Major telecoms providers have said that a third of the country will not receive super-fast broadband – the, so called, next generation access (NGA) networks. The business case simply doesn't stack up in terms of their expectations for a return on their investment.
Beyond the urban boundaries of York, Harrogate and Scarborough, the county of North Yorkshire falls into that category. It and its businesses risk being left behind.
In 2007 North Yorkshire County Council established NYnet to address this issue. NYnet is a public interest company in which the County owns all the shares. Its technology partner is BT, who provides and maintains the infrastructure.
The starting point was a feasibility study which looked at the technical issues and did some business modelling.
What they have done since is get ninety per cent of the county's public sector – local authorities, the NHS, emergency services and others – to sign up to having NYnet as their telecoms provider.
The business model shows that by aggregating this demand there are significant economies of scale. Even offering broadband at slightly below market rates, they can generate annual profit margins of around £4 million. This not only makes for a viable business; it means the margin can be used to fund a rural roll out of the NGA network.
The core of the new network is a fibre optic ring, running round the county and linking up 12 BT exchanges. This "backhaul", as it's known in the business, operates at an impressive 32 Gb, though it is capable of being upgraded tenfold in future. Already it has been extended to 47 'Points of Presence' (PoPs), from which NYnet can deliver to its customers.
EU State Aid approval has recently been given to extend the fibre optic cable further and into 27 market towns. A mix of technologies, such as WiFi and radio, can then take broadband out into the villages. Circumstances at each location will determine which technology is adopted.
This approach has already been tried in two villages on the North York Moors. The nearest point on the fibre optic network was a secondary school in Pickering market town. From there microwave technology delivers super-fast broadband to Newton-on-Rawcliffe and then on to Stape.
Billy, an enthusiast living in Newton-on-Rawcliffe acts as the local broadband distributor, where he trades as Beeline. EU rules permit NYnet to sell direct to the public sector, but not to private businesses or homes where they must remain the wholesaler. Beeline sells broadband (up to 10 megabits) to local residents and businesses at competitive open market rates.
A key point is that while NYnet offers to roll out its network widely in rural areas, it can only do so where someone will act as distributor and where communities indicate sufficient interest. The starting point in Newton-on-Rawcliffe was a meeting held at the village pub to test demand.
Early results seem impressive. Village B&Bs can now take online bookings and post pictures on their websites. They report that bookings have tripled. School children can now do coursework online from home, where previously they spent two hours after school at friends' houses in Pickering. A gentleman with MS is now being monitored online by his GP using Skype. And a print media business has decided it can now move its office into the area.
In October NYnet was selected as one of four government pilots under the Broadband Delivery UK initiative, along with initiatives in Cumbria, Herefordshire and the Scottish Highlands & Islands. These are intended to test the challenges and costs of providing superfast broadband nationwide. In North Yorkshire the funding that comes with being a pilot will be a useful contribution to the network's expansion.
Key lessons which David Cullen, NYnet's Chief Executive, draws from the experience are:
• That aggregating public sector demand for super-fast broadband has been key to driving down the cost;
• That retaining the profit margin in the public sector is what makes it possible to invest in unprofitable rural areas; and
• That in terms of infrastructure the crucial step has been getting high-capacity backhaul into the area. Wider provision can be built off this.
Getting superfast broadband into rural areas often seems like a daunting (and perhaps commercially impossible) task. If NYnet continues to go according to plan, that task will look a whole lot more achievable.
This case study is based on a presentation by NYnet Chief Executive, David Cullen, to the Sparse Rural AGM on 22nd November 2010.
Written by Brian Wilson, whose consultancy, Brian Wilson Associates, can be contacted on This email address is being protected from spambots. You need JavaScript enabled to view it. . Brian is also the RSN's Research Director.