In order to keep the UK at the forefront of digital connectivity globally, Ofcom has high-lighted the need for more investment to "enable a step change in the speeds and technology available to consumers". Specifically, Ofcom is aiming to achieve greater coverage of ‘ultrafast broadband’, involving networks which offer downstream capacity of 300 Mbit/s (with an upgrade path to 1 Gbit/s), and higher upload speeds than superfast broadband. Ofcom also considers it important for ultrafast networks to provide im-provements in reliability and quality.
This study assesses (i) applications that require ultrafast broadband, and how demand for bandwidth might evolve in the years to 2025; (ii) the evolution of network technologies and the degree to which they may meet evolving demand; and (iii) the direct and indirect benefits that might result from the more widespread deployment of ultrafast broadband in the UK.
WIK-Consult finds that UK consumers are relatively advanced compared with consumers in other European countries as regards their use of multiple devices and applications such as cloud computing. Based on WIK’s modelling of expected demand for current and future consumer and business applications in the home, we estimate that if they faced no technological or pricing constraints, around 40% of UK households may demand at least 1 Gbit/s downstream and 600 Mbit/s upstream by 2025. In addition, the demand model shows 42% of UK households having demand for at least 300 Mbit/s symmetric.
Under a less aggressive scenario in which forecast bandwidth requirements for some services are reduced, and we assume there is no use of more advanced media such as 8K and virtual reality (VR) (except in the context of gaming), we estimate that close to 60% of households would still require download speeds of at least 300 Mbit/s by 2025 of which 8% would even require Gigabit bandwidths.
Considering existing studies, a specific economic impact is harder to ascertain. One reason is that the effects on Gross Domestic Product (GDP) from different studies analyzed vary according to the methodologies used and time period studied. Another reason is that these studies rely on the assumption that relationships found between increases in broadband speeds and GDP in the past, when broadband speeds were much lower, will continue to apply in the future. However, there is little evidence on the extent to which this past relationship between increases in speed and GDP can be extrapolated for much larger increases in speeds in the future. At least one study suggests that there might be diminishing marginal returns. Alternatively, it is possible that if higher bandwidths and lower latency enable the development of groundbreaking applications, that they could support a step change in productivity. Thus, while a positive impact on GDP from deploying ultrafast broadband more widely in the UK seems likely, it is not possible to quantify the scale of this impact with a high degree of certainty.
The study is available for download.
