Are you suffering from Crapband in the City? Tell the Corporation.

The problem of crapband (slow and unreliable mobile and as poor fixed line services) in the City of London and its effect on global competitiveness are summarised in a video clip by the Common Councilman for Bishopsgate . The Corporation recently conducted a survey and has now, unlike Ofcom, identified a market failure and is looking at what action it can take without being accused of “state aid” (as BT accused Birmingham when it sought to organise a Stokab solution to rejuvenate its original industrial heartland).  

The City of London believes, of course, in making markets work and is known to be exploring a variety of options.

These include:  

  1.  introducing new players (whether private led or a Stockholm-style joint venture) to provide ubiquitous fibre and/or to improve 3G and 4G cover using the City assets (as has been done by other Cities across the UK, beginning with London’s traditional rival, Westminster)
  2. the use of simplified planning procedures to require all new-build office to have fibre and ducting  capability and co-ordinate street works to reduce civil engineering costs and improve speed to market
  3.  the identification of clusters of high demand, using demand registration programmes to help give investors confidence that they are financing a low risk utility projects

As yet none of the incumbent suppliers appears to have taken the rising tide of discontent seriously but the charges being quoted to SMEs in the City (plus £7 – 10,000 p.a.) appear to be three to four times the annual charge for domestic fibre to premises where the latter is available.

The Corporation’s exploration of the third option has therefore moved forward with a YouTube video inviting registrations of interest and a new survey of demand from its 13,000 businesses, msot them SMEDs and 25% of them high tech, as well as its 9,000 residents, 
Meanwhile, over the border, in Shoreditch , I am told that a consortium is moving ahead with using publicity for the Government voucher scheme to support a demand aggregation exercise to make it easier for alternative suppliers to supply fibre and transform the prospects of those priced out of the Tech City complex   

I look forward to hearing the response to exercises being done by the Corporation of London to identify demand and whether these are to be made available to potential suppliers and their backers. I add the backers because I look forward to seeing the consequences when investment analysts pick up on evidence both of the latent demand and of the reluctance (or inability) of incumbent suppliers to satisfy that demand.

I was recently given sight of an analysis of the anticipated impact on BT of a rise in interest rates before the end of its current price wars with Sky, Virgin and Talk Talk. Apparently BT’s “decision” that it is a content provider, not a publisher, has caused a significant rise in its cost of capital. Its borrowings are said to be rising while its investment plans (other than those funded via BDUK contracts) are falling. Hence the rumblings of support in some quarters for exploring a break-up of BT – provided a way is found of ensuring that the critical infrastructure roles (including the surveillance operations it conducts on behalf of GCHQ) remain under UK control.   

In the meantime I would urge those who live or work in the City and are suffering from the current market failure to respond to watch the video and register their interest and also to complete the survey contact their Common Councilmen. The City is unusual in that businesses have the vote. If they instead vote with their feet and move to where they can get affordable broadband that is fit for purpose, the consequences could be dire for UK as a whole, not just the CIty.

The rest of you who are suffering from crapband can, of course, now be assured that you are not being discriminated against, any more than the rest of British business, as suppliers cut prices in a fight for consumer market share in a shrinking market. Yes I did say “shrinking market”. Overall consumer spend on on-line connectivity and content is now stagnant or falling – as the major players seek to give away each other’s bread and butter in the hope of jam tomorrow.

The consequences of all those price wars and freebie offers do not look good if some of the analyses predicting an end to the bubble of debt-funded investment are correct. The share price of tech stocks with business models based on consumer or advertising spend look to tumble later this year when interest rates start to rise. Meanwhile there are many thousands, perhaps millions, of savers, plus businesses with cash reserves and pension and sovereign wealth getting out of dodgy government debt, looking for safe long term returns from utility investments.

The politics and economics of broadband have suddenly become even more “interesting”.