Your Gig is here: broadband convergence - Chattanooga Style

On Monday I heard that some of the Broadband Delivery UK team still do not think users need more than 2 mbps and wish to quietly slip the deadline for even this from 2012 to 2015. Meanwhile there is an expectation of separate multi-billion pound networks for smart grids and metering. Yesterday I learned that Chattanooga  plans to deliver both, plus a gigabit  to the home – and finally received a promise that an engineer will call tomorrow to find out why my supposed 7 mbps line runs at only 1.6.



Ofcom says that 50% of consumers find that switching broadband suppliers “is too much hassle” . I have come to suspect that, nonetheless, it is easier to switch than to get customer service. I originally switched from Cable to Satellite TV when I was unable to contact anyone to fix a fault during the run-up to Christmas. I now use four boradband suppliers (two fixed, two mobile) because of my lack of confidence in rapid service if any of them goes down.

Last week I heard that those responsible for the last government’s change of policy from competition in the local loop by 2002 to unbundling still regard the destruction of the integrated service operations of BT as a proud achievement rather than a lamentable byproduct. That change saved the cable companies from bankrupcy: caught in the late 1990s between Satellite TV and BT’s investments in fibre to within a mile of most of the population. Apparently they co-operated to persuade DTI that 128k always-on Internet, which they could deliver, was “broadband” and to get the local loop unbundling which wrecked BT’s investment case for fibre to the home. 

The consequence is that the UK has one of widest penetrations of cheap, fragile, poorly supported, narrowband, most of it still incapable of meeting the original Conservative target of delvering full motion, entertainment quality video to the home by 2002. Over 30% of students (with access to gigabit networks in their halls of residence) now watch TV over their PCs but the rest of us have to watch i-player on matchbox sized windows or stream it to prevent freezing while it catches up with itself. 

Perhaps even worse is that price expectations, market fragmentation (especially for public sector business) and regulatory and fiscal uncertainty (e.g. business rating valuations) mean that the Chattanooga Choo Choo and its equivalents will have steamed off into the distance before we have get our act together.

Stephen Carter’s speach to the Westminster Media Forum last week was a welcome blast of fresh air. As one of the authors of the policy studies in 1978 – 9 which led to telecoms liberalisation and privatisation, I disagreed with his belief in the contribution that government can make, but his basic economic and business analyses were spot on. The UK is doomed to economic decay unless and until it demonstrates that it is serious about the need to treat broadband as a core part of the national insfratructure.  

The difference is that I believe the prime contribution of HMG is as an intelligent customer – in much the same way as Roland Hill, the Victorian Postmaster General – used mail contracts to pull through investment in railways after Anthony Trollope‘s report on delivering government services to the final third. (In 1851 Trollope was tasked to study the delivery  of mail to rural areas – which he said was the most enjoyable two yers of his life. What he learned on his travels also inspired “The Warden”, the first of the Barsetshire novels).  The railway and steamship industries similarly benefited from Admiralty mail and telegraph contracts, building on the success of the previous East India Company initiatives (without which the Indian Mutiny would have succeeded).

The examples that Stephen Carter gave of what is happening today in the rest of Europe (e.g. near universal 100 mbps to the home in Finland, or even Belgium, by the end of 2012) illustrate the challenge we have if we are to deliver Jeremy Hunt’s objective of the best superfast broadband in Europe. But the best in Europe is not good enough. The European Commission is about to unveil its plans to help Europe catch up with the rest of the world. 

So what is in the way forward, given that central government has no new money and the idea of a hypothecated telecoms tax (the equivalent of a Victorian tax on canals to fund railways) has fallen by the wayside?

The first step is to allow “market forces” to actually work  

We need to begin by removing the obstacles to pooling the communications budgets of the public sector (including health, education, local government) and combining them with the budgets of major local employers (using the same interpretations of state aid as the rest of the EU) and the plans of the utilities for smart grids and smart metering. Once this is achieved it will be found that there is more than enough funding for most communities to organise local equivalants of the Chattanooga solution, for linking across competing national networks.

At this point, as sometime vice – chairman of the aggregation sub-group of the BSG, I declare a prejudice. I do not believe that any attempt by Ofcom, BIS, DCMS, Cabinet Office (or who-over) to co-ordinate this process nationally will lead to anything other than a stitch-up in favour of major players. HMG cannot afford to be a “robust” lead because of the fear that HM Treasury might be liable if BT is unable to sweat its legacy networks and pay down its pension deficit. Virgin has to give a return to its owners before it can consider new investment. There are also the fears of legal action by the mobile operators.    

The task is to pre-empt years of wrangling by creating policy frameworks that are clearly seen to realistically enable the shareholders (not just pensioners and bondholders) of BT, Virgin, Vodafone and their peers to be among those will do better from expediting the construction and exploitation of next generation networks across the UK. That means looking again at the revenue streams, including up- front contracts, capital allowances, privileged leasing deals and subscription services and other ways of reducing the risk of new investment.

That will entail taking a cool look at network neutrality – whatever that means. Why should those who help pay for the network not receive premium services? And what about the contribution of those who take the lion’s share of on-line advertising revenue while most ISPs are struggling to survive, providing cheap, or even free, Internet?

The role of Govenrment and Regulator is not to plan but to ensure that the “rules” are “fair”? – whatever “rules” and “fair” mean.

On monday the Communications Working Party of the Information Society Alliance (EURIM) attempted to list some of the topics that will cause political grief next spring as the implications of the plans that the European Commission is about to announce sink in.

It is a worrying list but more interesting will will be the reaction of Ministers and MPs as they discover just how far behind the UK is in “vision”, let alone reality. In that context I look forward to hearing what happens on Saturday in Penrith at Rory Stewart’s conference. Unfortunately I agreed to let my deputy go and it is a sell-out. I suspect it may turn out to be one of those seminal events that leads to a wholesale change of attitude. I look forward to seeing the Flying Scotman outpace the Chattanooga Choo Choo along the Settle to Carlisle Line.