B4RN: limited broadband availability drives demand in rural areas

Monday 22 August 2011 | 11:52 CET | Background

Broadband is high on the political agenda in the UK, even with the current round of budget cuts. In April 2010 parliament passed the Digital Economy Act, followed by a number of amendments after the new government took office. The law is expected to lead to a 'Digital Britain', with at least 2Mbps broadband for the entire population by 2015. In addition the Broadband Delivery UK (BDUK) initiative targets bringing broadband to the 'final third', the places where neither BT nor Virgin Media can offer sufficient bandwidth.

Both operators and a number of other parties are working on reducing the digital divide:

  • BT is deploying FTTC and FTTH to two-thirds of British locations. It also added a plan to expand its ADSL2+ network to 90 percent of the population, by covering another 2.5 million sites including 900,000 in rural areas.
  • A number of local initiatives are rolling out fibre to street cabinets and then laying VDSL2. These include Vtesse Broadband, Rutland Telecom, Call Flow Solutions, IDNet and Digital Region (Yorkshire).
  • Virgin Media is expanding its footprint by 100,000 households this year.
  • Fujitsu, together with Virgin Media and TalkTalk, wants to deploy a gigabit FTTH network in outlying areas, connecting up to 5 million sites within five years (see our commentary ‘Fujitsu makes some surprising choices with UK FTTH network'). 

Fujitsu’s plans depend on receiving financing from the BDUK fund. This includes GBP 530 million, as well as a similar amount expected from local authorities. Another GBP 300 million will be available after 2015. Forty areas have been identified to make use of the fund. Fujitsu expects the public contributions should limit its own investments to GBP 1.5-2.0 billion.

The latest initiative targeting the ‘final third’ is called B4RN: Broadband for Rural North, focused on the north of Lancashire. It’s not counting on a contribution from BDUK, although the fund has set aside GBP 10.3 million for all of Lancashire. B4RN is looking at a completely different set-up: it targets a customer-owned network. The project looks to cover around 5,000 sites in 24 towns and is currently assessing demand from local residents, using a website, flyers and local meetings. If at least 50 percent of residents targeted in the first phase (1,322 connections) sign up, the project will start in October, construction will begin in December and the first connections will be available in January 2012. A FTTH network offering symmetric broadband at 1Gbps over point-to-point connections is planned. The costs are estimated at GBP 5.6 million, and the whole project should be completed within three years. The first phase would be profitable with a take-up of 70 percent, but additional funds will need to be raised to go ahead with phases 2 and 3.

The standard price for a 1/1 Gbps connection will be GBP 30 per month (including VAT), plus a one-time connection cost of GBP 150. Participants are invited to become shareholders and must contribute at least GBP 1,500. However they can also contribute in kind by helping work on the roll-out. In exchange they get the connection costs and first year of service free.   

The project has a number of other notable characteristics that appear aimed at lowering the cost of both roll-out and subscriptions:

  • Subscribers (and anyone else interested) can become shareholders in a non-profit organization. This requires a contribution of at least GBP 100 and a maximum GBP 20,000.
  • Due to the subscribers’ participation, the cost per connection should be limited to GBP 1,000. The project assumes that farmers will be willing to make their land available and dig passages for ducts.
  • B4RN wants to deliver internet access and encourage subscribers to take (free) ‘over-the-top’ services, from Gmail and VoIP (Skype) to YouView (broadcast TV, partially free).

Shares can only be sold back to the cooperative. The cooperative aims to buy back the shares eventually in order to offer shareholders an extra return. It also expects to pay dividends.

B4RN has posted its business plan on its website, supporting the plans discussed above. Lindsey Annison, one of the founders of B4RN (spoken as ‘barn’) expressed optimism about the plans in an interview with Telecompaper. Of the targeted residents in phase 1, 65 percent are already connected to the internet, but “far too many” are on dial-up and satellite due to a lack of cable networks and the long distance to ADSL exchanges, according to Annison. “I think we may find it easier to get to the 70 percent level than most telcos because of the community engagement and ownership.”

Telecompaper is organizing on 12 October the Breedband NL 2011 conference in The Hague. Alternative financing models for next-generation networks will be among the topics discussed. 

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