Paul Lee, telecoms director at Deloitte said: “Deloitte welcomes the news that the telecoms industry is looking at ways to invest in the UK's broadband infrastructure. The telecommunications industry is looking for assurances that they will be able to make a return on any investment into next generation broadband services. Any investment will need to consider what cost, if any, can be passed on to the consumer or to an intermediary, such as an advertiser.

“Key to the debate on investment in broadband infrastructure is costing the benefit of speed and ensuring it coincides with commercial logic. Will an upgrade unleash an equivalent wave of value?

“Despite effectively having no fibre-to-the-premise residential connections, e-commerce spending in the UK is almost £47 billion higher than in Italy, despite 7% of Italian homes being passed by fibre. The UK also has the highest Internet per-connection advertising revenues in the world, again despite having an average broadband speed of just 3 Mbit/s. Brute speed alone, it would appear, does not create value.

“However the argument could readily be made that while we may not know today which commercially viable services require 100 Mbit/s, in 10 years’ time, we might question why we ever doubted the need for such speed.

Variety of speeds and price points
“Another challenge will be that the market, at both retail and wholesale levels, is likely to want a variety of "speeds", each with its corresponding price point.  Whilst some web users will be happy with low broadband speeds, sufficient for e-mail and a spot of online shopping, power users may want to consume video over the web and thus need the highest speeds.  However the underlying costs of fibre deployment are substantially the same regardless of speed wanted. So the industry needs to ascertain how to charge customers who are migrated from copper to fibre yet just want the speed they had had on copper.

Regulators will need to coordinate
“Delivering a fibre-based network in the UK will ultimately mean substantial disruption and digging up roads and pavements. Telecoms & utility regulators will need to develop a co-ordinated approach. Whilst digging up roads increases operators' near-term carbon footprint, in the long term, the lower costs of powering fibre may provide some balance.”

- Ends -

Notes

In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.

Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities.  Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms.

The information contained in this press release is correct at the time of going to press.