Independent broadband reports calls for private sector investment

Leaving the development of the broadband market to the private sector is a tacit acknowledgement that the government cannot respond fast enough to technology...

Leaving the development of the broadband market to the private sector is a tacit acknowledgement that the government cannot respond fast enough to technology advances and market forces.

Francesco Caio, the Lehman Brothers banker brought in to investigate barriers to investment in next generation access, declined even to say what he thought was the threshold for "high speed". "It is a moving target," he said.

Caio's report on barriers to investment in next generation networks, ie high speed digital networks, gets government off the hook as far as short term financial investment goes. Caio's privileged position may have given him special insight into the amount of money likely to be available from the public sector. Still, his report showed more insight than usual into what is practical.

The Broadband Stakeholders Group, a group of mainly telecommunications equipment suppliers and network operators, welcomed this. BSG chairman Kip Meek said, "This report states that although there is no government money on the table everyone involved in the provision of broadband must work more closely together" to deploy super-fast broadband in the UK.

BT has already announced a £1.2bn plan to bring multimegabit connections to 10 million households. Virgin Media is using fibre to boost its speeds to 50Mbit/s. Led by 3, the mobile network operators are rapidly making cheap 384kbit/s data connections, just enough for streaming video, available on laptops and internet-enabled smartphones.

But, according to a Cisco report, the UK lags behind much of the rest of Europe in broadband speed. Caio said that the UK is not presently disadvantaged by this, but that is not going to stay the case. He called for government and Ofcom, the regulatory watchdog, to work together to overhaul the rules of the game.

Caio's vision is for a market-led free-for-all that uses every suitable technology and combination of allied interested parties to get high speed links to all in the country. He noted that population density is crucial to broadband affordability. However, this ignores the value, both direct and indirect, of such a link.

North Yorkshire, one of the most sparsely populated counties in the UK, built a 30Gbit/s optical fibre ring network. It justified the initial £4m cost by aggregating public sector traffic and applications such as bulk purchasing to save money. It also received development grants from Yorkshire Forward and the European Union.

But this cheap funding meant it cannot sell direct to the public for fear of distorting the market. It is now looking for service providers to resell capacity to the public, starting with business parks, digital creative hotshops, cottage industries and tourism.

Each job created is worth £1m over 10 years, it estimates. As NYnet has already hired four people, it is on track to justify that investment itself.

Caio wants this collaboration between public and private sectors to be more common, especially where normal commercial returns are iffy or non-existent.

But this requires a complete overhaul of the interconnection regime. To enable connectivity between private networks, Ofcom needs to set technical interface standards. It also needs to monitor termination fees so that smaller network operators are not disadvantaged when their customers inevitably make more calls to customers owned by larger networks.

Shriti Vadera, the business minister, has said the government has accepted Caio's report in principle. She plans to set up a team to give force to his recommendations.

However, the final piece of the jigsaw will fall into place on 23 September, when Ofcom unveils its assessment of the broadband marketplace. Only then will network users see the true shape of the puzzle.

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