At the recent BDUK Industry Day, some eyebrows were raised at the NextGenUs Ashby FttH project not requiring a penny of Taxpayers Money to deploy.

Having discussed the reaction with those who were there and who were not, it is worth clarifying the position as regards the wider Final Third NGA picture.

It is helpful to consider NGA as a Digital Supply Chain, most simply as a two stage process:

1 – the Digital Village Pump that get a fat pipe into at least striking distance of each local community and ideally into its heart

2 – the First Mile Access Network that delivers the bits to and from every home and business.

The NextGenUs Community Interest Business Model is concerned with the latter stage and that is where Taxpayers Money is not necessarily required, given enough customer demand from the outset.

This is the area where the Big Society initiative, being pioneered for rural broadband in Cumbria, can help to realise that demand by grassroots action, awareness-raising and education so that communities can make some informed choices as to their 4th Utility Futures.

Recent news regarding our friends in Utopia simply confirms the economics of rural FttH

The former stage, the Digital Village Pump, is a different beast.

The biggest challenge and cause of individual project uncertainty is the distance based charging that hits rural areas hardest for Fat Pipe provision.

One solution worth considering is for Government/OFCOM to mandate that there is a single DVP price available everywhere across the Final Third.

As BT has by far and away the most comprehensive national footprint, and in rural areas is often the only commercial provider, then this mandate would fall upon BT, as a standard DVP product.

This sounds simple and appealing – the approach would level the Fat Pipe playing field for everyone – will it work commercially though?

No – Why?

As pointed out by a senior Exec on Friday, for BT to drop prices in rural areas as part of this levelling then it would have to increase prices in non Final Third Areas elsewhere to compensate for lost revenues (setting aside the fact that those revenues losses may be hypothetical as the current price points make those Fat Pipes non-viable to use at present).

The unavoidable problem for BT is that in those other markets, BT is competing with many other carriers and therefore cannot raise prices nas it will lose business – i.e. distance independent pricing for DVPs looks to be a self-defeating proposition – unless every carrier is regulated (or taxed) equally to remove the disparity, which in turn creates a vast new reel of red tape to bind up the market.

Hmm.

So what are the alternatives?

Public Sector Asset Building is the most interesting prospect – the reuse of infrastructure, prime examples being connectivity for schools and other public buildings, that is already delivering the bits into these areas of Final Third need.

NYNet is a helpful model as a guide to how this might be implemented, the drwaback with NYNet being that it does not actually own any network infrastructure, rather leases circuits from BT – this means that the prices charged are not dissimilar from what BT themselves would offer.

What is really required, and this is where Taxpayer Subsidy (with appropriate clawbacks to keep HM Treasury happy!) can play an important role, is for Public Sector to translate its current connectivity OPEX into CAPEX by building out the interconnects and making available the Digital Village Pump feeds.

A great example of how this can be delivered is the CLEO network in Lancashire and Cumbria, that supplies rural schools across two counties and also deliver the Digital Village Pumps to a number of pioneering Community networks including GAB and WENNET

From there onwards, each community can then elect to build its own infrastructure or employ the services of a wide range of different suppliers to do it for them.

So by focusing Taxpayer Intervention on the Digital Village Pump and letting communities and market decide and deliver the most appropriate First Mile delivery infrastructure, ultimately FttH and FiWi for starters, we move a step closer to building the 4th Utility that the UK requires to compete (and cooperate) globally.