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Investment in broadband infrastructure key for robust British economy and future competitiveness

LSE Enterprise's latest report, commissioned by Convergys, was undertaken by Paolo Dini and Claire Milne of the Department of Media and Communications and Dr Robert Milne of Antelope Consulting. It identifies the economic and societal benefits of broadband investment, and shows that smart technology solutions will play a major role in enhancing the value of superfast broadband.

fibre opticSmart solutions that enable innovative, policy driven pricing plans will drive new revenues that can boost the value of superfast broadband for operators as the UK looks to maintain a competitive edge in Europe. This is one important finding from a new research paper entitled “Costs and Benefits of Superfast Broadband in the UK”, commissioned by Convergys Smart Revenue Solutions via LSE Enterprise, which also identifies a £1.1billion shortfall in infrastructure funding.

With the UK Government targeting 100% fast broadband coverage and 90% superfast broadband coverage across the UK by 2015*, the paper identifies a problematic gap in funding of at least £1.1billion to support deployment. Though private and public sources are expecting to provide funding of £1.3billion, this is less, for example, than the likely revenue from the forthcoming digital dividend spectrum auction**.

The paper provides an analysis of the costs, revenues, and economic and societal benefits of ‘superfast’ broadband deployment in the UK. While broadband offers some clear socio-economic benefits, the paper also identifies a number of stumbling blocks that may be encountered. These include funding, education in ‘e-skills’, and ability to adopt new pricing models for new services.

“This paper shows that serious investment in broadband can deliver serious social and economic benefits for the UK,” said Morag Lucey, Global SVP Marketing, Convergys Information Management. “Yet, the current funding gap of £1.1billion means that we’re likely to remain uncompetitive in Europe, let alone the rest of the world, until we find some way of bridging this infrastructure shortfall. We believe operators should not be pressurised to fulfill this gap, as they already face tough market conditions. Yet we see smart solutions taking some pressure off operators; with a more advanced broadband infrastructure, smart solutions can help boost revenues as operators evolve to next-generation solutions in the future.”

The paper suggests that suitable service offerings can generate significant savings and revenue increases. These financial returns can help stimulate the industry and provide a better economic outlook, if the funding gap identified for superfast broadband is plugged and Government targets met.

Core to this innovation is a focus on smart solutions and the role they can play in increasing the take-up of broadband services, greater usage and additional revenues. ‘Smart solutions’, such as billing, customer care and real time charging and policy solutions, can, for example, give service providers unprecedented insights into customer behaviour. These insights allow providers to tailor service offerings that improve the customer experience in line with their demands and pricing expectations, ultimately generating greater revenue and reducing ‘churn’.

“Our new paper shows that there is much the UK can gain from deploying fast broadband, but there is much still to be done to make it a reality,” said Dr Paolo Dini, Senior Research Fellow, London School of Economics and Political Science. “Investment is clearly one challenge that needs to be overcome, but so too is encouraging further use of broadband and take-up among customers. The study argues that smart solutions will help provide the insights that operators need to improve service offerings that drive greater use, not to mention the commensurate cost increases and efficiencies that are also generated.”

Read the paper|



*Broadband speed definitions: We follow Ofcom by taking ‘superfast broadband’ to have downlink speeds greater than 24 Mb/s. We also take ‘basic broadband’ to have downlink speeds less than 2 Mb/s and ‘fast broadband’ to have downlink speeds between 2 Mb/s and 24 Mb/s.

**Spectrum auction: Evidence from other countries suggests that the government revenue in the UK would be between £1.1 billion and £2.5 billion for the 800 MHz frequency band.

Convergys develops and implements Smart Revenue Solutions for the utility, retail energy, telecoms, cable, satellite, and broadband markets.

See Claire Milne's post on the LSE Media Policy Project blog

See other LSE Enterprise reports|