The British military machine may be firing on all cylinders, but
the future of the UK e-economy is not looking so bright. A widely
leaked OECD report last month placed the UK 11th out of 13 in the
league of broadband penetration.
Last week brought further bad news about the availability of fixed
and wireless bandwidth - the fuel of the digital economy.
The messenger was the Communications Management Association, which
polled 562 user organisations in its annual survey.
Called
Communications Market 2001, the survey discovered an
alarming mismatch between high demand for broadband and stalling
levels of supply.
An increased number of big businesses - 71% compared to 45% last
year - reported that the lack of broadband services in the local
loop was inhibiting their business, according to the survey.
A further 89% of respondents said that British Telecom should be
forced to speed up the delivery of ADSL, the "always-on" technology
being rolled out to local exchanges for home use.
The CMA report sits badly with the government's ambition of being
the world's number one e-economy by 2005.
The government's recently convened Broadband Stakeholders Group
responded to the OECD survey by admitting that it would be a tough
call to reach seventh position - and that would only be if
everything went to plan.
The group was originally formed by the government to resolve the
disputes over the timeframe for rolling out ADSL.
Evidence of the appetite for broadband in the form of ADSL
contradicts the arguments from both the Broadband Stakeholders
Group and BT's chief executive officer Peter Bonfield.
Bonfield has responded to complaints about BT's tardiness in
rolling out broadband by claiming there is no demand for ADSL in
the UK market.
Last week BT stated that 60% of UK homes have access to ADSL and
that 1,000 exchanges have been upgraded to deliver the "always-on"
broadband.
"We are ready, willing and able but there is no demand. We are
desperate here, waiting for the orders," reiterated one spokeswoman
for the company.
But not everyone is convinced by these arguments. Alan Boxer,
managing director of e-centre, told CW360: "There's a lot of
incipient demand, but people can get away with saying 'there's no
demand', because there's no infrastructure to facilitate it."
Boxer suggested that the current focus on delivering ADSL into
homes and the local community by BT and the government is
misguided: "It is irrelevant and has no impact on B2B usage" he
said.
David Harrington, the director general of the CMA, called on the
government to intervene. "The CMA has long urged the government to
seize either the chicken or the egg in order to let demand grow.
The free market cannot solve this one; it requires
intervention."
Harrington suggested that two forms of action might be appropriate:
one would be to ensure that the telecoms watchdog Oftel is "a
little more rigorous" in its policing duties of competition in the
market, including ADSL.
Another possibility would be to persuade the Treasury of the
desirability of tax incentives for both user and supplier.
While companies wait in vain for ADSL, the CMA survey revealed that
many enterprises are pinning their hopes on mobile broadband to
plug the gap. Demand for 128kbps or more to the handset "is growing
inexorably", reported deputy director of the CMA, Mark Smith. Of
the survey's respondents, 75% wanted 64kbps, "and right now", while
a further 12% expect to use 2mbps over the coming year.
However, the 38kbps capability of the interim technology, GPRS, has
not convinced the majority of business users, with 83% saying they
do not consider it a worthwhile migration option. And while 3G is
expected to be at least three years away, 60% of the CMA
respondents believe it will offer an alternative to fixed broadband
access.
With GPRS apparently failing to deliver and vendors expecting major
teething problems with the roll-out of its successor, 3G, analysts
are warning of a serious gap between user expectation and what the
technology can deliver.
"If users are wanting 2mbps and more, they are doomed to
disappointment," warned Katrina Bond, senior analyst with telecoms
consultancy Analysys. "You can do an awful lot in terms of access
to e-mail and intranets with what is available now," she
commented.
The upside of the CMA report is that investment in ICT is holding
up and that investment in e-business continues to grow, even if the
main motivation for the latter is to shore up a defensive strategy
of "achieving cost reductions and improving services".
These findings will be the subject of fierce debate and discussion
at the annual CMA conference in Brighton from 29 to 31 October.
Further information:
www.thecma.com