UK pledges £200m for fibre and £16m for 5G in 2017 budget

The UK government has pledged additional funding for fibre broadband and 5G deployment, but is set to hit mobile users with additional charges for roaming outside of Europe.

During its latest budget, chancellor Philip Hammond committed £16 million in state funds for a National 5G Innovation Network, which will partner with research institutions to develop projects around the next generation of mobile connectivity.

A number of organisations within the UK are already driving 5G research, including BT, which has partnered with Huawei to test 5G advancements, and the University of Surrey’s 5G Innovation Centre. The latter received £12 million in funding and is backed by operators including Telefonica, Vodafone, and BT-owned EE.

Foreign minister Boris Johnson has previously pledged to bring 5G to London by 2020 during his time as mayor of the UK capital, with over £760 million committed to the development of 5G over the next five years.

The latest commitment pales in comparison to Hammond’s previous financial statement in September when he announced funds of £750 million would be made available for 5G projects.

Some within the industry questioned the low investment figure in 5G, given previously stated ambitions to make the UK “a leader” in 5G connectivity.

Sally Mewies, partner at Gowling WLG, said:  “The announcement of a £16 million investment in 5G does not feel like a significant sum of money particularly when George Osborne had the ambition for the UK to lead the way in 5G technology and is likely to be very important to the autonomous car sector. Having said that, there are clearly benefits to the announced investment in a mobile hub at research institutions.

 “Irrespective of the investment, many large players in the Telecoms sector view the UK’s planning laws as one of the biggest barriers to the 5G rollout. Until that is resolved, roll out of this technology at pace will be challenging and not just in London.”

Will Stewart, VP of the Institution of Engineering and Technology said investment in 5G is welcome, but it will take more than just money to position the UK as a pioneer in the technology.

“5G has the potential to transform the UK economy, modernise industry and support the fast-growing digital social space so a bold and long-term strategy from Government is vital.

“But it’s important to stress that the 5G investment announced today will not come anywhere close to bridging the investment gap needed to deliver 5G across the UK - so the Government strategy’s recognition that regulatory modernisation is needed to make the final bill of delivering 5G more affordable, for example by enabling operators to share networks, is pivotal. 

 “The biggest challenge for Government will be improving coverage for all, as 5G cannot transform what it doesn’t cover. And achieving universal coverage for the UK, outside high-capacity urban areas, will not be affordable or achievable without regulatory change.”

Fibre investment

Hammond also announced £200 million in funding for “full fibre”, which is understood to mean fibre to the home, deployment, which will be driven by the Broadband Delivery UK programme. This aims to deliver “superfast” broadband (speeds of above 24Mbps) to 95% of UK homes by the end of this year, and 97% of homes by 2020.

In his autumn statement, Hammond also committed £200 million towards fibre broadband funding. This followed on from predecessor George Osbourne’s commitment of the same figure, £200 million, in fibre funding as part of last year’s budget.

Lee Wade, the CEO of UK-based cloud provider Exponential-e, said more needs to be done to address concerns around the UK’s network infrastructure.

“Today's budget from the Chancellor was a start, but it still does not go far enough to address the network infrastructure of the UK. Yes, we have seen £200 million has been set aside to help deliver broadband across the country, but more still needs to be done. 

“The government shouldn't be applauded for solving the country's broadband crisis just yet. There is still a long way to go to sort out the perilous state of our digital infrastructure.

The inability to constantly modernise Britain's network infrastructure is not just a matter of being bottom of the broadband leagues.

It's also a major bottleneck to the progress of business and our increasingly digital economy.”


It wasn’t all good news for the industry, however, as Hammond announced additional costs for those using their mobile phones while abroad.

In his Budget speech Hammond told the House of Commons his budget plan contained measures “to introduce UK VAT on roaming telecoms outside the EU in line with international standard practice”.

Current rates of VAT are 20%, with the treasury speculating that the additional charges will raise up to £65 million for the government.

The European Union is set to introduce free roaming across all member states, including the UK, later this year, so Hammond exempted EU roaming from the charges. However, it remains unclear what impact the UK’s decision to leave the EU as part of last year’s referendum will have on roaming in the future.

The charges could negatively impact the industry, as VAT charges are paid directly to the treasury, and roaming is already charged at a premium in some countries. This could mean consumers are less likely to use their phones while abroad.