Superfast broadband demand to outstrip Digital Britain funds

Analyst research suggests £12m pot is "pretty weak" compared with the scale of the challenge

Demand for fibre broadband will grow fast

Government plans to help fund rollout of fibre-optic broadband are likely to fall far short of the forecast growth for demand for the technology, according to research.

The study by analyst Point Topic has cast doubt on the government’s ability to reach its broadband access targets with funding of £12m.

The sum announced as part of the Digital Britain report is “pretty weak” when compared with the scale of the challenge, according to Tim Johnson, chief analyst at Point Topic.

“Allowing only £12m to get more homes online looks pretty weak when you consider the size of the task on one hand and the potential benefits on the other,” said Johnson.

The cash is meant to help ensure that superfast next-generation broadband is made available to homes and businesses in areas that would not justify commercial rollout.

Point Topic’s latest forecast suggests there are still more than nine million UK homes without internet access and that the number is falling only slowly. The company estimates that by 2014 there will still be 6.5 million homes without web access.

These figures clash with Digital Britain’s estimate that six million people without access would be assisted. But the confusion seems to arise from the definition of those without access – new digital inclusion champion Martha Lane Fox will be targeting six million people who are “both digitally and socially excluded”.

Nevertheless, Point Topic is optimistic about the growth of broadband access in the UK, and has adjusted its forecasts accordingly.

The number of broadband lines rose to more than 17.8 million in the first half of 2009, which was 100,000 more than the company had predicted at the beginning of the year. As a result, Point Topic has inflated its overall forecast for the whole year by 36 per cent.

“Looking further ahead, Point Topic now projects more than 23 million broadband lines in the UK by the end of 2013, nearly 1.2 million more than in its last forecast,” said the company in a statement.

“Set against the targets in the government’s new implementation plan for Digital Britain, the statistics and forecasts show how far there is to go,” it said.

“[Next-generation access] coverage is actually negligible today although it is expected to increase quickly over the next year and Point Topic forecasts it will pass 50 per cent by 2014. At that rate, the 2017 target should be achievable, although it will depend on some kind of subsidy to reach the more remote areas.”

Point Topic expects there to be more than seven million next-generation fibre lines in service by the end of 2014. By then, there will be more than 20 million households and 1.7 million business premises with one or more broadband lines. Next-generation access will have 30 per cent of the market, with cable claiming 21 per cent and DSL down to 49 per cent.

Point Topic’s figures separate out fibre-based next-generation access from fibre-based cable services such as those already provided by Virgin Media.