On tax breaks, public subsidies and community networks.

The UK government has recently decided to suspend the application of tax breaks to community benefit societies. A full description of what happened is reported here. I am neither an expert nor passionate of fiscal matters, but I would like to share some thoughts about the impact of this decision on community broadband networks.

Tax breaks have been quite useful to support community broadband networks in the UK (and in Spain, too). They offer a financial incentive for local investors and often represent the only support from public sector to these initiatives. Suspending the application of tax breaks may discourage local communities from investing in their own networks, although the need for fast broadband may be stronger than any fiscal incentive. 

I must say that the UK government, on its website (updated just 2 weeks ago) admitted that “the Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Social Investment Tax Relief (known as EIS, SEIS and SITR) are well suited to raising funds for investment in broadband schemes”. Then I hope that the government will reintroduce some sort of tax breaks in favour of community networks, once any fiscal or legal issues will be sorted out.

Unfortunately I have read somewhere online that the government is thinking to replace tax breaks with direct subsidies. Whether this is just rumours or not, I feel the need to share some insights from my research on community networks (see here and here for my latest papers on this topic).

Public subsidies are not necessarily the best solution for community networks.

Under the current regulatory regime, the use of public funding entails a number of administrative requirements that local communities are most likely unable to deal with.

Furthermore public subsidies are at odds with the ethos of community networks. The success of these initiatives depend on their ability to mobilise local resources and encourage people to share their time or money to build a cooperative network. Public subsidies make it easier to launch such projects but may undermine their sustainability in the long term.

As communities no longer need to raise funding and invest their own money, they have little incentive to engage in the roll-out or get involved in the project. However, the engagement of local communities not only favours network investment: it also raises interest and encourage demand for broadband services, thereby ensuring a stable customer base to the network.

Community networks have been on the scene for more than 15 years. Lots of these initiatives just relied on public subsidies and then failed because unable to become economically and financially sustainable. Projects like B4RN in the UK and Guifi.net, instead, have proved that community networks can be sustainable, if local communities effectively engage and contribute to the projects. 

If the government is willing to support these initiatives, there are plenty of actions to put in place. Public subsidies are not necessarily the solution, but may become part of the problem!

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Mr Gove, Brexit and the rural divide… let’s be precise!

Last week, in his speech at the National Farmer Union conference, Michael Gove (the Secretary of State for Environment, Food and Rural Affairs)  identified access to fibre broadband and 4G as a key priority for the rural UK.

This may sound odd to those thinking of the countryside as a wild and old-fashioned world, not interested in the modern technologies. In point of fact, access to internet and digital services can hugely benefit rural communities and businesses. Unfortunately, rural areas have been struggling with poor connectivity for a long time.

So, well done to Mr Gove for acknowledging this issue and taking a clear stance in favour of universal access to broadband! Hopefully his statement will be followed by some concrete actions to support broadband rollout to the most remote communities.

Indeed I do agree with Mr Gove that “we must argue for this investment not just with passion but also precision”: too often public policy in broadband networks has been led by ideology rather than common sense.

Pity that the Secretary of State himself did not resist the temptation of reaffirming his personal beliefs, blaming the EU for the lack of connectivity in rural areas. What would you expect from a Brexiter, after all?

Following Mr Gove’s recommendation, I have decided to put my passion aside and share with you a brief yet precise analysis of his statements…

  • “inside the EU, rules on state aid have prevented us from investing in broadband in a way that is best for the UK”.

The EU state aid guidelines indeed pose a number of restrictions on public interventions in the superfast broadband market. For example, public funds must be assigned through a competitive process and cannot be allocated to areas already served by commercial operators, in order to minimise market distortions.

Such a bureaucratic approach, however, has not foreclosed opportunistic behaviours from incumbents, whilst limiting the responsiveness of public bodies to new market stimuli. Consequently, I agree with Mr Gove that the EU State aid guidelines are far from being perfect.

Yet, it would be unfair to put all the blame on the EU regulation. For example, the failure of the Mobile Infrastructure project has nothing to do with the EU state aid guidelines. Likewise, if the Broadband Delivery to UK programme failed to target the areas most in need for public intervention is not (only) due to the limitations of the current EU regulation.

 

  • “when we leave the EU we can put that money towards domestic priorities, like making our digital infrastructure work by improving rural broadband and connectivity overall.”

I cannot disapprove Mr Gove’s intention to devote “the money we no longer have to give to the EU” to rural communities (even though I thought they had already been promised to NHS… )

However, the Secretary of State could have been more precise and mention the considerable amount of EU funding invested to expand broadband coverage across the UK over the past 10 years.

As detailed in the table below, almost £300m from the European Regional Development Funds (ERDF) have been invested to support the supply of fast broadband, under the BDUK programme or other local projects. And the table does not include the numerous projects funded by ERDF to promote the digitisation of businesses and the creation of digital enterprises across the UK.

In fact, 13% of the £1.7m public funding invested since 2011 in the BDUK programme came from the EU purse. In Cornwall, the EU funded 40% of the overall investment needed to provide 95% of the premises with superfast broadband. (… and, yet, 56.5% of Cornish electors voted to leave)

 

 Local Authority  Project  Amount (m)
 Wales  BDUK Phase 1  £           80.0
 Cornwall  Superfast Cornwall  £           53.5
 Scotland  BDUK Phase 1  £           25.0
 Lancashire, Blackpool, Blackburn with Darwen  BDUK Phase 1  £           16.5
 Norther Ireland  BDUK Phase 1  £           16.5
 Cumbria  BDUK Phase 1  £           13.7
 Cheshire East, Cheshire West & Chester, Warrington, Halton  BDUK Phase 1  £           13.6
 South Yorkshire  Digital Region  £           11.7
 North Yorkshire  BDUK Phase 1  £           11.6
 West Yorkshire  BDUK Phase 1 & 2  £           11.1
 Greater Manchester  BDUK Phase 1  £             5.0
 East Riding of Yorkshire  BDUK Phase 1  £             4.4
 Merseyside  BDUK Phase 1  £             4.4
 Nottinghamshire  BDUK Phase 1  £             2.7
 Derbyshire  BDUK Phase 1  £             2.5
 Cambridgeshire  BDUK Phase 3  £             2.3
 North Lincolnshire, North East Lincolnshire  BDUK Phase 1  £             2.1
 Northumberland  BDUK Phase 1 & 2  £             2.0
 Warvickshire  BDUK Phase 3  £             2.0
 Worcestershire  BDUK Phase 3  £             1.6
 Leicestershire  BDUK Phase 1  £             1.2
 North Yorkshire  BDUK Phase 3  £             1.0
 Wiltshire, South Gloucestershire  BDUK Phase 1  £             0.7
 Cambridgeshire, Peterborough  BDUK Phase 2  £             0.6
 Lincolnshire  BDUK Phase 1  £             0.6
 Greater Manchester  BDUK Phase 2  £             0.5
 Newcastle  BDUK Phase 1  £             0.4
 Total EU funding for local broadband projects   £         287.3

 

No matter how significant the contribution of the EU has been so far: according to Mr Gove, the rural divide in the UK will be solved only taking back control. To be more precise, though, the Secretary of State should have also clarified how the government intends to exert its control on the superfast broadband market. In particular:

  • What resources will be made available to compensate the loss of EU funding in support of digital inclusion?
  • What rules will be applied to foster investment and safeguard competition in the broadband market?
  • What regulation will be enforced to make public interventions more effective and efficient?

All these questions need a precise and clear answer, if we want to address the rural divide effectively. Don’t worry, Mr Gove… you have time until 29th March 2019!

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Data about EU funding have been retrieved from:

https://www.gov.uk/guidance/erdf-programmes-progress-and-achievements#projects-funded-by-erdf, www.ispreview.co.uk, www.scottishcities.org.uk, http://www.superfastcornwall.org, www.digitalregion.co.uk/

What I have learnt from my first (unsuccessful) grant application!

A couple of weeks ago, I submitted my first application for a research grant.

For those not into academia, it is worth mentioning that being able to attract funding has become a crucial skill for researchers and researchers-to-be.

Therefore, when I found this call for projects, I thought it could be a good opportunity for me to test my capabilities and, why not, try to get some funding for future research.

Unfortunately, my application was not successful.

No need to say I was a bit disappointed, as I believe our proposal was cool enough to be at least short-listed.

However, past is past. I did not get the grant, but I did get some useful experience… and here I am to share what I have learnt from my first unsuccessful grant application!

Grant applications are less complicated than expected.

Probably it is my Italian bias, but I was expecting tons of paperwork… I was pretty surprised and pleased to discover that the application form consisted only of two pages. The project had to be descripted in 500 words and this was indeed challenging. Yet formal requirements were minimal and this made everything easier and quicker.

Get as much information as you can

Reflecting in hindsight, I should have collected more information on the organisation awarding the grant. I wish I attended their networking events to understand what their main interests are and what projects they had been working on. This would have probably improved my application and made it more fit-for-purpose.

A good marriage requires time and effort.

One of the requirements of the call for projects was to involve at least another University and a company or SME. I thought that everyone would have been thrilled to join my project and collaborate – I mean, who would say no to the opportunity of getting some funds? The reality has been quite different. It took some time to identify and liaise with the right partners. This was probably the most challenging and formative experience, as it forced me to go out of my comfort zone and test my persuasion and negotiation skills. A great opportunity for a non-native English speaker!

Research is not cheap.

I had never thought about it until it came to estimate the costs of my research project. A lot of different factors needed to be considered while planning data collection. No, I am not talking about epistemology. It was all about asking the right questions to the right people. For example, how much is a pre-paid envelop? What is the cost of printing a glossy report? Information is key, again, and that you cannot find it in extant literature. So you just need to be a real researcher and search for the most convenient printing service in your city.

Feedback are less detailed than expected.

How many times have we been told to accept criticism and learn from others’ comments? Indeed, feedback can be extremely formative but, in this case, I was a bit disappointed. The response to my application was quite vague and I wish I had more detailed comments, to better understand the weaknesses of my project.

 

Overall, it was a positive experience despite the negative outcome. I am glad I tried, and I will definitely try again.

Now I have much clearer ideas of what to expect from a grant application and next time I will be able to manage the whole process more effectively. Hopefully I will get at least short-listed!

Fingers crossed and best luck to all the researchers out there applying for their first (or 100th ) grant!

Grant

Broadband for all, all for broadband

As part of my research, I have recently had an exciting trip to Melling. I suspect most of you do not know this tiny village in rural Lancashire. Neither did I, before discovering Broadband for the Rural North (B4RN).

For those who do not know B4RN, I would suggest to have a look here and here. To put it simply, it is a community project providing ultrafast broadband to connect remote and super-rural villages in the North West of England. Since 2011, people from the local communities teamed up to dig their own network. When I say dig, yes, I mean that! Volunteers are digging the ducts and posing the fibre – rather than just waiting for telcos or public authorities to do it.

Along with the physical roll-out, B4RN runs the ‘Come and Get IT Club’. Every Friday, people are welcome in their office in Melling to seek assistance with routers and tablets over a cup of tea. In a very friendly and passionate environment, anyone can learn the steps to set up a Vonage account or the tricks to boost the wi-fi signal indoor.

One Friday afternoon I joined the Club in Melling and it was one of the most fascinating experience of my researcher’s career. There is no better way to research such projects than being part of it for few hours. Therefore, I immersed myself in B4RN’s world for one day…. and I learn a lot, indeed. Now I can even self-install a fibre termination into my house –  I just need to wait for B4RN to come to Newcastle.

Most importantly, I had the chance to directly experience what communities can achieve when people share their expertise to pursue a communal goal. Listening to the stories of volunteers, employees and customers, I just realised that initiatives like B4RN can really empower local communities, by providing a faster connection and getting people actively involved in the digital revolution.

In the early 2000s, many communities wireless networks were established and scholars viewed those projects as an opportunity to promote both digital inclusion and socio-economic development. Unfortunately, only few of those initiatives have survived to the impediments of wi-fi technology and the difficulties of cooperative projects. However, B4RN proves that community-led networks still have a lot to say and to do. Policymakers and practitioners should carefully listen to such initiatives and learn some lessons.

First, innovative business models can make a difference and challenge our common sense of broadband investment.

Second, people are the most powerful asset when their potential is acknowledged and their contribution is valued.

Third, broadband is definitely not a luxury good for techies and urban elites. Anyone can get the most out of it, when provided with a decent connection and practical skills.

It may be too early to evaluate the long-term impact of B4RN. Nevertheless, this project is forcing policymakers, practitioners and researchers to rethink the dynamics in broadband market and consider alternative approaches to infrastructure delivery. Its implications might go beyond the diffusion of digital services and inspire a new model for social inclusion and economic development.

No need to say that I am excited and proud to research it!