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Rural broadband survives UK spending cut

22 октября 2010

As the U.K. government spared rural network investment from a raft of spending cuts, Lloyds TSB's telecoms head on Thursday stressed the need for states to play a role in funding broadband rollout.

"Is it reasonable to expect BT's shareholders to fund an uneconomical business? Well in my opinion, in principle, no," said Richard Price, head of telecoms at Lloyds TSB Corporate Markets.

He commented to Total Telecom that governments need to provide the private sector with incentives to spend money on putting infrastructure into sparsely-populated areas.

"You need to make sure telcos can generate revenues from their investments in these areas," he said.

Price's comments come after the U.K.'s Chancellor of the Exchequer George Osborne on Wednesday spared rural broadband rollout from his planned £83 billion worth of government spending cuts, which will take place over the next four years.

Instead the coalition government reaffirmed plans to invest £530 million in extending broadband networks in rural areas, £300 million of which will be contributed by national broadcaster the BBC.

"Pilots will go ahead in the Highlands and Islands, North Yorkshire, Cumbria and Herefordshire," said Osborne, in the House of Commons on Wednesday.

"All of this will help encourage the growth of our creative industries as a key part of the new economy we are seeking to build," he said.

Osborne may have saved rural network investment from the axe, but the U.K. has already pushed back its target for rolling out universal broadband service to the whole country.

In July the government announced plans to provide minimum 2-Mbps broadband speeds to every home by 2015, three years later than the previous government's target. The delay was announced a month after the coalition scrapped plans also proposed by the previous government to levy a 50 pence monthly duty on every fixed-line, a move criticised by former Digital Britain minister Lord Carter.

When the delay was announced, BT suggested that around £2 billion of public money would be required to fund the rollout of broadband networks to the whole of the U.K. – significantly more than the £530 million earmarked by the Chancellor.

"It's hard for the government at this moment in time to justify any sort of expenditure," said Price.

"But it shouldn't force private companies to make uneconomic investments," he said.

BT itself is investing £2.5 billion to provide two thirds of the U.K. with access to fibre-based broadband services by 2015

Источник: Total Telecom

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