Leaving the development of the broadband market to the private
sector is a tacit acknowledgement that the government cannot
respond fast enough to technology advances and market forces.
Francesco Caio,
the Lehman Brothers banker brought in to investigate barriers
to investment in next generation access, declined even to say what
he thought was the threshold for "high speed". "It is a moving
target," he said.
Caio's report on barriers to investment in next generation
networks, ie high speed digital networks, gets government off the
hook as far as short term financial investment goes. Caio's
privileged position may have given him special insight into the
amount of money likely to be available from the public sector.
Still, his report showed more insight than usual into what is
practical.
The Broadband Stakeholders Group, a group of mainly
telecommunications equipment suppliers and network operators,
welcomed this. BSG chairman Kip Meek said, "This report states that
although there is no government money on the table everyone
involved in the provision of broadband must work more closely
together" to deploy super-fast broadband in the UK.
BT has already announced a £1.2bn plan to bring multimegabit
connections to 10 million households. Virgin Media is using fibre
to boost its speeds to 50Mbit/s. Led by 3, the mobile network
operators are rapidly making cheap 384kbit/s data connections, just
enough for streaming video, available on laptops and
internet-enabled smartphones.
But, according to a Cisco report, the UK lags behind much of the
rest of Europe in broadband speed. Caio said that the UK is not
presently disadvantaged by this, but that is not going to stay the
case. He called for government and Ofcom, the regulatory watchdog,
to work together to overhaul the rules of the game.
Caio's vision is for a market-led free-for-all that uses every
suitable technology and combination of allied interested parties to
get high speed links to all in the country. He noted that
population density is crucial to broadband affordability. However,
this ignores the value, both direct and indirect, of such a
link.
North Yorkshire, one of the most sparsely populated counties in
the UK, built a 30Gbit/s optical fibre ring network. It justified
the initial £4m cost by aggregating public sector traffic and
applications such as bulk purchasing to save money. It also
received development grants from Yorkshire Forward and the European
Union.
But this cheap funding meant it cannot sell direct to the public
for fear of distorting the market. It is now looking for service
providers to resell capacity to the public, starting with business
parks, digital creative hotshops, cottage industries and
tourism.
Each job created is worth £1m over 10 years, it estimates. As
NYnet has already hired four people, it is on track to justify that
investment itself.
Caio wants this collaboration between public and private sectors
to be more common, especially where normal commercial returns are
iffy or non-existent.
But this requires a complete overhaul of the interconnection
regime. To enable connectivity between private networks, Ofcom
needs to set technical interface standards. It also needs to
monitor termination fees so that smaller network operators are not
disadvantaged when their customers inevitably make more calls to
customers owned by larger networks.
Shriti Vadera, the business minister, has said the government
has accepted Caio's report in principle. She plans to set up a team
to give force to his recommendations.
However, the final piece of the jigsaw will fall into place on
23 September, when Ofcom unveils its assessment of the broadband
marketplace. Only then will network users see the true shape of the
puzzle.