Sir George Young, MP for North West Hampshire,
Below is the full text of Sir George's speech.
I want to look at this from the point
of view of my constituents, in a prosperous part of the country with
the lowest rate of unemployment in England.
"Get AOL Broadband Now, Click Here!" which I did.
"Get on line fast with high-speed AOL - order now!".I clicked again. Then the small print appeared. I was invited to provide my phone number, which I dutifully did. Back came the message:
"AOL Broadband is currently not available in your area. Please check again at a later date."Note the implication that broadband is riding on some wave that is heading in my direction.
Of course, delivery of broadband rests mainly with BT - we are not on cable in my Hampshire village - so I logged on to www.broadband1.bt.com/availability. I tapped in my number again and got the following message:
"Sorry, details of the exchange serving your number could not be found. This is because your local BT exchange has not been upgraded for ADSL service yet or you receive your telephone service from another telecoms supplier."Again, note the use of the word "yet".
So I wrote to BT to find out about "yet". Here's their response. I was told:
"… broadband is at the very top of BT's commercial agenda, especially ADSL"very encouraging. But then I read on:
"Despite a recent exercise stepping up the enabling programme and an accompanying nationwide marketing campaign with other Internet Service Providers, we are not enabling further exchanges until we can be confident that the demand for, and commercial viability of, doing so can be proven . . . . We believe the chief obstacle for achieving "Broadband Britain" is demand, rather than supply."Demand is of course a function of the value of a product, its price, effective marketing and how easy it is for the customer to acquire and use the product. I'll come back to this in a moment.
But on with my personal quest. Having fallen at the ADSL fence, I decided to settle for BT Home Highway, their trade name for ISDN, which would be faster than my existing modem connection. I logged on to www.bt.com/buying_bt/product. I got a warm welcome to the BT shop and ordered Home Highway on line on Dec 28th, having given every relevant detail and - as requested - specifying a date "at least eight days away" for installation. My order was welcomed, acknowledged and given an order number with 11 digits – suggesting a high demand for ISDN. The appointed day came and went, a performance unmatched by BT. I emailed BT quoting my order number. Back came the answer:
Subj: RE: Order No 9000923400I replied with my telephone number. BT now replied, perhaps having done some political research:
Dear Sir George YoungThis was 10 days ago and the trail has gone cold. I continue to contact the outside world via AOL at 28.8 kilobits per second.
In reciting this disappointing experience, I don't seek to pillory BT in particular - we all make mistakes. Perhaps I will some day soon enjoy the delights of ISDN. But only perhaps. The critical point for someone working from home in a rural village - albeit not far from the major commercial centres of Andover, Basingstoke and Newbury - is the uncertainty of it all. I have no way of knowing when I will be able to use a broad band connection - if ever. And even with the much more basic ISDN, I'm told there will have to be "a survey", which may result in cancelling my order.
Every day across my constituency and in other constituencies across
the country, individuals and small firms have the same experience. The
government tells us that take up of broadband is vital for the UK's
economic future. I agree. The government wants to see more development
of new kinds of business activity in rural areas. I agree. Suppliers
urge and encourage us to speed up our Internet access. I want to do
Constituents who understand these things tell me there are alternative ways to deliver broadband to our rural communities, using satellite communications or local wireless communications. Or we might in theory be reached by one of the cable franchise companies. The problem is that all of this is equally fraught with uncertainty. How can we get a small, innovative, hi-tech company to commit to basing itself in a rural area when the nation's own strategy delivers only uncertainty? How can a local authority commit investment to deliver its services via broadband to the rural population when there is no way of knowing who will have the opportunity for access and when? How can a content provider plan for delivery of broadband services to farmers and other self-employed people and small firms in the countryside? In answer to questions about improving access to broadband the Government constantly repeats the boast that ADSL is available to more than 60% of the UK population. It could of course reach 80% or even 85% without making much progress in rural areas!
I am as fervent a believer in free market enterprise as anyone. But all these uncertainties amount to what I would certainly call "market failure". We cannot risk such a critical plank in the country's infrastructure development to a hodge podge of incentives, motivation, regulation and grants that might - one day - hit fifty per cent of my rural constituents and miss the other fifty per cent. In the e-Minister's most recent statement on this issue we learn that:
. . . the Government does not believe there is a case for fiscal incentives to stimulate infrastructure investment as proposed by the Broadband Stakeholders Group. The Government believes that the use of the tax system to support particular types of investment should be limited to cases where there is clear evidence of market failure, sufficient to justify the costs of intervention, and [where] the tax system is judged the most effective instrument for achieving policy goals. The Government does not believe that the criteria apply in this case.The Government says that the UK "arguably already has one of the most competitive broadband markets in Europe". Yet in the same report we are shown to be seventh in the G7 for broadband take up. That's a jolly positive way of saying we are bottom of the league. Moreover, there are another three non-G7 countries ahead of us. The Government "expects take up to improve". Recent market research reports suggest that household take up in the UK will double in 2002. Sounds good until you realise that doubling will move us from less than 1% of households to less than 2%! To be fair to BT and its competitors, most companies in the telecommunications sector and many companies in the Internet sector more generally are currently having significant problems keeping up with the investment levels required to deploy the rapidly evolving infrastructure, provide reliable services and return a profit to their shareholders. From a strictly commercial perspective the case for short or medium term investment in providing broadband to areas with a low population density is a weak one. However, from a national strategic perspective it is essential that we provide the access and remove the uncertainty. This is a clear case for appropriate public involvement to bridge the gap. Unfortunately the present government strategy seeks to do this without any assurance that the gap will be fully bridged and in ways that - if anything - increase the uncertainty, while fudging the responsibility, confusing all concerned.
No doubt someone will want to know what is my answer to
this problem. I recognise that there isn't a single, simple, easy answer.
But I do think there is a critical element missing from the equation.
Government is right to want to work with the grain of the market and
right to encourage and support local authorities to invest in online
services so as to provide at least some "pull" to entice suppliers into
the countryside. But no amount of push or pull will definitely assure
provision. Left to this approach it will always be patchy. And that's
just not good enough. The market for telecommunications infrastructure
isn't "free", it is very highly regulated and deeply affected by other
aspects of government policies, locally as well as nationally. The Government,
using the regulatory agencies, its licensing powers, the tax regime
and its leverage with local authorities, needs to actively negotiate
with the infrastructure providers on the basis of "We will deliver this
if you will deliver that". "That" has to be real assurance
of affordable broad band access throughout the country and in the short
term rather than in some distant era. "This" has to be something
that will entice and motivate suppliers to get stuck in and do the job
as fast as they can. Government, the regulator and the industry need
to get together to work out how to deliver universal access to this
critical technology in a competitive, mixed market environment. I sense
that the Broadband Stakeholders Group has been an attempt to bring about
such a result but while keeping up appearances of non-intervention in
the market. The time has come to take off the mask and the gloves and
go toe to toe.
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