Budget leaves key network issues unresolved

Alistair Darling's Budget proposal to introduce a 50p per month tax on fixed-wire phones to support the roll-out of high-speed broadband may be overtaken by events.

Alistair Darling's Budget proposal to introduce a 50p per month tax on fixed-wire phones to support the roll-out of high-speed broadband may be overtaken by events.

Firstly, the Conservatives have promised to scrap the tax if they win the upcoming election. Secondly, Conservative election promises to force BT to open its ducts and poles to other network operators, which could achieve an even faster roll-out of high-speed broadband, are already being met by communications regulator Ofcom.

In fact, Ofcom has gone further by proposing that BT also offer an "unbundled" price to third parties on all fibre that it installs. As BT is free to price access at this level, BT has been happy to lend its support to the proposal.

All this is well and good, and if any of it is implemented by the next government, it should improve British citizens' access to fibre-based broadband connections.

But let's be clear: the politicians' comments are designed to appeal to voters, not to businesses. Even so, the next government must still resolve some crucial issues. Its answers will determine whether Britain really does start to rebase its economy on digital technologies or merely treads water in the bit stream.

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Digital Economy Bill

The issue that presses hardest is the Digital Economy Bill, now before the House of Commons. This contains clauses that allow, indeed encourage, internet service providers to cut off websites and customers if copyright holders merely allege that they deal illegally in copyrighted material.

A leaked letter from the BPI, the music organisation pushing for the Digital Economy Bill's anti-piracy clauses, suggests that the clauses may be pulled in order to get the rest of the bill through in the "wash-up" at the end of this parliament.

But the issue itself will not go away, indeed is key to secret international negotiations on a controversial anti-counterfeiting trade agreement (Acta). It is a thorny issue the next government may prefer to see resolved in Brussels, concentrating instead on building high-speed networks.

Network infrastructure

Politicians' glib talk about providing access to "superfast" broadband usually does not address the hard physical realities of building such networks.

The decision to unbundle local loops stopped dead BT's 21CN plan to convert and converge its entire network to digital operation using Internet Protocol (IP) technologies. BT continued to convert its backbone network to IP, but ignored the local loop or "last mile". As a result, there is plenty of high-speed fibre in the core network and leased lines, but virtually nothing in the wider access network, especially in rural areas.

This has to change if the UK is to become a digital economy. The change has started. BT is spending £1.5bn to provide 40% of houses with fibre to the cabinet, although this may change to fibre to the premises now following Ofcom's latest proposals, and Virgin Media is testing a 200Mbps broadband service over TV cables.

A key unresolved question here is the role of wireless technologies. Radio is cheap to implement widely but offers variable performance. Mobile network operators are keen to use frequencies that allow them to serve broadband to remote areas. But the government needs as much money as it can get for them at auction to help pay down the record national debt. Taking another £22bn out of their coffers, as the government did with the 3G auction, will slow down network builds and upgrades.


Government figures suggest one in five people see no reason to go online. The prime minister would like to force everyone on to the internet by making more government services available only online. This is because the government saves £12 per transaction if it is completed online rather than in person, and £3.30 if it is done by telephone.

But there is a problem. The Broadband Stakeholder Group (BSG) reports that commercial service providers with most to gain from fast broadband, such as television broadcasters BSkyB and the BBC, believe that the access speeds enjoyed today by most citizens are adequate for their immediate plans. They told the BSG they will wait until the high-speed networks are built before they develop products that take advantage of the extra speed.

Access devices

In this scenario, the user's access device is a determining factor. It is a fact that more people have access to mobile phones than to PCs. The rate at which mobile phone users are switching to smartphones (ie, broadband-capable phones) suggests that more users will have access to broadband via mobile than fixed networks.

Factors such as smaller formats, network latency, privacy, security and mobility mean that companies will have to reconsider in depth how and where they "touch" their customers and staff. Core IT systems may be untouched, but service delivery systems are likely to force radical rethinking, redevelopment and innovation from the IT department.

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