If you are about to have a broadband or Internet connection installed under the Gigabit Broadband Voucher Scheme, then read on. Because you may not actually be saving any money.
What I’m about to write is quite contentious, and I will caveat that this is my own opinion, however recently I have discovered that the Gigabit Broadband Voucher Scheme is a bit of a farce.
What is the Gigabit Broadband Voucher Scheme?
The Gigabit Broadband Voucher Scheme provides a £2,500 grant to businesses who wish to upgrade their Internet to a Gigabit capable service.
You need to upgrade to a line that has the potential to go up to gigabit speeds. Typically this may take the form of a leased line, which has a gigabit bearer, meaning a simple phone call to your provider can increase your speed to up to 1Gb.
What can the £2,500 grant be used to cover?
The Gigabit Broadband Voucher Scheme is intended to aid with the installation costs of a broadband connection.
Typically, this takes the form of Excess Construction Charges (ECCs) which can range from £0 to tens of thousands of pounds depending on your situation. Specifically for dedicated leased lines, land and roads may need to be dug up. Traffic management put in place to deal with temporary road works, and any other number of construction work required to physically get an Internet connection to your premises.
It can also cover the costs of routing equipment that supports the increased speeds.
What does the £2,500 grant not cover?
Switches, Wireless Access Points and other associated hardware which are not directly related to the connection.
It also cannot be used to pay VAT, nor any ongoing costs for the service.
Who is it intended for?
Primary candidates for these are business estates which have poor connectivity.
A prime example on this was a local farm estate near here, which housed around 15 businesses. ECCs to install a leased line was over £40k. Each of the businesses can claim a voucher under the scheme, and so pay for the majority of the costs with the grant, leaving just the VAT to pay.
That said, It can be used by any business and in any location to aid them in getting a gigabit capable service, and so there are little to no restrictions around its use.
What is actually happening?
The frustrations around this for me personally, are that most Internet Service Providers are abusing the scheme.
Instead of using the grant to get Internet to people who otherwise couldn’t afford it, the grant is being used to profit Internet Service Providers.
Did you know that on a 3 Year term, you should always be entitled to free installation on a dedicated leased line connection?
Now, this does exclude fees for ECCs and for any additional work required to switch you from your old to your new connection (typically where we would get involved), but the lines themselves are and have always been offered to us with free installation.
To add to this on my comment around ECC’s. The likes of BT and Virgin will even typically cover the first £1,000 or possibly £2,000 of ECCs – and that’s still not touching the grant!
What we have seen from many providers now, is that they will offer you a connection and a router at Zero cost, advertising how they are using the grant to provide this to you for free.
What’s actually happening behind the scenes, is the line installation was already free, and the router provided is only worth £500. The remaining £2,000 is pure profit to the provider.
Why do I care?
You should care, because you may actually be paying over the odds for the line in the first place.
A number of times we have been shown quotes from local firms claiming to use the grant to lower costs. However on each occasion, we have been able to beat the monthly rental price and have zero installation costs, and that’s without touching the grant!
I will say that the caveat here is that most who have approached us for a quote already have the necessary router in place to support the faster connection, but even factoring in the additional monthly cost – it would likely be cheaper to pay for the upgraded hardware outside of the grant over the 3 year term.
Some very clever people are building their businesses off the back of the profit they make from each installation. The question however, is whether these businesses will be sustainable after 31 March 2021 when the scheme ends. At this time, they will only have the very small margins from each connection to keep them operating.
At this time of course, there is little to no overhead required, so those businesses could scale back down again and live off the recurring revenue. As long as they have enough staff to respond to technical issues for those connections then that may need nothing more.
It’s very disingenuous though, and in my opinion something which shouldn’t be allowed.
The money which is being made available by the government, is to help and support growing businesses who can’t afford these lines. Instead, it’s helping to support and grow new businesses to sell these lines, which in itself perhaps isn’t a bad thing to help the British economy – but there are lots more worthy businesses who I’m sure could do with some help.
Are there exceptions to this?
Yes. There are quite a number of Internet Service Providers around the country who are building out their own networks, installing their own hardware in cabinets and junction boxes around the country, and are able to be very, very competitive on pricing for super fast broadband connections.
These businesses are reinvesting at least some of the profits made from the scheme, growing a network that could someday rival the likes of BT and Virgin across the country. It’s going to be an interesting decade as coverage expands, along with the governments keen attitude towards rolling out fast connectivity to 100% of the UK.