Connected Research

Union policy research in the 21st century

Archive for January 2010

Hunting a policy on broadband

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Jeremy Hunt, Shadow Secretary of State for Culture, Media and Sport, gave a speech last Thursday on the Digital Economy Bill. The audience seems to have been largely concerned with regional broadcasting media, given the title of the document under which the speech is filed, but he spent some of his time on Ofcom and on the landline duty aspects and it is these that I want to turn to here.

So, what doesn’t he like?

– the new requirement on Ofcom to promote investment: it’s another layer of regulation which doesn’t deal with the fundamental issue of how to stimulate private sector investment in next generation broadband.

– the landline duty: it’s another barrier to investment and is ‘ill-conceived, deeply unfair, and simply won’t do what the Government hopes it will’. (Nice use of the rule of three, there.)

On the first, the difficulty is that the existing sole statutory duty on Ofcom to promote competition has led to the situation we now have, in which an over-reliance on competition as the sole policy lever in regulatory terms has led to a distinct lack of investment: with a market dominated by competition and price, and consumer market sentiment as a result demanding more and more bandwidth at cheaper and cheaper prices, it’s no surprise that wholesale providers have been somewhat wary of being able to make a return on high-cost investments in new access infrastructure. Ofcom does indeed already have a responsibility to bear in mind the impact on investment of its decisions; promoting this to a formal statutory duty does provide it with another tool in its regulatory kitbag.

Its duty to report on the state of the infrastructure every two years will also help promote an infrastructure which is fit for purpose; Hunt didn’t mention this specifically, though he seems to be against reporting requirements in general on the grounds that they conform to over-regulation, so is probably opposed.

Secondly, the landline duty is a modest levy on all landlines which is intended to generate pump-priming finance from which to develop investment projects, on this sort of scale. It won’t raise enough to deliver next generation broadband by itself – that’s not what it’s designed to do – and neither will it ‘crowd out’ (if you believe this sort of economic doggerel) private investment – not least as a result of its lack of scale. Raising around £150m-£175m per year, it should, instead, act as an encouragement to tease out (and thus bring forward) private sector investment finance. You might disagree with the way it is being raised, but the seedcorn role of the duty in generating public-private investment schemes ought to be plain.

I’ll ignore the nonsense about households paying the levy three times (via phone, fax and broadband) as someone’s (im)practical joke (how many households really have different providers for these things? And do households get their broadband and their phones from different companies? No, not many, in these days of bundled, triple play services).

And what should DEB have done instead, in Hunt’s view?

– reformed the regulatory structure

– dealt with the chronically slow progress being made in investment in next generation broadband.

In principle, and put so succinctly, it’s hard to disagree with either. But Hunt is looking for regulatory reform which encompasses ‘light touch’ regulation (a somewhat discredited phrase, these days) and less of a micro-management role for Ofcom. This latter, by the way, is something of a straw figure since – at least in the telecoms arena – Ofcom’s role is far from capable of being described as micro-management. In short, he’s looking for deregulation, and it is this which is intended to deal with the slow progress in instituting next generation broadband.

Here, Hunt specifically refers to access to BT’s ducts as a means of delivering competitive investment via new market entrants. His problem here, however, is that Ofcom has already examined this issue and concluded that, while there is a role for duct access as a means of supporting competition to deliver high-speed broadband services,

At this time, access to BT ducts on its own does not appear to be an effective immediate solution to competition issues in fixed access networks. [para 1.30]

Apart from ducts then – what else does Hunt think will help encourage investment in high speed broadband? Er, nothing else, m’lud. That’s it (according to the speech). Rien. Nada. Oh – apart from optimism which, in the conclusion to the speech he refers to as being ‘the basis of our approach’.

So, that’s a policy based on duct access which Ofcom has already ruled out as a solution on its own – and a blind faith and crossed fingers that a deregulated market and ‘light touch’ regulation will provide. Nothing more specific in terms of speeding up investment – and certainly nothing about ensuring a cohesive deployment on an equitable basis, both to the nations and regions of the UK and socio-economically. (By the way, Mr. Hunt, (South) Korea is so much further ahead of the UK on these issues not because of private sector competition but largely because, as you’ll know from your visit, the Korean housing experience is dominated by densely populated residential apartment blocks as opposed to private houses. (Actually, it was planned that way – but that takes us on to a slightly different track). It is this style of housing that lends itself particularly well to generating decent investment returns).

We know to where the market will deliver if left to its own devices and it will have little to do with equity. It will focus investment on delivering on a multi-player basis to already well-catered for areas – and hang the rest (and hang BT too, as a supplier of last resort). That’s not a policy with a future, either for the nations and regions of the UK, or for those responsible for providing landlines. In comparison, DEB does provide some hopes that investment will be encouraged, both as a result of regulatory certainty, to which a statutory duty to promote investment will provide some further assistance; and as a result of the landline duty being used to provide seedcorn finance for local development projects. Knocking out these rational measures, and replacing them only with a discredited policy of deregulation, is a recipe for failure on broadband infrastructure which this country can’t afford.

Written by Calvin

29/01/2010 at 7:00 pm

TUC Recession Report No. 15

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The TUC has just produced its latest Recession Report, accessible here at Nicola Smith’s ToUChstone blog posting. This is the penultimate in the series given that data shows the economy no longer to be contracting – so an official, if somewhat marginal, end to the recession has been achieved. (On this point, see also Adam Lent’s post on why the recovery has been so anaemic in the UK).

The headline data are that: 2.458m are unemployed (down on the month and on the quarter, but up by more than half a million on the year) – at a rate of 7.8% (a slight drop on the month and unchanged on the quarter, but up by 1.6 percentage points on the year). The employment rate of the working age population now stands at 72.4%, down by 0.1 percentage points on the quarter and by 1.7 points on the year. The headline figures are, once again, more positive than expected but evidence of a sustained recovery on the employment market is not yet here and long-term unemployment also continues to demonstrate cause for concern.

The second part to the Report continues the social theme of the previous edition’s specific area of focus, which looked at the effects of unemployment on physical and mental health, by looking at the other social effects of recession, including on poverty, happiness, family life, crime, drug and alcohol use and on the prospects for the children of unemployed people. Nicola had blogged previously on the question of how a ‘social recession’ could be measured and had suggested that the view was, on the whole, satisfactory despite some areas of concern. Here, too, the report argues that, while the UK is weathering this recession rather better than those of the 1980s and 1990s, the negative social effects of rising unemployment will continue to cause damage for some years to come. An important lesson for those advocating harsh cuts to expenditure: cuts are not only economically regressive, they leave the social scars festering, too.

Written by Calvin

29/01/2010 at 2:05 pm

Posted in Economic trends

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Not just a picture from my hols…

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… but also a reference not only to this week’s welcome economic news but also to the TUC’s forthcoming Going Green at Work conference, taking place on 15 March and being chaired by Prospect’s own Paul Noon.

Written by Calvin

28/01/2010 at 8:39 pm

We chill aaht on iht…

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Photo: Islas Canarias

For the next week or so. Hoping not to bump into the lovely Louise and Jamie, though…

Written by Calvin

19/01/2010 at 5:15 pm

Posted in Uncategorized

EU hearing no picnic for Kroes

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European Voice reported yesterday that Neelie Kroes, the Dutch politician who is currently EU Competition Commissioner and who has been nominated to head the new department of the digital agenda, has written to the European Parliament’s industry, research and energy committee to clarify points raised in her hearing, which took place on Thursday last week.

Kroes’s letter is, according to European Voice, intended to stave off concerns over whether she is sufficiently prepared for the job following the ‘disappointment and frustration‘ [registration required; limited viewing time] of the members of the committee over her performance. It has been reported that Kroes was ‘off her game‘ at the hearing, which was also reported as having been one of the tougher ones, no doubt prompted by Kroes’s own reputation, and that Kroes had done herself no favours by sticking to her desk at Competition since the announcement of the new Commission rather than on playing the political game. Kroes’s appearance before the parliament seems to have been marked by a broad-brush, with little details emerging other than a commitment to net neutrality and to free online expression, to tightening up Europe’s diverse online copyright laws and to building a single digital market, and to the principle of mobile roaming, but without a coherent legislative programme tying it all together. To be fair, the brief on the digital agenda is a new one. It has also been suggested that European People’s Party members have been under instructions not to sanction Kroes’s appointment until their own Commissioner nominees had been approved.

The committee has not written its formal evaluation and it has been suggested that Kroes will receive an invitation to a second hearing, likely to be held this morning at 11 am in camera although this had not been confirmed as of last night. Parliament was due to vote on the new Commission on January 26th, although this now looks likely to be postponed until the second week of February following the withdrawal from the process of Rumiana Jeleva, the much-criticised Bulgarian Commissioner-designate.

Written by Calvin

19/01/2010 at 11:29 am

Haiti: trade union action

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Amidst news that the death toll in Haiti may be as high as 200,000 people (over 70,000 people have already been buried), and that cruise ships have continued to find private places to dock just 60 miles from the earthquake zone, TUC Aid has launched its own appeal for funds for emergency relief. You can find further information about the TUC Aid appeal and a chance to donate online – via justgiving.com, so you can be sure that funds will find their way to where they are intended – here. Over 3m Haitian people are in desperate need of food, clothes, shelter and essential medicines and tens of thousands are facing their sixth night out in the open.

You can also find full news on what trade unions are doing in response to this disaster over at LabourStart.

Written by Calvin

18/01/2010 at 12:16 pm

Doesn’t he work for a trade union?

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According to a survey on the state of technological knowledge amongst ordinary people, 10% of people on the streets of London believe Steve Jobs, chief executive and co-founder of Apple, to be a trade union leader. Other leading figures in the industry, including Sir Tim Berners-Lee, founder of the internet, also fared poorly (9% thought he worked for MI5, which would appear to reflect the pervasive influence of James Bond films: Bernard Lee was M (albeit of MI6) in all Bond films up to Moonraker), while the apparently inexorable rise of social media sites still meant that 11% of respondents couldn’t name a single one without prompting. Do check out the YouTube video on the survey link, by the way – especially the very last interviewee, in front of Westminster Cathedral: a ‘guess the title of his daily newspaper’ competition will follow…

Well, (a) it’s nice that trade unions still feature strongly enough in public life to make it on to these sorts of questionnaire; and (b) that people do still remember enough about trade unions for us to feature somewhere on their horizons. (Obviously, aside of the issue of entirely random answers that questionnaires sometimes generate.)

Perhaps it’s the name ‘Steve’ – a good, solid name befitting a trade unionist – which resulted in the mis-identification of Steve Jobs. Indeed, in Prospect there are quite a few ‘Steves’ amongst the union’s cadre of negotiations officers. I’m not sure that Apple is yet unionised so as to make Steve Jobs a credible choice for union leader, however – though the company does seem to have been involved in labour rights violations in the past…

Written by Calvin

15/01/2010 at 12:56 pm

Posted in Labour movement stuff

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