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.

Never mind the quality, feel the speed.

In his recent rather self-congratulatory speech, Jeremy Hunt borrowed some of Team GB’s Olympic success to freshen up the performance of his department’s broadband development plans.  As others have pointed out, he didn’t actually have a lot to say that was new: he basically defended the pursuit of broadband speeds as a prerequisite for the country having the ‘best network in Europe’ and cited some helpful statistics on the UK’s relative performance – ignoring some less flattering metrics.  He also hit back at the other recent criticisms of government strategy by the House of Lords Communications Committee, in particular their alleged misconception that ‘fibre to the cabinet is the sum of the government’s ambitions’ for the broadband network. 

On the question of speed, Hunt is right to point out the folly of setting an arbitrary target that is deemed to be ‘enough’ to meet broadband demands: the latter are always likely to exceed current expectations.  However, he still fails to address the HoL’s legitimate concern over universality.  As the Select Committee put it: “what is important is the long term assurance that as new internet applications emerge, everyone will be able to benefit, from inhabitants of inner cities to the remotest areas of the UK.” 

The ‘misunderstanding’ over FTTC is perhaps more worrying.  Hunt seems to justify the choice of this technology as if it were a matter of government planning, whereas the choice is entirely a matter for BT. Similarly, the idea that FTTC “is most likely to be a temporary stepping stone to fibre to the home” and that “by 2016 fibre to the home will be available on demand to over two thirds of the population” are again matters that are both entirely dependent on BT’s commercial judgement.  (On current expectations, BT’s pricing of ‘FTTP on demand’ is likely to make it too expensive for the residential market).  

Hunt also fails to acknowledge the HoL’s deeper concern with FTTC – and the PON network that BT is also rolling out – that this architecture is unsuitable for physical unbundling, thus stifling the prospects for service competition.  The Committee’s fear is therefore that current broadband investments, including government subsidies, will allow BT to recreate in fibre the monopoly it gradually lost in its copper network.  But hey, monopoly or not, it’ll be fast..!!

 

 

Behold the meaning of everything

Recently returned from holiday, I was eager to take a look at the findings from the inquiry by the House of Lords Select Committee on superfast broadband.  The report's 67 pages contain a lot of material for discussion but here’s a first, rather sweeping impression…

Douglas Adams wrote that the answer to the meaning of life, the universe, and everything was 42.  In similar gnomic fashion, the members of the ‘Lords Communications Committee appear to have concluded that, in the realm of broadband, the answer is either ‘dark fibre’ or ‘middle mile’ or possibly both.  If you listen to much of the oral evidence from the ‘Lords Inquiry (and I have), it’s striking how often the peers shoe-horned these two concepts into the discussion – even where they weren’t entirely relevant.  Indeed, members of the Committee admitted that they weren’t altogether sure about the meaning of the two terms or why they might be of such significance issues but it was as if an ancient sage had whispered to them mysteriously that the concepts would somehow unlock the solution to delivering the best broadband network in Europe.  As a result, the Committee’s ‘alternative vision’ for a broadband strategy has been fashioned around the twin pillars of wholesale access to dark fibre and the provision of backhaul.  While there’s undoubtedly merit in exploring both issues, their dominance in the construction has perhaps been at the expense of other, more mundane considerations – for example, the role of wireless in rural areas and the affordability of a fibre-only solution.  That’s soothsayers for you!

Steady as she goes…

‘Poked with a twig’ was just one of several, relatively benign metaphors that the Lex column in last week’s FT used to describe the reaction of Europe’s telecom incumbents to Neelie Kroes’ decision not to impose price reductions on access to their legacy, copper networks.  Predictably, that view was not shared by the competitor fraternity: a swift response from ECTA argued that “the direction…will harm the competitive conditions of the broadband markets and will eventually harm consumer interests without fostering investments”.  But the incumbents’ feeling of this coming as a ‘welcome respite’ was based not just on the favourable pricing decision but also from its durability: Kroes said she wanted the regulatory guidance ‘to apply at least until 2020’. 

The idea of regulatory stability is routinely trotted out as a precursor of private sector investment but Kroes was right to give this factor renewed prominence in her policy statement:  From another perspective, Sean Williams, Group Strategy Director of BT, provided a very tangible illustration of the investor’s fear of instability in the evidence he gave to the House of Lords Select Committee on superfast broadband: 

“One of the most supportive things that Ofcom could do is make a long-term commitment to its regulatory policy towards fibre networks. At the time when we made our fibre investments, we had a conversation with Ofcom about how it was seeking to regulate this risk investment that we were making. It made some very supportive remarks but it did not feel the need to regulate this investment. In fact, it was so uncertain that it would be very difficult to regulate, and we completely agree with that. But every three years it has to make that choice again. That is a very difficult environment for us to make a 20-year-view investment with a 12-year payback if the regulatory regime can change every three years…” 

He has a point!

The eye of the beholder

Ofcom’s Annual Report was published yesterday and, guess what?, the regulator gives itself a largely glowing end-of-term assessment.  To be fair, the Report does at least dissect Ofcom’s individual goals, and attempts to monitor progress on each, but some of the progress statements take a rather blinkered view of regulatory achievement.  For example, as regards broadband, Ofcom identifies one of its aims as “to create an environment that gives confidence to potential investors, enabling them to make a case to roll out new superfast networks”. Here’s the first action review:

“After we required BT to offer access to its network of underground ducts and telegraph poles to allow companies to offer superfast broadband services, BT published prices for these in October 2011. These prices are among the lowest, if not the lowest, for comparable products elsewhere in Europe….In areas where BT has no commercial plans to invest, access to these ducts and poles will allow other providers to bid for the funding which will be made available by Broadband Delivery UK (BDUK)…” 

Sounds plausible enough but, in the real world, things look a little less rosy.  We heard just this week that Fujitsu, BT’s only qualified rival under the BDUK tendering framework, has withdrawn from two further broadband contests. Indeed, there’s a growing consensus that BDUK’s whole approach to subsidy allocation unreasonably favours the incumbent.  As to competitive access to BT’s passive infrastructure, there is countless anecdotal evidence from competitive providers that the PIA product is simply not fit for purpose.  No wonder, then, that BT itself acknowledges a lack of interest: in evidence to the House of Lords Select Committee on superfast broadband, Sean Williams, BT’s Group Strategy Director, admitted that “there is no demand for PIA”.

The success of other facets of Ofcom’s broadband policy can (and will) be questioned on another day but, for current purposes, a more realistic judgement in Ofcom’s report card might be: ‘could do better’.

Plumbing matters

For anyone who believes that the open Internet and cloud computing are simply dependent on the exchange of ideas and content services, June 30^th provided a timely reminder.  On that day, as blogger TechnoLlama reports, a significant part of the ‘cloud’ failed when a key Amazon data centre (EC2) in Virginia was hit by a violent storm, knocking out its power.  This particular cloud centre hosted important content for various Internet services, including Netflix and Instagram, putting them offline for up to six hours.  Nor was this a wholly isolated incident: the same data centre had crashed earlier in the month, and it seems that cloud outages are now becoming so frequent that websites and Twitter accounts have sprung up to document them.

A central assumption behind the growth of cloud services is that storage and processing are distributed amongst different data centres, in theory making outages less likely. Their whole principle of distribution rests on the assumption of network resilience: if one server is knocked down, others can take up the load. Indeed, this is the one of the founding pillars of the Internet as we know it.  However, the reality is that, from a distributed model, we have been migrating content to more and more centralized services – in terms of both geography and industry concentration.  It’s reported that the top 10 cloud providers are now all based in the US, and that Amazon alone holds an estimated 15% of the cloud market

 
For TechnoLlama, the danger is that this growing reliance on fewer providers has made legal or regulatory control of the Internet an easier task.  For our purposes, the simpler, but no less vital lesson is that the ‘information superhighway’ relies crucially on the resilience of its road (network) infrastructure. Put another way, plumbing matters!