July 23, 2018 / 12:58 PM / 7 months ago

UPDATE 1-UK sets out full-fibre network plan to catch up with European rivals

(Adds reaction, details)

By Kate Holton

LONDON, July 23 (Reuters) - Britain could pay for the roll out of full-fibre broadband to its most remote regions with up to $6.6 billion of public money to tackle its position at the bottom of the European league for "gold standard" connectivity.

Britain lags most other European countries in the race to deliver full-fibre networks that generate speeds of 1 gigabits per second, with only 4 percent of UK premises connected, compared with 71 percent in Spain and 89 percent in Portugal.

"We want everyone in the UK to benefit from world-class connectivity no matter where they live, work or travel," digital minister Jeremy Wright said.

Analysts welcomed the proposal as a pragmatic approach that balanced the need to provide a fair return on investment to the likes of Britain's biggest telecoms group BT with higher targets plus the acknowledgement that it would need public money to get fibre to rural areas.

Under the plan, Britain will insist that full fibre connections are available to all new build properties, operators will be able to enter tenanted buildings to connect renters, and competition will be promoted amongst commercial providers.

Nationwide availability was likely to require funding of 3 to 5 billion pounds ($6.57 billion) to support commercial investment in parts of the country that are harder to reach and less populated, it said. Under previous investment plans, central government, local government and commercial firms have worked together.

Ultimately the government hopes the majority of the population will have 5G mobile access while 15 million premises should have full-fibre broadband by 2025. It wants full-fibre broadband coverage across all of the country by 2033.

The broadband market is dominated by BT in Britain, with its infrastructure arm Openreach seeking to connect fibre to 3 million premises by the end of 2020. It has previously relied on a fibre-copper hybrid technology which delivers slower speeds.

Other operators rely on this core network, including pay-TV groups Sky and TalkTalk and mobile operators such as Vodafone and O2.

Cable operator Virgin Media, owned by John Malone's Liberty Global, also covers more than half of the country while smaller fibre providers are developing, including the Goldman Sachs-backed CityFibre.

BT said it would work with the regulator. Its shares were up 2 percent, helped by the government's view that any regulation on pricing should enable firms making "large, risky investments" to see "a fair return on investment commensurate to the level of risk". It did not give any further details.

The government also said the market could be reviewed every five years and not three, giving longer-term clarity.

Some felt however that the plan was not ambitious enough.

"At the projected rate of fibre optic roll out, we will take until 2025 to get where many of our competitors were a few years ago," said Dan Lewis, Senior Advisor on Infrastructure at the Institute of Directors.

"More needs to be done to substantially speed up the UK's digital infrastructure development. We risk losing business that is dependent on good connectivity to competitors abroad."

The plans will inform regulator Ofcom as it sets new policy. ($1 = 0.7612 pounds) (Reporting by Kate Holton; editing by Michael Holden and Jane Merriman)

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