The old duffers, better known as the House of Lords, are choking on their claret and cucumber sandwiches, but it’s difficult to win an argument when you conceded the debate 28 years earlier.
Its Select Committee on Communications has had a look and doesn’t like the Government’s broadband strategy. They think its too focused on delivering higher broadband speeds to metrosexuals at the cost of those who choose to live in the shires. They’ve published an alternative vision and hope that the Lords’ Broadband Prayer will be answered.
At the heart of their concern is a worry about a digital divide between the country and the city, creating a two tier society of ‘haves’ and ‘have nots’. The quarrel with any national infrastructure that needs to reach every home and business in the land, of course, is cost. The Lords’ prayer is a tad silent on what it’s vision might cost or where the funding might come from.
The fundamental issue with rural broadband is techno-economics. Not all telephone exchanges are created equal. In the cities, there might be as many as 100,000 homes connected to a telephone exchange. The provider can therefore take a risk with how many of those homes will pay for the service, making the capital investment a relatively comfortable decision.
But in the countryside, where many of the Lords seem to reside and where as few as 100 homes are connected to an exchange, the economics are less comfortable. In other words, if you look out your kitchen window and can see more cattle than potential broadband subscribers, I’d temper your expectations about getting an ultrafast broadband service anytime soon.
Another irk is that BT, the only company in the country investing appreciative levels of capital to improve fixed line broadband services, could become a monopoly again. BT is investing heavily to bring fibre-based broadband to two thirds of the country. The final third, which means the most remote areas, are simply not economic. As a public company, BT can’t be expected to play fast and loose with its shareholders cash. BT also allows any alternative provider to resell its broadband service, creating that competition keeps prices low and service high and avoids the wasted investment of duplicated infrastructure.
The Lords want the government to invest in building an alternative infrastructure that would be open to all providers to offer services. That would simply jeopardise the returns that businesses like BT and Virgin Media could expect and likely diminish their enthusiasm for future investment.
The Government has committed £530 million to subsidise higher speed broadband for rural areas. That should deliver reasonable service to around 90 percent of premises, but still leaves a gap.
Another source of incremental funding could be the price that you and I pay for our broadband service. Competition in the broadband market in the UK has allowed us to enjoy among the lowest prices for broadband in Europe. Of course BT and other providers could simply charge end users in rural areas significantly more for their broadband connections than their city-dwelling cousins do. I’m prepared to wager that neither approach would meet universal approval.
The Lords rightly say that broadband infrastructure is central to the country’s social and economic wellbeing. In 1984, the Government sold British Telecommunications to private shareholders, the first of the then Government’s foray into privatisation. That act diminishes the Lords’ right to make demands on BT and the rest of the industry now and begs the question why, if it’s so important, was it privatised in the first place.
I have more faith in the integrity of research that BT’s highly skilled engineering teams have done on rural broadband. While careers in broadcasting are well represented among the Select Committee’s membership, only one, Lord St John of Bletso, has any direct experience of the telecommunications industry, having served as sales and marketing director for Globix in the late 1990s.
The answer to the Lords’ prayer is straightforward if not simple. It needs investment. If the Committee truly believe that it’s an investment worth making, they should be looking at other Government investments and suggest a re-prioritisation as they’re doing in Australia and New Zealand.
An alternative would be to put pressure on the regulator to get on with the already delayed auction of spectrum that would enable higher speed, next generation mobile broadband across the country. The techno economics in rural areas would be less gruelling. It might even suit rural lifestyles better.