THE FUTURE OF BROADBAND IN BRITAIN
27th January 2004
Presented at the Access to Broadband Campaign Conference
hosted by Cisco Systems, UK Headquarters in London
Introduction
Listening just now to internet guru, David Isenberg and the US experience
and the future, I should just say one thing and then sit down: "Deliver the
bits, stupid!" But I have been asked to speak for a little longer than
that so I want to echo David's definition of broadband: 'A fast pipe, Always
On, and Get out of the Way'. As I will expand on later, the Government's
failure is their definition of broadband: 'Always On'. And that's it. But
you and I know that a fast pipe should be the criterion.
For the home internet user, a vast range of new services are becoming
instantly available and for business users, there are exciting opportunities
for growth and development not only in the office environment, but in
hard-pressed rural areas too - where villagers can diversify into new
areas of economic activity, provided broadband is available.
However, whilst these benefits and drivers of broadband are many and varied,
there is a long way to go to realising its full potential.
In this country, whilst the availability of broadband is improving, take-up
rates are still relatively low and represent a minority of the population.
Indeed, the International Telecommunication Union's Digital Access Index,
which was published last November, ranked the UK only 12th in terms of
Information and Communication Technology (ICT) access.
We must also address the problems being faced by those who are not reaping
the benefits of current developments. And I believe that Ofcom has a vital
role to play here.
Availability
But looking first at availability, the Government have pledged to achieve
100% UK coverage by year end 2005. Currently, 80% of the UK population,
largely concentrated in urban areas, have broadband access via fixed ADSL.
At the same time, cable broadband, offered mainly by NTL and Telewest,
reaches about 45% of the population. The Government have also set a target
of having the most extensive and competitive market for broadband access in
the G7 of industrialised countries by 2005. We are currently third in
terms of competitiveness, and third in terms of extensiveness. And this is
good news.
Progress is being made but we should not get carried away whilst there is so
much more to be done.
It is vital that these targets are not seen as the light at the end of the
tunnel. The Broadband Stakeholders Group have recently called for the
Government to redouble their efforts. I agree wholeheartedly. With the
deadlines in sight, new targets need to be set to ensure that efforts don't
just fizzle out.
Take Up
But wile the capability for accessing broadband is improving, take-up rates
are still very disappointing.
The most recent figures from Oftel show that there are now over 3 million
broadband connections in the UK, increasing at a rate of 40,000 a week.
However, this still represents a minority. There is a long way to go.
When access in this country is compared to other countries the results are
poor. The International Telecommunication Union, in their October 2003
report, "Birth of Broadband", ranked the UK 25th in terms of broadband
penetration.
More needs to be done to ensure that the majority of people, many of whose
homes are not yet online at all, get the benefits of broadband.
Broadband Speed
Before I look at what I believe should be our priorities for driving the
industry forward, I want to look briefly at one important unresolved
question.
What constitutes broadband?
Oftel and the Government have qualified its take-up figures by stating they
are for download speeds of between 128 kbit/s and 2 mbit/s. You and I know
that 128 kbits/s is not broadband as we would understand it. In actual
fact, the definition of what constitutes broadband is open to some dispute,
with many considering the definition of broadband to be services over
500kbps.
BT are on record as saying that they do not want to discuss Oftel's stance.
However, a spokesman has made clear that "512Kbps is the lowest service we
market as broadband, but ultimately consumers will decide what broadband
is."
BT believes that so-called mid-band connections "do not provide the same
internet experience for customers".
I agree. If that experience isn't good, it will hardly encourage others to
take-up broadband.
Tim Johnson, the chief analyst at broadband specialist Point Topic, has
insisted that broadband below 2Mbps cannot deliver on many of the promises
made for the technology without better service guarantees. He has said:
"Below 2Mbps, it doesn't really matter whether it is 128Kbps, 512Kbps or
1Mbps. What's important are contention ratios and service levels, and
current ADSL is not really up to the job."
I believe this failure to pin down the speeds constituting broadband might
go some way to explaining Oftel's latest research, which says that one in
ten broadband customers are unhappy with their service, saying that it is
slower than they anticipated.
Freeserve have also highlighted this point when they said "The term
broadband has been used inconsistently for some time and this has led to
serious problems of customer confusion and a failure to meet customer
expectations."
In resolving these issues, the Broadband Stakeholders Group, have suggested
that the Government must realise that for new services to appear companies
have to start investing in infrastructure again.
Again, I agree. It is vital that momentum is not lost. Developments are
required to ensure that there is a focus on providing the services that
consumers demand.
We should be moving beyond disputes over definition. Instead we should be
looking to the future and harnessing new technologies. Countries such as
South Korea and Sweden are deploying next-generation broadband, which
provides ultra-high speed internet access. I call this 'wideband'.
In Japan, many consumers can enjoy speeds of 100 megabytes per second -
200 times faster than those commonly offered in the UK.
Investment is needed as families and businesses consume more bandwidth and
operators seek to offer higher value services such as video on demand.
This much is clear, what is not clear is how to achieve it and I want to
offer a few thoughts on this now.
Driving the industry Forward
In many countries, developments have been led by the public sector taking on
a substantial portion of the risk through subsidies or loan schemes. The BSG
doubt, however, that the UK Government are willing to play this role.
I share this doubt and it is for this reason that I believe that competition
is so important. I believe that a dynamic competitive environment within a
strong regulatory framework is vital to the development of these
technologies.
One of the most important bodies in taking this agenda forward is Ofcom
which has a huge responsibility, not just as a regulator, but also as a
promoter.
Ofcom needs to provide a regulatory framework that will foster a genuinely
competitive UK broadband market, and ultimately lower prices for consumers
and businesses. This will require opening up competition and abandoning
rules which were appropriate 10 years ago, but stifle competition now.
Ofcom needs to work closely with industry to pre-empt and resolve disputes.
It needs to take quick and decisive action to prevent anti-competitive
practices. But it also needs to encourage a high level of consumer awareness
of the nature of broadband services and the choices available.
Another important area that needs to be addressed regards local loop
unbundling.
The restrictions placed on BT after deregulation of the telecoms market mean
it has to make its products available to other service providers at
wholesale prices to ensure they can compete fairly on price. About 150 net
service providers compete with BT to sell ADSL, but many are still critical
about the grip it has on ADSL delivery.
Many firms have suggested that a more vigorous adjustment to local loop
unbundling costs would let the competition move away from dependence on BT
and allow new services to be offered. I agree that this is one of a number
of important questions that needs to be addressed and I know that Ofcom
already has this on their agenda. If the law needs to be changed, then
Parliament and the DTI should do just that.
The DTI should always remember that its responsibility is for UK plc in the
round and not for individual sectors. And where dark fibres remain unlit
because taxation prevents them from being so, the tax regime needs to be
changed. A valuable resource such as our fibre network infrastructure being
under utilised is sinful. It is not in our national interest. As David
Isenberg said earlier, one fibre optic bundle provides enough bandwidth for
a telephone service for a small country! Wide band could become a reality.
Digital Divide
Whilst I have suggested that access and take-up are improving and that
competition is vital to take this forward, I am concerned that these
developments do not form a uniform pattern. In some areas normal competitive
practices are leaving communities behind.
As I mentioned earlier, 80% of the UK is currently covered by "affordable"
broadband technology. However, in many more remote parts of the country,
broadband is only available by satellite at a cost beyond most households.
More needs to be done to address this 'digital divide'.
BT's intention to set triggers under its demand registration scheme for a
further 2,300 exchanges covering rural areas is welcome. It is suggested
that if all these exchanges hit their triggers, over 99% of UK homes and
small businesses will be served by broadband-enabled exchanges.
I believe that this process could be enhanced.
As I have already suggested, the Government and Ofcom have a duty to promote
broadband technology. Successful promotion, leading to increased demand
could mean these trigger levels being lowered. This would accelerate and
increase roll-out.
The Countryside Agency have also played a valuable role and I regret that it
may close. They have developed a valuable best practice guide, aimed at
providing broadband access in areas unlikely to get broadband through their
phone line (ADSL) from BT or others in the near future, if at all.
Communities trying to find ways to solve the problems for themselves should
be encouraged.
Community-owned social enterprises, such as the 'Community Broadband
Network' initiative at Stoneleigh Park, in which ABC are partners, have a
valuable role to play.
Individually, these schemes are praiseworthy and the fact that so much
effort is being put into them is clear confirmation that the country side
needs broadband as much, if not more than in the cities.
Whilst I support such schemes, I believe that for them to be successful,
they need sustained support. It is easy for the Government to be
enthusiastic but if adequate and long term support is not offered then they
can easily fail. Indeed I met a senior civil servant the other day who
works for the DTI and asked me what the letters stand for. "Department for
Temporary Initiatives" he said. We must ensure that initiatives set up to
promote self-help in rural areas to provide broadband are not also
temporary.
In addition to these existing efforts, I also believe that research and
development into new technologies is vital.
To this end, I was fascinated to learn recently that Southern Electric have
just launched, starting in Winchester, an internet service across the
electricity power network.
I was also interested to learn about new research, to be conducted at York
University, into new high-altitude platforms. A team of scientists, funded
by a European consortium, Capanina, propose to use solar powered engines to
keep a fleet of insect-like microlight planes flying at an altitude of 12
miles, in positions above blind spots in high-speed modem reception. It is
thought that this could mean a new way of delivering high-speed internet
services to computer users out of reach of conventional broadband. I
dread to think, however, how robust this particular platform will be in
Britain's wet and windy climate.
These exciting developments need to be fostered and embraced.
Before I move on, I would just like to highlight my concern about some other
groups that are being left behind.
UK online's annual report emphasises the two most transparent dimensions to
this, age and income.
Our lowest income households are over seven times less likely to be online
than those in the top income group.
Similarly, while over 78% of 16-24 year olds are internet users, this falls
to just 16% for those over 65.
It is vital that more encouragement be given to these groups.
Take-Up Problems in the Business Community
I said earlier that availability and take-up is not uniform and variations
can also be seen in business use.
It was of particular concern to learn last week of the high profile
disbanding of UK online for business.
This body, set up to promote business internet use, is being closed down
following the gloomy results of a Government survey, carried out by Booz
Allen Hamilton.
This survey found that the UK now has one of the lowest levels of internet
use among small businesses and that these rates are falling.
Only 69 per cent of firms with 10 to 49 staff are using the internet, down
from 77 per cent two years ago.
The results look even worse when it is noted that, despite the money that
has been spent on this body, the number of businesses which said they were
aware of the initiative has actually fallen, since the same time last year,
from 48 to 43 per cent.
Booz Allen Hamilton have concluded that the main cause of this is that,
while firms rushed to log on during the internet boom, many failed to fully
integrate the technology into their company structure.
For example, companies may have set up an internet site and started to use
e-mail, but they did not take steps to link up their systems with their
suppliers, or trade over the internet. As a result they failed to see
increased productivity or lower costs so many clicked off.
Other explanations include the suggestion that the cost of hooking-up, as a
proportion of total revenue, is more expensive for smaller firms.
These problems need to be addressed and it is of concern that the
Government's answer is to close this flagship project. I sincerely hope that
this decision does not signal the end of the Government's much trumpeted
commitments to help businesses harness internet technologies. Back to the
unofficial meaning of 'DTI'.
It is vital that we don't sit by while other countries rush past, and
software suppliers such as yourselves have a vital role to play in this and
in the provisions of affordable and integrated systems.
Cyber Attacks
Before I conclude, I would like to look briefly at one of the negative
spin-offs of internet technology. There are two issues of concern.
Firstly, there is growing concern worldwide, amongst lawmakers and computer
experts, that as our interconnectivity grows, we become ever more vulnerable
to cyber attacks. There are almost 60,000 viruses in existence and they
have gone from being a nuisance to a permanent menace.
Almost every year since 2000 has seen the unleashing of a virulent program
that uses the net to travel.
The Love Bug struck in 2000 and was followed by the Nimda and Code Red
viruses. More recently we have had Sobig, Palyh, Slammer and MSBlast viruses
that have spread further and caused more havoc than early virus writers
could have ever imagined.
There is genuine and necessary concern that an outbreak of virulent computer
attacks will have devastating effects on consumers, businesses and
government agencies.
In the USA this threat is being taken very seriously. Last June, the
Department of Homeland Security established a National Cyber Security
Division. This division is taking forward the National Strategy to secure
cyberspace and has started developing co-ordinated warning and response
procedures in the course of handling incidents.
The European Union are also setting up an agency to co-ordinate work to
combat the rising tide of cybercrime. The European Network and Information
Security Agency, with a budget of 24.3m euros (£17m), will help educate the
public about viruses, hacker attacks and other security problems. It will
also act as a co-ordinator for Europe-wide investigations into virus
outbreaks or electronic attacks.
However, very little is being done here in the UK. I believe that more work
is urgently needed to take forward this critical agenda.
Cyber terrorists could attack our nation's infrastructure. Our electricity
and gas supplies are all computer controlled as are our national broadcast
networks so all are vulnerable to attack. Al Qaeda and other terrorist
organizations may well adopt this tactic in the future. I believe that we
need to be more prepared.
My second area of concern is Spam. We all recognize the nuisance value of
spam emails and the predictions that it will clog up the internet by the end
of the year if something isn't done. Microsoft have proposals for the
future and 'Sir Bill', if I may call him that prematurely, has come up with
a 'the spammer pays' idea. The EU has recently passed anti-spamming
directives, but despite that it is getting worse.
Worryingly, criminal gangs, as well as established marketing firms, are
taking advantage of the Electronic Communications Directive, which became
law last month, to make Britain one of the world's fastest- growing sources
of spam.
For the first time, Britain is among the top ten originators of spam, which
now accounts for about 15 billion daily e-mails around the world. Most
recent spam has originated in the United States (mainly from Florida), as
well as China and South Korea, with Britain barely in there. But last
month, for the first time, Britain overtook India to become one of the ten
main offenders.
This growth in spam in Britain appears to be directly related to the new
law, which makes it a criminal offence, punishable by a fine, to send spam
to private e-mail addresses after the Information Commissioner has issued an
enforcement order. But after lobbying by the marketing industry, the
Department of Trade and Industry agreed that business e-mail addresses
should be exempted from the law. I believe that this legislation needs to
be looked at again.
Conclusion
Overall, I believe that continuing the roll out of broadband across the UK
has a tremendous amount to offer our society. Benefits will be felt across
the board as new services become available.
Consumers will have enhanced opportunities, and businesses have a vast
potential to gain in terms of improved productivity, competitiveness and
growth.
Availability and take-up rates are improving but more needs to be done.
There is no room for complacency and our goals should be set ever higher.
Broadband must be broadband and that means the provision of high speeds
which could achieved through use of the dark fibre network.
Competition is vital to encourage new technologies. Sustained support and
encouragement from the Government is also critical to put in place the
structures and regulatory framework that will realize these goals.
Temporary initiatives are not enough.
Our nation's future is dependent on the provision and take-up of broadband
and, in the years to come, 'wide-band'. And this is a responsibility that
the industry and no Government must shirk.
