How the UK could get the world's fastest broadband
22nd Apr 2011 | 10:00
What needs to be done to bring us up to speed
This article is brought to you in association withLG Optimus 2X
Last month, BT made Cornwall a little bit faster: it gave fifty people internet access at speeds of up to 40Mbps as part of a roll-out that will reach 80% of UK homes by 2014.
40Mbps sounds impressive, and it was - in 2005. That's when Asian ISPs were upping speeds to 40 and 50Mbps or higher, and it's taken quite a while for us to catch up.
By the time the average UK consumer gets 40Mbps broadband many other countries will be on 100-plus - and because BT's fibre doesn't reach our homes and offices we'll still have the same "up to" nonsense that makes the UK's broadband adverts so confusing.
British broadband is rubbish. The average UK broadband speed is just 6.2Mbps, Ofcom says, and while faster options do exist they aren't widespread - so for example Virgin's 100Mb service is only available to one million homes, and BT's roll-out can't deliver 100Mbps until we have fibre-optic connections from the cabinets in our streets to the sockets in our homes.
Akamai's most recent State of the Internet report rated us 17th in the world for broadband. Akamai reckons our average speed was even lower than Ofcom's number - it says we're averaging 4Mbps - while the world leaders, South Korea, averaged 14Mbps.
Hong Kong was second with 9.2Mbps and Japan 8.5Mbps. These figures are averages for the entire country, taking into account both urban broadband and slower rural services: when it comes to cities with fast broadband, the UK didn't make the top 100.
WHERE'S WALLY?And by "Wally", we mean "Britain". We don't feature in the world's top broadband table
The undisputed leader of fast broadband is South Korea, whose cities enjoy peak broadband speeds of around 57Mbps. So why are they so far ahead, and what could we do to catch up?
Fixing our broadband
"The Korean question is an easy one," says Trefor Davies, founder of communications provider Timico and council member of the Internet Service Providers Association, ISPA. "Most people live in densely packed multi-tenant dwellings such as apartment blocks, which makes it easy and far more cost effective to serve them with high speed, fibre-based connectivity. A 1-gig fibre connection to an apartment block can easily be distributed as 100Mbps or more to each apartment."
Oliver Johnson of broadband analysts Point Topic agrees. "South Korea is a little unusual," he says. "Dense population concentration and relatively high numbers of people per household mean that it would be theoretically easier to make a return for a commercial deployment - although that said, it's unlikely it would be quite so ubiquitous today without government intervention."
Given that BT is already rolling out Fibre to the Cabinet (FTTC), couldn't it do the last mile to homes and businesses while it's at it? The technical answer is yes, but the economic one is no.
"This is a straightforward business case issue," Davies says. "It is cheaper to supply Fibre to the Cabinet than Fibre to the Premises, especially in rural areas where the cost of digs and wayleaves can be very high. BT is in the business of making money... this is quite unfortunate for UK PLC, because I think it is in the national interest to go 100Mbps everywhere rather than the - initially - more cost-effective 40Mbps."
Don't think of 40Mbps as a step towards 100Mbps, Davies warns: think of it as BT telling you not to hold your breath. "The people who are now euphoric because they're getting FTTC will have to wait a very long time before they get 100Mbps," he says. "BT will want to wait for that investment to be repaid before spending any more money in a specific area."
Could someone else jump in and do what BT won't? Fujitsu would like to, but there are two problems.
The wayleaves - rents paid to locate ducts and poles on private land - negotiated by BT are often so low that rivals can't possibly hope to pay similar prices, and Fujitsu and several other network providers claim that BT's charges for access to its own network are ridiculous.
Fujitsu wants Ofcom to force BT Openreach - BT's network arm - to provide access to telegraph poles and cable ducts on "fair, reasonable and non-discriminatory terms".
The government could also help by changing the way it taxes network operators. The coalition government abandoned its promise to review the rates levied on fibre optic networks, so - excepting BT and Virgin - firms are taxed according to the length of their networks.
That taxation, which makes things particularly difficult in rural areas, is "an active disincentive to competitive, next-generation access roll-out". Who said that? Ed Vaizey, our communications minister. Of course, he wasn't in power then.
"It cannot be right that a network operator might have to pay rates on a specific length of cable whilst BT does not," Davies says, noting that whenever the rates have been challenged in court, the courts have found in favour of the status quo.
"Operators should be getting together en masse to oppose the rating system - but they are not." In the current climate, local authorities won't be keen on giving up this particular cash cow.
What about South Korea-style subsidy? Oliver Johnson isn't convinced that it would work.
"It would be very difficult to transfer the model to Europe without affecting or compensating the market... we're already too far down the commercial deployment road to make significant intervention meaningful for most of the population. Where government can make a difference is in the commercially marginal - or flat-out impossible - areas and population."
That's an issue that applies to BT and to Virgin: large parts of the UK are sparsely populated, which makes rolling out any kind of broadband prohibitively expensive. The operators are private businesses, not charities.
As Trefor Davies explains:, "the investment case really doesn't exist for BT to roll out services [in rural areas]," he says. "Even where there is substantial EC aid as was the case in Cornwall, this only just brought the business case return on investment to an acceptable time frame - 13 years or so, I am given to understand."
SURFING THE NET: Thanks to BT, these ordinary businessmen can now SURF THE NET! [Image credit: BT Plc]
There's more to broadband than the operators' return on their investment, though. South Korea's investment in broadband and related technologies saved its economy.
Reeling from the collapse of the Asian financial markets in the 1990s, its government saw technology as a lifeline and spent billions on infrastructure, subsidies and investment in IT firms. In the 1990s, South Korea was an economic basket case. Now, it's one of the world's more successful economies.
Given that our economy is apparently a basket case too, could broadband help us out of the hole?
There are certainly economic benefits, Oliver Johnson says. "Broadband increases the tax base, increases GDP - by up to 2% from the first period of broadband... and even more today, reduces government expenditure in the medium to long term and improves the quality of life and access to services for the population."
It turns out that the biggest obstacle to super-fast broadband may be that the benefits take too long to arrive - for MPs, that is. As Johnson points out, "you don't get much benefit in the five-year lifespan of a Parliament." Why invest in something if you might not be around to get the credit?
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