Opening a well-attended debate in Westminster Hall, Sir George warned of a "digital divide" if rural areas could not access brodband services. The text of his speech follows.
Sir George Young (North-West Hampshire): I am grateful to the Minister for abandoning his visit to Wales to reply to this debate. I have heard him speak many times on this subject and not only is he in total command of his brief, but he speaks with commitment and enthusiasm on the subject.
Many issues fill the rural MP's postbag, but the non-availability of broadband is elbowing its way up the political agenda, certainly in Hampshire and, I suspect from looking around the Committee, elsewhere. It is a reflection of the changing nature of rural life that the absence of the latest technology is such an issue. The blood pressure of many of my constituents has been further raised by the high profile campaign urging them to sign up for broadband when they have already tried to do so and been told that they cannot have it.
I have three objectives for rural broadband: to increase accessibility and affordability, to promote greater openness from infrastructure providers on the options, and to obtain some answers from the Government in areas where they hold the key. The internet is to wealth creation in this century what the roads and the railways were in the last two. As the exchange of information becomes as important as the exchange of goods and services, the information highway—the internet—is a key element of a country's infrastructure. Just as countries that have prospered needed an efficient transport system to carry people and goods quickly, so the growth economies of tomorrow need an efficient highway for information to move around quickly. Broadband provides that efficient highway. A computer using a standard phone connection can download up to 56 kilobits of information a second. Broadband, however, allows it to download information at rates from up to 512 kilobits to more than 20 megabits per second, some 400 times faster than a standard connection. The services now being marketed to consumers are what I call introductory broadband at up to 512 kilobits, approaching 10 times the speed of a standard phone connection. Other advantages of broadband are that it is always connected and comes at a flat rate price, meaning that the user pays a standard price per month or year, regardless of the time spent online.
The Government are seized of the importance of broadband. In his letter to me on 26 February, the Minister said:
"If the UK is to succeed as a world-class place for e-business, public service delivery and online participation, it is essential that we develop a world-class communications infrastructure."
The Government have set a target to have the most extensive and competitive broadband market in the G7 by 2005. If that is the right target, we are a long way behind the leaders. Japan had more than 5 million ADSL subscribers at the end of last year and was adding no fewer than 300,000 a month. We have about 750,000.
Two options are available to the Government to enable them to hit that ambitious target. One is to decide that broadband is a universal service, like water or daily delivery of mail, that everyone should have it and that, if the revenue from the service does not cover its cost, the Government will make up the difference. That subsidy to the universal supplier can be justified by invisible benefits, such as equality of opportunity or international competitive advantage.
The other option, which has been adopted in this country, is not to rely on a universal obligation, but to promote a market with alternative suppliers and means of access, and then to let competition ferment away, moderated by regulation. That has certainly proved more economical. Less than $5 per head has been spent by the UK Government to support broadband infrastructure, compared with $25 in France and $90 in Japan.
That policy has worked well in city centres where people and companies are being offered faster and faster internet connection at lower and lower prices by a variety of competing suppliers using a range of different technologies. Around 50 per cent. of broadband is provided not over BT's wires but over cable.That policy is working less well in rural areas and gives rise to a policy issue for Ministers. Are they content to see that differential provision and, if not, does their current approach need adjustment?
Mr. Anthony Steen (Totnes): Is my right hon. Friend aware that Devon's topography is hilly and that BT has not invested the necessary money to enable people who want to work at home—they increasingly want to do that—to access broadband? Is he also aware that structural funds from the European Union and Government funding for broadband facilities are being dispersed to the regional development agencies rather than the providers of broadband? Why is the money not being used to encourage BT to widen broadband facilities instead of being used for wasteful bureaucracy?
Sir George Young : As a fellow cyclist, I am aware of the topography of Devon and that it is not a flat county. My hon. Friend asked a good question and although he seemed to direct it at me, I know that he was directing it at the Minister who will, I am sure, take it on board in his response.
Rural areas play a vital role in the life of the nation, accounting for nearly 25 per cent. of its population, 30 per cent. of its employment, 30 per cent. of its gross domestic product and 80 per cent. of its landscape. According to the Country Land and Business Association, whose activity in this area I applaud, only 20 per cent. of rural areas have access to broadband. The broadband stakeholder group gives a lower figure of less than 10 per cent., emphasising the point that there is no definition of a rural area. Such a situation puts rural business at a clear competitive disadvantage to urban business. There is an urgent need in rural areas to diversify from agricultural employment and to develop home-based employment to discourage travel. In Hampshire, many farmers are diversifying into other income areas. I visited one recently who has the UK franchise for a solar-powered swimming pool purifier. Folk like him need broadband because, without it, it is more difficult to compete. They cannot get broadband because they live too far from an exchange or it is unviable for BT to enable the exchange, and the costs of alternative provision are very high.
People living in many of the small towns and villages in Hampshire may, if they are lucky, be on an uncertain path towards what I call introductory broadband in the form of either ADSL or the more restrictive satellite services. However, large parts of the country have no choice at all. They are told to use satellite services, or to form local co-operatives to put up more radio masts and take the risk of investing in local community wireless systems, or to club together and risk £55,000 for BT's new exchange activate proposition. They are busy folk who are trying to run their own companies. They are confronted by a mosaic of agencies that are falling over one another to offer potential and sometimes conflicting help and advice on rural broadband. It cannot be right when developing a national infrastructure that is critical to the future of the country's economy and a foundation for important social and public service developments to ask those busy people to get broadband to their village as well.
Lembit Öpik (Montgomeryshire): Does the right hon. Gentleman agree that that haphazard approach to something with strategic importance—as it certainly has in mid-Wales—risks enabling the Government to abdicate? It is the Government's responsibility to recognise not just the economic benefits for rural areas, but the environmental benefits for all of us in having a strategic approach that is transparent and affordable for rural communities.
Sir George Young : I agree with the hon. Gentleman. If one wants to conserve energy and minimise the need for travel, the better the communications infrastructure, the more progress will be made. The moral is simple. People who live in cities have access to an information motorway. In villages they have access to a footpath. Without change, there will be a drift to jobs in the cities.
The main broadband provider in rural areas is BT. As of 21 March, only 1,158 exchanges of 5,500 had been ADSL-enabled, which is just over one fifth. Both the Government and BT stress that that covers approximately 71 per cent. of homes. However, that is the mean of 90 per cent. of city homes and less than 10 per cent. of rural homes. Another 179 exchanges are currently at the build stage, having reached their trigger levels and bringing the percentage of enabled exchanges to around 25 per cent. A further 102 exchanges will have trigger levels published on Monday. I declare an interest—as Chairman of the Standards and Privileges Committee, that is a wise precaution—because I live in an area served by an unenabled exchange, along with my near neighbour, the chairman of British Telecom.
Mr. Hugo Swire (East Devon): If my right hon. Friend moved from his constituency to Devon, he would be in good company because, by the end of the year, 45 per cent. of the population of Devon will be unserved by broadband compared with the national figure of 20 per cent. That shows the problems that we have.
Sir George Young : My hon. Friend reinforces my point about the risk of a digital divide between rural and urban areas.
BT has reduced the price of broadband, introduced a rolling programme to enable exchanges, set targets and, in some cases, reduced those targets. I commend it for the progress that it has made, but too many people are still left out in the cold. That means that businesses that need broadband will have to consider more expensive options if the trigger level cannot be reached or if no trigger level has been set for that exchange. The director general of Oftel told me on 25 February:
"Where no trigger levels have been set, BT does not believe it to be commercially viable to fully enable the exchange using current cost information and its existing business model."
ADSL coverage will never reach many parts of rural areas. The Minister told us in the debate in the House on 4 March:
"It is clear that it will reach 80 per cent. over the next year or two, but the big challenge will be how to get from 80 per cent. to 90 per cent. and over."—[Official Report, 4 March 2003; Vol. 400, c. 738.]
BT is working hard to find ways of extending broadband availability to rural areas through marketing initiatives and through working with interested public and private sector bodies. However, its plans have to be made within the current commercial and regulatory framework and it is clear that, unless there is dramatic change in the economics of broadband provision, the remaining 10 per cent. of areas will require a different public-private partnership model or a different technological platform. Are the Government prepared to put together the right combination of interested parties and give the appropriate encouragement and support, so that rural broadband in those areas becomes a reality on a time scale that will benchmark against key competitors?
Mr. David Drew (Stroud): I know that this is a reprise of the earlier debate, but there are two key issues that should be raised with BT, through the Minister. First, BT often sets the highest targets in the most rural areas, which seems unfair and counter-productive. Secondly, take-up in rural areas is very low, even where there is ADSL. That is because we have not provided the proper packaging to make it clear to people what they are signing up to. Does the right hon. Gentleman agree?
Sir George Young : Yes, I entirely endorse that. I agree that we should tackle not only the supply side, about which I have been talking, but the demand side. We need to explain to small and medium-sized enterprises exactly what the benefit of broadband is.
Mr. George Osborne (Tatton): I congratulate my right hon. Friend on securing the debate. Does he agree that one problem has been that people have expected to have broadband available, have gone through a process to get that service but have then found that they could not get it? The trouble with the demand side of the argument is that demand is stimulated where the service cannot be provided.
Sir George Young : My hon. Friend is exactly right. If he raises that problem with BT, it will tell him that it is anxious to increase demand in areas where broadband is already available but take-up is low. That is why it is promoting broadband as a concept, but the downside to that, which my hon. Friend rightly mentioned, is that it irritates those who want broadband, dial in their exchange number and are then told that it is not available, that there is no trigger level and that there are no plans to bring it within reach.
In fairness to the Government, they are worried about the digital divide. Some £30 million of grant has been given to the regional development agencies so that a digital divide in high-speed internet access does not open up between urban and rural communities. The Minister said on 4 March that he was working on that problem "energetically". I want to find out how that reservoir of energy is being applied.
In particular, I want to know how the prime ministerial commitment given last November will be met. I make no apologies for returning to that question a fourth time. The last time that the Minister spoke, he said:
"It would not be sensible, however, for me to announce from the Dispatch Box precisely how that will be determined"—[Official Report, 4 March 2003; Vol. 400, c. 739.]
With respect, I disagree. It would be sensible for us to know how that commitment was going to be delivered, because it goes to the heart of the issue under debate this afternoon.
The Prime Minister set the Government targets of 8 megabits per second in broadband connections in secondary schools and 2 megabits per second in primary schools. In non-broadband-enabled areas in my constituency, such bandwidths might be provided through a private circuit, which helps the school but does nothing for the rest of the village. An alternative, bolder and preferable method would be for the Government to specify a delivery mechanism for schools that would bring opportunities for the school and automatically pull through additional broadband infrastructure to the surrounding area—somewhere that might otherwise have to wait a long time for broadband under normal commercial conditions.
Until there is clarity on that issue, there will continue to be blight and uncertainty. Children will learn in one environment at school—proper broadband—and go home to a more basic form of delivery. How that commitment is delivered is of enormous interest to communities large enough to have a school or GP practice but not large enough to have their telephone exchanges enabled. In my constituency, that includes Whitchurch, Overton, Kingsclere, St. Mary Bourne, Hatherden and Abbotts Ann.
In the debate on 4 March, the Minister was pressed on that subject by the hon. Member for Sheffield, Hallam (Mr. Allan), who asked whether the Government would
"draw up contracts with added public benefit, or . . . end up with tight contracts"?
The answer was straight from "Yes, Minister":
"I am confident that we will be able to achieve suitable contracts".—[Official Report, 4 March 2003; Vol. 400, c. 739.]
Can the Minister shed more light on that this afternoon? His letter to me on 26 February said:
"The public sector as a user of broadband will be a major driver for the introduction of broadband services throughout the country."
Later, speaking of the £1 billion that the Government are going to spend on broadband connectivity for public services during the next three years, the Minister said:
"We will make sure that the potential benefit of this spending is maximised and takes full account of the benefits of broadband."
The primary objective of the UK broadband taskforce is to support the aggregation of public sector demand for broadband and to ensure that through such aggregation, there is an extension of broadband availability, particularly in rural areas.
Mr. Richard Allan (Sheffield, Hallam): The right hon. Gentleman may be interested to know that concern is being expressed in some public sector organisations that are demanding to be aggregated, that that is causing problems. That applies particularly to the national health service network. The contracting for NHSnet has, in effect, been put on hold while the demand aggregation process takes place, and it feels that it is losing time and capacity that it desperately needs. There are problems across the piece.
Sir George Young : That underlines the need for joined-up government and a cohesive approach that looks at the broader benefits of public sector aggregation. As the hon. Gentleman has just implied, there is some cynicism outside this place over whether we will get the broader benefits potentially available.
Some people living in rural areas will need a wireless solution, on which I want to press the Minister. Wireless broadband is based on a network of a central transmitter and a series of receivers. The clear advantage of wireless broadband is speed. At up to 11 megabits per second, it is far faster than other forms of broadband, and the roads do not have to be dug up for it to be installed.
However, wireless has a number of disadvantages. First, the technology in the UK is still very much in its infancy. With the wireless spectrum currently allocated in the UK, connection fails if there is no clear line of sight, just as mobile phone signals can be lost in a valley. Secondly, unless there is external funding, the local community—by definition, the village—has to fund the cost of installing the service and stand the risk that enough people will subscribe, while each user has to pay for individual receivers' equipment. Thirdly, the issue arises of connecting the community wireless network to the main internet, known as backhaul. There have already been two failed attempts to auction the spectrum suitable for that, but even where the licence was taken up there was no obligation on the successful bidder to deploy. As a result, fixed wireless networks are springing up all over the country, but they are all in towns—unlike in the USA, where they are also in the countryside.
Mr. Andrew Lansley (South Cambridgeshire): Those solutions, and the technologies involved, need to be linked to the aggregation of public sector demand. If the public sector uses leased lines where a wireless solution might be developed, that will not help the community generally.
I have further questions on the allocation of spectrum for that purpose. The 28 GHz auctions did not deliver the demand levels anticipated. My right hon. Friend may know, as we have briefly discussed, that the technology and equipment used by a company such as Cambridge Broadband—an equipment supplier rather than an operator—is successfully in use in other countries, operating at 3.5 GHz. Some problems with the use of wireless solutions, to which he referred, would not apply to the use of that spectrum to the same extent. The question of whether that spectrum is to be licensed is, therefore, real and immediate.
Sir George Young : I want to probe the Government on their taking account of broadband issues when they make their decisions on allocating the spectrum. As my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) said, the Government have not released the sweet spot, which is the 2 GHz spectrum. He implied the question, which I shall pose again, whether the Government will optimise public benefit through conditions that actively encourage rural deployment or whether they will maximise income regardless of broader policy imperatives.
In its annual report to the Government last November, the BSG said:
"The Government should give priority to the support of broadband services when deciding policy on spectrum allocations"
on the basis that
"wireless schemes offer the most attractive means of providing broadband facilities to large sections of the population and their timely deployment will be crucial to the achievement of Broadband Britain objectives".
The Government released their response to the BSG's report on 20 March and said that the Radiocommunications Agency would be making additional spectrum available this year. Whether that will be the right spectrum under the right conditions remains to be seen, but the price is obviously important. The BSG's response states:
"Unleashing the potential of wireless is absolutely essential for Broadband Britain, but there are some real commercial regulatory barriers that need to be overcome, particularly around the provision and assignment of suitable spectrum".
I hope that I have conveyed to the Minister my constituents' mood and that he can give me a message to take back to them. They feel a little bruised by some of the Government's policies. They have an appetite for the new technology and are frustrated that they cannot get it. I hope that the Minister will help to bring it within their reach.