Photographer: Chris Ratcliffe/Bloomberg

The U.K. Wants to Connect Two Million More Homes to Fiber Broadband

  • Plan commits 400 million pounds for matching investments
  • Government will support local fiber-optic, 5G trials

Chancellor of the Exchequer Philip Hammond will announce a plan to invest 1 billion pounds ($1.2 billion) to improve Britain’s broadband infrastructure, part of a program aimed at boosting productivity as the U.K. leaves the European Union.

The plan, under which 2 million more households could get access to full-fiber broadband, will be confirmed in Wednesday’s Autumn Statement, the Treasury said in an e-mailed statement. The government will contribute 400 million pounds to a new Digital Infrastructure Investment Fund, to be matched by emerging fiber-broadband providers wanting to scale up.

Hammond’s first fiscal event since his appointment in July will set out a new framework after he abandoned his predecessor George Osborne’s plan to balance the books by 2020, as well as targeted investment projects as he seeks to ready the economy for the fallout from Brexit negotiations. He has already warned the economy may face "sharp challenges" ahead.

Britain’s communications network is the subject of fierce debate, given its importance to the digital economy post-Brexit and the ongoing review of Openreach, the national fiber-optic network operated by former telecom monopoly BT Group Plc. Because of the expense of installing full fiber connections, BT runs mostly copper wires into homes, and is trying to squeeze more speed out of the existing copper.

"The government’s objective here is not to replace the role of commercial finance, but to be a catalyst to finance digital investment,” said Mark Collins, co-founder and director of strategy and public affairs at CityFibre Infrastructure Holdings Plc, which offers fiber-to-the-home. “It’s a policy objective that I think the government will want to see get underway fairly quickly.”

Currently, only 2 percent of the U.K.’s homes and businesses have access to the full-fiber broadband, much lower than the EU average of about 20 percent. The matching funds will help companies like Sky Plc and TalkTalk Telecom Group Plc that compete with BT but rely on Openreach to offer broadband service to their customers.

Sky and TalkTalk said in separate statements that they welcome the initiative, though Sky added that it didn’t go far enough. In the past both companies have called for a breakup of Openreach by the communications regulator, Ofcom.

“We won’t achieve the necessary step change in driving full fiber investment across the country unless Ofcom also takes bold and decisive action on the future of Openreach,” Sky Chief Operating Officer Andrew Griffith said in a statement.

In addition to the matching fund for emerging broadband providers, Hammond will announce a plan to extend fiber networks, in partnership with localities to help businesses across the U.K. The government also plans to support fiber-optic and 5G trials.

The Treasury already announced other infrastructure projects will include 1.3 billion pounds to improve Britain’s roads.

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