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Selected Speeches in the House of Commons and elsewhere

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.


© Copyright Michael Fabricant MP & Solnet Systems Ltd. All rights reserved.