A new New Deal could bring light at the end of the fibre…

November 29, 2008 on 10:41 am | In blog | No Comments

Roosevelt created the New Deal within 100 days of becoming President of the United States of America in 1932. The New Deal created jobs and led to the creation and expansion of America’s road and transport infrastructure under the auspices of the WPA (Works Progress Administration).

The Industrial Revolution was all about increasing the velocity of circulation of money, as was the following Transport Revolution and latterly the Telecoms and Internet revolution. In the UK, under Prime Minister Margaret Thatcher and assisted by the now Lord Young of Graffham, Telecoms was deregulated and competition brought in, resulting in countless kilometres of fibre optic cable being laid. So much so that on average, we British citizens lives within 1Km of a fibre cable.

The current UK administration is trying to come up with answers to what is by any stretch a tricky problem, with reductions in VAT, partial if not complete nationalisation of banks, and other fiscal changes….

… however there is the mother of all industries needing a helping hand which could solve a number of problems and which would ultimately benefit the GDP of UK plc and which would also leave us on a more competitive footing…

Virgin Media are touting their internet access service as “The Mother of all Broadband” and claim it’s delivered over fibre optic. Well it is, and it isn’t. Fibre optics form an intrinsic part of the backbone of networks as fibre can carry unimaginable amounts of data at very high speeds but it’s always seen as being too expensive to run to the home. Virgin Media are running fibre almost to the home, but relying on the old coax cables to actually reach the home.

What we have in the UK as physical infrastructure going into the home is a mix of mostly copper wires and some coax cable. Coax cable is the same stuff that comes out of your TV and connects to your aerial. Copper wire is copper wire. Coax was what the CableTV companies laid in during the 80s and 90s, a competitive market that eventually collapsed, coalesced and formed part of Virgin Media, which offers “broadband” on either Cable or copper.

Cable in this instance shouldn’t be confused with fibre optic cable. Virgin, like BT and others, will use fibre optics in their network cores. BT’s network core is now referred to as 21st Century network and it is a breathtaking project; to converge the old-style voice networks and the miscellaneous collections of data networks onto one network is a truly epic project and one that I hope succeeds.

The problem is that 21st Century network leaves us the consumer on 19th Century copper.

If you are a BT customer for broadband you’ll receive the service on copper wire, if Virgin on either copper wire or coax cable, neither of which can offer the kind of bandwidth we need as a country to be really competitive. The ONLY physical infrastructure that can deliver true broadband services – starting at 100Mbps both directions – is fibre optic. Which means that the copper wires and the coax cable needs to be replaced.

But who would do it and who would pay?

BT currently claim that it would cost possibly £30 billion to complete this project on a national basis, not because the technology is expensive, but because of the manpower required – it’s a dig up the road exercise more than a hi-tech one.

BT is reluctant to get involved as, reasonably enough, they ask why should they bear the costs and have no guaranteed customer base for their services at the end of the project. But BT is really the only entity that could conceivably do this.

Now here we have the imagination to fast forward UK plc and to take advantage of the financial dire straits we find our selves in. As there seems to be no shortage of Government cash for bankers, we tap some of that into telecoms. BT’s Open Reach could be bought by the Government for the economic good of the country. Anyone made unemployed as a result of the credit crunch could be retrained by this new nationalised Open Reach to do the civil engineering of laying fibre to the home.

All service providers, including BT, would then pay Open Reach to run their services over the newly laid fibre. This seems like a fair but competitive market to me, though of course Ofcom still be involved in ensuring that fairness.

This would end up with the minimum 100Mbps services that we need, would position UK plc way ahead of anyone else as we’d have a NATIONAL end-to-end fibre optic network which would add an estimated 5% to to the GDP – cash which would be most welcome I’m sure and unemployment would actually be reduced during this financial crisis. The project would unite the country, if marketed and positioned correctly and intelligently, which in turn would help restore confidence.

So it’s win win all the way, by reshaping Roosevelt’s original idea and applying it to 21st Century needs, we could end up with the mother of all 21st Century Networks.

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