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Super-Connected Cities vouchers win mixed approval from ISPs

The government’s voucher scheme for small businesses to improve their broadband connection has won a lukewarm welcome from the broadband industry.

The Super-Connected Cities vouchers give small and medium-sized businesses up to £3,000 to install superfast or ultrafast broadband.

The leading proposal among responses is that businesses need to be able to bundle state broadband vouchers to cover their connection costs.

Super-Connected Cities vouchers win mixed approval from ISPs
Superfast urban broadband is proving tricky to get right

Read Recombu Digital’s guide to Super-Connected Cities and the Urban Broadband FundThey’ve also recommended a central portal to help businesses reach broadband suppliers, and ensuring the vouchers fully cover installation, but not ongoing subscriptions.

But beyond these requests the scheme has divided ISPs, with BT and Virgin Media at odds with altnets and mobile providers, and TalkTalk completely opposed.

The Broadband Stakeholder Group said: “There is not universal support for the scheme with some companies and organisations holding substantial concerns about the rationale for pursuing a connection voucher scheme.

“However, in addition to those concerns there is also the perspective from some that 
connection vouchers could play a role in upgrading or connecting SMEs to high speed/high grade connections who would not otherwise have done so and that this could yield a wider social and economic benefit.”

Small businesses in Belfast, Cardiff, Edinburgh, Manchester and Salford are currently able to test drive the vouchers, applying for £250 to £3,000 towards set-up costs.

Some respondents felt the vouchers should stretch to £4,000 to cover more difficult engineering installation work.

The government’s Communications Consumer Panel said: “The Panel broadly welcomes the intentions of the proposed scheme but has reservations that the scheme does not go far enough, and may not achieve the best possible return on investment.”

Vouchers could also be exchanged for digital business skills training, the Panel added, and many small business would welcome a low-cost ‘leased line’ style superfast broadband service.

The Internet Service Providers’ Association (ISPA) said: “We appreciate and are aware of the challenges that the super-connected cities fund has had and that the vouchers scheme is now aimed at a specific users, SMEs. 

“However, it is important that public money does not distort competition and that the overall benefits of the scheme are made clear.”

ISPA members recommended that the money for cities should also be available to rural businesses, and to residents where there’s a common need for faster broadband, as well as better information from local authorities.

The government’s original Urban Broadband Fund to help councils build fibre networks in 18 cities was scuppered in July 2013.

Virgin and BT complained that helping new ISPs install ultrafast gigabit broadband would be unfair competition to their superfast services offering hundreds of megabits.

Pilot projects in Birmingham and Edinburgh were quickly scrapped, and the government retargeted the UBF towards connection vouchers and urban WiFi projects.

BT, Virgin, Hyperoptic and TalkTalk talk Super-Connected Cities

BT’s response argues for a BDUK-style scheme where local government chooses a supplier, rather than relying on users to generate demand.

It also proposed a ‘landlords voucher’ which would let owners of business parks or large office buildings combine all their tenants’ vouchers to finance a major network improvement.

Virgin Media said ongoing monthly costs and lack of awareness are the biggest barriers to superfast broadband take-up, and was concerned the vouchers could encourage businesses to simply switch providers for free.

Its response also suggested that businesses shouldn’t get vouchers if they already have connections at 30Mbps or better.

Hyperoptic, which specialises in gigabit pure fibre residential and business connections, said the vouchers should be open to home-workers and mixed residential and business areas.

The fibre provider also called for businesses to obtain a minimum number of quotes to bolster competition, for rigorous auditing, minimum contract periods, and smooth cashflow to help smaller ISPs.

TalkTalk said the vouchers scheme is a ‘fundamentally wrong use of the available funding’, and should be supervised by Ofcom and carefully targeted.

“Although we will obviously benefit    as a business in delivering a scheme such as this, we think this is the wrong approach and will only serve to further strengthen BT’s already dominant position,” TalkTalk added.

“Instead we think government should be focusing any available funding on education and digital skills training to help ensure SMEs understand and can exploit the benefits that the internet affords as these are the real barriers to getting online – not the cost of connection.”

Image: IvanWalsh.com/Flickr

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