UPDATE BSG Claim UK Businesses Failing to Capitalise on Faster Broadband

A new report from the Broadband Stakeholder Group (BSG), which is a sometimes controversial think-tank for the Government on matters of broadband policy, has warned that Small and Medium Sized Enterprises (SMEs) across the United Kingdom are failing to unlock the “commercial potential” of faster broadband connectivity.

The Capitalising On Connectivity report, which references previous studies from the FSB (here), Lloyds Banking Group (here) and Go ON UK (here), suggests that economic returns of potentially up to £18.8 billion could be overlooked because businesses aren’t getting the most out of modern technology and broadband.

Pamela Learmonth, CEO of BSG, said:

“Whilst tackling infrastructure issues is costly and time-consuming, understanding usage of infrastructure and communicating the benefits of doing more online is arguably even more challenging. Given the high importance of capturing the economic benefits from both private and public investment in broadband, we hope this report is a useful input, building on existing initiatives to ensure the UK’s SMEs really do capitalise on the connectivity available to them.”

The BSG has also made five somewhat general recommendations, which seek to encourage a better understanding of how SMEs use technology and to incentivise further take-up and exploitation of the latest connectivity. But their suggestions really could do with a bit more meat on the bone.

The 5 Recommendations

1. Government should expand the evidence base on SME broadband use.

Identifying key trends in what SMEs are doing online by SME characteristic is invaluable in understanding policy in this area. We believe that making a number of additions to the biannual Small Business Survey conducted by the Department of Business, Innovation and Skills, policy-makers will be better placed to understand the complex relationship between SME performance and exploitation of broadband connectivity.

The 2012 survey covered basic questions on whether a business has broadband, pays taxes online, has a website and sells through a website. We believe the Department for Business, Innovation and Skills should amend areas of its 2014 survey to incorporate further questions on what SMEs are doing online and why, and how this corresponds to aspirations for growth.

We believe that this list of current uses can be populated further to incorporate more sophisticated uses of broadband for financial activities, social media and online advertising, use of cloud computing, online training, video conferencing and other areas covered in the course of this report. Similarly, we believe further questions can be added to survey how SMEs perceive broadband-enabled benefits as part of their broader plans for growth, and should be a dimension to most questions on small business activity including innovation, exporting and interactions with government.

The survey should also give consideration to how increased mobile broadband connectivity is helping a growing number of SMEs, particularly as tablet and smart phone use can alter the way businesses operate.

2. Policy makers should have access to better information on how to persuade SMEs of the benefits of being active online.

Given the growing number of case studies of business benefit, we believe that an online platform detailing case studies of effective SME engagement would be useful for policy makers and wider stakeholders. The BSG is looking to facilitate such a platform, and is currently assessing viability with a number of organisations such as Go ON UK.

3. Industry and government need to better understand the requirements of SMEs for broadband in terms of bandwidth and other characteristics.

Improved evidence on what SMEs are doing online and why will aid policy-makers in understanding current demand. Nonetheless, given the structural lag in digital maturity, we may also wish to assess what future and fully-utilised demand for SMEs might be. We believe that there is scope to better understand requirements of SMEs for broadband in terms of bandwidth and other characteristics (both now and for the future, for both fixed and mobile broadband connectivity). This is an area which the BSG will develop as part of its 2014 work programme and as an input to the government’s Digital Communications Infrastructure Strategy.

4. The Department for Culture, Media and Sport should strengthen central resource within Broadband Delivery UK to assist local authorities with demand stimulation activity.

Currently local authorities are responsible for the stimulation components of their BDUK funding, but it is imperative that this is perceived as being equally important as the physical delivery of infrastructure on the ground given the nature of these large scale projects. The delivery on the ground of these new networks presents a unique opportunity for selling the benefits to SMEs, and there are positive lessons to be learnt from more advanced projects such as Superfast North Yorkshire and Superfast Cornwall.

Whilst of course local authorities have an obvious motivation in ensuring take-up and use of broadband is positive, we believe that strengthening the central resource and advice given by DCMS and BDUK will help convert the substantial investment made by public and private sector into greater economic returns for SMEs.

5. Government should look to drive SME usage and uptake through its engagement with SMEs via government services and transactions.

As has been acknowledged in the work of the Government Digital Service (GDS), government departments across Whitehall have a significant role to play in stimulating the online activities of SMEs in a positive way. Whether it be statutory obligations such as RTE Pay-As-You-Earn submissions through the HMRC portal, or incentivised transactions such as money off for submitting VAT returns online, there are a range of ways that SME interaction with government can increase online activity.

The BSG had not yet made their full report available to the public, although it will become available sometime later this morning.

UPDATE 7:21am:

Report now live at the link above.