BT warns rural areas will suffer broadband delays unless government steps up

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People living in rural areas could face a further delay in getting next-generation full-fibre broadband unless the government stops dragging its feet and removes financial barriers, the chief executive of BT has warned.

Millions of homes face being last on the list to receive rural broadband because they are commercially unattractive for operators to reach with full-fibre broadband, which could put rural residents at risk of becoming “second-class” citizens in the digital revolution.

Philip Jansen said that exemption on a form of business rates, charged on the new networks once they are built, would be worth £1bn to BT, money that could be spent on connecting about 3m homes.

The BT boss has said that the government and telecoms regulator Ofcom need to remove financial and regulatory barriers to help firms building full-fibre and gigabit networks or rollout targets would be missed.

He said that while the government has “said a lot”, there is now an “urgency” to act if it is to have a hope of meeting its goal of 85% coverage of all homes in the UK with gigabit speed broadband by 2025.

“The biggest contribution the government can make are on cumulo rates, essentially business rates charged on the new networks once they are built; it risks significantly slowing our progress,” he said.

“Exemption on these rates would be worth about £1bn to BT alone, equivalent to [getting full-fibre broadband to] about 3m premises. Without it we may need to rethink the pace and shape of our fibre build and those living in rural areas may need to wait longer.”

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BT is investing £12bn to roll-out full-fibre broadband to 20m premises by the mid- to late 2020s. In November, the government diluted its target from Boris Johnson’s election pledge of a full-fibre connection for every home by 2025, to 85% coverage with gigabit speed coverage, and said it would look to spend £1.2bn of a £5bn commitment to subsidise expansion in to commercially unattractive rural areas. 

Earlier this month, the Public Accounts Committee (PAC), parliament’s spending watchdog, criticised the government for a catalogue of failures relating to the rollout saying it would miss its 2025 target.

“Look at the PAC report, the government has said a lot but we would like to see extra money to build in really rural areas quickly,” said Jansen. “We want to go as fast as we possibly can and build as much [in] rural [areas] as we possibly can, the government can help us on cumulo and not tax us on the build.”

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But he also implored Ofcom to introduce what it believes are fair regulatory relief measures to encourage investment in the rollout in its Wholesale Fixed Telecoms Market Review which will be published next month.

These include price controls for 10 to 15 years, to protect the return on BT’s £12bn investment that it said would take 20 years to pay off, and not to be too quick to step in to regulate.

“We are not looking for some super-normal return, just a fair return,” said Jansen. “BT is ready, willing and able to build like fury and fibre up the UK but we need Ofcom to come good on creating a climate that encourages investment and the government to show some urgency in removing barriers. There has been plenty of time for talking now we need to turbo charge the move to the next generation of connectivity.”