need an agile and scalable network. 5G and full-fibre broadband takes us into a brave new world. As a nation, Scotland has been at the forefront of innovation and technology for hundreds of years and it is vital that the roll out of fibre networks is done right in order to lay a firm foundation for future breakthroughs.
- Sean Duffy is head of technology, media and telecoms at Barclays Corporate Banking.