What’s it Worth?

Amid all the frustrations of trying to follow a public funding process that is clearly being made up by the relevant bodies as they go along, we’ve actually been able to get on with some real work towards the project. We’ve got a model that demonstrates the build cost (we can deliver a 1000+ MB/s network for less than the government’s per premise ‘value’ figure of £3,400 for a 10Mb/s service)  and another that shows that the service is sustainable and financially viable. So far, so good.

What we haven’t had though is an actual model of the economic uplift that the service area might get from both the provision of any effective broadband to our area and of the differences we could see between the benefits from different service models and technologies.

Any such model, anywhere, is going to be somewhat speculative but, by carefully researching what’s happening elsewhere, looking at market trends and talking with local households and businesses, we’ve been able to make a stab at it. And here it is, both for local information and in case it might help other communities who are scratching their collective heads over the same thing.

In creating a model of annual economic uplift (for the first year of service – it’ll build thereafter), we’ve looked firstly at:

  1. Tariffs and occupancy rates in visitor accommodation.
  2. The benefits to sponsored (or potentially sponsored) existing events in the glen, most notably the Mhor Festival. This excludes new events being facilitated by broadband provision.
  3. Direct and attributable cost savings for different types of business in the glen.
  4. The possibility of inward investment and new businesses, including only two already known examples.
  5. Any uplift to domestic property transactions, based on local figures.

Then we’ve included the uplift in property values. This gives an estimate of the change in values of domestic properties only, including residences, holiday homes and holiday lets. This is based on average value and transaction data from zoopla.co.uk and is likely a significant underestimate.

After putting all of these together, the outcome has surprised even us: we get an estimated first year benefit to our glen of <200 properties of something in excess of £8M, combining both economic activity and property value.

In terms of economic activity alone, the figure is a minimum of around £1.1M and, excluding property transaction values, about £3/4M. There’s also a potential first year only benefit of around £300k from the sale of plots currently under development.

For a service which will cost circa £500k to build and which should be cash positive in operation, that’s a fairly major public benefit. It however excludes:

  • Benefits to the many local residents who work from home.
  • Benefit to students having effective access to materials.
  • Improvements to public communication access to visitors.
  • The impact of inward migration and investment (beyond the two specific examples given).
  • Any attempt to measure increased resilience from economic diversification.
  • Benefits accruing from deployment of emerging healthcare and monitoring technologies.
  • Environmental and cost benefits from reduced travel and commuting.
  • Onward benefits to other communities who can piggyback on our connection.

It’s also worth noting that even the most optimistic deployment of the BT model of FTTC broadband would only generate a fraction of the benefit of a universal fibre (FTTP) model – we estimate around a quarter of the total uplift and about 11% of the direct trading uplift. That’s down to a combination of lack of reach of their technology and a failure to create sufficient differentiation to attract inward mobility. The relative benefit would also decrease in future years as the BT architecture falls ever further behind global best practice.

This has been a very useful process for us and we’re pretty confident that this model is at least reasonably robust and tied to experiences elsewhere. A PDF of the full report is available here.

If you’re a community working your way through the same issues as we have, please don’t hesitate to get in touch and we’ll do what we can to help. And if you’re a community who is ahead of us on the curve here and you spot something we’ve missed, please let us know.

 

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