The Impact of High-Speed Broadband for Communities

The Impact of High-Speed

Broadband for Communities

A Report by Regeneris Consulting for Openreach

December 2017

Contents

1. Executive Summary 4

2. Introduction 6

The Openreach Commercial Rollout 6

Broadband Delivery UK

(BDUK) Partnerships 6

The Openreach Community Fibre

Partnership Scheme 7

Bridging the Digital Divide 8

3. Strengthening Community Economies 10

4. Assessing the Impact of

Fibre for Communities 11

Business Impacts 11

1) Increased Productivity 12

2) Innovating and Opening New Markets 13

3) Enabling New Business Creation 14

4) Flexible Working 15

5. The Economic Impact for Residents 17

Gauging the Personal Benefits

to Community Residents 17

The Effect on House Prices and Wealth 18

6. Social Benefits 20

The Social Value of Digital Inclusion 20

Healthcare Benefits 22

Education Benefits 23

7. Environmental Impacts 25

8. Summary of Overall Benefits 27

Appendices

Appendix A 29

Community Fibre Partnerships:

Fibre Technologies

Appendix B 30

Estimating CFP Business Impacts

Regeneris Consulting is an independent economics

consultancy that provides research-based advice to major

corporates, developers, national government bodies and

local government. Regeneris specialises in preparing

robust assessments of economic impact, focusing on the

impact of new technology, physical developments, policy

changes, investment programmes and corporate economic

footprint. Regeneris work across the UK from their offices

in London and Manchester. See: www.regeneris.co.uk for

further information.

1. Executive Summary

With national coverage of superfast broadband on

track to hit 95% by the end of 2017, the UK is an

increasingly digitally connected society

Openreach, the fixed digital infrastructure

business which is part of the BT Group, has played

a pivotal role, through its commercial investment

programme and by investing in the public/private

Broadband Delivery UK (BDUK) partnerships which

have

delivered superfast broadband in areas that

were not covered by any private sector plans.

The challenges of delivering fibre infrastructure to

isolated communities that still do not have access

to high-speed broadband remain considerable.

Openreach is deploying an expanding variety of

technologies, techniques and co-investment

models to address this.

This report looks at the benefits of the Openreach

appr

oach to connecting communities that remain

on the wrong side of the digital divide. It also

provides an assessment of the business,

residential, social and environmental impacts

associated with Openreach’s Community Fibre

Partnerships (CFP) programme, drawing on the

latest evidence about how fibre broadband has

affected the communities that Openreach has

connected to date. We assess impacts generated

throu

gh ten channels:

1) business productivity: generated by firms

and employees when they take-up fibre

broadband and exploit a new generation of

business production and process applications

2) business innovation and access to new

markets: created by businesses able to

develop and promote new and richer products

and services online and across wider

geographical markets and leading to turnover

and economic growth

new business start-ups: created when

entrepreneurs capitalise on fibre broadband

to operate new business models at lower cost

and more flexibly than established businesses

4) flexible working: enabled through gigabit

cloud, file transfer and communications/

conferencing applications and delivering

additional productivity improvements

5) private benefits to households: accrued

through increases in house price an

d housing

wealth

6) resident use value: estimated by monetising

the value residents attach to enhanced

connectivity

7) social value: focussing on the benefits to

older residents of reduced isolation, increased

community engagement, confidence and

financial and time savings associated with

access to online services

8) access to employment: enabled when

residents gain access to wider job

opportunities online and ben

efit from

employment and increased salaries

9) healthcare impacts: generated as advances

in connected health technologies deliver cost

savings on hospital admissions

10) reduced carbon emission: resulting from a

shift from physical to digital product and

increased flexible and tele-working from cloud

and video/audio technologies.

1. Premises able to access and order 24mbps+, made available by private and public sector investments. thinkbroadband.com

Table 1 summarises our headline estimates of the

impact that will be generated from Openreach’s

Community Fibre Partnerships and demonstrates

the breadth and scale of those impacts for

communities across the UK.

In total we estimate that the economic and

social impacts generated by Openreach’s

Community Fibre Partnerships will be just over

£XX billion over 15 years

Table 1: Community Fibre Partnership Impact Assessment:

Headline Economic & Social Impacts Over 15 Years

Business Impacts

Productivity £xxm

Innovating & Opening New Markets £xxm

New Business Creation £xxm

Flexible Working Benefits £xxm

Total Business Impacts £xxm

Economic Benefits for Residents*

Increased Housing Wealth £xxm

Resident Use Value £xxm

Social Benefits*

Social Value: 75+ year old residents only £xxm

Access to Employment: through online job search £xxm

Healthcare technology £xxm

Total Social Benefits £xxm

Source: Regeneris Consulting. * Caution should be taken in summing impact values. No total economic benefit for

residents is provided; there is likely to be some cross-over between resident welfare benefits and increased housing wealth.

Some of the economic benefits to residents may also be accounted for within social benefits.

2. This excludes resident user benefits, to avoid double counting impacts associated with increased housing wealth.

2. Introduction

Over the last seven years, a sustained period of

investment with the support of government, local

authorities and communities has enabled

Openreach to extend its fibre infrastructure to

many areas including remote and rural

communities, business parks and industrial

estates, as well as new-build residential

developments. Coverage of superfast broadband

across the UK is above 94% at the time

of writing

and it is on track to hit the government’s target

for 95% by the end of 2017

The disruptive nature of technology has impacted

on many aspects of home and working life. The

UK has become an increasingly digitally

connected society, dependent on future-proof

digital infrastructure to underpin its continued

evolution. A new hierarchy of international

competitiveness has emerged based on digital

connectivity and innovation competencies. The

government’s 2017 Digital Strategy reflects this

with a commitment to embed technology into all

elements of the economy.

This report explores the benefits of Openreach’s

continued and extensive investment in fibre

broadband for communities across the UK. It

then examines the impacts generated specifically

by Openreach’s investment through its

Community F

ibre P

artnerships (CFP) programme,

drawing on compelling evidence showing the

impacts of fibre broadband. Throughout the

report, we highlight a series of testimonials

offering local insight into the tangible benefits of

fibre broadband. The findings set out a

compelling case for continued investment in

high-speed broadband infrastructure and for the

UK to continue building its digital capabilities.

The Openreach Commercial Rollout

• extending fibre to remaining communities

• extending gigabit capable fibre to the premise

(FTTP or ‘full fibre’) technology to 2 million

premises and 100mbps+ capable Gfast

broadband to 10 million by the end of 2020

• developing a business case to build a large-

scale FTTP network across the UK

• helping the government deliver a universal

broadband service to give every home in Britain

access to a minimum of 10Mbps by 2020

Broadband Delivery UK (BDUK)

Partnerships

The majority of £1.58 billion of public investment

in fibre networks by July 2017

, has flowed

through the government’s Superfast Broadband

Programme, delivered by BDUK in conjunction

with BT, devolved and local authorities and the

European Union. With significant investment

from BT, this has al

lowed the UK to make

considerable progress in achieving its target of

connecting 95% of premises to superfast

broadband by 2017. It is also making a valuable

contribution to an evolving ultrafast broadband

agenda, through the deployment of full fibre

technologies in locations across the UK.

By the third quarter of 2017, the BDUK

programme has enabled superfast broadband

access to over 4.6 million propertie

. The rollout

will continue to push into more challenging

locations, often rural, but also in areas of

concentrated commercial activity and new

residential and business developments.

3. thinkbroadband.com

4. including through debt funding, enabled by the government’s £40 billion UK Guarantees Scheme for infrastructure.

5. Openreach is currently undertaking a consultation to explore the means to delivering major full fibre investment. See www.btplchere

6. Introduced in the 2017 Digital Economy Act.

7. This figure includes BDUK phase 1 and 2 (Superfast Extension Programme) contracts only. Information made available by BDUK here

. This report assumes expenditure

doesn’t include any phase 3 investment commitments.

8. This information is published by the UK government at quarterly intervals. Q3 data is available here

“With our high-speed fibre connection, we’re

now able to operate a site-to-site Virtual

Private Network (VPN) service between our

clinics which has improved security and

privacy when sharing data. The better

connectivity also allows us to operate an

internet based phone service between our

clinics, saving us money.”

Chris Matthews, Founder and Chief Executive

Officer, Silverlink Clinics

The Openreach Community Fibre

Partnership Scheme

Community Fibre Partnerships (CFP) augment

Openreach’s commercial and BDUK rollout. To

date, more than 400 contracts have been signed

to bring fibre broadband to communities via

fibre-to-the-premises (FTTP) and fibre-to-the-

cabinet (FTTC) technologies.

The CFP scheme reflects Openreach’s desire to

‘never say no’ to working together with individual

communities to find a suitab

le and affordable

fibre broadband option. W

e set out the key

benefits of the CFP approach below. These are

framed around the Openreach network, its

inherent qualities and deployed technologies.

“We were delighted when Openreach got in

touch and told us that the installation would

be Fibre-to-the-Premise broadband – meaning

Cotwalton would receive future-proofed

download speeds of up to 330Mbps. That’s

equal

to the best in the whole country which is

astonishing for a tiny village like ours!”

Brian Scott, resident of Cotwalton, Staffordshire

An Open Wholesale Network

The Openreach network is intrinsic to BT’s fibre

rollout, including commercial, government co-

funded (BDUK) and CFP deployments. With an

open access platform at its core and the wealth of

experience which Openreach brings to large-scale

rollouts,

CFP projects are afforded a solution which

allows communities to reap the rewards of fibre.

“B

T was a real saviour. They offered a

continual presence, understanding of

community fibre and how to jointly fund a

cabinet.”

Sam Schofield, Local Broadband Campaigner,

Kings Cliffe, Northamptonshire

Crucially, this means that CFPs also benefit from

the following Openreach network qualities:

Choice of Internet Service Providers

CFPs also benefit from Openreach’s wholesale

platform in that it provides equivalent access to a

wide range of residential and commercially-

focused Internet Service Providers (ISPs). This

ensures that CFP communities can access:

• a choice of Communication Providers (CPs)

• a variety of services from competing CPs,

resulting in lower prices

• a robust and resilient network, managed to the

hig

hest regulated standards, ensuring

consistent quality, performance and reliability.

9. CP choice is a hallmark of FTTC fibre networks, with a range of products available from a wide range of providers.

A Flexible Solution

The CFP approach offers flexibility around:

• partnership models allowing for engagement

with local bodies to jointly contribute

• funding approaches with an emphasis on gap

funding

, leveraging investment from resident

and business cash contributions and external

funding sources such as vouchers and grants

• solutions exploring all possible network

configurations and deliver best value t

o the

consumer

• sustainable solutions, serving communities in

perpetuity and removing the risk of long-term

ownership and management Ï network assets

“I would highly recommend using Openreach

to provision a community as this removes

much of the risk and liability of owning

infrastructure and keeps an open market for

subscribers.”

Jon Wohlters, Resident and Community Broadband

Campaigner from Coleorton, Leicestershire

Openreach also offers a grant to CFPs to reduce

the cost of fibre for communities where the new

infrastructure serves the local school or similar

Ofsted equivalent organisation. Rural areas have

often been left out of national voucher schemes

for enhanced broadband. Moreover, the costs of

connecting in these areas often exceeds the

voucher limit on offer. In these instances,

Openreach will contri

bute up to £30,000, capped

at 75% of the cost of the ‘gap’ fund for the

community to find. As of November 2017, 50

grants have been awarded at a total value of over

£560,000.

Expertise and Delivery Experience

Openreach has a wealth of experience and

expertise in delivering fibre broadband to millions

of homes and businesses across the UK. This

includes working in some of the most challenging

locations and w

ithin multi-agency partnerships, to

develop solutions and connect communities to

high-speed fibre.

“After three years' campaigning including the

last year planning with Openreach, the benefits

to the local community, who dug deep in their

pockets to fund this, are already clear, and

there's no doubt that making fibre broadband

available will encourage some businesses to

stay, who might have otherwise reloc

ated.

Senior managers at BT were instrumental in

introducing us to the Community Fibre

Partnership programme, which appeared to be

our only way forward.”

Paul Severs, chairman, Bussage & Chalford

Broadband Action Group, Gloucestershire

Dedicated teams in Openreach act as the conduit

for community engagement, providing:

• expertise in planning, network design and cost

estimation

• efficient network construction

deployment,

accommodating local sensitivities to bring a

sustainable approach to installations

• robust and highly-regulated network

management processes and systems to ensure

long-term viability of the new fibre broadband.

10. The funding ‘gap’ represents the value of funding required that will not be covered by Openreach’s commercial investment.

Bridging the Digital Divide

In 2016, the average broadband speed in rural

areas was 12Mbps compared to 40Mbps in urban

areas

and although the UK’s fibre broadband

footprint has expanded, there are considerable

challenges associated with delivering fibre to

everybody.

The costs of fibre roll-out can outweigh likely

revenue streams in harder to reach and more

sparsely populated areas, so innovative technic

and funding solutions are required as a result.

Openreach is working with communities across

the UK to address the nation’s connectivity

challenge and B

T has offered to play a leading

role under a voluntary offer to government to

deliver universal broadband at minimum speeds

of 10Mbps to around 99% of the country by the

end of 2020. The government is currently

considering this offer alongside the option

introducing a Universal Service Obligation (USO)

which would give every home and business in the

UK the legal right to request a high-speed

connection, with a universal minimum speed of

10Mbps. The ambition would be to deliver this by

the mid-2020s.

Under the B

T offer, which would be legally

binding and largely delivered by Openreach,

many premises would be expected to receive

substantially faster speed

s than 10Mbps, with

many also expected to receive connections more

quickly than could be delivered under a

regulatory approach.

This will ensure the UK continues to push the

boundaries of technology for the benefits of its

citizens, businesses and environment.

11. Ofcom, 2017 ‘UK Home Broadband Performance’.

12. See for example Rural England (2016). ‘State of Rural Services’

13. See English Indices of Multiple Deprivation, 2015.

3. Strengthening Community Economies

Delivering fibre broadband to communities

strengthens local economies by supporting local

businesses to grow and attracting and retaining a

local workforce. Slow connectivity can act as a

barrier for economic growth in rural communities,

particular

ly for Small and Medium-sized

Enterprises (SMEs)

. Access to fast, reliable

broadband is fundamental to running a business

efficiently and working patterns and business

practices are increasingly dictated by effective

broadband connectivity and the demands of

technology.

Smaller communities across the UK face

challenges associated with supporting an ageing

population and with retaining younger people and

those of working age. In rural areas 21% of the

population are 65+, compared to 15% in urban

areas. Those aged 20 to 44 represent 27% of the

population compared to 36% in urban areas.

Fibre broadband contributes towards

communities retaining and attracting the younger

people that are crucial to maintaining a

sustainable workforce and local economy, by

enabling:

• young people to access education resources

d courses remotely

• people to start businesses from home and

access education from home in rural areas

• greater access to public services, a key

component of rural deprivation

These outcomes align with other elements

associated with the social and environmental

impacts described in chapters 6 and 7 of this

report.

Figure 3.1 Urban & Rural Population in Great Britain by Age (% of total population)

24%

22%

0 to 19

36%

27%

20 to 44

24%

30%

45 to 64

15%

21%

65+

Urban

Rural

Source: England, Wales and Scotland Census Data

Through the remainder of this report we examine

the economic, social and environmental benefits

that arise by delivering fibre broadband to

communities across the UK.

“Faster broadband speeds have made even the

simplest things more efficient. Ordering stock

online for the gallery and gift shop takes a

fraction of the time and we’ve been able to

create a fantastic website and use social media

to promote th

e business and attract new

customers. And we can both be doing different

things online at the same time rather than

having to take it in turns.”

Jane, Co-Owner, Gallery 45, Northumberland

We also provide estimates of the impacts

resulting from Openreach investment through

Community Fibre Partnerships. We evaluate the

scale of impact by drawing on published research

and accepted methodologies. The findings

reflect

conservative estimates in the context of rapid

technological change and an evolving research

base that is probing further into the

transformative impacts of fibre connectivity.

“Upgrading the broadband capabilities of the

Castle Quarter will have a tangible impact on

businesses in the area, enabling them to

operate the way you would expect from a

business in the capital city, thereby helping

Cardif

f retain businesses and, indeed, attract

new ones.”

Adrian Field, Executive Director, Cardiff Business

Improvement District

NOTE: These impacts refer to the CFP investment

only. They are nonetheless indicative of the

impact associated with the wider Openreach

investment in communities which, through its

commercial fibre roll-out and BDUK partnerships,

will stretch beyond this. Case study quotes in the

foll

owing sections include business insights taken

from communities outside the CFP deployment to

provide a rich account of community experiences.

Business Impacts

The core economic impacts associated with fibre

for communities will be created by businesses

adopting and exploiting fibre to deliver economic

growth.

“Broadband is essential to our business. Our

whole business model relies on it. We had a

week wit

hout broadband once and we had to

de-camp to a local restaurant to use their wi-fi.

We just can’t function without it.”

Andy Hibbs, Director at Craft ICT, Norfolk.

It is possible to quantify the business impacts

associated with fibre in communities across four

primary channels:

1) Increased productivity

2) Innovation and opening markets

3) Business start-ups

4) Flexible working practices.

4. Assessing the Impact of Fibre

for Communities

“We can now investigate, diagnose and

resolve many faults in factory machinery

remotely, and as soon as they occur, without

having to send engineers to site. Our orders,

invoices, accounts and stock control system

are always available, so our people aren’t

wasting their time waiting for information or

systems they need to do their jobs. People are

less frustrated at work, and that helps us be a

more harmon

ious and productive team.”

Chris Jones, MD, Corgi Socks, Carmarthenshire

1) Increased Productivity

To compete in national and global markets,

businesses need to be able to deliver efficiently

and effectively. Fibre will drive productivity in

community level economies, among employees

and by enabling a new generation of business

production and process applications.

“There are four people in the office her

e and

each of them loses about half an hour a day

due to slow broadband speeds. I've calculated

the cost savings to my business will be £6,000

per year with superfast, as we'll be able to

work more efficiently.”

Anthony Pilkington, MD BookCheck Ltd, Chalford,

Gloucestershire

Recent efforts to assess the productivity effects

associated with enhanced broadband connectivity

converge on a 0.3% uplift where a d

oubling in

speed is achieved. This is applied in the

Department for Community and Local

Government (DCLG)’s 2017 assessment of the

economic impacts associated with the Universal

Service Obligation as well as in the 2013

Evaluation of the BDUK National Broadband

Programme. This draws on 2012 research by

Chalmers, which found a doubling of speed is

associated with a 0.3 percentage point increase in

Gross Dome

stic Product (GDP) growth in OECD

countries

Community Fibre Partnerships Impact

Assessment: Productivity

We assume that on average, businesses taking up

fibre broadband for the first time in CFP

communities can generate productivity

improvements in line with the 2017 DCMS

assessment. We also assume that those impacts

vary by sector and size. A 2008 European

Commission study estimated broadband

productivit

y impacts for a range of industry

types

• manufacturing and construction: 0.14%

increase in GVA per firm per annum

• knowledge intensive

: 0.58% per annum

• other services: 0.32% per annum (efficiency

benefits only).

This approach allows us to apply impacts to

individual businesses and to be tailored to the

locations supported through the CFP scheme.

14. Rohman, Ibrahim Kholilul, and Erik Bohlin. (2012). ‘Does Broadband Speed Really Matter for Driving Economic Growth? Investigating OECD Countries.

15. Micus Management (2008). ‘The Impact of Broadband on Growth and Productivity’. European Commission, DG Information Society and Media.

16. These are the information and communication (Standard Industrial Classification J), financial (SIC K) and professional, scientific and technical (SIC M) sectors.

“We’re already finding that ultrafast

broadband is giving our business a major

boost. Everything we do online now works so

much more quickly and efficiently. Our remote

and rural location helps to give the beers that

we produce their purity and character, the

downside has always been that we have lagged

behind in terms of connectivity.

“Ultrafast will be a vital part of the future

development of the busin

ess whether we are

communicating online with our customers and

suppliers or using the technology to work more

efficiently. It has already strengthened our

infrastructure as we continue to expand the

business which includes greater use of

e-commerce and a recent redesign of our

website.”

Patrick McCaig, Managing Director of Otter Brewery,

Devon

Applying productivity uplifts for a doubling in

speed represents a conservative approach, given

the marked increases in speed delivered through

CFP, which provides 100Mbps broadband and

above to communities that are often still receiving

less than 2Mbps.

Our assessment suggests that over a 15-year

period, £XX million in GVA could be

generated within communities benefitting

from CFP investment due to productivity

improvements alone

2) Innovating and Opening New Markets

Through enhanced upload and download speeds,

businesses will be able to develop and promote

new and richer products and services online and

across wider geographical markets. They will be

stimulated by greater exposure to innovation,

information and an international online

community and marketplace.

“Since we connected to superfast broadband,

our ecommerce business has really taken off,

doubling in tw

o years. Corgi is now a significant

exporter, with new major distributors in Korea,

China, Japan and Australia.”

Chris Jones, Managing Director of Corgi Socks,

Carmarthenshire

Fibre-enabled innovation is driven by rapid

technological change and therefore can be

difficult to forecast. Examples of the tools and

applications that business can exploit through

fibre, now and in future, include:

• next generatio

n digital design and prototyping

• additive manufacturing (3D printing)

• next generation HD video conferencing

• user generated products and services and online

point of sale (PoS) software

• smart sensor technology, e.g. in monitoring and

making automatic adjustments in production

and supply-chain management

“Video conferencing is now seamless which

allows us to keep in touch with our staff and

customers arou

nd the world much more easily.

It’s reduced our travel costs and therefore

enabled us to offer a more cost-effective

service to our customers.”

Andy Hibbs, Director at Craft ICT, Norfolk

17. Appendix A contains the detailed assumptions applied to all business impacts,

covering our approach to fibre adoption, technology change, disaggregation of

impacts by business sector and size and discounting and multiplier effects over

our 15-year assessment period.

A Note on Terminology: We refer to fibre

broadband throughout the impact assessment. All estimates of impact for the

CFP programme assume a step change in connectivity from basic broadband

(below 24Mbps) to superfast (24Mbps) broadband. Many homes and businesses

are accessing fibre through CFP speeds well in excess of 24Mbps, and some less,

dependent on

the technology deployed. Overall, our assumption is a

conservative one.

This increase in innovation sets the scene for a

new ecosystem which will evolve through the

application of digital technologies, the use of

smart data and internet enabled devices

“Fibre broadband has provided a platform for

us to generate revenue through internet-

driven services, and it gives us confidence to

examine future revenues. We saw the

potential to generate new revenues through

internet-driv

en services, so long as we had

reliable access to sufficient bandwidth.”

Iain Brown, MD, Sandy Balls Holiday Village,

New Forest

Community Fibre Partnerships Impact

Assessment: Innovation and Opening

New Markets

We estimate businesses will, on average, replicate

the productivity gains described above, by

innovating, extending market share and entering

into new markets.

This would see £XX million in GVA

created

for CFP community economies over

15 years.

3) Enabling New Business Creation

Over a quarter of UK businesses (486,000) are in

the countryside and more people start businesses

in rural areas than in major towns. A 2015 study

by the Department for Environment, Food & Rural

Affairs (Defra) found that increasing numbers of

people are relocating to the countryside from

towns, and many of those doing so

are starting

businesses

. The availability of fibre broadband

stands to accelerate this trend.

Fibre broadband acts as a stimulus for new

business creation and entrepreneurship. Through

access to fibre infrastructure, communities and

individuals benefit from increased opportunities

to trade online, access global markets remotely

and operate businesses from home, including

rural locations.

Specifically, bus

inesses in communities gaining

access to fibre for the first time will enjoy an

increase in the power of cloud computing and be

able to conduct more of their operations and

collaborative working online. This enables new

business models and new ways of working, and

offers a greater ability to reach new markets and

retain staff through flexible working. It also

reduces the costs associated with starting and

running a business, e.g. through lower premises

costs.

“You can’t just ‘pop down the road’ to see

global customers, but you can meet, see,

share documents and talk with them online

whenever you need. Export is now the fastest-

expanding part of our business, and there’s no

doubt that our superfast communications are

making this growth both possible and

manageable.”

Laurence Harris, Owner, Daioni organic dairy farm,

Pembrokeshire

18. Find out more from EEF (2016). ‘The Fourth Industrial Revolution: A Primer for Manufacturers’.

19 Murphy Salisbury, 2015 ‘Rural start-ups to rival urban businesses due to superfast broadband’.

Community Fibre Partnerships Impact

Assessment: New Business Creation

We have estimated the number of business start-

ups that could arise if barriers to entry, including

costs, were reduced in certain sectors.

Assumptions have been informed by a study

which estimates that business creation could rise

by up to 1.7% per annum due to increased cloud

computing power

It is estimated that CFP investment will

create £XX million in GVA for the UK

economy over 15 years, as a result of

business creation.

4) Flexible Working

Research shows that flexible working practices,

including working from home and at remote

locations, are 21% higher among firms who are

utilising fibre broadband versus basic

broadband

, and that employee productivity rises

significantly as a result

Businesses in fibre connected communities will be

able to begin using a wide range of digital human

resource (HR), communications and other

business process applications. These will enable

more employers and employees to communicate

and work efficiently and flexibly, leading to the

following benefits:

• reduced overheads associated with business

premises

• lower business and commuter travel costs and

carbon emissions

• healthier work-life balance,

which in turn has

been proven to improve employee motivation

and retention

• reduced barriers to work for carers, single

parents and disabled people

• increased employer access to a wider labour

pool when recruiting.

“I have the opportunity to work with Royal

British Legion Industries, helping veterans and

their families. The work involves a great deal of

travelling but when I get fibre I will be able to

do th

at work online, without leaving my

home!”

Margaret Saunders an Occupational Psychologist

from Moy in Scotland

Community Fibre Partnerships Impact

Assessment: Flexible Working

We assume that productivity will be 20% higher

for employees working flexibly versus purely

office-based employees. This is deliberately

conservative and is five percentage points lower

than suggested by the research, allowing for

leve

lling off in the increase in worker flexibility and

productivity gains over time.

Through an increase in the adoption of

flexible working practices, CFP could create

an estimated £XX million in GVA, over a

15-year period.

20. Etro, F (2009). ‘The Economic Impact of Cloud Computing on Business Creation, Employment and Output in Europe’.

21. Strategic Networks Group (2013). Data refers to a survey of 16,000 firms in the US.

22. R

ockbridge Associates Inc. (2005/6). “The National Technology Readiness Survey”. estimates that employees working flexibly are 25% more productive than other

employees. 20% has been applied in estimating impacts allowing for some levelling off in the increase in worker flexibility and productivity gains over time.

Community Fibre Partnerships Impact

Assessment: Summary of Business Impacts

The business and employment benefits,

attributed to CFP projects over a 15-year period,

are summarised in Table 4.2 below.

In total, the benefits to communities

connected to fibre by the CFP scheme sum

to £XX million over our 15-year assessment

period.

The impacts associated with Openreach’s national

rollout of fibre broadband techn

ologies, through

commercial and BDUK partnerships, would be

considerably greater, reflecting the scale of

delivery to millions of new businesses and homes.

Table 4.2: Community Fibre Partnership Impact Assessment:

Summary of Business Benefits (15-year Period)

Productivity Benefits £xxm

Innovating & Opening New Markets Benefits £xxm

New Business Creation Benefits £xxm

Flexible Working Benefits £xxm

Total Benefits £xxm

Source: Regeneris Consulting. Figures may not sum due to rounding.

In this section, we explore the economic benefits

that will accrue to community residents, using an

assessment of ‘willingness to pay’, and through

evidence on the effects of broadband connectivity

on house prices and wealth.

Gauging the Personal Benefits to

Community Residents

Assessing people’s willingness to pay for a

product or service is a widely used approach in

economic impact analysis and recommen

ded

under HM Treasury’s guidance

. By looking at

the amount residents are willing to pay for a fibre

broadband subscription versus older copper-

based connection, we get an indication of the

value they place on fibre and, by proxy, a

monetary value of the personal benefits. The

approach assumes that benefits cannot be less

than the additional cost, otherwise consumers

would not make the purchase.

This app

roach is taken in three studies, by the

Fibre to the Home (FTTH) Council, WIK-Consult

and Plum Consulting, suggesting residents’

willingness to pay for an upgrade to fibre

broadband at a minimum of 5 euros (£4.40

) per

month, or £53 annually

Community Fibre Partnerships Impact

Assessment: Resident Use Value

We apply the evidence set out above to evaluate

the personal economic benefit to residents who

ave upgraded to fibre as part of the CFP scheme.

Assuming take-up of fibre broadband among

households rises to 35% within five years,

this suggests a total economic benefit of £XX

million over our 15-year assessment period.

In addition to the installation and rental costs

associated with accessing fibre broadband, it is

evident from the considerable time and money

that many CFP community groups have

commit

ted that residents value fibre connectivity

greatly.

“Life-changing sounds a bit over the top but it

really has transformed how we live and work at

home. Broadband is an essential utility now.

It’s something people look for in a new

property. Now, I can get on the company’s

VPN instantly and work online, the kids can

get on with their homework and we can all

stream movies and download music – all at the

me time.”

Andy Godward, Local Broadband Campaigner,

Eshott, Northumberland

The majority of CFP communities have mobilised

and established formal groups to campaign and

ultimately co-funded a fibre broadband solution,

in partnership with Openreach. In doing so,

communities have made significant monetary

contributions to bridge the commercial funding

gap, which has prevented fibre broadband from

being deploy

ed in more challenging and harder-

to-reach areas.

23. HM Treasury (2013). ‘The Green Book: Appraisal and Evaluation in Central Government.’

24. Applying the exchange rate from xe.com on 10.07.17.

25. DotEcon and the FTTH Council Europe (2012), ‘Regulatory policy and the roll-out of fibre-to-the-home networks’; WIK-Consult (2012), ‘Re-thinking the Digital Agenda for

Europe (DAE): A richer choice of technologies’; Plum Consulting (2011). ‘Copper Pricing and the Fibre T

ransition’. NOTE: This does not reflect current or future prices for

BT fibre broadband. Rather it is a finding based on research from across Europe of the additional price residents have been willing to pay for fibre versus older copper

connections.

5. The Economic Impact for Residents

The financial and opportunity costs

incurred by

both residential and business communities alike,

are difficult to measure but testament to the

value placed on bringing fibre broadband to their

area.

The Effect on House Prices and Wealth

Research undertaken by leading price comparison

sites highlights the importance placed on

broadband connectivity when purchasing a new

home:

• a GoCompare survey of 2,000 ho

use buyers

found that 43% prioritised a good, reliable

broadband connection strong enough to stream

TV and films

• a survey by Rightmove, of over 3,000 users,

found that information on broadband

connectivity was ranked as a more important

feature when searching for property than

transport links and nearby schools. The

property search site now includes a tool for

users to check connectivity at any address

Housing markets where only basic broadband is

available appear to have suffered. Savills

conducted a survey which found that nearly 70%

of respondents reported that slow broadband was

a constraint on letting properties in rural

locations

Analysis of the relationship between broadband

and house prices undertaken by the Spatial

Economic Research Centre (SERC) showed that,

on average, house prices rose

by 2.8% where dial-

up internet was replaced by first generation ADSL

broadband connections

. The survey undertaken

by Rightmove (see above) suggested slow

broadband could reduce the value of a home by

up to 20% .

“Reaching a solution through the Community

Fibre Partnership was certainly worth it for our

community as it is really helping to protect the

housing market from any depreciation

associated with

poor broadband speeds.”

Jon Wohlters, Resident and Community Broadband

Campaigner from Coleorton, Leicestershire

Community Fibre Partnerships Impact

Assessment: Housing Wealth

The estimated average house price in CFP

communities is £326,000

. Applying the 2.8%

rise in prices estimated by SERC suggests house

prices would rise by £9,100, on average, where a

doubling in speed is achieved. This is likely t

o be

an underestimate; CFP case studies show that in

many locations speeds will rise from basic (2Mbps

or less) to superfast (30Mbps or above).

Summing these house value uplifts across

the residential properties set to benefit

from CFP, gains in housing wealth total

£XX million

26. The cost to residents of foregoing leisure time and time in which they could potentially be earning income.

27. After a good neighbourhood (66%), low crime rate (59%), proximity to shops (51%) and a good GP or dentist (44%). moneywise.co.uk

July 2017.

28. rightmove.co.uk

August 2016.

29. Savills (2015). ‘Estate Benchmarking Survey’.

30. SERC (2014). ‘Speed 2.0: Evaluation Access to Universal Digital Highways’.

31. Rightmove, August 2016.

32. Based on district level average house price data from CLG and Registers of Scotland, 2017.

33. This is a one-off benefit and so, unlike other benefits assessed in this report, we do not count over 15 years.

Community Fibre Partnerships Impact

Assessment: Summary of Economic Benefits

for Residents

The private economic benefits for residents,

attributed to existing and planned Community

Fibre Partnerships, are summarised below.

As for the results in previous sections, the impacts

associated with national Openreach rollout of

fibre broadband technologies, through

commercial and BDUK partnerships, would be

cons

iderably greater, reflecting the scale of

delivery to millions of new businesses and homes.

Table 5.1: Community Fibre Partnership Impact Assessment:

Summary of Resident Benefits (15-year Period)

The Effect on House Prices and Wealth £xxm

Resident Use Value £xxm

Source: Regeneris Consulting. Caution should be taken in summing impact values. No total economic benefit for residents

is provided; there is likely to be some cross-over between resident welfare benefits and increased housing wealth.

The Social Value of Digital Inclusion

In St Breward, Cornwall, a village without fibre

broadband, just 27% of the population currently

use email and 15% use social networking. Yet,

59% of those surveyed believe that the internet is

intrinsic to community cohesion, making people

feel more socially connected and involved

This is supported by PriceWaterhouseCoopers

(PwC), which examined how digital and social

exclusion are interrelated and appear to be

mutually reinforcing. Of those surveyed, 81% of

those aged over 55 reported that being online

makes them feel a greater part of modern society

and as a result, less lonely

“We believe that fibre broadband promotes

social inclusion by improving access to health,

education and commercial services and

supports sustainable employment by

encouraging flexible

approaches to working

from home and the growth of small

businesses. It will encourage some businesses

to stay, who might have otherwise relocated.”

Paul Severs, chairman of the Bussage & Chalfont

Broadband Action Group, Gloucestershire

BT has published a study on the value of digital

inclusion

, drawing on:

• interviews with people that previously had low

levels of digital literacy but who recently started

to use the internet at least once a week

• tried and tested methods for assessing Social

Return on Investment (SROI) – most notably,

individuals stated and revealed preferences for

engaging in certain online activities

• previous research into the value attached to a

number of online activities and benefits.

The study revealed that the social benefits of

getting online are worth £1,064 a year to

someone u

sing the internet for the first time

This value comes from a combination of benefits,

including:

• financial savings associated with online

shopping

• enhanced and wider employment opportunities

through online job searches

• reduced feelings of isolation and improved

confidence.

A range of further evidence exists to support

some of the specific benefits listed under

Table 6.1:

• Reduced Isolation and Communit

Engagement: research undertaken by HACT

across a wide range of indicators suggests a

social value associated with internet access of

£2,413 per user, higher than estimated under

BT’s SROI research

• Access to Employment Through Online Job

Search: research by PwC found that the

potential economic impact of getting everyone

in the UK online would create a £500m

economic benefit, derived from shorter periods

of worklessness

34. Varley, 2015 ‘Sustainable Digital Neighbourhoods: A Study of the Social and Spatial Effects of Technological Transition in a Rural Village’.

35. Cabinet Office, 2014 ‘Government Digital Inclusion Strategy’.

36. BT. ‘Digital Inclusion: The Social Return on Investment’.

37. The detail evidence and method applied is set out in BT’s Valuing Digital Inclusion report –

www.btplc.co

m/Purposefulbusiness/Connectivity/Beingonlineisgoodforsociety/Valuing-Digital-Inclusion.pdf

38. HACT Social Value Bank and Value Calculator hact.org.uk/value-calculator

39. Core Cities, 2015 ‘Speed Up Broadband’.

6. Social Benefits

• Access to Online Public Services: as

government services become increasingly

digitised, digital exclusion will become an even

greater problem for those who cannot access

fibre broadband. This is just one more factor

highlighting the crucial importance of fibre

broadband to areas left on the wrong side of the

digital divide.

The UK is leading the way in delivering public

services online:

• The UK Government

runs an estimated 89% of

public services online.

• In 2015/16, the government made £339 million

of operational savings through digital

transformation

• The UK was ranked No. 1 in the 2016 UN E-

government Survey, based on delivery of basic

economic and social services, education,

health, labour and employment and finance,

and assessed on:

• the adequacy of telecommunication

infrastructure

• the ability of hum

an resources to promote and

use ICT

• the availability of online services and content.

40. Cabinet Office, Government announces efficiency savings for 2015/16, 2017. Page 4.

Table 6.1: Monetised Social Value Attached to New Internet Users

Based on Interviews with Digitally Excluded Individuals

Outcome Value Likelihood Source Total

Confidence £707 34% Magnitude in change in confidence £240

Reduced Isolation £1,055 24% % more active in their community £253

& socialising online

Time Saving £785 37% % using government services online £290

Hobbies & £77 57% % reporting engagement in £44

Reduced Boredom online hobbies

Financial Savings £560 31% % shopping online £173

Online Job Search £1,325 4.7% % of workforce that are job seekers £274

Total £1,064

Source BT. ‘Digital Inclusion: The Social Return on Investment’. Note: some of the social benefits listed here may be

accounted for in the willingness to pay assessment provided in Section 4. To avoid double counting, caution should be

taken in combining values from the two assessments.

Community Fibre Partnerships Impact

Assessment: Social Value

To produce a conservative estimate of economic

value relevant to CFP communities, we apply

these benefits in Table 6.1 to people aged 75 and

over, excluding the value associated with online

job search

. We apply the value associated with

online job search to the estimated number that

are currently unemployed in CFP communities

There were an estimated 7,500 people aged 75

and above resident in CFP communities at the

time of the 2011 Census. Although many others

are likely to benefit, it is this age group that are

most likely to not have engaged in significant

online activity previously, and which stand to

benefit from increased confidence and reduced

isolation.

Assuming 35% of those aged over 75 adopt

fibre broadband, £XX million in social val

will be generated as a result of CFP, over a

15-year period.

Applying the value associated with online

job search from the BT research to

unemployed residents in CFP locations, and

assuming 35% adoption of fibre, suggests a

total benefit of £XX million, over a 15-year

period.

Healthcare Benefits

Fibre broadband is assisting the healthcare sector

to develop and deploy transformative

technologies and improve

access to healthcare.

This is having a multi-faceted impact on medical

and health-based industries and patients, as new

forms of outreach, remote diagnosis and patient

monitoring become increasingly commonplace

and deliverable.

Investment in E-Health Services

The government is investing £4.2 billion in NHS

England over the next five years in areas such as

electronic patient records, apps and wearable

devi

ces, telehealth and assistive technologies.

Fibre broadband is also set to change the systems

through which patient’s access healthcare, with

NHS England investing an additional £45 million

over the next five years, as part of the General

Practice Forward View, to stimulate the use of

online consultations.

It is estimated that 10% of patients in every

general practice will book appointments and order

rep

eat prescriptions online by March 2018. This

digitisation of healthcare services stands to play a

vital role in rural areas, where 52% of inhabitants

live within walking distance of a doctor’s surgery

(compared to 62% in urban areas)

Improved Health Outcomes

The development of new applications in the field

of healthcare has been facilitated by high speed

connectivity. It is also borne out of the need

respond to an ageing population and the growing

number of people with long term conditions

(LTCs), such as chronic obstructive pulmonary

disease (COPD), heart failure and diabetes.

41. Applying population by age at district level from the 2011 Census.

42. Drawing on the latest Annual Population Survey, 2016/17.

43. Townsent, Sathiaseelan and Fairhurts (2013) ‘Enhanced broadband access as a solution to the social and economic problems of the rural digital divide’. Local Economy:

The Journal of the L

ocal Economy Policy Unit.

NHS England spends 70% of its budget on the 15

million people nationally who have one or more of

these conditions. As the population ages, these

numbers are expected to grow by 23% over the

next 20 years

. The current approach to the

delivery of care to people with LTCs is

unsustainable in terms of cost and quality of care.

The advances being made in the field of

telehealth offer the possibility of subst

antially

reducing the number of hospital admissions and

the unit cost of contact between patient and

specialists.

Telehealth technology is significantly improving

health outcomes. The Nuffield Trust ran a whole-

system telehealth demonstrator trial for 3,100

patients diagnosed with COPD, heart failure or

diabetes. It found that telehealth services

delivered a 45% reduction in mortality, reduced

emergency ad

missions by 20%, led to 14% fewer

elective admissions and 14% fewer bed days

Community Fibre Partnerships Impact

Assessment: Healthcare Benefits

The Nuffield trial found that overall costs of

hospital care were £1,888 lower among telehealth

users with COPD, heart disease or diabetes, than

for control patients.

Applying Clinical Commission Group (CCG) data

from Public Health England and regional data

om the British Heart Foundation we estimate

that 9,400 individuals are diagnosed with COPD,

heart failure or diabetes in areas benefitting (or

set to benefit) from CFP fibre broadband

deployments.

Applying the costs savings over our 15-year

assessment period and assuming 35%

take-up of whole service telehealth,

suggests potential costs savings to hospitals

of £XX million across CFP communities

Education Benefits

Higher Education

Fibre broadband is an increasing necessity for

schools and pupils, to keep pace with changes in

the way education is delivered. UK schools

currently spend £900 million annually on

education technology.

There are close links between educational

attainment and fibre internet access. Pupils who

grow up in rural communities could be at a

disadvantage compared to their urban dwelling

eers, as they may be less able to access online

learning resources and carry out research-based

projects

“The internet plays an important role in our

school today, from students researching

projects to developing new computing skills

which are vital for their working lives ahead.

We are looking forward to seeing the benefits

of the new high-speed link to our students and

staff when it goes live next ye

ar.”

Paul Gardner, Teacher at Dunedin School, Edinburgh

44. 2020 Health (2010) - Healthcare without walls – A Framework for Delivering Telehealth at Scale.

45. Nuffield Trust (2012). ‘’The Impact of Telehealth on the use of Hospital Care and Mortality’.

46. This provides broad indication of the scale of cost savings that could be brought about but should be treated with caution. The Nuffield study concluded that there was a

need for further investigation to evidence causality. Moreover, these savings cannot be attributed solely to fibre broadband alo

ne. They will also be dependent on further

investment to ensure the widespread deployment and take-up of telehealth technologies and services.

47. Turner, 2017 ‘Poor Broadband puts children’s education at risk in rural areas’. The Telegraph, 17th January 2017.

The increasing use of fibre-enabled educational

tools and applications extends past primary and

secondary education in to higher education and

adult learning:

• A recent study of over 7,000 higher education

students found that c. 70% thought digital

technology improved their learning when used

effectively by teaching staff

• Cambridgeshire County Council's Adult

Learning and Skills team runs computer an

internet classes in some of the county's most

remote towns and villages

, to develop a range

of computer literacy skills and promote digital

inclusion.

“This new technology will provide a leap in

digital services that will benefit every single

member of the school community, pupils,

parents, staff and visitors.”

Rob Connolly, Head Teacher at Ditcham Park School,

Hampshire

The evidence outlined here suggests higher

educational attainment, enhanced skills and

greater employability among those that can

access e-learning applications and services.

Inevitably this will benefit local businesses in their

search for job-ready and skilled employees, result

in higher value employment and wages, and

facilitate economic growth within communities.

“Superfast broadband is proving to have many

benefits for family life

: We can access the

fullest high-quality media, which means my

young children can take advantage of a raft of

educational resources.”

Jon Wohlters, Resident and Community Broadband

Campaigner from Coleorton, Leicestershire

As yet, there is no clear evidence of the strength

of the relationship between online learning and

higher value employment or economic growth.

We have not sought to quantify these effec

ts here

but the signs are that they add significantly to the

ways in which fibre broadband is strengthening

local economies.

48. The Joint Information Systems Committee (Jisc) 2016 Student Digital Experience Tracker 2016: results from the pilot project. Page 22, para 15.

49. Online Centres Network, 2015 ‘Rural Centres: Cambridgeshire Adult Learning and Skills’.

On top of economic and social benefits, fibre

broadband reduces business and commuter travel

and energy use, resulting in CO

abatement. It

does so through a range of mechanisms:

• Dematerialisation: in recent years fibre

broadband has fuelled a shift in production and

consumption of news, books, music and films to

digital platforms. This reduces the need to

manufacture, publish, print and ship a range of

phy

sical products and results in reduced carbon

emissions.

• E-commerce: fibre provides a more seamless

online shopping experience and drives

increased e-commerce, both business to

consumer (B2C) and business to business (B2B).

E-commerce reduces the need for commercial,

retail and wholesale floorspace and associated

energy requirements.

• Video conferencing: fibre has made video

conferencing services an effec

tive and

accessible option for most businesses. Roll-out

to businesses not yet receiving fibre will allow

them to take part in video meetings and avoid

business travel.

• Cloud computing: enabling widespread and

seamless use of online file sharing and business

process applications (e.g. CRM and HR

systems). This supports a rise in home/remote

working (and so a decrease in business and

commuter travel) and re

duces the need for

physical IT equipment and associated

production and energy use.

• Telecommuting: everyday use of cloud and

video conferencing and the more general rise of

online communications and commerce has

opened the opportunity for many to work and

do business remotely and from home. This

reduces commuter travel and congestion.

The distance travelled to shop, work and attend

face-to-face meetings is

greater for residents in

more isolated areas. The power of fibre-enabled

telecommuting, e-commerce and

videoconferencing to reduce these journeys will

be greater than in urban areas.

“We have been able to cut costs and address

our environmental responsibilities by reducing

the amount of paper we use. We print fewer

catalogues, and we present our promotions,

letters, invoices and statements online to

custome

rs wherever we can.”

Chris Jones, Managing Director of Corgi Socks,

Carmarthenshire

Community Fibre Partnerships Impact

Assessment: Carbon Abatement

The Carbon Trust worked with Openreach to

assess carbon abatement from a breadth of

broadband enabled applications. The resulting

method paper sets out the evidence and approach

taken to assess carbon abatement across a

number of areas.

Using the Carbon Trust

assessment, we have

applied CO

reductions per user per annum for

de-materialisation, e-commerce, telecommuting

and video conferencing. These are applied to

households and businesses covered by

Community Fibre Partnerships to provide an

estimate of total carbon savings over our 15 year

impact assessment period.

7. Environmental Impacts

Our estimates of environmental benefits are likely

to be conservative. We apply average carbon

reductions per user from UK-wide data, but (as

stated above) the effect of broadband on carbon

abatement is likely to be especially pronounced in

the often rural communities covered by CFPs.

Over a 15 year period, carbon abatement

resulting from de-materialisation,

e-commerce, telecommuting and video

conferenci

ng will total 24,300 tonnes

of CO

Annually, this is equivalent to the carbon

emissions produced by more than 3,000

drivers, or 5% of all drivers in CFP

communities

50. Based on: average kilometres driven per driver from the 2016 National Travel Survey; average CO2 emissions produced by cars, per kilometre from DfT Vehicle Statistics;

the proportion of those aged 17+ with a full driver’s license from the DVLA.

Table 7.1: Community Fibre Partnerships Impact Assessment: Carbon Emissions

Reductions Impacts, Applying Carbon Trust Methodology

Carbon Trust CO

Unit of CFP CO

Abatement CO

Abatement

Reduction Per Measurement Units/Users Over Per Annum, Over 15 Years

Unit, pa (kg) (tonnes)* (tonnes)**

De-materialisation 31 Residential 42,300 460 5,600

Connections

E-commerce 83 Business 3,700 110 1,300

Connections

Flexible/ 950 Telecommuters 800 270 3,300

Home Working

Video Conferencing 28 Number of 2,200 1,150*** 14,100

conference calls

Total 9,000 1,980 24,300

Source: Regeneris Consulting; Carbon Trust (2016). ‘BT’s 3:1 Carbon Abatement Methodology’.

*based on 35% fibre adoption. **based on fibre adoption rising to 35% over five years. *** based on an average of one call

per fibre adopting business per week.

This report has explored the diversity of benefits

delivered through the Openreach investment in

fibre, in areas that remain without the high-speed

fibre broadband that is now available to the vast

majority of people across the rest of the UK.

Significant benefits will arise from:

• delivering on the ground and financial support

to groups looking to bring fibre to their

community where commercial investmen

t has

not materialised

• the added resilience afforded to community

economies by tackling challenges associated

with a lack of business investment, an ageing

population and retaining a local workforce

• the economic value residents’ place on fibre

broadband and increases in house prices

derived from its availability

• greater community engagement and well-being

and reduced isolation

• access to an emerging set

of healthcare and

educational technologies and services

• reductions on carbon emissions and pollutants.

We have also estimated the scale of benefits that

will arise as a result of Openreach’s commitment

to extend fibre to over 60,000 premises

communities across the UK through its

Community Fibre Partnerships programme. Over

a 15 year period we estimate that CFP will lead to

the following benefits:

• busi

nesses in CFP communities to date stand to

generate £XX million for local economies across

the UK

• residents in CFP communities to date will

benefit from around £XX million in economic

value, mainly through increased housing values

• the monetised value of social, educational and

health benefits will total around £XX million

• An estimated 24,300 tonnes of carbon

emissions that would have otherwise entered

e atmosphere, will be saved as a result of CFP.

In total we estimate that the economic and

social impacts generated by Openreach’s

Community Fibre Partnerships will be just

over £XX billion over 15 years

These impacts provide an indication of the larger

scale benefits that will be achieved through

Openreach’s wider investments in fibre for

communities. The findings overall set out a

compelling case for

continued investment in fibre

broadband networks, and in locations that lag the

rest of the UK on broadband capability in

particular.

51. As of December 2017. More premises will have been contracted subsequently.

52. This excludes resident user benefits, to avoid double counting impacts associated with increased housing wealth.

8. Summary of Overall Benefits

Table 8.1: Community Fibre Partnership Impact Assessment:

Headline Impacts Over 15 Years

Business Impacts

Productivity £xxm

Innovating & Opening New Markets £xxm

New Business Creation £xxm

Flexible Working Benefits £xxm

Total Business Impacts £xxm

Economic Benefits for Residents*

Resident Use Value £xxm

Increased Housing Wealth £xxm

Social Benefits*

Social Value: 75+ year old residents only £xxm

Access to Employment: through online job search £xxm

Healthcare technology £xxm

Total Social Benefits £xxm

Source: Regeneris Consulting. *Caution should be taken in summing impact values. No total economic benefit for

residents is provided; there is likely to be some cross-over between resident welfare benefits and increased housing wealth.

Some of the economic benefits to residents may also be accounted for within social benefits.

Community Fibre Partnerships:

Fibre Technologies

CFP deployments adhere to the same standards of

construction and installation as those associated

with nationwide rollouts. Fibre components within

the local network may rely on elements of the

existing copper infrastructure or be overlaid by

end-to-end fibre.

Openreach has a selection of fibre solutions at its

disposal to achieve superfast and ultrafast

tcomes. These are outlined below and are at

various stages of maturity, with some

technologies expected to become increasingly

important in future deployments.

Appendix A

Table A.1: Openreach Fibre Broadband Technologies

Technology Summary Speed

Capability

Fibre to the Cabinet • Fibre-copper hybrid solution Superfast

(FTTC) • Most widely-deployed technology across the UK

• Reliant on existing infrastructure

• Subject to incremental performance uplifts

Fibre to the Premise • Pure fibre solution Ultrafast

(FTTP) • Increasing component of Openreach network

• Suitable in rural and urban settings

• Highest specification Openreach technology

FTTP on Demand • Offered in conjunction with FTTC Ultrafast

• Subject to different ordering process and

additional installation fees

G.Fast • Currently under trial Ultrafast

• Operates in conjunction with FTTC to offer

increased performance

• Widespread deployment anticipated

Source: Openreach

At present, CFP rollouts have mainly used FTTC

(90%), with FTTP deployed in remaining locations

(10%). The evolution of Openreach’s technical

mix and pending the results of ongoing field trials,

means this balance is likely to change in the

future. It is anticipated that FTTP will become an

increasingly prominent solution, while new build

development si

tes will also see full fibre installed

as the preferred technology of choice.

Estimating CFP Business Impacts

To produce estimates of economic growth

(through Gross Value Added, or GVA), and

employment, a baseline GVA and employment

position has been formed for the locations that

stand to benefit from the CFP deployment. This

draws on the following data:

• forecast CFP premise coverage: provided by BT

(over 60,000)

• estimates of the business : premise ratio at local

authority level: u

sing DCLG data on residential

dwellings, CoStar.com business premise data

and ONS Business Counts (enterprise data)

• GVA per business, based on:

• ONS Regional GVA data by sector

• employee data from the ONS Business

• average employees per micro, small, medium

and large business, by sector, from the

Annual Business Inquiry (ABI).

We have applied a 20% dampening factor

bus

iness:premise ratio for communities that lie

outside of cities and larger towns. This reflects the

lower proportion of business premises situated in

smaller towns and villages versus more densely

populated areas within any given local authority

area.

Modelling Assumptions

All impacts have applied the following:

• a 15-year assessment period consistent with

European telecommunication infrastructure

assessmen

t guidance

• a 3.5% discount rate consistent with HM

Treasury’s Green Book

• a combined multiplier effect of 1.25. Each of

the six channels of impact that have been

assessed are multiplied by this figure to account

for the knock-on benefits generated due to

increased employee/resident spending power

(induced multiplier effects) and increased supply

chain purchasing by businesses (indirect

multiplier effects

)

Adoption

We assume that adoption of broadband amongst

businesses rises to 35%, although take-up is

assumed to be higher from knowledge-based

businesses, lower among other manufacturing

firms and lower still within other service sectors. It

is also assumed that larger businesses adopt at a

faster rate. This is a conservative assumption that

draws on Openreach adoption rates to date.

Time Dependency

Our m

odelling of productivity and innovation

impacts has assumed the following build-up

periods:

• broadband services enabled: one year after the

start of network build

• 35% adoption rate reached: after five years

• productivity benefits achieved: one year after

adoption

• in

novation benefits realised: four years after

adoption.

53. HM Treasury Green Book Appraisal Guide. Indirect multiplier effects have not been factored into the assessment of private household benefits.

54. HM Treasury Green Book Appraisal Guide. Only induced impacts applied in the assessment of private household benefits.

Appendix B

Sector Analysis

We have applied the following sector definitions

for knowledge intensive and other service sectors

from the Standard Industrial Classifications (SIC):

• knowledge based: information &

communication (J), financial & insurance (K)

and professional, scientific & technical (M)

activities

• other services: transport & storage (H) and

administrative and support service activities.

Wholesale and reta

il (G) and other service

activities (S) have been excluded from the

assessment as the benefits from broadband are

currently less clear.

Technological Change

The benefit to businesses of high speed

broadband will increase over time, as new and

improved applications will emerge in reaction to

the enhanced capabilities offered by fibre

broadband. As businesses make use of these

applications they will be able

to generate new

impacts.

Based on available research, it is difficult to

predict the exact scale of these effects and project

the associated benefits in the future. To account

for this, we have applied a conservative

assumption that technological change will lead to

a 2.5% uplift on all productivity and innovation

impacts in the short term (after 5 years), a 5%

uplift in the medium term (after 10 years) a

nd a

7.5% uplift in the long term (after 15 years).

New Business Creation

A peak increased growth rate of 1.5% is applied

to knowledge based sectors, whilst a 1.2% growth

rate is applied across other manufacturing and

construction and other services sectors, as a result

of fibre broadband connectivity. This compares to

estimates produced by Etro (2009) suggesting

growth in business creation of up to 1.7%

per

annum

It is assumed that the annual business growth rate

builds up to a peak rate in year 5, then persists in

years 6 to 8 before decreasing by 10% per year

thereafter. Survival rates are applied across two

broad sectors (knowledge based firms and ‘other

services’

) based on National Statistics business

counts data.

It is assumed that 99% of start-ups established in

year one are micro businesses (0-10 employees)

and by year 15, business sizes have grown to

reflect the national average

. Average employee

numbers for each area are applied across micro,

small and medium sizes and large businesses for

each sector drawing on the 2008 Annual Business

Inquiry.

Economic impact estimates have been generated

by applying GVA per worker figures across

knowledge based industries, manufacturing and

construction

and other services. The proportion of

GVA created by new businesses attributed to CFP

fibre rollout is programmed to fall to zero over a

five-year period, with the first employees within

start-up businesses being counted for one year.

55. Applies estimated SME business creation across the UK of 34,843, 1.7% of the total number of SMEs at the time according to National Statistics Business Counts, 2009.

Etro, F (2009). ‘The Economic Impact of Cloud Computing on Business Creation, Employment and Output in Europe’.

56. The knowledge based sector covers information & communication, financial & insurance and professional, scientific & technical activities. Other services cover transport &

storage and administrative & support service activities.

57. This projected level of business growth means that 95% will still be micro firms after a 15-year period.

Flexible Working Impacts

Rates of flexible working are programmed to

increase at roughly the same rate that has been

achieved through the move from basic (<2Mbps)

to superfast broadband. This assumes increases

will occur at the following rates:

• 3% per annum in the financial and professional

services sector (the sectors most likely to utilise

these technologies)

• 1% per annum in all other sectors

Baseline G

VA estimates have been generated by

applying GVA per worker figures across

knowledge based industries, manufacturing and

construction and other services.

Notes