The politics of fibre

Alongside its annual results, BT announced its plans for an expansion of its investment in fibre earlier today. The clear link between the two is that the cost reductions and greater efficiencies identified in the company’s financial reporting have freed sufficient resources for an acceleration of the investment programme so as to allow a further £1bn to be put into fibre projects, extending the reach to two-thirds of UK homes by 2015.

Current investment plans had envisaged 40% of UK homes being fibred up by 2012: thus, an expansion of 67% in the investment budget brings about the same percentage expansion in the number of homes within the reach of a fibre network at the local level. This is interesting in itself, since cost models predict that fibre investment should become more expensive on a per home basis the further investment travels, although this seems to apply largely only once fibre roll-out has been extended into rural areas, i.e. above about 58% of homes (Figure 1.5).

(Incidentally, the Analysys Mason model looks to remain fairly accurate at this point: it seems to predict that, with an investment of £1.5bn in fibre to the cabinet solutions, BT ought to reach about 46% of homes (compared to the 40% in the company’s plans); while a total investment of £2.5bn ought to see it through to about 72% (compared to ‘around two-thirds’). Either the model is slightly out, and the costs associated with roll-out to particular stages are slightly higher than envisaged; or else BT’s mix of fibre to the cabinet and fibre to the home solutions has raised the cost slightly, since the model is based only on the former. The BBC news report of today’s story identifies that around one in four of all homes envisaged as being covered by fibre by 2015 will have fibre to the home – and, therefore, much faster connection speeds. This would seem to suggest that the Analysys Mason model actually slightly under-estimates the cost of fibre roll-out.)

The announcement of BT’s roll-out plans has clearly been well-timed, given the events of the last seven days; and appears to put BT on the front foot.

Firstly, this takes BT to what we might call the ‘Digital Britain’ point – i.e. the two-thirds of homes that ‘the market’ would identify as being suitable for fibre investment. Taking fibre installation beyond this was intended to be the purpose of the ‘Final Third’ fund, raised by the landline duty, which of course has now been scrapped – and without actual plans for its replacement which are more than mere suggestions.

Secondly, the plans will achieve download speeds of (up to) 40 Mbps. The Tories’ manifesto commitment was to getting ‘a majority’ of UK homes wired to (up to) 100 Mbps connections by 2017. BT’s current plans seem to indicate that, by 2015, only around 17% of UK homes will have download speeds at this level. If the manifesto commitment is to be realisable – though today’s reporting seems to indicate that Digital Britain may well not be a priority for the new government – then plans need to be made for how this is going to be achieved. This is not the same as what also needs to be done to roll-out broadband in rural areas (into the ‘final third’) – which mission also needs to be accomplished – since this 17% seems to leave plenty more homes in urban areas with download speeds of much less than 100 Mbps.

Thirdly, Ian Livingston’s announcement contains a strong caveat: that the plans assume ‘an acceptable environment for investment’. This is clearly critical and is an evident acknowledgement not only that the regulatory environment plays an important role in investment decisions, but also that the change in government brings uncertainties in this area which will need to be settled. Inevitably so. But what matters here is that the announcement of the plans now indicates that the existing environment, both known and in the pipeline, is acceptable in terms of the plans – what is unknown is whether that will change and, if so, what impact that will have on the investment. The caveat is a clear indication that the plans are predicated on at least the continuation of the current regulatory environment (if not its further improvement) and that any deterioration may well lead to a reconsideration of them.

How the government responds will be interesting.

In terms of BT – well, it’s clear that more needs to be done to get Britain faster online so as to realise the benefits of Digital Britain, though the importance in this of a healthy, financially strong BT needs not to be forgotten (as well as that the company is still rebuilding its profitability). It should also be remembered that the expansion of the investment in fibre will be ‘managed within current levels of capital expenditure’ – something which implies cut-backs in expenditure on investment in other areas.

A new statutory duty for Ofcom to promote investment in the communications infrastructure in its approach to regulatory decisions would help enormously right now…

UN launches Broadband Commission

The International Telecommunications Union, an arm of the UN, has set up a Broadband Commission whose aims will be to define strategies for rolling out broadband networks worldwide and to examine the applications for the improvement in the delivery of a wide range of social services.

An impressive list of global private sector business leaders, UN agencies, regulatory bodies and politicians, including the European Commissioner for the Digital Agenda, Neelie Kroes, are to sit on the Commission, which will present findings to the UN’s Millennium Development Goals review summit in September. The Commissioners are intended to provide ‘expert input’ alongside an analysis of the deployment of broadband at all stages of economic development, with the ultimate intention of providing ‘practical recommendations on the possible routes towards the goal of high-speed networks at affordable prices.’

Hamadoun Touré, Secretary-General of the ITU, commented that:

In the 21st century, affordable, ubiquitous broadband networks will be as critical to social and economic prosperity as networks like transport, water and power… Not only does broadband deliver benefits across every sector of society, but it also helps promote social and economic development, and will be key in helping us get the Millennium Development Goals back on track.

There’s nothing much wrong with that, and it helps to reinforce the notion that the developing world does – perhaps controversially – need modems and routers just as much as it needs other basic essentials as a means of delivering the social and economic benefits that will improve life expectancy and the social situation. So, the initiative is welcome, although it is important to emphasise that it needs indeed to look at the full range of ‘possible routes’. Whether decent debate about the range of ways of potentially achieving these goals is likely to ensue from the Commission’s appointments, and the short time-scale for its work to be concluded, is a moot point. Alternative visions than ones based on deregulation and the removal of barriers, and on a centre stage for competition, are both possible and need to be explored if the initiative is to achieve its aims.

OK, on with the show

Though before we do, some interesting reaction to the overnight events picked up via TIGMOO by Anna Rose at Unison Active, as well as by Tom over at labour and capital.

In what is otherwise, given its timing, likely to be one of my more immediately unread posts in the one year (next week!) that this blog has been functioning, I did find this week that there were some interesting things happening in the world of regulatory broadband policy, both in Australia and in Italy, and in the world of net neutrality, in the US, which reflect some aspects of why the blog exists.

In Australia, the centre-left government has published a A$25m (£15m) report commissioned by McKinsey and KPMG that says, essentially, even if Telstra, the former incumbent, doesn’t decide to throw in its lot with the government’s plans for an initially publicly-owned national broadband network company, NBN Co can still go ahead on its own as a viable commercial entity (see here [registration required; limited viewing time] and, when that runs out, here for the basic news story].

Such a conclusion is really no great surprise, and perhaps its most important function is the practical assistance it will provide the government in its continuing negotiations with Telstra on the folding of its assets into NBN Co (although whether that’s a suitable use of public money is a different matter) – both that and the re-starting of structural separation discussions in the Australian parliament, scheduled for next week. The government’s intention to create a ‘Telstra 2’, having not so long ago sold the last one off to a lot of individual (‘mum and dad’) shareholders, with a long-term intent to do the same thing with NBN Co, is the subject of a lively debate, as the comments in The Australian show.

Meanwhile, a proposal for a super-fast broadband network in Italy was made by Vodafone, Wind and Fastweb (the latter two being existing Italian network operators) in Milan today. La Repubblica originally broke the story on Tuesday (you’ll need to speak Italian or else have a good translator – or else, if you’re quick, see either here and/or here for an English language version). The consortium of three want to spend €2.5bn on building a 100Mbps fibre network in Italy over the next five years – but che sorpresa, they want to build it only in the 15 major towns and cities. At the launch, it was also made clear that, over 5-10 years, the network could be extended in an €8.5bn investment to all towns with more than 20,000 inhabitants (representing around half the Italian population). Former incumbent Telecom Italia, which was invited into the project and which has always welcomed the notion of joint partnerships (provided that it keeps its finger on its existing network), has its own €7bn investment plans over three years but deployment so far has been somewhat relaxed.

Cynicism aside, any investment in high-speed broadband is welcome – but it does need to be part of a nationally- planned advance in fibre installation, and one that extends high speed broadband provision on an equitable basis right throughout the country: to rich and to poor; to urban and to rural; to young and to old. Where the market is allowed to dictate investment in nationally-important infrastructure, the end result can only be inequity, exclusion and a widening of the social and digital divides as a result of the inevitable cherry picking that will occur. Leaving the poor old incumbent to pick up the pieces for the rest is hardly reflective of a level playing field, while the concept of social justice – as well as that of evenly-spread economic development – deserves better treatment.

An interesting parallel between Italy and Australia is also that Agcom, the Italian regulator, has been looking at the creation of a separate, new company responsible for the country’s next generation broadband infrastructure.

Finally, in the US the Federal Communications Commission has made progress with its response to last month’s legal ruling against its sanctioning of Comcast for traffic management policies. I blogged about this here. The danger of the ruling was that an inability of the FCC to take action in this way, because broadband internet access is classed under US regulation law not as a telecoms service but as an information service (and thus subject to a different, lighter regulatory regime), left it unable to guarantee net neutrality – i.e. the freedom of internet users not to be subject to the ‘management’ of their surfing by their ISP. This impasse in turn seemed to threaten the FCC’s ambitious National Broadband Plan.

What the FCC has done, according to the BBC – a bit of a lighter read than the FCC’s own statement – is to develop a ‘third way’ (just like 1997 all over again!) which classifies the ‘transmission component’ of broadband access as a telecommunications service while taking a principled non-intervention approach to much of the rest of broadband access. The Chair of the FCC was at pains to point to the ‘narrow and tailored… cautious’ approach, and the need to overcome the difficulties posed to the National Broadband Plan by the legal decision, but even this limited compromise appears to have left the two Republicans on the FCC behind. Here, the Chair’s view is likely to be supported by the two Democrats, indicating it will thus prevail, but ISPs themselves already appear (according to the BBC report) rather unhappy.

These three highly separate, but highly linked, stories highlight the problems of regulating broadband access both in an environment of seeking control of the technology so that it serves the interest of the people, and in free market situations in which competition is supposed to prevail but which doesn’t necessarily always support the interests of the consumer, both taking place in the context of a neo-liberal dominated world view. You might wonder – just as bond markets opening in the middle of election night, as results are starting to come in, and subsequently with its intermittent results, was thought to be newsworthy as part of the BBC’s online internet coverage – just how we’ve got into this mess.

A lack of strategic thinking is one reason – and it’s clear that only strategic thinking can get us out of it.

Britain’s Digital Future II

I’ve now had a chance to listen to The Guardian‘s Tech Weekly podcast I blogged about last week. Unlike some of the comments on the podcast page, which mostly seem to reflect continuing disappointment over the copyright and file sharing aspects of the Digital Economy Act, I thought this was an interesting and reasonably open discussion on the policies of the three main parties towards Digital Britain, underpinned by some thoughtful and articulate comments on the issues and the policies.

The bits on broadband, specifically on how to fund broadband access in rural areas, occur from the 39.17-minute mark and wrap up around 48.50. I learned the following:

– an acknowledgment from Jeremy Hunt, shadow secretary for culture, media and sport, that the market won’t provide for all and that an element of subsidy would be necessary to extend broadband to rural areas. This is not new by itself, but the Tories’ vehicle for this, i.e. using the £200m surplus in the digital switchover portion of the BBC licence fee, was, according to Hunt, supported by the BBC on the grounds that the hungriest consumers of bandwidth were iPlayer users and that the BBC wanted to extend access to iPlayer further. This BBC support for the use in this way of the digital switchover surplus was news to me.

– Stephen Timms, minister for Digital Britain, argued that the switchover money would not be available until 2013 and that doing nothing until then was simply not good enough, while making progress in rural areas demanded investment of £150m per year (i.e. the sums being spoken as being raised by the landline duty). At the same time, conceding the switchover surplus for rural broadband would leave little left for the universal service commitment. Hunt’s reply was that he would rather use the sums which Labour had spoken of to subsidise regional news programmes from ITV for rural broadband instead. So, here we have a Tory spokesman unsympathetic to the notion of the need to subsidise independent sources of regional news – while I also remain unconvinced that the Tories in office would do much towards a universal broadband service at all: having a policy for rural broadband is not the same thing as ensuring that all households in the UK can get access to a minimum broadband service.

– Hunt commented that next generation investment could cost £29bn [apparently, for fibre to the premises solutions right across the UK] and that this was not something that one company [BT] could afford on its own.  He lamented the failure of the Digital Economy Act to do more about encouraging other private sector operators to step forward and said that he wanted ‘Virgin Media to do more; Sky to do more; Carphone Warehouse to use our pilons, telegraph poles, ducts and sewers’ as a way of stimulating a lot more investment in fibre. Of course, there’s nothing to stop any other operator from building out a fibre network and then connecting that with the networks of others to extend coverage. (Except, of course, the need for investment finance and then the obligation to offer that network on a wholesale basis, just like BT has to do. That ‘our’ is an interesting and revealing word, too!)

– Hunt’s reference to Virgin Media having a fibre network which reaches the major towns and cities, and half UK households, whereas BT was the only operator which had the infrastructure to reach rural areas, and that it was ‘madness’ to wait for BT to make that investment as it simply could not afford to do it, seems to me symptomatic of a Tory desire to see BT only as a provider of last resort – that competition will provide in the major areas and that, where it doesn’t, BT will have to provide. So, other operators would be allowed to cherry pick the best areas for their investment, i.e. those which offer the best returns, while leaving to BT alone the prospect of investing in low return areas (and then having to do so on a wholesale basis). I’m extremely unconvinced that this is a sensible, rational approach to getting fibre rolled out across the UK: it leaves far too little in terms of returns for the operator relied upon to undertake the most costly investments (and the only one with sufficient scale to generate the necessary finance). In a situation in which the costs of fibre investment have already been identified as too high for one operator to deal with, it seems completely contrary then to ask that same operator to fund all the unattractive, low return investments. The UK deserves much better joined-up thinking than that.

– ‘Anyone who laid fibre would have an obligation to wholesale the fibre they laid to anyone who wants it’. I’m quoting here because I was quite astounded by what I heard and replayed several times to make sure I got it right. This goes well beyond BT, for which wholesaling obligations as regards fibre investment will inevitably be mandated by Ofcom, while that ‘anyone’ seems on the face of it to encompass, for example, Virgin Media, as well as any other operator which currently does not have SMP (significant market power – only BT and Kingston Communications currently have SMP). On the other hand, it might be argued that there is a strong whiff of ‘in future’ to the quote and, bearing in mind that Virgin Media is expecting to have completed its delivery of superfast broadband right across its network by next year, it may well on this basis be held not to have been caught by the need to respond to such wholesale obligations.

By the way, the programme ended with a comment on the impact on fibre investment of valuation office decisions. This has been well summarised by Computer Weekly and is based on a court case brought by Vtesse, and lost, earlier this year. It had been Tory policy to ‘realign’ business rates charged on fibre networks, although this seemed to lead to a bit of a spat with the Valuation Office Agency and this policy seemed eventually not to make it into the Tories’ Technology Manifesto. Making the cost of fibre essentially cheaper is likely to have some impact on investment decisions since it will increase returns: but, where that investment wouldn’t otherwise be made at all – i.e. in the rural areas – it’s unlikely to have any impact.

[5 May edit: Today’s The Guardian has a summary of all the manifesto commitments to technology, broadband and digital issues.]

Britain’s digital future

The Guardian‘s Tech Weekly podcast this week focuses on the parties’ views and attitudes towards Britain’s digital future, featuring discussion and comment from the three leading parties’ main representatives (Stephen Timms, Jeremy Hunt and Lord Razzall) on the following issues:

– curbing piracy and file sharing

– intellectual property copyright reforms

– how to fund rural broadband penetration

– dealing with the library of government data.

I haven’t yet listened to this in full but will be doing so with some interest, blogging any issues that arise. In the meantime, you can pick up the podcast, or listen online, here.

A greener wireless industry

Telecoms companies have united in another green initiative, this time with the aim of achieving a 50% reduction in the energy consumption of so-called 4th generation (or LTE) mobile wireless communication networks, and with the aim of commercialising its work by the end of 2012. The Earth (Energy Aware Radio and neTwork tecHnologies) project is based on research into ways of saving energy in mobile networks, network components and radio interfaces with the aim of laying the foundations for a new generation of energy-efficient communications equipment.

Other than that, the company press release is really rather dense (which may well account for the distinct lack of interest amongst the UK press, even on what seems to be a slow news day). Indeed, the initiative seems to have got underway some three months ago and only now has a press release been put together about it. Alcatel-Lucent and Ericsson are the lead names on the initiative (as indeed the former was on a previously announced green initiative, which I blogged about here) but it also encompasses 13 other partners, including research institutes and universities, and the European standards organisation, ETSI, alongside the telecoms partners.

LTE (Long-Term Evolution) is the name for the next generation of mobile, with a wide range of frequencies deployed to allow users to watch high-definition video and receive much faster downloads on their mobile devices. An auction encompassing LTE-appropriate spectrum has just been concluded in the Netherlands, while similar is currently underway in Germany. Plans in the UK, intended to have been facilitated by Kip Meek’s independent brokerage and accepted by the government, have been derailed both by operator objections and by the loss of key chunks of the Digital Economy Bill, but may return to the agenda after the general election.

So, the new initiative is timely and very welcome – even if the EARTH programme, if not its aims, suffers from an inevitable imprecision as well as the equally inevitable strong dose of corporate puff. Similar to the last initiative, however, my gripe remains the relative lack of UK involvement. The University of Surrey is one of the consortium partners, but UK involvement seems otherwise to be minimal. Leadership on these sorts of initiatives is up for grabs and it would be a shame were the technical expertise in energy efficiency generated by such initiatives to flow largely elsewhere.

The ‘Google tax’ and net neutrality

It is being reported that Vodafone is to ask the European Union to take action so as to ‘facilitate bilateral agreements between telecom operators and online content providers like Google’ – essentially, to allow network operators to charge content providers, such as Google, YouTube and, probably, the BBC’s iPlayer, additional fees in relation to the network demands placed by the users of such services.

Operators would rather charge content providers than consumers, but it would seem that some network operators have started to realise that the ‘all you can eat’ model – under which bandwidth comes at a flat rate (except, perhaps, for usage caps on really high users) – is not a viable economic model in a scenario of the rapid growth in bandwidth consumption we are experiencing. More and more for less and less is never a particular sound economic model. Clearly, in such a situation of heavy retail competition, essentially preventing operators from starting to raise prices, or to alter pricing structures in accordance with consumers’ capacity usage, operators need to look for alternative sources of revenue – and content providers represent it. (How we’ve got into this mess in the first place is a different blog post altogether.)

Were they to succeed, then this is likely to lead to a further commercialisation of the internet, in terms of how the content that you read, or view, is paid for (though, to be fair, such a commercialisation is proceeding apace anyway via new advertising models), with network operators essentially wanting their own slice of this action.

On the face of it, the reference to the need for EU action looks a little odd – there is nothing to stop operators coming to such bilateral agreements amongst themselves and, in a free market, that’s probably the more preferable response (where, of course, content providers are prepared to play ball, which they may well not be).

The other difficulty, of course, is the reference to the principle of net neutrality, according to which network operators should carry net traffic on an open, non-discriminatory basis. (Roger Darlington reviews the issues of net neutrality very well in his monthly column for Connected, the magazine of the Connect Sector of Prospect, which you can also read online here.) Starting to charge content providers for network quality, or levels of consumption (as measured by capacity usage), starts to affect how the net operates since content providers, under the commercial pressures of such agreements, are likely to want to see ‘their’ traffic prioritised by those with whom they have reached such agreements. Indeed, such prioritisation is likely to be included within any such agreements on charging. The upshot will be changes to how the net operates, and is experienced, some of which may well be invisible to the naked eye – a problem for those supporting a liberal internet and likely to lead to such principles being heavily compromised.

The original source for this post reports that Vodafone is making its push via a shortly-to-be-finalised submission to an EU consultation on net neutrality. This is a bit strange, since the last I saw from the EU on this issue was this (part of last year’s EU telecoms package) which, in Annexe 2, does talk of the importance of preserving ‘the open and neutral character of the net’ and seeking to enshrine net neutrality as a policy objective for member states. I can’t find a reference to an open consultation on this on the appropriate pages of the EU portal, although we know from Ofcom’s annual plan for 2010/2011 that some activity will be taking place (A1.77) – while Roger’s piece also refers to a UK discussion and consultation on net neutrality taking place ‘later this year’ (and, evidently, within the context of EU action).

Such confusion aside, it is clear that operators (the original source cites also Telefonica) are starting to gird their loins for an attack on net neutrality so as to allow them to seek to charge content providers for access (in this context, Project Canvas takes on a new light since it would seem to allow project partners to side-step any such charges). Equally, the EU looks set against such a model, so it could be quite a battle. Consumers will end up paying the price somewhere, although whether that’s a cash-based or a principles-based price (or both) is an interesting question.

Orange refused Swiss merger

Swiss competition regulators have refused permission for Orange, the smallest of three operators in Switzerland, to merge with Sunrise, the Danish-owned second largest operator, on the grounds that the proposal would undermine market dynamics and damage consumer interests.

The merged entity, for which proposals had been developed last November, would have had a market share of 38%, compared to the 62% held by Swisscom, the former monopoly operator. However, the view of the Swiss authorities was that the merged operator: ‘would have been in a collective dominant position which risked eliminating effective competition.’ Uppermost in the authorities’ mind was that it would be more advantageous in a two-company market for both to collude over pricing levels.

An appeal, which must be lodged within 30 days, is thought likely [registration required; limited viewing time]. In the meantime, a knock-on effect of the decision has been to delay a planned flotation of TDC [registration required; limited viewing time], the Danish parent of Sunrise, which is currently owned by a consortium of five well-known private equity groups (Blackstone Group; Permira; Kohlberg, Kravis, Roberts & Co; Providence; and Apax Partners). Part of the Swiss merger would have meant France Telecom, Orange’s parent, handing over €1.5bn in cash to TDC in return for a 75% share in the merged operation – without which, on the face of it, the private equity groups concerned have been unable to realise sufficient gains prior to their exit from the Danish market.

Clearly, the Swiss mobile communications market is different to the UK one and Switzerland is outside the EU, so it’s not particularly interesting to examine the reasons for the approval of a merger in one market compared to a decision to reject a merger creating a still-small entity in another. At the same time, however, and taking these two recent situations together, it is interesting that the rationale for merger approval or rejection in neo-liberal societies seems, on the face of it, not to be so much the desire to create, or achieve, conditions of high competition but to minimise the point at which there is a potential for pricing collusion.

It’s also an interesting reflection on the role of private equity groups, and their ability to extract high rewards from relatively quiet situations (the Swiss mobile market is 9m consumers) – as well as a comment on  the involvement of private equity groups in telecoms companies. If the €1.5bn was as crucial as that to their exit from the Danish market, and sufficient to postpone it when its arrival has been blocked, then it is likely that the efficiency gains sparking their involvement in TDC have not been sufficient to make their involvement in Denmark worthwhile. At least – not yet; which may in turn spark a note of further warning to Danish trade union colleagues.

It would have been even more interesting had Deutsche Telekom, in which Blackstone has a stake, had been involved in the Swiss market.

Don’t worry: we’ve still got the 2 Mbps USC!

After yesterday’s stripping out from the pre-election legislative timetable of several of the things that the Connect Sector of Prospect has campaigned for as outcomes from the Digital Britain initiative, picking over the guts of what’s left leaves us with little more than the 2 Mbps universal service obligation oops, commitment.

Having read this this morning, I briefly wondered whether even this had survived – although indeed it has; it actually never formed a part of the Digital Economy Bill since no aspect of delivering the commitment needed fresh legislation.

Delivering the commitment to a 2 Mbps service by 2012 reflects the intention that broadband should be delivered on a universal service basis to all those areas in the country which are currently poorly served by broadband – i.e. by ‘no later than’ 2012, all homes in the UK, more or less, should have access to a broadband service of 2 Mbps. Digital Britain reported that currently some 11% of homes (pp. 53-58) – 2.75m in total – are not able to get access at this level of speed. Pursuing this commitment is to be the responsibility of Broadband Delivery UK, a body announced by Stephen Timms in early March and which is to be headed, so Timms announced in Parliament later that day (although it never featured in the BIS press release) by Adrian Kammellard, previously Head of Major Projects at Partnership UK. Broadband Delivery UK remains a somewhat mysterious body; as thinkbroadband comments, it is currently without a web presence – this is as close as I can find – and little information is available about it apart from it being constituted of a body of 12 staff from within BIS.

In the uncertainties of the pre-election period, it would be surprising if Broadband Delivery UK was to have much of a profile: its original workload was yesterday cut in half, although this cut may be restored if the outcome of the general election was to return a Labour government. Nevertheless, the other half – the 2 Mbps commitment – does remain and, given that it has all-party support, the establishment of Broadband Delivery UK prior to the election consequently ought not to interrupt its progress after it, whatever the outcome.

In that context, here’s my ‘Dear Adrian’ letter of the issues that remain to be resolved within the commitment. Some of these are long-term ones, perhaps a little outside of the central remit, but an early recognition that they are ones which need to be addressed would be welcome:

1. 2 Mbps was picked, in the words of the interim Digital Britain report, since it represented what, by 2012, ‘will be in step with standard broadband usage’ (p. 57). This was even then a little unambitious; some 15 months later it looks increasingly outmoded when average speeds are already twice that and when much higher speeds are being rolled out elsewhere. The commitment to a 2 Mbps can’t be changed, at this point, but what is on the tin should be what is in the tin – people benefiting from the USC should get access speeds which are not ‘up to’ but ‘at least’ 2 Mbps. The approach of the US National Broadband Plan, based on actual speed, has a lot to commend in this area.

2. 2 Mbps is a welcome start in terms of ensuring that all broadband coverage is applied on a universal service basis. But it is only a start and, in the grander scheme of things, it isn’t very fast and will, in time, simply provide a very linear demarcation of the digital divide. Some thought therefore needs to be given to how this speed will change over time and, specifically, how it will be uprated: if it is not, people behind it are likely to lose out as speeds are driven faster and faster elsewhere. So, there needs to be a formal review mechanism to ensure continuing relevancy (or perhaps, better said, to guard against increasing anachronism).

3. A 2 Mbps speed refers only to download speeds, not upload ones. In a Web 2.0 world dominated by active sharing, rather than passive receiving, and by cloud computing, upload speeds will adopt increasing importance. Thought therefore needs to be given as to how these can be reflected within the commitment, and also encompassed within the regular reviews of the speeds embraced by it.

So, there remain some things within the current policy programme which can still be pushed, to go on top of the things which need to be reinstated on 7 May. And, above all, Charles de Gaulle was right.

New powers for Ofcom also dropped

The government is also proposing to drop Clause 1 of the Digital Economy Bill (see also The Guardian). This would have given Ofcom new powers to have ‘particular regard’ in carrying out its statutory duties on behalf of consumers to the need ‘to promote investment in electronic communications networks’. The dead hand of the Tories on the tiller is all too visible here, too.

The Connect Sector had supported this Clause right from the publication of the final report of the Digital Britain initiative since it would have commanded Ofcom to focus in its promotion of the interests of consumers on the need for investment, alongside the existing duty to promote competition. It would have overturned a singular reliance on promoting competition, which had been how both Ofcom and Oftel before it had interpreted the interests of consumers. It is the promotion of competition, to the exclusion of all other concerns, that has allowed us to reach the stage of falling real prices for telecoms services to the point where it is likely to endanger investment. In an intensely competitive situation, falling prices can only inhibit levels of investment since it both undermines and makes more uncertain the rates of return that can be made. When investment is expensive – not least given the need to boost investment in fibre towards fibre to the premises solutions, rather than just fibre to the cabinet – such levels of uncertainty will simply lead to it not being made. And that’s not in the interests of consumers either.

Yet we’re now back in the situation of Ofcom interpreting its regulatory remit on looking at the interests of consumers solely through the telescope of competition. A one-club, narrowly focused and ultimately irrational approach to regulatory policy.

The new duties for Ofcom, by recognising the central role of investment in developing the UK’s communications infrastructure and in insisting that Ofcom supported that in its approach to regulatory decision-making, would have helped to support the case for that investment. Their likely withdrawal – voting on the Digital Economy Bill is tonight – only undermines that case and, in the process, undermines a significant portion of the Digital Britain initiative.

Landline duty dropped

The BBC is reporting that the proposed landline duty – the 50p/month levy on fixed lines to contribute towards building out high-speed broadband services beyond where the market would deliver – has been dropped.

The dropping of the proposal, on which a BIS consultation closed only last week, is not because the government is suddenly unconvinced of the need for the Next Generation Fund which the duty would have established; it has been dropped since the political controversy over it would potentially have held up the Finance Bill, which has to include the duty since it is a fiscal measure. This is one of a series of three measures – including also the rise in cider duty – which the government has dropped from the Finance Bill so as to ensure that it can complete its passage through Parliament before Parliament is dissolved later this week. Consequently, the landline duty is very much a victim of the election.

Should Labour win the election, it is likely to be re-instated – the government’s policy has not changed – perhaps in a second Finance Bill after the election. However, it is disappointing that the landline duty has been dropped since the policy which lay behind it – that of extending high-speed broadband on a socio-economically equitable basis right across the nations and regions of the UK – was both sound in principle and, actually, far more important than the levy itself. Without the levy, and the Fund, the UK has no practical, resource-based response to the need to spread high-speed broadband equally across the UK other than where the market – i.e. the major network operators – decide where it can be done profitably. That is likely to lead to the over-provision of networks in large urban areas and the under-provision of networks in less populated, more rural areas and, in turn, to a widening of the digital divide. It is also likely to contribute to the further economic overheating of the large urban centres.

For its part, the Tory policy on extending high-speed broadband beyond the market is ill-thought: based as it is on a reliance on the regulated opening up of BT’s ducts – a policy with which BT is happy to comply but which, as Ofcom has previously pointed out, is likely only ever to be a partial solution – backed by some money from the BBC licence fee otherwise earmarked for the digital switchover. The digital switchover is due to be complete by 2012 and the underspend in this budget is £200m, which Digital Britain had intended to use to meet its universal broadband service commitment by 2012. Any continuation of this budget beyond 2012 essentially takes money away from BBC programming – thus, for the Tories, killing two birds with one stone but which is likely to mean further cuts in the production of quality media content.

The landline duty was fair in the context in which it was originally put by Digital Britain – that households had received a benefit from falling telecoms prices in recent years and that it was thus reasonable to ask them to share some of that benefit. The Connect Sector of Prospect had always argued that it was a moderate, affordable and specific contribution from consumers towards the cost of roll-out of NGA infrastructure beyond the market, and we also supported it as a welcome sign of the government’s commitment to a policy of ‘industrial activism’.

The decline in consumer telephony bills has been well documented by Ofcom:

Source: Figure 4.55, Ofcom Communications Market Report 2009

The chart shows clearly the falling nature of household telecoms bills, which declined from 3.4% of monthly expenditure in 2005 to 3.2% in 2008 – the same proportion as in 2003. If we focus on the decline in the amount of expenditure on fixed voice and on internet and broadband – i.e. the sums going to the operators charged with responsibility for rolling out high-speed broadband services – we can see that these have fallen by £5.68 per month – at standard prices – since 2003 (a drop of 14.7%). In this context, a 50p/month levy was, and remains, fair.

This decline in return is not a rational basis on which to found an expectation that operators will roll out costly investment in fibre networks in areas where it is even partly speculative. They will, instead, concentrate only on the clearly most profitable areas. That will inhibit the roll out of fibre networks, putting the extension of fibre roll-out some twenty points lower than it otherwise would have been by 2017, and it will exacerbate the divides within the UK.

That would be a disaster for the UK both socially and economically.

FCC loses traffic management case

The US Federal Communications Commission yesterday lost its ‘open internet’ court case against Comcast, the US cable service provider. The case stemmed from action taken by the FCC when it established that Comcast had been throttling traffic from high-bandwidth file sharing services. The court ruled that the FCC had failed to tie its actions to ‘any statutorily mandated responsibility’ – i.e. that it had no powers to intervene in ISPs’ network management policies and practices in the way that it did – and thus in favour of Comcast’s own arguments.

The case had become something of a cause célèbre for ‘net neutrality’ in the US – the notion that internet traffic should not be restricted in any way by those delivering an internet service – and the FCC was putting a brave face on the decision (statements here), re-stating its ‘firm commitment’ to an open internet and noting that, while the decision had invalidated the FCC’s prior policy approach,

The Court in no way disagreed with the importance of preserving a free and open Internet; nor did it close the door to other methods for achieving this important end.

For its part, Comcast re-iterated its commitment to the FCC’s existing principles of an open internet, saying that its only purpose in taking the case had been to clear its name and reputation.

Some of the reporting focuses on the threat to the FCC’s ability to enforce its National Broadband Plan arising from the ruling, which the FCC may seek to deal with by seeking to have the principle of net neutrality enshrined in law, thus giving it the power to compel ISPs not to throttle traffic. The Commission has acknowledged that some of the recommendations in the Plan may be under threat as a result of the ruling and that it is examining each one to ensure that it has adequate authority. In the meantime, some mature reflection on the implications of the decision and the likelihood of change in a political context can be found here [registration required; limited viewing time]

In the UK, the Digital Economy Bill does contain such a power authorising Ofcom, under direction from the Secretary of State, to assess whether ‘technical measures’, including line speed throttling amongst others, should be imposed on ISPs for the purpose of preventing the use of the internet for copyright infringements, and giving the power to the Secretary of State to act on Ofcom’s assessments (clauses 10 and 11). Much of the attention has been given to clauses 17 (and now 18) of the Bill concerning the issue of what to do over copyright infringement, but it should be noted that this is very much the end of the line and that other measures are envisaged before such a stage is reached.

The DEB thus moves the discussion in this country on net neutrality substantially away from an open internet. However, it does so only in the context of copyright infringements – ISPs will not be able to use the law to prioritise traffic to their own content providers or to slow the connections of traffic headed to alternative providers, which was one of the reasons behind the FCC’s intervention with Comcast in the US. Coincidentally, the sites whose traffic was being throttled by Comcast were peer-to-peer BitTorrent sites.

Policies on an open internet, or on net neutrality, are fine in principle but are always likely to fall behind when the net is used for illegal activity, however much in need of reform and updating the law making that activity illegal apparently is.

T-Orange to build afresh?

Concluding the week with some news which has only just come to light, it’s been rumoured that T-Orange, which said today that it had successfully completed its joint venture following regulatory approvals earlier this week, and which may – or may not – be about to re-brand itself TOM, is considering building a brand new network for itself.

T-Mobile is thought to have been discussing with its network build partners, Nokia Siemens and Huawei, building out new base stations right across its spectrum coverage, from 900MHz to 2.6GHz. This would enable it to offer seamless services across different frequencies and regardless of the type of handset being used by the consumer, as well as improved capacity based on a network offering greater speed and efficiency and, therefore, a more attractive consumer prospect. Building a new network from scratch means offering such potential to consumers earlier than rival operators, providing a commercial boost to the JV, while others have also commented that building a new network is, in cost terms, likely anyway to be no more expensive than T-Mobile integrating its network with that of Orange – itself likely to be a significant project – since new technologies have emerged which allow base stations to be built on the basis of low power and which are, therefore, both cheap and, presumably, energy efficient.

These are all important considerations not least on top of last week’s news from Ericsson that the 400m mobile broadband subscriptions now generate more network traffic than 4.6bn mobile subscriptions [registration required; limited viewing time]. Worldwide data traffic has surged by 280% in each of these last two years, clearly putting immense and increasing pressure on mobile network capacity as well as on capital expenditure resources, since data revenues are not expected to surpass mobile revenues anywhere in the world until 2014 (when Japan is likely to be the first).

It’s just a rumour – and indeed, the reports suggest that Orange was somewhat of a cooler partner to the idea. If true, however, its significance will lie in two things. Firstly, from a trade union perspective, such an activity would see the creation of network build jobs during 2012-2014 once the JV has decided its strategy as a single operator – a welcome boost on top of what is likely to be job losses as the operators seek to realise efficiency gains of £3.5bn in network operation and capital expenditure savings, as well as other synergies. As the reports suggest, the move towards higher frequency services is likely to mean extensive network re-builds for other operators so there may well be knock-on effects on network build jobs in other areas, too.

Secondly, it should be recalled that one of the reasons that the Office of Fair Trading withdrew its opposition to the JV was the agreement reached with 3 UK over access to the JV’s network. It is to be hoped from a regulatory and competition perspective that this agreement was watertight as regards any new network instigated by the JV, and did not confine itself to access to existing base stations. These pages have argued previously that public competition policy was, as a result of this private agreement, essentially made subject to an arrangement which was not open to public scrutiny, while commentators at the time suggested that a focus on one or other network of the merged entity may well be to the detriment of maintenance investment in the other, and to any commercial agreements reliant on the other network. Such suggestions may well come true if the agreement is not ‘future proofed’ as regards access by 3 UK to any future networks the JV builds out jointly.

Ofcom budget and annual plan, 2010-2011

Amidst some kerfuffle over its proposals on the pay TV market, which have been three years in the making and which have concluded with something of a bloody nose for Rupert Murdoch, Ofcom has simultaneously published its annual workload programme for 2010-2011. The news release for the annual plan trumpets another year-on-year cut in the Ofcom budget – apparently, this is the sixth year in a row where the budget has been lower than previously. Demonstrating the declining cost of regulation is no doubt a good idea around election time, not least given the appetite the Tories demonstrated last year for taking an axe to Ofcom, and may also be a good defensive reaction against whatever departmental spending reviews are around the corner.

Declining budgets are, however, likely to put significant pressures on union negotiators when it comes to pay reviews and the existing proposals for efficiency savings in property, IT services and procurement will put the 860 or so staff working right across Ofcom, including in these specific areas, under some strain regardless of their contributions to developing its work programme. According to its website, Ofcom is one of ‘Britain’s top employers‘ scoring particularly highly on pay and benefits and working conditions – things that are not only hard-fought for and which do need to be defended but which, from an organisational perspective, clearly provide an important differentiator as well as added value when it comes to issues of staff recruitment and retention.

It is notable that Ofcom’s total budget for the year (£142.5m) again specifically includes deficit repair contributions to the pension schemes of the legacy regulators that existed prior to the creation of Ofcom and we look forward to a similar view coming to prevail during the year as regards the deficit repair contributions made to their own schemes by companies regulated by Ofcom.

The annual plan centres on progress in nine priority areas as well as in other major ongoing work areas, summarised here. It is a complex and involved plan, entailing Ofcom (and as usual) seeking to make progress on a wide variety of fronts simultaneously. One of the ‘major ongoing work areas’ is Ofcom’s Mobile Sector Merger Support programme, under which it seeks to provide support ‘as necessary’ to the European Commission and to the Competition Commission. I’m hoping that this will be one of its quieter work areas over the coming twelve months – but, at the same time, that Ofcom continues, despite the decline in its budget, to attract sufficient resources to carry out its role effectively.

HADOPI leads to increased illegal downloading?

Well, no – not really.

The BBC is reporting today a slightly old story that, following the introduction of the French ‘three strikes’ rule on illegal downloads, known as HADOPI, a small-scale survey has found that the incidence of illegal downloading rose by 3% in the three months to December 2009. (The story was originally run in Les Echoes on 9 March.) The ‘three strikes’ approach resembles the provisions on copyright protection in the Digital Economy Bill now going through the UK Parliament in that firstly an e-mail is sent; for repeated offences there is then a formal letter; and finally, for continued infringements, a court may rule that the connection be suspended for a period of up to one year. The UK provisions are based similarly on notifications, threats and then action (and the latter within a range of possibilities) but have evidently proved to be controversial despite the efforts of the Creative Coalition Campaign to point to the problems caused to jobs in the creative industries by copyright infringements becoming an apparently accepted part of daily life.

However, despite being passed – equally controversially – in October with the intention of starting enforcement procedures early in 2010, the French law is not yet in force, and the first warnings are now due to be issued only from next month. It is perfectly possible that the rise in illegal downloads is associated with either or both of an attempt to enjoy a postponed reprieve from the new law and greater publicity surrounding the issue: the new law came into being in the middle of the period covered by this research. Thus, it would be something of a surprise had incidences of illegal downloading not risen at this time.

As in the UK, the French law is expected to lead to a reduction in internet-based copyright infringements. In the UK, the government expects the new laws to lead to a 70-80% reduction in instances of unlawful file sharing (that’s the figure in Digital Britain, p. 110). Figures that ‘prove’ a drop of such a dimension in this activity may well lead to the DEB copyright provisions being seen to have worked – on the assumption that the law ends up being passed in some form faithful to the aims of Digital Britain – regardless of how much they have actually been used and in spite of the existing and continuing brouhaha over their nature, including a flashmob event being organised by the Open Rights Group this coming Thursday.

Gordon Brown on high-speed broadband

Prime Minister Gordon Brown has today made a powerful speech promising universal access to high speed broadband services by 2020. The No. 10 website today also has the story as its lead item, containing a full transcript).

The reason for the universal aspect of the promise is simple social justice – that high speed broadband ‘must be for all – not just for some’, in contrast to alternative plans reliant on the market alone which would see access determined ‘not even by need or social justice, or by the national interest, but by profitability alone’, ensuring the creation of ‘a lasting, pervasive and damaging new digital divide’. Under such a reliance, the Prime Minister continued, the UK would be ‘split between a fast-track and a slow-track to the future, between those fortunate to live in densely-populated areas and those not’.

The Connect Sector of Prospect has been arguing on precisely these lines for some time (and will be doing so again to the continuing BIS consultation on the Next Generation Fund. NB: I’ve reported the broken link; you can also find the consultation document here). Consequently, it is very pleasing that the Prime Minister is making the same points.

The commitment to a 2020 vision for high-speed universal broadband access builds on the government’s existing commitment to high-speed broadband to cover 90% of the population by 2017, towards which goal the Next Generation Fund is designed to assist and which the Prime Minister justified by saying that ‘if every household is to benefit, then it is fair that every household contributes’.

Interestingly, the aim to have universal access by a decade matches the timeframe for the Federal Communications Commission’s plans in the US (about which I blogged last week), though the approaches are otherwise quite different, based around the two headline issues of coverage and speed – which are clearly linked together in terms of investment (I would not go as far as saying that there is a trade-off between the two, but there may well be in terms of the ability to provide investment which meets required rates of return). The US approach builds on universal service at a minimum speed, but is otherwise dominated more by a high speed, ‘big bang’ (or should that be ‘big bucks’?) type of model; while the UK is more inclined to one based on universal coverage and a more incremental pace to speed.

Ensuring that the digital divide does not widen is the right approach – access to a high-speed broadband service is indeed an essential service (the Prime Minister repeated in his speech that superfast broadband is ‘the electricity of the digital age’). It should therefore be delivered on a universal, equitable basis across the nations and regions of the UK and it should be the preserve of every household. But the speed of the service is important, too, not least from the point of view of securing the economic benefits to the UK as a whole of high-speed services, and we must therefore ensure that we see the existing plans for high-speed access as part of a continuous approach to investment in the industry which does deliver guaranteed high speeds, and in both directions.

America’s National Broadband Plan

After 11 months of work, extensive public consultation and heavy recent trailing of proposals, the American Federal Communications Commission released Connecting America, its National Broadband Plan, on Tuesday this week (Connecting America; press release). Not all the five Commissioners agree with the Plan so, instead of a formal vote, an agreed joint statement has been issued focusing on the principles at stake. More information is available at a specific broadband website.

Running to some 360 pages, the Plan is not a light read and I’ve as yet got only as far as the executive summary. However, it’s useful to compare and contrast policy approaches to the development of broadband; policy-making doesn’t exist within a vacuum created by geographical borders.

The Plan exists on the basis of a four-pronged approach to policy-making in what it calls the ‘broadband ecosystem’, each of which it has a series of recommendations numbering 200 overall, and the six long-term goals the FCC thinks can serve as a ‘compass’ for the development of broadband over the decade-long lifetime of the Plan.

Starting with the latter – the vision thing – the six goals are these:

1: At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second.

2: The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.

3: Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose.

4: Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals and government buildings.

5: To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.

6. To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.

To ensure delivery of these goals, the Plan envisages the release of 500MHz more spectrum – the aim being that auction monies will be sufficient to finance the Plan; a Connect America Fund based on a shift of $15.5bn over the decade out of the existing Universal Service Fund and the provision of public funds of ‘a few billion dollars per year over two to three years’; and a Mobility Fund designed to ensure that no states lag behind the national average for 3G wireless coverage.

Aside of a small quibble around the slightly hyperbolic reference to the Plan ‘always being in beta’ (well-intentioned as the reference is to ensuring the Plan is flexible enough to meet changing circumstances, drafts do have to be concretised if action is ever to result), there are a lot of good things in it. Specifically, I like the following:

– the measure for high-speed broadband to be not ‘average’, or ‘up to’, but ‘actual’ and ‘at least’

– the specific requirement for upload speeds, as well as download ones, to be of a minimum standard

– an interim milestone of 50Mbps download and 20Mbps upload speeds to be delivered to 100m citizens within five years

– the universal service aspects of broadband to be based on delivering a ‘robust’ service to ‘every American’ which appears to be based on 4Mbps actual download speeds (not my emphasis but that of the Plan)

– the requirement for ‘anchor institutions’ (schools, hospitals, government buildings) in each community to have a 1 Gbps service

– the serious component based on improving digital literacy to improve the choice for citizens to be online.

There are some clear gaps. The availability of high-speed broadband is, despite the impressive language around speeds, aimed at just one-third of Americans; while a universal service of 4Mbps by 2020 might be said to be a little conservative. Such a programme creates, or exacerbates a clear digital divide within America with some, inevitably heavily urban, citizens to have super-fast speeds while others, inevitably out in the sticks, have to be content with a much poorer service.

There also appears to be little said about the levels of investment required to deliver such high speeds, which clearly require fibre to the home, other than via private sector investment based on competition. Estimates have put the costs of the Plan at some $350bn (£230bn). Given that there is a simultaneous requirement for access to be ‘affordable’, and in conjunction with other aspects of the Plan being funded by sales of wireless spectrum, that is likely to place a serious burden on capital expenditure amongst telephone companies and on the regulatory environment in which they operate. Whether that could be supplemented by state funding other than the $7bn intended to come from President Obama’s 2009 stimulus package is an interesting point for debate.

I would also be concerned that the Connect America Fund, designed to deliver universal service, is to be funded largely by a shift in existing Fund resources, together with a few billion dollars extra. The Fund (raised, incidentally, by a levy on telephone providers’ revenues, currently running at 15.3%, which may then be passed on to consumers) is already in difficulty concerning its existing responsibilities, so there is a natural concern as to how these will be met once the Fund is re-focused and – more so – how an expanded target will be delivered.

Nevertheless, the Plan – welcomed by the Communication Workers of America as a ‘good roadmap’ and described by it as ‘far-reaching’ – provides policy-makers with an extensive amount of material to debate over the coming months as the recommendations start to turn from paper towards implementation.

Virgin Media in fibre trial

Virgin Media, the UK’s consolidated cable operator, has announced that it will commence a trial in which glass fibre, used to deliver next generation, high-speed broadband services, is strung overground over telegraph poles (company press release; news media story [registration required; limited viewing time]. Households connected locally in this way can then be linked to the rest of the Virgin Media network.

The trial, which is taking place in the small rural Berkshire village of Woolhampton and which will last for six months, is significant in policy-making terms for a number of reasons:

1. it will test the viability of using telegraph poles to deliver fibre. Such a solution has been suggested in previous Ofcom statements on NGA (see Section 7) and could essentially provide a short-cut to the civil works required to deliver fibre technology. Typically, fibre optic cables are passed through underground ducts, but this accounts for the most significant investment costs in delivering next generation access, particularly the farther we get from urban areas. Fibre strung over poles is, however, much more common in the US, Canada and in Japan – from where, it would thus seem, that interesting deployment lessons may also be learned.

2. Virgin Media is a cable operator and is used to working with a different technology standard (DOCSIS 3.0 and its earlier variants) to glass fibre. The trial will thus test not only Virgin Media’s ability to work with a different standard, but also, given that the local fibre connections will plug into Virgin Media’s core cable network further up the line, how well the two different technologies communicate with each other.

3. If the trial is successful, it may provide a way in which the Virgin Media network, which has been stuck at around 12.5m homes passed (about 52% of UK households) for a considerable amount of time, can be extended beyond its current reach. Virgin Media’s lack of cash for investment in cable, given the history of the development of the sector in the UK, loaded as it was with debt and bankruptcy of the US parent operators, has completed inhibited it from extending its network beyond the core which is, inevitably, focused on urban, more densely-populated areas. This, in turn, would provide a greater capacity for Virgin Media to compete with BT, whose network is, of course, universal. At the same time, it opens up the question as to the point at which the Virgin Media network, which is currently protected from the wholesale regulatory requirements imposed on BT, might be opened up to similar obligations.

Virgin Media is being quite conservative in its press release about the number of homes that may be connected in this way: it has identified one million homes that stand to benefit from the deployment of fibre over telegraph poles – although, at the same time, it is apparently:

Keen to ensure that all communities, in towns, cities and villages right across the UK, stand to benefit.

Clearly, there is an unresolved tension there. It might be that there are technological reasons why such a deployment is suited to so few additional homes – which the trial could well help to iron out – if, for example, glass fibre, which tends not to lend itself to corners, proves not particularly amenable to this sort of deployment. Or it may well be, for instance, that existing capacity on telegraph poles is limited. Of course, it could also reflect the company’s own lack of investment cash, or indeed a fear that widespread deployment would result in regulatory intervention imposing a wholesale obligation.

Nevertheless, the trial is a welcome test bed opportunity and could well act to extend the reach of the market of the number of homes connected to next generation access technologies outside urban areas. It is also an interesting test of the extent to which the growth of ‘market’ based approaches to the deployment of next generation access is reliant on, or fearful of, the regulation required to deliver both extended levels of access and effective competition.

YouTube future under threat

Campaigners were calling last night for YouTube, a popular internet channel, to be closed down after it was claimed that it was implicated in instances of copycat drinking.

The claims arose as sales of Buckfast tonic wine rose by 40% in the last year despite its makers – a community of monks at Buckfast Abbey – having no advertising budget following their preference for a ‘reserved promotional approach‘. Buckfast, known as ‘Buckie’ amongst Glasgow neds amongst whom it has a reputation as ‘commotion lotion’, is now the biggest selling fortified wine in the UK.

Campaigners highlighting the rapid growth in sales despite the lack of marketing of the product pointed to the role of YouTube in spreading the word about the properties of the drink given its hosting of videos highlighting consumption. Earlier this year, Buckie was implicated in the rise of anti-social behaviour in the Strathclyde area.

YouTube could not be contacted for comment, but was believed to be checking with its lawyers over whether the videos of neds supping the drink need to be removed. YouTube is believed to be increasingly concerned over its future as a result of this sort of reporting on the Digital Economy Bill.

Broadband UK (coming sometime, maybe)

Stephen Timms has announced that Broadband UK – the delivery authority known in the Digital Britain White Paper as the Network Design and Procurement Group (then Company) – has been launched. This was due to be launched in October last year, then ‘in the New Year’, so its appearance now is overdue. Broadband UK will oversee projects submitted for funding under the Next Generation Fund, i.e. from the 50p/month landline duty, and has also been given the task of driving through the commitment to a 2Mbps broadband universal service commitment by 2012.

Further work does need to be done to establish the presence of Broadband UK, as thinkbroadband has identified.

The launch of Broadband UK has been accompanied by the publication of a specific research report written by Analysys Mason. The purpose of this has been to identify those communities most at risk of being left behind in the roll-out of next generation access technology. The report highlights that the percentage of the population with high-speed broadband will be twenty percentage points higher by 2017 than if left to the market alone – perhaps, in the context, a somewhat unsurprising result although credible evidence of the size of potential market failure is always worth having, in this area as much as any other.

At the same time, the launch is a welcome sign of faith in the Digital Britain project, as currently constituted, as much as the news reported today in The Guardian that ‘senior media industry figures’ believe that the Digital Economy Bill will pass into legislation prior to the ‘wash-up’ period before a general election (when Bills (or element of Bills) that do not have cross-party support fall by the wayside). The Connect Sector of Prospect will be welcoming the new statutory duty on Ofcom to promote investment, alongside the existing duty to promote competition.

In the meantime, Rory Cellan-Jones’s blog posting on the BBC today focuses again on broadband speeds: this is largely a bit of a recycling of old themes, to be honest: it comes as no great surprise that homes are only getting half the advertised speeds from current generation broadband, and the reasons why are pretty familiar. Changing that to achieve higher speeds requires investment; investment requires regulatory certainty in those areas where it can (perhaps) be financed competitively; and, where it can’t, it needs the assistance of direct financial intervention on the basis of what we used fondly to call a mixed economy. Not rocket science there, Rory – and something is being done about all these elements.

Getting the job finished is, of course, a different proposition.