The state of the UK digital economy in 2011

Since chancellor George Osborne pledged £520m to broadband rollout in the Comprehensive Spending Review last October, the government has increasingly focused on getting the UK digitally connected.

Internet access is key to this, whether it is via fibre, wireless or satellite, and a number of steps have been taken to ensure that businesses and communities across England, Scotland, Wales and Northern Ireland can access decent internet speeds.
Apart from some plans to auction spectrum to ensure 4G networks are operational by 2013/14, the majority of the drive has focused on broadband.

The government has described broadband infrastructure investment as “vital to supporting the overall growth agenda”, and has backed this up by allocating £530m until 2015 to support broadband rollout with a possible £300m for the following two years.

Culture secretary Jeremy Hunt also revealed plans to have a fibre point in every community by 2015, where the local communities themselves will be tasked with developing the network from the cabinets to the community.

“Only 15 per cent of UK subscribers have speeds above 5Mbit/s, compared with 65 per cent in South Korea,” said Hunt when announcing his broadband strategy in December last year.

“In the UK, 30 million people go online every day and yet nine million people have not been online once,” he added.

The first wave of the government’s funding was agreed in October 2010 for four UK-based pilot projects to establish how broadband rollout could work in rural areas, and create an idea of cost. The chosen areas were North Yorkshire, Herefordshire, Cumbria and the Highlands, with £5m to £10m set aside for each.

Since then, Osborne has also said he will make £50m available to local authorities that want to improve connectivity in their area. It is expected that this will benefit 800,000 homes and businesses.

Apart from the allocation of money, digital champion Martha Lane Fox has been given the task of running the Race Online 2012 campaign. The campaign’s aim is to connect people who have not previously had access to the web. One of Fox’s sche­mes involves making computers worth £98 each available to those on lower incomes.

In addition, there has been much activity in the devolved parliaments of Scotland, Wales and Northern Ireland, with all three announcing digital plans of their own.

Scotland
Scotland, for instance, recently published a report entitled Scotland’s Digital Future, which outlined ways in which it aims to ensure that every person in the country is connected to next-generation broadband by 2020. It hopes to overtake the UK uptake average.

Some £1.5m has been made available this year to increase the uptake and use of superfast broadband, with attention placed on getting more businesses online.

Scotland also hopes to secure as much of the available £530m as it can by working with local authorities and stakeholders to develop a strategic infrastructure plan.
An online portal for Scottish public information and services is also under way, with a beta site set to launch this summer.

Wales
Across a couple of borders into Wales, shadow business minister and MP for Wrexham Ian Lucas launched an attack on the coalition government to ensure specific funding was allocated to support broadband rollout.

“When ministers effectively say Wales has to wait for the scraps from a project across the border, it does not inspire much confidence,” said Lucas.
“It is vital that Wales exerts as much pressure on the government as possible to make sure it gets its fair share.”

Following his outburst, George Osborne announced that North Wales would receive a minimum of £10m in funding to support superfast broadband rollout. This will contribute to the Welsh Assembly government’s aim of ensuring that all businesses in Wales have access to superfast broadband by 2016, with households to follow by 2020.

Northern Ireland
Broadband is also central to the development of Northern Ireland’s economy, according to a recent e-Skills report. It indicated that if the full potential of its tech industry were exploited, it could boost the region’s economy by an additional £700m in the next five to seven years.

“Deploying superfast broadband will further drive competitiveness, innovation and enterprise, and much of the £0.7bn ICT uplift forecast in Northern Ireland will need competitive, superfast broadband,” says the report.

Telecoms giant BT has given some support to this idea by announcing it will accelerate investment in the region, leading to the percentage of lines connected to a fibre broadband cabinet jumping from 54 per cent to 88 per cent. This will come as part of BT Group’s £2.5bn investment in fibre rollout for the UK.