Broadband block to Britain's business

The Government's promise of country-wide broadband access to the Internet has slowed to a crawl, leaving UK companies stranded...

The Government's promise of country-wide broadband access to the Internet has slowed to a crawl, leaving UK companies stranded with e-business ideas but without the infrastructure to implement them. Antony Adshead reports.

Broadband Britain is beginning to seem an elusive prospect. Tony Blair has promised that the UK will be tomorrow's high-tech economy and last week e-minister Patricia Hewitt declared we would have the best broadband infrastructure of the G7 countries by 2005.

Yet the Department of Trade & Industry was forced to adopt bargain basement measures to sell its fixed wireless licences - one of the key legs of the broadband infrastructure. And the unbundling of the local loop, which is necessary for the provision of ADSL, is proceeding very slowly.

The bad news seems to be reaching a critical mass: both users and analysts are warning of the damage likely to be done to the UK's standing as a high-tech economy.

Frank Fabricius, principal analyst with Gartner Dataquest, said slow roll out could affect UK business and the standing of the UK economy. "It will affect businesses. They will lose out on the opportunities that come with e-business.

"They will be forced to use a mix of classical channels and e-business to reach customers. They will not be able to take advantage of the cost savings and flexibility of e-business or allow their employees to work from home," Fabricius said.

"A country that does not get the best possible broadband infrastructure implemented could end up looking like a museum," he added.

Margaret Smith, director of business technology and delivery for insurer Legal & General, cited practical examples of the way business is being held back.

"There is an incredible amount of cost that can be driven out by the efficiencies to be had from e-working and Legal & General is hoping to implement many of these. Any delay in rolling out broadband will slow the ability to drive out costs in this way.

"What worries me is that the longer we go on with services that are unreliable and slow, it becomes more difficult to get people to use e-business methods because it doesn't give a good user experience," she said.

Unbundling is central to the reality of broadband Britain. Fourteen carriers began bidding for the space in BT's exchanges necessary to install the equipment needed to run high-speed services into subscribers' premises in a process known as "bow wave" last October.

Since then World Online, Kingston Communications, Thus, Worldcom, KPNQwest, Redstone, Global Crossing and Telewest have dropped out, leaving Cable & Wireless and Energis among the few remaining.

And last week Internet service provider giants and BT wholesale customers Freeserve and AOL branded the conduct of unbundling a "national disgrace" and threatened legal action against BT for anti-competitive practices, saying that they were being discriminated against. They claim they are receiving less than 20 connections a day to ADSL while BT's Openworld hooked up more than 1,000 a day.

Big questions have been raised over the state of competition in the market and Oftel has come under heavy fire for the way it has regulated the unbundling process. Competition is viewed as key to creating the best possible penetration of high-speed Internet access and the BT's hold over the process is seen as particularly unhealthy.

Fabricius cited Germany as an example of where the incumbent telecoms company is less rigid in defending its holdings. "In Germany, it is easier for competitors to get access to the copper wires. Deutsche Telekom allowing competition is key to rolling out broadband."

David Harrington, directorgeneral of the Communications Managers Association, blamed Oftel's regulatory approach.

"Clearly, Oftel's focus is on complying with the Government's policy favouring light-touch regulation. But the danger of such a single-minded approach is that another, longer-term imperative is overlooked.

"It needs to encourage and foster the growth of an independent, third-party service provider market, able to compete on equal terms with the retail arms of vertically integrated network operators," he said.

The danger of the UKfalling behind was illustrated by Smith, who described Legal & General sales staff having to visit customers armed with CDs of product offerings when access to reliable high-speed Internet would be far cheaper and more flexible. She expressed frustration at the situation.

"We will probably face this situation for two more years and will probably have to continue working offline for longer than we hoped. A business can only operate as fast as the infrastructure allows. In the US broadband Internet access is reliable and cheap and in the third world it is not very accessible and very expensive - that is a way of assessing the world and we are certainly not up with the US," said Smith.

Commentators are unanimous in calling for the regulator to do more to create a level playing field on which the broadband operators can compete. Business should concentrate on what is offered through the medium and not worry about the medium itself. Most agree that broadband access should be a universal right.

"All subscribers should have the opportunity of accessing broadband Internet - it should be a human right," said Fabricius. "It is easier said than done, of course, but things should be moving at a faster pace and the regulators should be making this happen."

Harrington is more precise in his demands on the regulator. "By failing to compel BT to open its network on equal terms to the independents, Oftel is sending some very negative signals to the service provider market.

"The primary issue is not whether a particular market is competitive or not and it is not about significant market power and who should or should not be constrained.

"It is about enabling the growth of a sector where content is king and innovation thrives. It is about offering unrestricted choice of delivery options to service providers - the same service whether via wireless or line. That won't happen without market intervention," said Harrington.

The Government seems to be the only body which thinks broadband Britain is on track. Yet it is the only organisation which has the power to accelerate the development of a broadband infrastructure essential for a thriving UK e-economy. Until it wakes up to needs of ambitious UK businesses it will be an uphill struggle.

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