BBC to finance super-fast broadband in Rural areas

The BBC license fee over the next seven years has complied up to £830 million to help finance the expensive task of building superfast broadband networks in rural areas.

George Osborne, chancellor, announced in his complete spending review the location of four pilot projects that ministers hope will serve as models for how the public and private sectors should collaborate to build high-speed broadband networks in rural Britain.

The projects will be in the Highlands and Islands, North Yorkshire, Cumbria and Herefordshire. Broadband infrastructure is extensively seen as an important driver of competitiveness and innovation, and according to Mr Osborne, the government’s plans should help nurture creative industries such as advertising and media.

Ministers are particularly anxious to evade superfast broadband networks being confined to towns and cities, and are hoping that companies including BT can be persuaded to expand their high-speed infrastructure to rural areas by tapping public money.

BT, the UK’s leading fixed-line phone company, has constantly insisted that it cannot cover the cost of extending its urban-focused high-speed network to rural areas without some public funds. The government, after rejecting the former Labor administration’s plans for a telephone tax to fund superfast broadband, has instead chosen to take money from the BBC license fee.

According to Mr Osborne, the BBC would contribute £530 million from its license fee to superfast broadband by 2015, but the total could rise to £830 million by 2017.

BT welcomed the government’s pledge, and according to BT, the £530 million outlined by Mr Osborne would undoubtedly play a part in extending high-speed networks based on optical fibre.

Mr Osborne announced that BT and Virgin Media, the cable television operator, are both interested in participating in the four pilot projects.

BT is spending £2.5 billion on a high-speed network that should cover 4 million of the UK’s 26 million homes by the end of this year. The infrastructure should reach 17 million homes by 2015.Virgin Media’s superfast network covers 12.7 million homes, mainly in towns and cities. It is interested in expanding the infrastructure into rural areas, partly by tapping public funds.

According to Virgin, there’s a real opportunity to look at each area and ensure any public money is used to help find the best possible solution to benefit the local community.

The government’s plans are partly planned to ensure that all homes have broadband speeds of about 2 MB/ second by 2015, which is sufficient to watch video over the internet, such as the BBC iPlayer. An estimated 2 million homes do not have basic broadband of 2 MB/s.

The government also announced plans to sell a large chunk of radio spectrum currently used by Whitehall departments including the Ministry of Defense over the next decade. Some of the 500 megahertz of spectrum could be suitable for enabling web surfing on smartphones and laptops.