Government broadband plans face £1bn funding shortfall

A £1.1bn funding gap means the government's targets for broadband are unlikely to be met, says a report by the London School of Economics. The government wants 100% access to fast broadband services and 90% access to superfast services by 2015.


The report says the government should do more to ensure that underinvestment does not harm the UK economy. A rise in broadband penetration of 10% can lead to a 0.9%-1.5% boost in GDP per capita, the report adds.


The cost of meeting the targets will be £2.4bn but funding for broadband from all public sources amounts to a total of £1.3bn, according to the LSE report, which was sponsored by customer management software company Convergys. That leaves an estimated £1.1bn gap that private investors will be expected to fill, it says.


"The government target of 100% coverage by basic broadband by 2015 is likely to be met, but it is less clear when the government targets of 90% coverage by superfast broadband, and 100% coverage by fast broadband, are likely to be met," the report says. The LSE defines "basic" broadband as services offering speeds of up to 2Mbps. "Fast" broadband ranges from 2Mbps to 24Mbps, and "superfast" exceeds 24Mbps.


Paolo Dini, one of the report's authors, said the government should spend more on broadband given the economic benefits it could bring. "In this year's budget the government allocated £200bn for transport infrastructure and £50m to broadband. That doesn't seem quite right." But a spokesman for the Department for Culture, Media and Sport denied the targets were likely to be missed.


Read the full article on the BBC News website.

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