The idea of broadband-starved Cornish fishing villages and Cumbrian farmsteads uploading the “Catch of the Day” or “The Biggest Pumpkin” to video-sharing sites will one day become the norm in the U.K., with the £530 million government allocation to turn “not spots” into internet hotspots within four years.
Broadband services of up to 2Mbps – decent enough to enable browsing on the web, talking over Skype, and watching TV reruns – will be made available to about 25 million UK households. Another £300 million has been promised after 2015, which will enable 90% of homes to enjoy 24 Mbps and faster. This means multiple households can download videos from a single line at the same time.
With the network getting integrated, it is likely that cheap mobile broadband services will mushroom outside of that 90%. Satellite masts can always be built on reliable structures on the ground.
BT Group, the global telecom giant headquartered in London, has sweetened the pot by announcing they will lay down fiber optic connections that will reach about two-thirds of the households by 2015, even without government subsidy. Fiber optic connections are expected to reach towns and cities where the Group has projected to recover its £2.5 billion investments. It is going to be a challenge however to lay the groundwork in towns that have small populations, because this would mean extending longer cables to reach fewer subscribers. Once this happens though, this is going to be UK’s largest fiber network, and most likely Europe’s biggest, if all goes to plan by 2015.
Economy of scale will have an effect on whether broadband connections will remain affordable or become premium. The threat of higher prices where there is no competition is grounded on the fact that demand is inelastic where services are deemed essential. Speed can be addictive, especially when it opens doors heretofore unknown. To allay these fears, BT may have to partner with other cable networks that have already duct works for existing services.
One of the bigger networks who has access to 12 million homes is Virgin Media, and BT proposes it will utilize its existing channels to provide top-speed internet connection, making them the sole provider in the area. Infrastructure will not be as expensive compared to rolling out an entirely independent network, but the increase in price will most likely come from what marketers call “market skimming” – the practice of charging premium prices once a new product or service, perceived as indispensable, is launched.
The BT Group however is not assured that it will win all of the contracts. Fujitsu, the Japanese electronics firm – has proposed to reach 5 million homes in 3 to 5 years, if it outbids BT to win £500 million in government subsidy.
But what about cottages that are spread so far apart? Fiber is not going to make sense to connect only a handful of farmers spread over a very large area. Huawei, a Chinese telecoms firm, has offered to supply network equipment and software to reach the 10% by a combination of satellite and mobile phone masts. This is another opportunity for cheap mobile broadband service providers to cash in on.
Despite fearless projections, analysts in the tech space believe that the most UK can achieve is to bring high-speed internet service to 75% of homes. Government subsidy may not be enough to spread the hot spots around, so the connections will most likely be made available to the village center, where people can go to schools, libraries or post offices and share the service with the other town folk. Nevertheless, this backbone will enable other forms of data transmission over the airwaves to enable people to connect via broadband services.
This is going to be a boon for rural residents who could certainly benefit from going online, and fast. Users who have endured dial-up connections – because that’s the only thing they can get -only lasted so long because it is better to shop or file government forms online than to travel to the urban center to do the same.
Despite the formidable challenge that plugging the whole of the United Kingdom into the hotspot zone presents, investors who are looking to cash in on this inevitable trend are confident that there will always be demand for services that improve lives by leaps and bounds.
Blake Sanders is a tech writer at UK broadband comparison site Broadband Expert, with a specialty in finding cheap mobile broadband deals and writing on industry news and information.
Note: Photo courtesy of powi via FlickR Creative Commons.