Lessons across the pond

Potentially a very big subject this, but I just wanted to mention a minor spat that erupted  recently over differences in broadband policy between the US and the EU… It probably kicked off when Susan Crawford, arch critic of the US broadband duopoly, promoted her latest book with statements like this:

“Investment by the incumbents is shrinking, competition is non-existent, America is falling far behind other developed nations, prices are high, and we have no path to the fiber upgrade the country desperately needs”. 

Unsurprisingly, the incumbents hit back.  David Cohen of Comcast posted this comment last month: 

“82% of U.S. homes have access to speeds in excess of 100 mbps, while in Europe, only 2 percent of the population has access to these speeds… No wonder Neelie Kroes, a senior European Internet policymaker, declared that Europe "needs to catch up," citing the United States as a model”. 

That 2% claim for European access to superfast broadband is of course completely wrong: reliable research confirms that the actual figure is twenty-times that figure.  Nonetheless, a similar statistic was trotted out out very recently by Lowell McAdam. CEO of Verizon: 

"More than 80% of American households live in areas that offer access to broadband networks capable of delivering data with speeds in excess of 100 mbps…Contrast this with the European Union, where innovation and investment in advanced networks have stagnated under an onerous regulatory regime… and where today only about 2% of households have access to broadband networks with 100mbps-plus speeds". 

Well, apart from reiterating the fallacious 2% for Europe, Mr McAdam now talks about US networks capable of delivering 100 mbps, not those necessarily doing so.  As others have pointed out, this US/EU comparison essentially boils down to the different coverage figures for cable technology – and has little or nothing to do with ‘an onerous regulatory regime’.

However, while the quoted statistical claims are simply untrue, I’m inclined to go along with some of McAdam’s other comments, e.g. 

“…European regulators have adopted policies that generally limited network infrastructure deployment to a single facility in a given country or region. Other companies were allowed to ‘resell’ broadband services to consumers, but only if they used the same infrastructure. This ‘retail’ competition resulted in prices that may have covered the costs of operations but left little capital or other incentive for companies to invest in improving these networks”. 

But on the bigger question of whether/how regulation suppresses investment, I leave the final word to a far more authoritative voice: 

“Both AT&T and Verizon proffer Europe as an example of a region that lags in broadband deployment because of overregulation.  Contrary to [the] Bells’ claims, sensible regulation targeted at bottlenecks does nothing to disincentivize network investment. That is the lesson from Europe and the USA”.  

Those words of wisdom come courtesy of Sheba Chacko, Head of North American Regulation for BT.

Train crash? What train crash?

Like so many industry commentators, I’ve been very critical in the past of the whole BDUK process for the distribution of broadband subsidies.  More recently, much of this technocratic criticism has been refocused to question the government worth of DCMS and the political future of Maria Miller herself.  While I take a modicum of credit for anticipating this sorry state of affairs, I have to recognise that others were there well before me.  In particular, I’d like to acknowledge the prescient commentaries of Philip Virgo in his IT/political blog.  As far back as January 2012 he was predicting the fiasco that was likely to ensue from DCMS oversight of a flawed broadband model – while still showing some sympathy for the enormity of the task..

In his blog of 4^th January 2012, Virgo anticipated the almost inevitable fiasco with what is alleged to be a Civil Service Staff College Case Study sent to him by a senior Whitehall Mandarin.  I apologise to those of you who may have seen the supposed Case Study before, and for its length, but - eighteen months on - I think it’s well worth another look… 

The scene

You are Head of Broadband Stuff at the Ministry of Entertainment, sitting in your office one day, idly wondering whether to spend the weekend with Fiona Bruce or with the Duke of Cambridge's mother-in-law, when the door slams open and in strolls The Boss (en route to lunch at the Savoy).  "Here's 10p" he says.  "Everyone is to have 100 Megs by Thursday".

"Right Boss", you say.  "I'm on the case".

You ponder for a bit and then you call Malcolm Corbett, because you've heard he's something to do with broadband.  "Malcolm", you say, silkily.  "I've got 10p for you and I want you to fix us up with broadband stuff.  100 Megs for everybody by Thursday.  Can do?"

"Well," says Malcolm.  "I'd like to, but the trouble is, I've got all these tiny projects and 10p won't go very far.  I really need a quid."

At that you blanche (because you suspect The Boss is spent up on film studios and museums and broadcasting "Strictly" and throwing the javelin in 2012 and other vital stuff).  So you promise to let Malcolm know and ring off.  More pondering and then one of your team lifts his head from the Guardian crossword and suggests that you might get some advice from BT.  "Good thinking," you say and call Ian Livingstone.  "Ian", you begin.  "I've got 10p and if you promise to give everyone 100 Megs by Thursday, it's yours!"

Ian pauses for a couple of seconds before he replies.  "Well," he says, thoughtfully.  "I admit I've got a bit of a problem with my pension fund and Openreach is certainly in need of some support.  So - yes - send it over and I promise to accelerate our existing hyper-speed programme that has been covering 125% of the country since 1991, even though there is no demand and the technology isn't ready and which makes UK the best country in the whole world for everything thanks to BT."

"Great," you reply, and hang up.  "Chaps;" you say, interrupting your team's focus on the latest syllabus for Theatrical Studies and Asian Dance in All Schools.  "I've just done a deal with BT and they'll give everybody 100 Megs by Thursday, so long as I give them our 10p."

One of the guys looks up from his papers.  "Isn't that a bit dodgy?" he asks.  "Won't The Boss be a bit nervous about lack of competition and Brussels and all that stuff?  And won't the small players get upset at being left out?"

But another of the guys also looks up.  "How about divvying up the 10p among County Councils and letting them take the flak?  Only a few of them know what they're doing and so you can give them a bit of guidance, nudge-nudge.  They'll run some sort of competition but end up giving their share to BT anyway.  Takes the heat off you, let's them feel they're in charge - doing Big Society stuff - and you can tell The Boss that the job's done so far as you're concerned and that Dave will be happy."

"Sounds good," you say.  "But hang on, what if there's some more money from somewhere else in government?" 

At this, everyone looks confused.  Even a bit shocked.  "But that's nothing to do with us," somebody says.  "That's their business.  DEFRA and BIS and things.  You'll be talking about joined-up government next!"

"True" I murmur, settling down to think about Fiona Bruce again. 

But not for long.  There's a tap on the door and in marches Neelie Kroes and Malcolm Corbett.  You suspect that your day is only just beginning.

Your Task

You are to produce a comprehensive, funded, broadband implementation plan for the whole of the UK that is: future-proof; exceeds EU targets; based on either infrastructure or service competition (or both); sustainable; attracts maximum private investment, and rewards innovation.

=================================

Exactly.