Will the proposed BDUK framework do more harm than good?

Last week, in Brussels, Ed Vaizey talked of the need to use market forces to pull through investment in broadband. A day later Jeremy Hunt wrote to MPs on the replacement of central competitions for funding by allocations to authorities to “be made available once we have reached agreement with them on other sources of funds and their plans for delivery”. I blogged a welcome while pointing out the need to put the broadband infrastructure plans alongside those for smart metering and grid infrastructure so as to cut the costs of both.

I had been briefed on the lack of progress in aligning the DECC/OfGEM and DCMS/BIS/OfCom agendas and how this was delaying industry-funded scalable pilots (that will interconnect and inter-operate to international standards). Today I was e-mailed on the Prior Information Notice for the Broadband UK plans to delay procurements by another year while it concocts a framework contract to limit competition to a handful of nationally approved cartels. Do officials inhabit the same planet as Officials and MPs? Or is this a consultants pipedream that has been overtaken by the events of the past fortnight – with 107 MPs supporting the motion for debate in the House of Commons on the need to expedite action.

None of the DTI/DCMS/OGC co-ordinated broadband aggregation/network sharing exercises over the past decade has gone live. From the Regional Aggregation Boards and Broadband Aggregation Project to OCEAN the waves) and the “evolving” plans for PSN the consultants advising Whitehall have been paid £millions and the main would-be suppliers have spent tens of £millions (each), bidding for business that has never been awarded. Meanwhile Janet and the NEN have saved their customers (including local government and communities where the contracts allows) 30 to 70% on list price. More-over their frameworks are available for others to use or copy at little or no cost. Local government consortia can often boast of similar savings and opportunities. Those who drafted and reviewed the BDUK PIN appear to have learned nothing from that collective experience and be determined to reinvent yet another square Whitehall wheel at the expense of suppliers and customers alike.

The time has surely come to allow market forces to address the centralised planning and regulatory failures of the past decade that have reduced the UK from leader to laggard in the on-line world, including by preventing BT from completing its investment programme to deliver “full motion entertainment quality video to the home by 2002” (the BT half of duopoly, alias competition in the local loop, policy of the previous Conservative government). 

The necessary BT fibre investment programme was running ahead of schedule in 1997 before it was replaced by the bad farce of local loop unbundling. The latter, as had been predicted, not only destroyed the BT business model but also removed an economically sustainable UK on-line communications and content market. Instead we had expectations of cheap connections and free downloads in the belief that “some-one else will pay” (e.g. advertisers). Sky has inherited the paying market and we now have to enable the markets to recreate sustainable business models for terrestrial broadband – e.g. allowing customers to pay up front for a broadband connection that adds more value to their house than double glazing or a conservatory.

It is great that competition in the local loop has finally come to life again, with BT and Virgin expected to compete across half the Country by 2015, but was the price of saving the NTL and Telewest from near anihilation by BT too high?

Should parliament have been consulted on the policy change?

What are the lessons when it comes to the review of the role of Ofcom?

Rebuilding healthy markets will not be easy and it not at all clear whether Broadband UK is part of the solution or symptomatic of the problem.   

I am about to review the draft report of the EURIM sub-group looking at practical experience with shared network service procurements. Next week sees the announcement of the EURIM policy study into using investment in shared infrastructures to help pull through economic recovery. This will come to fruition under my successor who will be more objective in looking at the issues – I helped draft the last Conservative Government’s policies! – hence some of the comments above.

It may be that I will have to eat some of my words when I see what is produced.

If so, I will be delighted – provided that my own broadband connection problems (and those of my rural relatives) have indeed been sorted.

But I fear not.