The consultation states (para 2.2) that "Looking ahead 10 -15 years in the communications space is challenging if not near impossible." It then proceeds to do so, with scenarios that are already out of date. Some of the technologies said (in Appendix D) to be "in development" have already been deployed. Several said to be "new to market" have been in use for over a decade. All three scenarios for 2025- 30 already co-exist, sometimes in the same geographic community, stratified by age and skill. And those creating the industries of the future are beginning to migrate accordingly.
The future is what we make it.
The core issue is whether our ambitions are to be constrained by government, regulators, incumbents or by the willingness of consumers and business customers to pay for what is on offer - and therefore of investors to provide the necessary funding.
The elephant in the room is willingness to pay: more particularly, who is willing to pay what, how and when. As with the early railways, progress (around the world, not just in the UK) is being driven by those who have found ways of pooling needs (including with other utilities) and/or using advance payments and funding from would-be customers to remove the risk from their investment - despite the opposition of canal owners who saw no need to frighten the horses or set fire to the hayfields.
Many existing networks are creaking under demand from those who do not expect to pay more than they currently do for a mix of fixed line, mobile services (including wifi) and content (whether broadcast, timeshifted or downloaded). But new entrants are building cheaper, more reliable fibre and wireless networks, capable of delivering much better service at lower cost and of handling future change in ways that many legacy networks cannot. Meanwhile those benefiting most from the take-off in on-line traffic and e-commerce (Amazon, Apple, e-Bay, Facebook, Google etc.) are calling for "net neutrality" while paying for little more than the links to their data centres. And those in government who wish us to transact on-line often appear very reluctant to contribute to the investment necessary to enable us to do so.
The list of those who contributed to the exercise to draft the consultation may help indicate why the scenarios and questions are as they are, when surely the key question is how to ensure that networks support not only current inter-operability standards but are capable of incremental upgrade, as demand, technologies and standards evolve in ways that have not been predicted, let alone fit the business models of the dominant players of the day.
The main inputs, other than from trade associations and other collectives, are from Telcos, Mobile Operators and Broadcasters with past investments and well-established business models to protect. Apart from CISCO, Ericsson and Huawei the voices of those who are building and equipping leading edge networks around the world are missing. So too are the voices of most of the e-tailers, content publishers and social network operators whose traffic is causing our current infrastructures to creak (Amazon, Apple, e-Bay, Facebook, John Lewis, Netflix, Twitter). There appear to be no inputs from those measuring the speed, scale and nature of the growth of traffic flows over a mix of traffic from fixed to mobile to wifi, let alone how much of it flows between networks locally (part of scenario 3) as opposed to via central peering centres. There were no inputs from the alternative network providers who are beginning to provide gigabit services to the business parks and housing complexes left out of the plans of BT and Virgin. Nor from the interest groups representing business users (urban or rural) apart from the FSB who recently condemned our current broadband infrastructure as unfit for purpose .
Is that the fault of Government for not consulting a much wider audience?
Or is it the fault of those not consulted for being too busy building the future to spend time Whitehall watching and thus "discovering" the opportunity to inputs to the draft. On this front I should plead guilty to not having spotted the importance of the previous exercise and blogged accordingly to drum up inputs, let alone made the time to submit my own views.
Hence my reason for repeating the call for YOU to respond to this consultation - even though it was launched with little fanfare during the silly season.
An "alternative vision" of the current UK communications market may help explain the importance of obtaining views from a much wider audience.
The UK consumer broadband investment model (dating from before the rise of the Internet) is broken. Prices are falling faster than demand is rising. BT is therefore switching funds from infrastructure investment into improving service to retain existing customers and into a content price war to try to get new ones. Meanwhile BT's rivals are seeking to piggyback on its past investments (e.g. the doubling of Openreach fibre lines over the past year) and the extensions being funded by the taxpayer (via BDUK). They are lobbying for unbundled access (VULA and PIA) at prices which unscramble BT's cross subsidies with its new content business.
Meanwhile the needs of business (large and small) and of those consumers willing to pay up front in order to get world class connectivity are being ignored - except by the newcomers (some well funded, others not) who the incumbents have been seeking to lock out of the market. But some of BT's rivals are now looking to do deals with the newcomers in order to get better, faster access to high value customers and lower cost than via BT. And there is also increasing pressure on BT to offer better deals for those whose want to link their local fibre networks onto BT's national trunking service.
To look at the market another way:
BT's 21CN investment programme (completion delayed by nearly a decade when local loop unbundling wrecked the business model and caused the share price to plummet) is now coming to an end (except for the extensions paid for by Government). Virgin's new owner is planning to build on some of the old cable company infrastructure investments abandoned when NTL and Telewest had to focus on integrating the best of their networks in order to survive. Vodafone appears to be planning to give the bulk of its funds (after upgrading to 4G and investing in overseas networks) back to shareholders and try to get better prices for access to BT's infrastructure - rather than extend the infrastructure it acquired with Cable and Wireless.
The other mobile operators are also (like Vodafone) looking at infrastructure sharing including with local authorities (e.g. the "Wireless Concessions"). Sky too appears to decided to put its funds elsewhere, while looking at how best to exploit the investments planned by new players like City Fibre. Meanwhile the new alternative networks may have finally broken through BT's successful blocking operation with regard to BDUK funding. From Cumbria and B4RN, through West Oxfordshire and Cotswold Broadband and the other small commuities served by Gigaclear to City Fibre (with York, Peterborough, Coventry and now Kirklees) and ITS (with Hammersmith and Fulham and othrs) or the growing number of Hyperoptic networks , we can see a proliferation of local utility broadband networks springing up, with their finances underpinned by demand from local authorities, commercial centres and business parks, apartment blocks and housing complexes. We shold not forget, however, that most need to interwork locally with BT even if they do not rely on it for trunking to the London Internet Exchange
At this point I would like to applaud Ofcom (I do not often do so) for realising that the alternative network operatorsm who are beginning to transform the services available to communities left out of the plans of BT and Virginm have also been left out of their market review structure and for commissioning INCA to help them with a survey to correct this.
The problem for the incumbents with whom DCMS and Ofcom are used to working is that the UK is used to cheap, slow, always on Internet. Even our supposed "superfast" is fit only for video streaming and low resolution conferencing (e.g. Skype). New players like Hyperoptic have to compete with "free" (or almost "free") for anyone who take an over-priced phone line. However, their ongoing charge (i.e. leaving out initial freebies on both sides) for 100 mbps uncapped (including a telephone service) appears less than any of the BT "unlimited" broadband offerings (whether superfast or infinity). And their gigabit service costs only for only 50% more.
So what about the role of Government and regulators in promoting both competition and investment?
By original discipline I am a historian. I remember looking at the "rigging" of a pair of Royal Commission enquiries into price fixing during the early stages of the Industrial Revolution (when traditional pricing structures were collapsing as new sources of supply opened up and whole trades, such as handloom weaving, exploded and collapsed within a decade or so). By the time the evidence had been collected the market had been transformed. By the time the reports had been agreed the findings (and all the lobbying that had gone into securing them) were of no relevance - save that intervention that would have prevented or delayed that transformation had been avoided.
At London Business School I enjoyed the case studies in Michael Beesley's course on the regulation of private sector monopolies and his explanation as to why it was futile to even try do anything more than control price, quality of service and predatory behaviour. The recent histories of Ofcom and Ofgem indicate why he was right.
Hence also my strong prejudice against Governments or Regulators basing policy on predictions of the future, as opposed to better detecting and responding to change when it happens and on removing the obstacles to change that block new entrants from exploiting better, cheaper ways of meeting user needs, even if only in niche geographic markets or business sectors.
The pace of change is running well ahead of the timescales for the alternative scenarios in the consultation. They are happening already, in parallel. We need to stop wadting time trying to forecast and instead focus on how to allow and encourage (not discourage) new investors to fund those who will enable the UK to keep abreast of global change.
The questions asked in the consultation are relevant but the main of role of the regulator is to control abusive behaviour and the main role of Government, as in the early years of the railway age (and the Admiralty mail contracts), is as a lead customer - mandating (via PSN) adherence to inter-operability standards for those who want its business. Hence the importance of the City Fibre arrangements with Easynet to be piloted with Kirklees.
Kirklees is by no means the only council which has to either take 30 - 40% out of its operating costs or grow its revenue base substantially. Hence the impetus behind the local authority exploration of wireless concessions to use ubiquitous local wifi to help kick start local economic growth, inprove social cohesion and slash the cost of local on-line public service delivery using their obligations under the Social Values Act as part of the planning and procurement process. Some of the wico plans are already, via coherant "smart city" thinking, helping pull forward Scenario 3 in the consultation.
Those like Regional Network Solutions who are advising councils on how to get best value from such concessions also emphasise the need for these to operate to international inter-operability standards, not just for seamless connectivity today but also to enable seamless evolution into the world of tomorrow. I recently blogged on the importance of standards but I recommend you also read the comment (to that entry) by Sean Barker on the need to mandate user-driven standards in order to maintain long-term flexibility (he uses the intended life span of the Queen Elizabeth class aircraft carriers to illustrate the issues) avoid supplier lock-in. This is clearly a role for government and, given the way that the Internet itself is creaking badly because major players are not updating the routers they use, the time has come for HMG to follow the US government and include IPV6 compliance as a mandatory part of its own procurement processes.
Adherance to international standards also makes much easier for failing network operators, large or small, to be taken over and consolidated, or broken up, with seamless transition for their customers (unlike the trauma that followed the collapse of Worldcom or the problems faced by those local authorities who fell for the more recent profit share promises of Gowex).
The diagram on page 56 of Section 5 of the consultation paper illustrates why it is so difficult for incumbent players to raise funds at economic cost. Prices are falling faster than demand is rising. The same analysis could, however, have been done before each of the railway booms of the 19th Century. The lead investors in the railway floatations were nearly always eastate owners, merchants and businessmen who wanted cheaper, faster access to market for their coal, farm produce or manufactures than was provided by the canals. Later they were joined by those who wished to build whole new communities (c.f. Metroland, unusual only because the railway company itself was allow to exploit its land holdings). Many railways never much, if any, profit for shareholders but they transformed the communities they served.
Hence my regular calls to make it much easier to draw in infrastructure investment from those whose commercial centres and business parks will rise in value as well as from house-holders and businesses willing to pay up front for a three to five year service. In practice I expect many of the networks to then be bought up, or at least operated, by a relatively small number of national and global players (provided they were designed, built and equipped to global inter-operability standards) as were most of the railways built by the Stephenson's (or the original telephone companies).
I suspect, however, that enabling and encouraging customer (including local authority and other public sector) and community funding for local utility networks (built and equiped to international standards) may be the only way to bring forward investment of the scale and nature needed to give the UK a world-beating communications infrastructure - just as it gave us world-beating railway system and created our original water, gas and electricity utilities.
To conclude,. Speak now or live with the consequences.
P.S. 20th August I have been getting some very interesting feedback - including the idea of a "local internet exchange" in every market town to help pull through both inter-operability and resilience.