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Fujitsu and the final third

Rory Cellan-Jones | 08:45 UK time, Thursday, 14 April 2011

Hurrah - Fujitsu has banished the broadband blues from the final third. That, no doubt, will be the reaction in government to yesterday's news that the Japanese firm is planning a fast fibre network to serve five million homes which would otherwise be left in the broadband slow lane. But before we get too excited about this new dawn for British broadband, we need a little more information. Namely, what will it cost, where will it be available, and how much public money will it need?

man sitting under a tree with a laptop

First, let's look at the context. Right now, if you want to get a superfast broadband connection - and that really means one based on fibre - you have limited choice, either BT or Virgin Media. And if you're not in the two thirds of the country those two firms say they can afford to reach over the next couple of years, then tough.

So Fujitsu's plan to build its own network - in conjunction with Virgin Media, TalkTalk and Cisco - does two things. First, it provides the possibility of a third player in the fibre game, though one which will be closely allied with Virgin. So internet service providers (ISPs) without a fibre offering should be able to provide one via the Fujitsu network - if they don't like the look of BTs Openreach which will also be offering them a wholesale fibre deal. More competition, which sounds good.

Secondly, five million homes in rural Britain now have a real chance of getting fast broadband - and even, according to Fujitsu, having a better deal than is available in the towns. The company says that by delivering fibre direct to homes, rather than to pavement cabinets as BT mostly does, it can promise speeds of up to 1Gbps. Cue mutterings from BT about why on earth anyone should want those speeds - but for rural campaigners whose battle-cry has been "final third first" this sounds like very good news.

And Fujitsu says it's helping to push the UK up the global broadband league, and we need to be more ambitious about the technology we use. The UK is 27th in the OECD broadband rankings, Andy Stevenson of Fujitsu told me. You need 1Gbps from day one.

So to the questions - first of all, what will it cost to build, and then to buy? When the debate about next generation broadband was raging a few years ago, some huge figures were bandied around for the cost of bringing fibre to the whole of Britain - something in the region of 28 billion. Now Fujitsu is talking of building its network for two billion, which seems a bargain.

The company is getting access to BTs infrastructure - its ducts and poles - and that means there may not have to be too much expensive digging up of roads. Nevertheless, questions are being asked about how the sums add up. BT put out a pointed statement calling for more clarity and behind the scenes is frankly disbelieving: if we can not see the business case for this, how can they, asked one insider. We don't understand how they're getting it to this cost unless they're going to charge rural customers a lot more.

Still, its in BTs interest to be sceptical about the arrival of what could be a powerful new competitor - and the telecoms giant did spend many years saying fast fibre broadband was not really needed and not affordable, before deciding that the investment case did in fact add up.

But it's important to remember that this new network won't reach all of the final third - and we are not at all clear exactly where the five million homes to be offered this fast lane to the future will be. That all depends, says Fujitsu, on where the £530m set aside by the government for rural broadband projects is allocated.

That money, set aside from the TV licence fee, is crucial to the building of this network - work won't start without it, and Fujitsu is clearly hoping to get the lion's share of the cash. The company thinks the government would rather deal with one big provider operating nationally than dozens of small local projects - and judging by the enthusiastic reaction of the broadband minister Ed Vaizey to yesterdays announcement, it looks as though that's right.

So Fujitsu has gone a long way to providing an answer for the rural broadband campaigners, the government, the ISPs wanting a competitive fibre wholesaler - just about everyone except BT. All we need now is a bit more detail on how it all adds up.


  • Comment number 1.

    Living in country this seems a good thing but there still a feeling of I believe it when I see it. I do not understand the business model to make it pay.

    If they doing this so they open up smaller towns to fibre and happen to connect up those homes inbetween it makes sense. But there again what do they mean by "rural" - a large village or town of 2000 homes or a small hamlet of 20 homes.

    Lets hope it means that people in the country can have a communication system fit for this century. Farmers need boardband for the tracking of animals, children need it as schools use online tools and others use it to run their businesses.

  • Comment number 2.

    BT is inverting over 2.5 billion to improve it's broadband across the country. My question is how much are Virgin and Fujitsu going to pay? or do they just want to grab a government subsidy?

    BT opened access to their pole, duct and cable network before any Ofcom ruling.

    Also if Virgin are so keen to use BT ducts, cables and poles why have they not opened their network to other providers?

    It seems they want lots from everyone else but bring little to the party.

  • Comment number 3.

    ISPreview indicates that Fujitsu maybe investing around two billion, they offer no source for this.

    It is certainly an improvement upon the BT offer which also included a grab for government cash. Perhaps a little competition would do BR good. Even if figures quoted indicate eighty percent of the network would be reliant upon BT infrastructure.

    Already there is speculation of the negative impact upon BT returns. As yet there is scant detail in the Fujitsu proposal other than a nice PR announcement. Undoubtedly they are seeking to exert pressure on Ofcom. The result of which remains to be seen.

    With such uncertainties and no real details it is hard to get excited about the announcement just yet.

  • Comment number 4.

    myibbcid - £2 billion. It's in the blog.

    And how does opening up Virgin's stuff help? I live a good few miles away from their cable. Giving BT that is not going to do anything to get decent broadband to me. And doesn't BT have a connect to every Virgin home already because it used to be the GPO?

  • Comment number 5.

    Apologies myibbcid. I meant to address that to mackrec.

  • Comment number 6.

    Presumably the "final third" simply becomes "the final sixth" if they're doing 5m homes and they're all in the final third ?

    The business model can work if they charge enough, if people pay that and if they take the long view on the investment.

  • Comment number 7.

    After the shambles Fujitsu made of their involvement in the NHS IT projects, if I were the government I would be very wary before giving them any money.

    If something appears too good to be true, it usually isn't true.

  • Comment number 8.

    If Fujitsu can pull this off for just £2bn, it'll prove conclusively how overpriced and slow BT is. No wonder they're not keen.

  • Comment number 9.

    Having lived with 1mb for the past ten years, watching the rest of the UK fly past me (in terms of speed) It will be a welcome relief to finally catch up though I will reiterate what AndyT said "I'll believe it when I see it".

  • Comment number 10.

    Give a man 1mbps broadband and he will moan he doesn't have 8, give him 8mbps and he will moan he doesn’t have 20, give him 20mbps and he will moan he doesn’t have 100………

    Exactly at what point will people be happy because even if Mr Smith at number 22 has 1gbps he will only complain when Mr Jones at number 23 says he has 1.01gbps

  • Comment number 11.

    BT is a byeword for expensive indolence. Anything that help this behemoth, "wake up and smell the coffee" is good. However, I seriously doubt this announcement is anything more than "marketing".

    With mobile 3&4G the internet speeds accessible to users will already be enhanced and offer a cheaper option than wiring the countryside as many masts are already in place.

    As a major global IT business it is sad Fujitsu has not indicated that they will act as a telco as this would give serious competition to all the current providers. Fujitsu certainly could not be worse than the current bunch of Telcos in terms of service or price.

  • Comment number 12.

    To No 10 Icarus_5000.

    I can't speak for every man but personally I'll stop wanting more when the speed available to me is adequate to run the things that I want to run. E.g. Streaming Iplayer HD. I don't want a particular bandwidth I want an adequate bandwidth. I don't give a monkey's what Mr Jones has, I just want to be able to make use of the services on offer that I would like to have.

  • Comment number 13.

    I am paying £20 per month for my broadband connection (including line rental), getting about 1.5Mbps, but to be honest I really don't mind paying upto £50 to get the speed increased to 5Mbps or something, the slow speed is really limiting my access to interactive services such as interactive TV

  • Comment number 14.

    Forget rural, what about areas such as where I live in St. Helens? Suburb of a 50,000 population town, in a metropolitan (i.e. predominantly urban) borough of 150,000+, and BT can't even guarantee 1 meg connection. They suggest we might just get 2 meg on ADSL2+, when they bother to install it. I have a horrible feeling that areas such as ours will fall between the gaps of BT's lacking network and Fujitsu's new one.

  • Comment number 15.

    I know the focus on super fast (or even just fast) broadband always related to country areas but there are places in towns where it is unavailable too. I live in a development that was build between 10 and 20 years ago (depending on which part you live in) and the fibre network stops at the end of the pre-existing road with no sign of it ever extending to the newer areas. This is, slightly, offset by the fact I get 4M (on average) through the copper wires but that's the fastest I'll ever get being 2Km from the hub.

    It isn't just out in the country and small village areas that need to be addressed.


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