Better broadband uptake will secure London's future

The London mayor wants the capital's small businesses to make the most of broadband opportunities, but they will jump when they...

The London mayor wants the capital's small businesses to make the most of broadband opportunities, but they will jump when they are ready, not when pushed. Daniel Thomas reports.

As the European market continues to grow London will have to work harder than ever to retain its place at the economic heart of the community.

An increased focus on e-business and related technologies will be vital to achieving this aim, according to Ken Livingstone, the mayor of London.

It is not clear why the release of a report expected to be published this week by the mayor's office, has been postponed.

It estimates that London has the potential to increase its gross domestic product (GDP) by 16% per year, if broadband use by small and medium sized businesses (SMEs) in the capital becomes more widespread. It cites analyst research to back up these claims.

The report - Broadband: Connecting to London's Future - suggests that many SMEs in the capital are not aware of the benefits of broadband. Government policy in London should focus on identifying the potential benefits to the city's SMEs, of which there are about 650,000, it said.

Neil Mellor, who was seconded from BT as an e-business adviser to the Greater London Authority (GLA) between November 2001 and August 2002, has prepared the report for the mayor's office. He said the influence of information and communication technologies, particularly broadband, on the capital's economy and communities is already substantial - but that it needs to grow.

While much of the broadband argument has centred on access, particularly in rural areas, the biggest issue in London, Mellor said, is persuading businesses to sign up to high speed Internet services.

"London has a major advantage over other regions in the short-term in having near ubiquitous availability of affordable broadband services," he wrote.

"Action needs to be taken to boost the awareness and adoption of broadband applications and content, particularly among smaller enterprises, to realise the benefits to businesses and the region."

The implications of broadband for national or regional GDP, public value and social cohesion are not widely understood and are therefore overlooked, said Mellor.

"Broadband is frequently relegated to the technology agenda as it is perceived as tangential, rather than central to the successful delivery of the mayor's key strategies," he wrote.

"This report contends that far from being peripheral, the provision and wide use of services enabled by broadband networks are critical to London's future and central to the successful delivery of the mayor's key strategies."

Livingstone agreed that government bodies such as the GLA need to put more emphasis on boosting interest in broadband services.

"Those not connected cited a lack of interest as one of the most significant problems preventing use," he said. "It demonstrates to policy makers that engagement is perhaps even more important than funding in promoting access."

The report could act as a reminder about broadband for some small London firms, but most are already well aware of the advantages of high-speed Internet services, according to the Federation of Small Businesses.

"London's small businesses are astute enough to know about broadband," said Stephen Alambritis, IT spokesman at the federation. "However, they will move to it when they are ready, not when the GLA tells them."

The majority of small businesses find a level which they are happy at and do not want to overstretch themselves, by, for example, taking more online orders than they can cope with, Alambritis said.

"The pressure to upgrade to broadband will come from a supplier or a business partner rather than anywhere else," he said.

"If you deal with someone like Marks & Spencer or Sainsbury's and they want you to go broadband, you go broadband."

"If the GLA can get businesses in the centre of London up and running on broadband and increasing profits it may camouflage any losses relating to congestion charging (which begins in February)," he added.

Livingstone insisted that encouraging businesses to use broadband services and ensuring London's public services set an example by creating effective broadband content will help to improve the capital's productivity.

"Most importantly," he said, "we must ensure that we reap the potential financial, personal and environmental benefits that broadband enables, to reinforce London's position as a leading world city."

E-business - key to London's growth?
Increasing use of e-business forms a large part of mayor Ken Livingstone's draft London plan, which sets out planning policy for the capital for the next 15 years.

In the document, launched in June, Livingstone called for more affordable and competitive broadband access, the development of e-government through a comprehensive strategy and the e-enablement of new residential and commercial developments.

He also highlighted the need for London boroughs to identify and support the development of new e-businesses and for more effective and socially inclusive e-education for Londoners.

Broadband adoption can boost GDP
Analyst firm Gartner has carried out studies of the impact that broadband, by facilitating greater communication, collaboration and innovation, can have on gross domestic product (GDP) within a region.

Gartner's initial work focused on Michigan, US, but it was extended to the US economy as a whole. Its findings suggest a potential increase in GDP of $500bn (£333bn) annually on the basis of a 50% broadband adoption rate.

If a similar model is applied to London's economy, the report - Broadband: Connection to London's Future - suggests an average potential increase in GDP of 16% per year during the period 2002-2016, on the assumption that the adoption rate increases steadily to 50% by 2016.

Separate research from Fletcher Advisory, an Internet consultancy firm, estimates that by 2005, broadband will be producing £3.5bn productivity savings and £1.2bn cost savings a year for small and medium sized businesses in the UK.

By 2005, Fletcher estimates that broadband will have increased such companies' Internet usage by 2.4 million hours a day, with about 40% of all smaller businesses in the UK - or 1.4 million companies - connected to high speed Internet services.

Read more on IT for small and medium-sized enterprises (SME)