Don't just cut the ribbon, fuse the fibre

Last monday, in an ad lib that was not in his script, Francis Maude said, at the Get Safe On-line summit, that the government was so serious about the need to address on-line crime that it was giving new money to cybersecurity at a time when it was in the process of making the biggest cuts to public spending since the 1920s. The current meldown of the eurozone shows that the Government is, unfortunately all too right to do make those cuts. 

But how do we prevent a re-run of the 1930s when recovery was driven by re-armament?

As executive chairman of the Conservative Technology Forum I am seeking to assemble teams to look at the issues that have to be addressed to enable the UK recovery to be driven by market-driven, high tech investment.Then we have to put forward policy proposals that will withstand outside peer review and appeal to voters, if they are to be adopted by the party. Finally the proposals have to sold to the Government – remembering that Government policy is that set of compromise on which the tribes of Whitehall can persuade their ministers to agree, embellished with sound bites that may or may not relate to reality.

My personal point of reference is the late 18th century when a bonfire of regulation (and of taxes which cost more to collect than they raised in revenue) enabled Britain to grow its way out revolution. The comparator is France where Jacques Necker, (who married Edward Gibbon’s former girl friend Suzanne Curchod, “I sighed as a lover and obeyed as son”) cooked the books (the Compte Rendu) to demonstrate that the finances were sound and the government had met its targets – and thus condemned the ruling classes to the guillotine. Meanwhile the UK Board of Trade, with Gibbon as a member, was a model of masterful inactivity – allowing the economy to recover from bankrupcy after the loss of the American colonies while the government spent as little as possible on anything.

Gibbons’ “The Decline and fall of the Roman Empire” describes an over-centralised welfare state (bread and circuses) brought down by over-taxation and regulation as much as by corruption and civil war. The first volume had as least as much impact on the politic al thinking of the day as Adam Smith’s “Wealth of Nations”.  

So what should ministers do?

One answer is to celebrate the success of those who do not ask their officials for millions or billions that government has not got. Lindsey Annison was given a mile of 96 core fibre for her birthday and the local farmers have given her the wayleaves. This morning she sent me a link to the video of the Secretary of State splicing the fibre to connect the local cyberbarn. At first I thought it was looking a video of a speach in the House of Commons terrace – the cyberbarn is a lot smarter than I expected.

Economic recovery will come when those living in the Eden Valley (or Bristol, Derby, Manchester and the London broadband deserts) can compete on an equal footing with those in China, Finland, Japan or Sweden who already have fibre to the backwoods.

In order to achieve that, we will have to allow market forces to overcome the damage done by a decade of regulatory failure which destroyed BT’s previous business case for investment (which was a gallop to fibre so that it could massacre the Cable companies after 2002 – the  Conservative target for competition in the local loop to supply entertainment quality, motion video to the home). Local loop unbundling destroyed that business case and we have yet to put a credible alternative in its place. In consequence we have demand rationing (alias traffic management) as the current incumbents seek to get others to fund those investment programmes that cannot be covered from current cash flow.     

The current morass of semi-incompatible networks has “more bottlenecks than a brewery”.  The incentives for customers, property developers and long term investors to provide the investment funds necessary to make money by removing them have been regulated out of existance. In consequence British investors are funding the networks of South America because they cannot get a return from investing in those to serve London, south of the river.

Now that I have recovered from man-flu I hope to make time to blog on some of the actions necessary. But this monring I was cahllenged to give my vision for 2015.

I should say that, given the necessary bonfire of regulation and obfuscation I looked forward to a situation in which 

  • Local Authorities are collecting more cash from busines rates on fibre – but are using it to cover their share of the cost of the bonds used to fund local improvements or to subsidise access for the disadvanted.
  • BT is a making more profit and employing more people from providing backhaul services to others (including the mobile operators) than it does from all its services at present – and is providing better (and more profitable) local services to about a third of the nation.
  • Virgin, Fujitsu, Cable and Wireless, Arqiva etc are making a good living competing with BT on backhaul and are (between them) are prime providers of local services to another third.
  • Another third draw services from a kaleidoscope of providers, all using international inter-operability standards, from Google (to set the pace on net neutrality) and Chinacom (for those who want services at least as good as mainland China) to community networks (where the local authorities, businesses and residents organised provision themselves).
  • All of of us have a choice of services that do not pass through the same “single points of failure”, whether local or national (albeit in rural areas that choice may be between powerline transmission and terrestrial and satellite radio).        
  • The prime function of Ofcom is to ensure that we are provided with accurate information on delivered quality of service so that we can make informed quality of choice  
  • And the pace of investment and employment growth in providing upgraded services, as well as in indiginous and exported content is still accelerating