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UPD Policy Exchange Tells UK Government to Stop the Broadband Subsidy

Monday, January 7th, 2013 (11:24 am) - Score 685
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The Policy Exchange, an educational charity which also claims to be the UK’s leading think tank, has warned the government that its case for “spending any more taxpayers’ money” to subsidise the roll-out of superfast broadband is “weak” and should be stopped in 2015. Instead it wants the country to focus on connecting people who don’t use the internet.

At present the existing broadband strategy only goes up to mid-2015 and by then the government aims to have made superfast broadband (25Mbps to 30Mbps+) ISP services available to 90% of people in each local authority area (the last 10% will have to make do with speeds of at least 2Mbps+).

However today’s Policy Exchange report (‘Superfast and the Furious‘), which is supported by GO ON UK, calls on the government to construct a post-2015 strategy that would focus on helping the 10.8 million people not online (half of whom are over 65) and to do more to help small businesses make the “most of the opportunities presented by the internet“.

Chris Yiu, Author of the Report, said:

Successive governments have been right to invest public money in basic broadband connectivity. The government’s current spending plans will extend fast broadband to the vast majority of people. Any further public money should be spent on making sure we are putting this to good use. It’s far from clear that your taxes should help to pay for me to have an even faster connection.

There is no doubt that broadband, both fixed and wireless, makes a major contribution to the economy. But the right person to decide how much speed your family or business needs is you – not the government.”

We certainly agree that the right person to decide how much speed “your family or business needs is you“, although unfortunately some people in more rural and sub-urban areas have neither the choice nor money to build their own superfast broadband ISP and network (excellent projects like B4RN notwithstanding).

The Policy Exchange appears to assume that any post-2015 strategy would automatically focus on areas that already have good broadband, which seems far from certain. It appears more likely that any extra funding would focus on the last 10% of rural areas where connectivity remains poor.

Dana Tobak, Managing Director of ISP Hyperoptic, added:

I agree that it’s important to get everyone online, but that part of getting people to use the internet effectively is ensuring that they get a positive experience, and for that speed is essential. In 2015, 2Mb will not be enough to take advantage of the latest services, tools, and applications that will permeate the online world. It’s not about speed or reach; it’s about speed and reach.

Surveys of this nature are flawed because they ask people about their attitude to something that they don’t know they want. It’s why Steve Jobs didn’t believe in surveys. Let’s remember that to have a fully connected country we need people to have more than enough bandwidth, so that speed is no longer the conversation, rather the possibilities that the connection enables.

The important thing is that the Government continues to spend funds on long term infrastructure, rather than wasting taxpayer’s money on a programme that will immediately require further investment when it is finished. People also need to be educated on how to best take advantage of this infrastructure. There isn’t any reason that funding can’t achieve all of these objectives.”

A related survey of 2,000 people and 500 businesses by Ipsos MORI for Policy Exchange found that 79% of respondents thought every household should be able to have access to the internet, but only a quarter (24%) think it is fair for people in remote areas to pay more.

It also discovered that people are split (49% vs. 49%) on whether it is more important to invest in connectivity, even if it means more masts and street cabinets, or to preserve neighbourhoods and the environment, even if this constrains broadband speeds and coverage.

The Reports Other Recommendations:

• Introducing a streamlined planning regime for local authorities wanting to accelerate the rollout of fixed and mobile connectivity for their communities

• Being more relaxed about developing government digital services that require a broadband connection, as part of a broader drive to get people engaged with the benefits of the web

• A stronger role for the Minister responsible for broadband, with a more explicit remit to promote economic growth opportunities from mainstream use of the internet

In either case it’s far from clear what the government will actually do, if anything, and plenty of money has already been spent on attempting to connect older people and those with lower incomes (e.g. the cheap PC and broadband scheme). Similarly it looks increasingly likely that we’ll see a change of government in 2015, which usually results in some degree of policy shift.

UPDATE 12:22pm

The Country Land and Business Association (CLA) has now added its comment to the report.

Dr Charles Trotman, CLA Head of Rural Development, said:

We have long advocated a clearer Government focus on ensuring that all in rural areas have access to an affordable and effective broadband connection of at least two Megabits per second (Mbps).

As we stated in our own policy statement “Broadband Fit For Growth”, without universal coverage and the need for a universal service obligation, the rural/urban digital divide will simply be exacerbated. What is clear from the Policy Exchange research is that the majority of the British public agree with us.

Around 20 percent of those who live in rural England and Wales are still unable to receive anywhere near the Government’s benchmark of two Mbps. There is still a huge amount to be done to ensure coverage is universal.

We believe the Government must do more to help the countryside. By seeking to form a strategic alliance with other rural interest groups to agree common objectives, we can help to deliver a comprehensive broadband strategy.”

The CLA said that it advocates a ‘patchwork-quilt’ model whereby other technologies, such as wifi and satellite, become widely available and used. It also accuses the existing Broadband Delivery UK (BDUK) framework of being “too bureaucratic” and of needing a system where contracts awarded to infrastructure providers include fair compensation provisions for any failure to meet time and coverage requirements.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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22 Responses
  1. Its all a complete shambles, with the last two governments not getting to grips with the telcos and sorting it all out. I agree totally with what Dana says.
    The £530 million is being wasted helping those with connections go faster. many on the urban fringes will still be slow. Rurals will get fobbed off with expensive copper bonding or satellites. The next government will have to start again, and still we talk about a fast train set for a few commuters. They just don’t seem to get it, or they have been brainwashed by vital vision. (google it).
    We need fibre. Moral and optic, and no amount of coercion will get people online until they and their friends/family/workmates all have a fit for purpose connection.
    I also agree with Steve Jobs, surveys are totally worthless.
    Winston Churchill got it right. “I love statistics, I can make them say anything I like”.
    The problem we have now is that another batch of funding is coming up, and all the snouts are in the trough. Like last time, a lot of it will go on surveys, think tanks, quangos and be wasted. You watch.

    • Avatar FibreFred

      Two comments containing “moral and optic” in the first 7 days of January? I was hoping they’d be more spread out across the year to be honest! 😉

  2. Avatar Somerset

    So Chris, are you saying that the government should provide the £15B to install FTTP to all UK properties?

    • Avatar DTMark

      That appears to be what BDUK have decided. By ruling out alt tech options which might actually work such as current-gen Wi-Fi and ruling in other current-gen options which won’t such as FTTC (unless you have some very wealthy residents prepared to shell out small fortunes potentially resulting in a much bigger overall spend), then it only really leaves FTTP as the viable option. And there isn’t the money for that. Dead-end.

  3. Avatar Max

    I couldn’t disagree more. We need more investment, not less. Those with access to 120Mbps internet through Virgin do not need public investment, I agree.

    However, I am usually pretty critical of our government and initially suspected this relatively low amount of money (£530M) would do no good. But it is already well on the way to bringing fast internet to towns and villages such as my own, which wern’t on BT’s rollout list without funding from the council and government.

  4. Max, its bringing faster internet to a few near the cabs, many in your village will still be on line lengths too poor to be a lot of use. BT could have done it without funding, its a very small amount we’re talking about to enable a cabinet on an existing network. The reason BT get the funding is to stop altnets getting it and doing the job right, and building competitive futureproof fibre networks.

    • Avatar FibreFred

      Its not “a few near the cabs” as it has been stated in the past some 90%+ of people are within 1km of their cabinet, half of the UK within 500m

    • Avatar Somerset

      What funding does an ‘altnet’ typically need to install FTTP?

  5. Avatar on this planet

    I must admit I am rather struggling to grasp Chris’s logic that if its not FTTH then its not ‘fit for purpose’. Why is it that ADSL is not fit for purpose? Seems most customers are pretty content with ADSL given that BT Retail has so few customers even though it gives FTTC away for free (and no if it was FTTH BT Retail wouldn’t sell any more). Dana makes the point that customers don’t know that they need FTTH. Seems to me that is a matter of opinion (PS for every Steve Jobs who was right in their predictions there were probably 50 others who failed). Anyway, even if we were 100% sure that customers would want FTTH at some point in the future it would make no sense to build FTTH now since the £ billions in interest cost every year would be far more than the ‘wasted’ FTTC investment that would need to be written off (as a consequence of an FTTC first approach). Unless of course we live in a world where money grows on trees …

    • Avatar DTMark

      Why do we have cars, are’t bicycles fit for purpose?

    • Avatar on this planet

      DTMark – in this context then yes your bicycle is good enough especially when no one wants to buy a car and you are asking taxpayers to cough up the extra for a car. Upgrading from FTTC to FTTH is like upgrading from a VW Golf to a Ferrari – yes nice if we all had one but certainly not necessary

    • Avatar DTMark

      Given the variability of FTTC’s performance I don’t think the VW Golf is an appropriate analogy. In this context, it could be anywhere between a Trabant and a Porsche.

    • Avatar on this planet

      … so if we go with your approach: why would you want to upgrade the Trabants, the Golfs and the Porsches to Ferraris? Lets get the Trabant drivers into VW Golfs and so everyone gets something that is fit for purpose …

    • Avatar DTMark

      A comprehensive plan is needed to bring everyone’s speeds up to at least a basic level.

      If we ran fibre to every phone cab in the country, then most peoples’ speeds would increase, but not all, some would see no benefit at all.

      The Government is pursuing a target of 2Meg narrowband for all. This on the day that Netflix announces a 10Meg streaming service. In a few years, that may very well be 30Meg or more.

      We’re still missing that comprehensive plan.

    • Avatar New_Londoner

      DTMark – I take your point but not sure I want to see my tax money spent so others can get Netflix in HD or Ultra HD. I agree with the principle of making broadband as widely available as possible, and also at raising minimum speeds, but not with “gold-plating” the approach. As commented by others, getting everyone to VW Golf levels is fair enough, those that want Ferraris can pay for it themselves.

  6. Avatar FibreFred

    So lets get this in perspective then… 5Million or so over 65 year old’s are not online

    Two questions

    Q1) Is that a surprise to anyone?
    Q2) How many of the 5Million actually want to get on line but cannot do so

    I’d estimate at thousands for Q2, not even 100’s of thousands

    • Avatar DTMark

      Our village has an older age demographic than average, and yet 91% of the village uses the internet. Most of the steering group communication is via email.

      I would suppose that has to do with two things – the level of affluence and the (relatively) remote location.

      I don’t know that this is true, but a hypothesis: rural areas have a higher than average number of elderly residents.

      So to target them requires significant attention be paid to rural broadband.

  7. Avatar dragoneast

    There’s an almighty assumption in there: that everyone agrees with you. I am one of the retirees and have FTTC, but in my street only 2 out of 18 houses have it (a roughly 50:50 mix of families and retirees). Neighbouring streets are similar in take up and we are in an affluent village without Virgin cable and sub-5Meg ADSL (not VDSL which for me at the end of the cab run runs at 30+Meg); and national stats for take up look very similar. So any assumption I might make about “most people agree with me” is hugely wide of the mark. And I have elderly relatives who won’t allow a computer in the house. They are in possession of all their faculties and know what it can do. Even if you talk the hinds legs off a donkey it won’t change their mind – it’s been tried. And they live quite happily without the “benefits”. Sorry to burst your bubble folks.

    Nevertheless I acknowledge that a drowning economy has no option but to clutch at anything which might conceivably help it to stay afloat, and there seems to be precious little else.

    • Avatar DTMark

      That’s why we surveyed the entire village, with about a 95% return rate on the surveys. I think our villages might differ a bit.

      The village has fixed-line speeds from 0.5Meg* to 7Meg which are semi-randomly distributed, there is no firm correlation between line length and attainble rate not would you necessarily expect there to be, given how old all the kit is.

      Two thirds of people regard what we have now as a “serious problem” and only 18% of people said their current availability “meets their *current* needs”.

      Of course, if an alternative platform were availabe, your point is valid in that there is no guarantee that anyone would upgrade to it. So we also surveyed price levels for installation and ongoing monthly fees and the respondents indicated they would pay more for a useful service.

      The thing more request than any other is Virgin cable, so as to be able to get the TV services which some consider more important than the broadband speeds, though without Cable and looking at other platforms, the broadband speeds become the barrier.

      * That’s the lowest speed from those who completed the tech parts of the survey, not necessarily the lowest attainable rate

    • Avatar FibreFred

      Two differing villages, but which of the two is most commonplace , DTMark’s or dragoneasts?

      I really do think that most over 65’s just don’t give a fig about PC’s or the Internet, nothing wrong with that

      As opposed to this strange view that the over 65’s are all gagging for tech and great internet services, come on people get real!!!

      Out of all of the people that are not connected to the Internet the amount that are not connected because they cannot get a service that will allow them to connect must be such a tiny fraction of this 10million, so lets be realistic

    • Avatar DTMark

      Funny thing is, until I lived here, I’d have agreed with you 100%. I think we underestimate the so-called “silver surfers”.

  8. Avatar zemadeiran

    What pensioners really need is the ability to pay their gas bill and not freeze to death.

    Many people of advanced age also feel left out in the cold due to the fear of technology and the COMPUTER….

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