Back to the drawing board…

Earlier this week, Robert Leigh of The Guardian put forward the idea of imposing a monthly £2 levy on broadband subscriptions in order to subsidise the costs of (print) investigative journalism.  Daft as it may seem, the idea was welcomed by Leigh’s (normally sensible) colleague on The Guardian, Roy Greenslade. 

I have to admit that I’m mildly sympathetic to the idea: like Leigh, I worry about a world in which, absent the investigative writing of commercial journalism, “wwe’ll just get the timid BBC on the one hand, and superficial junk on the other”.  But the £2 broadband levy simply won’t do as a remedy: aside from its obvious distribution concerns (who wants to subsidize Murdoch?), the levy is patently in the wrong place: any economic transfer should be attached to usage, not general subscriptions.  In other words, I agree with Mr. Leigh’s critics who respond with an ‘adapt or die’ message: the challenge is for the quality press to come up with some kind of ‘pay wall’ that meets their needs and is fit for purpose. 

But the broader point is that newspaper proprietors are not alone in struggling to find an economic model that continues to reward their investment: the providers of broadband infrastructure, particularly those investing in the expensive access network, are desperate to find ways of sharing their costs with others in the broadband value chain.  So far, all such attempts have been rebuffed – typically on grounds of net neutrality – but the pursuit of new business models is a healthy sign of market development and should not be discouraged.

 

Peer support

From time to time, it’s reassuring to learn that you’re not entirely a voice in the wilderness.  I’m therefore very grateful to Jon Hunt for pointing me towards the recent Nesta report on ‘The case for innovation-led growth’.  The thrust of this document is that the UK’s economic growth depends on our ability to foster innovation.  Fearing that the country is losing ground in this ability, and so losing international competitiveness, the Nesta paper sets out a number of proposals for enhancing the prospects for innovation.  One of these proposals is for significantly increased investment in broadband infrastructure and the policy document speaks a great deal of sense on this score, e.g. 

·        “Broadband, and in particular super-fast broadband …is the twenty-first century equivalent of the motorway system… Public investment in broadband should be seen as strategic investment…

·        We do not fully know what applications superfast broadband will give rise to… but if the history of the last 30 years has taught us anything, it is that people and businesses find ingenious uses for more memory, more processing power and more bandwidth.  It was not so long ago that Bill Gates opined that 640k of memory would suffice for most computer users.  Looking further back, the American Interstate system and the German autobahns were built long before there were enough cars to fill them.  Like these projects, superfast broadband is an investment in the future”. 

The report goes on to recommend that the government funds the construction of a national FTTH network, initially to some limited areas and costing ‘perhaps £5 billion’.  (Access to the national network would then be leased to service providers on a competitive basis).  So, in line with the recent House of Lords recommendation, the aim is for a fully fibre solution with uncertain cost.  And, similarly perhaps, it may not receive serious consideration from a cash-strapped Treasury.  We can only hope, however, that someone in government does at least read Nesta’s excellent report.

‘Something Somewhere'.…?

Not sure what to make of the Everything Everywhere (‘EE’) 4G launch yesterday.   Apart from the hoop-la over 4G itself,  the company more quietly announced it will also launch a fibre broadband service to homes and businesses with fixed-line internet speeds ‘typically ten times faster’ than today’s average broadband speeds: “Our Fibre Broadband will be available to over 11 million homes, representing around half of the population. We will be adding more homes all the time… EE is the only place where you will be able to get superfast internet - home and away”.

 So is this a new fixed network for the UK?  Well, not quite.  Dig a bit deeper and the T-Mobile website offers some additional clues:

 “Fibre speed may vary depending on distance from street cabinet and how many people are using the network at the same time as you…10 times faster based on 58.5 Mbps average speed on EE Fibre compared to the average speed of 5.9Mbits/s on ADSL broadband…”  All of this seems to confirm the story in ISP Review that EE “will make use of BT’s latest Fibre-to-the-Cabinet (FTTC) technology and should offer speeds of up to almost 80Mbps…  It will also offer standard broadband via ADSL in non-fibre areas”.

Ten times faster?  80 Mbps? Not according to our good friends at Br0ken Teleph0n3:

“Br0ken Teleph0n3 has received reports that even 24Mbps is the top end of what BT’s Infinity fibre to the cabinet service will deliver. It appears that some councils are being told to plan for the average speed delivered from an Infinity cabinet to be just 15Mbps….Users who live close to the cabinet and have good quality copper will enjoy the top speed, but most will not”.

 
One to watch…

Nice move but no game-changer

Don’t get me wrong: I’ve no wish to rain on anybody’s parade, least of all that of the new Culture Secretary, Maria Miller.  The ‘swathe of red tape’ she plans to sweep away from the bureaucracy of broadband deployment is truly welcome, has been widely applauded and will no doubt lessen the pain for many of those intending to lay fibre.  I’m not even going to quibble over the fact that the DCMS press release which details the government’s intentions is riddled with phrases like ‘facilitate discussions’, ‘broker a new deal’ and ‘review existing schemes’ – none of which could be accused of excessive  precision.  No, the dissenting voice in my ear simply makes the pedantic  point that the overwhelming challenge in constructing a broadband access network is the business investment case, particularly since the asset deployed is both sunk (literally and metaphorically)  and earns unusually slow pay-back.  Other than at the margin, none of this is changed by the DCMS announcement.  So, while a VM spokesperson is right to confirm that “steps like this will help support Virgin Media's on-going private investment”, it unfortunately remains the case that the requirement for wholly new infrastructure is essentially unaltered.

All change at DCMS

Maria Miller?  Former under-secretary at Department for Work and Pensions?  Nuff said.

 

No easy answers

On reflection, I think my piece on Jeremy Hunt’s ‘Faster, Higher, Stronger’ speech  was a little unjust to focus so narrowly on the issue of speed.  To be sure, this was very much the focus of Hunt’s remarks, and my criticism was that this emphasis risked obscuring other legitimate objectives (such as the scope for competitive provision) but, elsewhere, the speech also contained some important remarks about the necessary mix of broadband technologies.

As wireless capabilities evolve, it becomes increasingly likely that broadband access will be delivered via mobile devices – even in urban areas.  But, as Hunt pointed out: “in order to cope with capacity, we will need to get that mobile signal onto a fibre backbone as soon as possible”  

 
As Victor Keegan has pointed out in The Guardian, the recent upbeat announcements about 4G, however welcome, should not blind us to this reality.  The development of the UK’s fixed network, whatever its investment and ownership model, has to remain the key focus of attention for government and other stakeholders.