Connected Research

Union policy research in the 21st century

Nope, still scrabbling in the dark…

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Amidst the discussions over whether or not the Tories are softening plans for spending cuts in the event they win the general election with enough seats to form a majority, Shadow Chancellor George Osborne also gave the BBC yesterday further (but not better) on the Tories’ broadband plans.

Looking at the transcipt, Osborne’s promises are, amidst the hyperbole, the confusion and the mis-statements, that:

– ‘the next Conservative government is going to aim to have a 100 megabit Broadband to a majority of the population by 2017’

– ‘And if there are some parts of the country where the market can’t get to (because I think the best way to deliver this is by breaking up the British Telecom monopoly at the moment, which holds back companies like Carphone Warehouse or Virgin) if we find the market can’t do that, then use the BBC licence fee, the digital switch over money in the BBC licence fee, to get Broadband out to the rest of the country. But let’s see, first of all, if we can have the market delivering that super-fast Broadband to the country.’

So, the ‘aim’ is to have 100 Mb access speeds to ‘a majority’ of the population, and the means of funding that (in response to Sophie Raworth’s direct question) will be to ‘[break] up the British Telecom monopoly’ and then ‘use the BBC licence fee’.

Jeremy Hunt is also reported by the Financial Times yesterday (in a very brief piece) to be intending to compel BT to open its ducts as a solution. It would not be a surprise if Jeremy Hunt didn’t read these pages that closely – but I would refer him to my piece on Friday last week (the one just below this one, in fact).

As Osborne didn’t quite note, the aim to get 100 Mbps to a majority of the population is of course easily accomplished since ‘the majority of the population’ of the UK live in urban areas – and quite densely populated ones, at that. (It also seems to ignore that BT currently plans to get 40% of the population connected to up to 100 Mbps services by 2012, so it’s not as ambitious as it sounds.) The trick, however, is to get similar speeds to those living outside such centres (who are in at least as much need of the same speeds, given the references Osborne made to telemedicine): there are clear socio-economic arguments why broadband must be rolled out on a socially equitable basis across the nations and regions of the UK.

Here, the notion that this can be achieved by ‘breaking up the BT monopoly’ is quite laughable. A map of exchanges which have been unbundled under the current programme is likely to bear a very close correlation to centres of population, as is the map of coverage of the UK by cable networks (a map that is unlikely to change significantly in the next ohh, seven years or so) – and there’s a very obvious reason for that. ‘The market’ won’t go where it can’t make a profit – so allowing ‘the market’ to intervene in areas that it has already quite clearly stated that it won’t touch on the basis of the economics of existing broadband, let alone the high-speed variety, is, quite simply, not a solution at all.

I’ll leave Osborne to explain how a retail market share of broadband of 34% (DSL plus retained unbundled loops) and a number of unbundled local loops which is larger than those held by BT Retail, constitutes a monopoly.

Osborne’s reference to using the digital switchover portion of the licence fee to fund broadband expansion is also very interesting in the political context. This amounts to 3.5% of the BBC licence fee, while Digital Britain reported that the underspend in this fund is around £200m (while the government is currently proposing to use this towards its commitment of a universal 2 Mbps commitment by 2012). This part of the licence fee is also due to expire once the digital switchover scheme finishes in 2012.

So, Osborne now needs to do three things:

1. explain how the Tories will meet the commitment to a 2 Mbps universal service by 2012, since he is proposing to subsume the funds for doing so for other purposes

2. explain how the continuation of this additional fund beyond 2012 differs from what the government is seeking to do with the 50p/month landline duty (which the Tories have both derided and promised to end). Presumably, after 2012, this part of the licence fee could, otherwise, be returned to licence fee payers, either immediately or over time, or used to fund other BBC services. Given that the Tories are unlikely to be sympathetic to the latter, its explanation of why, in contrast to the former, it is retaining a specific earmarked duty for a different purpose is going to be an interesting one. As thinkbroadband.com comments, this is more or less ‘a shift in one type of tax to another

3. Given that Osborne was making clear reference to access speeds of 100 Mbps, which will require fibre being rolled out not to the cabinet but to the premises – a much more expensive form of roll-out – Osborne needs to define where the money is going to come from and, perhaps more pertinently, which investors he thinks might have sufficient scale to have that sort of cash available and under what conditions they might want to use it to fund next generation access. This could of course be a political reference to the ‘up to’ 100 Mbps speeds which could be delivered by fibre to the cabinet – but some clarity as regards whether he is thinking of fibre to the cabinet or to the premises would be welcome.

In the meantime, carry on scrabbling…

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Written by Calvin

01/02/2010 at 12:57 pm

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