The long term future of the British economy may hinge on
what communications minister Stephen Carter says next week in
hisinterim report on how to create "Digital
Britain".
In this article:
There are few UK businesses or consumers who do not use one or
more of radio, television, telephones or the internet. According to
the Department for Business Enterprise and Regulatory Reform
(BERR), together these media add £52bn to GDP. Increasingly they
determine how, where and when companies do business, and how
citizens spend their leisure time.
In the past fortnight, Labour and Conservative politicians have
both suggested this sector could take over from financial services
and property as the future economic drivers. The National Endowment
for Science, Technology and the Arts (Nesta), a government quango,
extrapolated South Korea's experience to suggest universal UK
access to high speed broadband would create 600,000 jobs in
information and communications technologies in four years, and
boost GDP by £18bn.
Stephen Carter will aim to produce actionable recommendations to
accelerate the rate of growth, and cement the UK's position as a
world leader in the knowledge and learning economy, he said.
The proposed vehicle is a (logically single)
high-speed digital national communications network
infrastructure that carries telephony, internet and broadcast
transmissions in discrete digital data streams.
Two basic problems
Carter faces two basic problems. One is the cost of building the
network. The other is to protect the rights of those who put
content on the network.
Several factors complicate them. The most pressing is that
investment money or credit is hard or impossible to find, thanks to
the recession.
Second, other countries are already building their own such
networks. This is diverting capital, skills and attention away from
Britain. The UK risks becoming an also-ran when the global economy
kicks off again, proponents argue.
Third, a converged network means formerly isolated operators,
typically television and radio broadcasters and telephone
companies, find themselves both competing and cooperating with each
other. Regulating these new relationships will be tricky.
Fourth, while there is consensus that content must be protected,
there is no agreement on how to do it. Any attempt to legislate
without consultation will meet fierce opposition from lawmakers and
industry, say experts.
These are issues Carter knows well. Before becoming a minister
he served as head of Ofcom, the communications regulatory
agency. Before that, he oversaw the collapse of NTL, the cable TV
operator that became Virgin Media, under £12bn of debt.
Investor confidence
His most important task now is to give investors confidence. He
told the Westminster Media Forum recently: "The biggest prizeis we
get to a point whereby we can genuinely start writing business
plans for the universal delivery of public services though online
and digital [networks]."
He has several levers he can pull. One is to write a universal
service obligation (USO) to provide broadband access into every
communication licence that Ofcom oversees. BT, which presently
enjoys the right and duty to provide basic telephony services to
all, would support this, "but only if there is an industry-wide
fund to pay for it", a BT spokesman said.
Another is radio frequency spectrum. Ofcom is presently
reallocating frequencies as broadcast technologies go digital.
Nesta suggests swopping £5bn worth of frequencies for telcos'
promise to roll-out universal broadband (at a snail-like 2mbps).
Ofcom's annual plan for 2009/10 says: "We think that, in general, a
market-based approach to spectrum management is the most suitable
way to achieve the best use of this resource." It is unlikely to
give up billions the government needs desperately for a
promise.
Content owners
Protecting content is hugely contentious. Content owners want to
force internet service providers to police illegal downloaders.
Spokesmen for ISPs are adamant they will fight to the end against
this imposition.
But Carter's main problem is money. The Broadband Stakeholders'
Group reported last year it would cost $5bn to run optical fibre to
the kerb, but £27bn to run it into the nation's 24 million
households. BT and Virgin Media are not well-positioned by
themselves to raise that kind of money (see table). Besides, they
have already offered to run fibre to urban households. The problem
is to provide rural households with high-speed access. Carter could
solve this by bringing in other network operators, especially
mobile.
Carter hints that public service providers could siphon their
budgets to support rural networks. According Eurim, a
cross-parliamentary industry body, there are at least 40 private
network operators, including National Grid, the electricity
distributor. The trick is to tie them to the public grid. Carter
may well look to develop relevant interface standards that Ofcom
would then regulate.
If Carter gets it right, he could put the UK on an economic fast
track. If he doesn't, he will destroy the legacy of Briton Tim
Berners-Lee, who almost single-handedly invented the world wide
web.
The Carter report is out early next week. We will have full
coverage on the website.
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| Issuer Ranking: Telecoms, Cable, And
Satellite Operators In Europe, The Middle East, And Africa | | | |
| | | |
| Company | Corporate credit rating | Business risk profile | Financial risk profile |
| Belgacom S.A. | A/Stable/A-1 | Strong | Modest |
| Telefonica S.A. | A-/Stable/A-2 | Strong | Modest |
| France Telecom S.A. | A-/Stable/A-2 | Strong | Modest |
| Swisscom AG | A-/Stable/-- | Strong | Modest |
| Telefonica O2 Czech Republic a.s. | A-/Stable/-- | Strong | Modest |
| TeliaSonera AB | A-/Stable/A-2 | Strong | Modest |
| Vodafone Group PLC | A-/Stable/A-2 | Strong | Intermediate |
| Deutsche Telekom AG | BBB+/Stable/A-2 | Strong | Intermediate |
| Koninklijke KPN N.V. | BBB+/Negative/A-2 | Satisfactory | Intermediate |
| Telekom Austria AG | BBB+/Negative/A-2 | Satisfactory | Intermediate |
| BT Group PLC | BBB+/Negative/A-2 | Satisfactory | Intermediate |
| Telenor ASA | BBB+/Negative/A-2 | Satisfactory | Intermediate |
| Telecom Italia SpA | BBB/Stable/A-2 | Strong | Intermediate |
| Vivendi S.A. | BBB/Stable/A-2 | Satisfactory | Intermediate |
| Portugal Telecom SGPS S.A. | BBB-/Stable/A-3 | Satisfactory | Aggressive |
| Eutelsat S.A. | BB+/Stable/B | Strong | Aggressive |
| Inmarsat Investments Ltd. | BB/Positive/-- | Weak | Aggressive |
| Comstar United TeleSystems (JSC) | BB/Stable/-- | Weak | Aggressive |
| Cable & Wireless PLC | BB-/Positive/B | Weak | Aggressive |
| Virgin Media Inc. | B+/Positive/-- | Weak | Highly leveraged |
| BCM Ireland Finance Ltd. | B+/Stable/-- | Satisfactory | Highly leveraged |
Read more about Digital Britain:
New laws may curb P2P file sharing >>
New UK broadband minister faces challenge of intervention
>>
Image: Rex Features