Connected Research

Union policy research in the 21st century

Policy Exchange nonsense

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Policy Exchange, a right-wing think tank interested in ‘free market and localist solutions to public policy questions’, which has the status of an educational charity, is promoting a new report on the future of broadcasting. The focus of the report is largely outside the main remit of this blog, but its recommendations do include the dropping of the 50p/month landline duty suggested in Digital Britain and the subject of recent BIS consultations (the author of the report – Mark Oliver, a media policy adviser, insists on referring to duty as the ‘telecom tax’, which I feel gives something away about the report’s intentions). In contrast, this blog has supported the principle of the duty.

[Edit 15 January: Liberal Conspiracy has a good blog posting on the rest of the report here].

The report’s recommendation on the landline duty – that it should be dropped because the case for building out high speed internet infrastructure to the whole of the UK is unproven and that, even if it was, it was likely to benefit the whole of the UK economy and thus should be funded out of general taxation – is fair comment. We’ve taken the alternative view that there are strong social justice, integrationist arguments in building out such a network outside of the major urban population centres, taking such access speeds ‘beyond the market’, and that there are also strong economic benefits to doing so as well, spreading economic development away from overheated areas. [15 January edit: Policy Exchange has form here too, having previously argued that regeneration programmes were doomed to fail in many areas and suggested that funds might be better used in encouraging people to move to other locations. Hat-tip: New Statesman]

Where the report overstays its welcome, however, as far as this blog is concerned, is on the costings associated with the duty. All on the same page of the report (p. 67), it persists in quoting a figure of £3.5bn as being the cost of ‘overall spending for Digital Britain’s broadband vision’ as well as being the costs of building out ‘high speed infrastructure to the whole UK’ and of ‘going from 60 to 90 per cent 50 Mbit/sec household accessability’.

All this is a bit confused (and, actually,  the language is all a bit breathless, too). I may be wrong, but I can’t recall that Digital Britain was ever this specific about the costs of its vision. (And the report doesn’t seem to reference where it believes this £3.5bn comes from – it just cites it as an assumption.). What Digital Britain does state is that the 50p/month duty will raise £150m-£175m per year (or, by the end of 2017, a total of a maximum £1.225bn, given a start date for the duty of 2011). This is around one-third of the cost of the duty apparently assumed by the Policy Exchange report. The Digital Britain assumptions are also commensurate with the £200m per year that would be raised based on Ofcom’s figures for the number of fixed landlines in operation (33.2m – see Figure 4.1) (there will be some exemptions from the duty, taking the figure closer to the Digital Britain estimate). This would thus seem to be authoritative.

It’s also worth pointing out that, back in 2007, Enders Research quoted a cost of £11.2bn as the costs of building fibre to the home to 90% of UK households (see the NGA briefing published by the Connect sector of Prospect, and repeated in the Broadband Stakeholder Group’s Pipe Dreams).

Neither can I recall Digital Britain talking about rolling out a specific 50 Mbps access speed right across the UK: it talks about rolling out ‘next generation broadband’ and refers specifically to Virgin Media’s trials of its 50Mbps cable technology, but it is not specific about the speeds of the fibre connections which will be the access route outside the urban areas of Virgin Media’s network. It could not be – these will vary, based on whether fibre is rolled out to the curb or to the home – and they could actually be much higher.

The political divide around the duty is a reasonably clear one – but it doesn’t help the essential clarity when numbers are apparently plucked out of thin air and, evidently, bear no relationship to the sums likely to be raised by the duty. A credible report – and conclusion on the issue of the duty – would seem to demand a little more preparatory homework first.

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Written by Calvin

14/01/2010 at 12:36 pm

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