How to put the digital into Britain

We may well look back on 2009 as a crucial turning point for the technology industry in the UK. One of the most significant events of the year was the publication of Lord Carter’s Digital Britain report, which outlined plans to create a competitive digital economy in the UK. His recommendations on opening up access to broadband, releasing radio spectrum, and improving digital literacy were warmly welcomed by the industry. 

The Digital Britain report has contributed significantly to the sense that politicians of all parties understand just how vital next-generation broadband, and the digital economy as a whole, is to the UK’s future competitiveness – even though they may differ on the route to achieving it.

As you may recall, the government has proposed a new “broadband tax”, or what the Treasury has chosen to call “landline duty”, in the form of a 50p per month charge on fixed landline connections, to help pay for next-generation access (NGA) to broadband. It is widely expected that the government will bring forward legislation to enable this to happen before the general election.

Meanwhile, Lord Mandelson recently announced a consultation on how the resulting Next Generation Fund should be spent. Deciding on how the fund should be spent before the legislation to create it has raised a few eyebrows. However, given that the Conservatives have expressed their opposition to the levy, the government is perhaps understandably keen to get work under way ahead of what will be a hotly contested general election.

The government is asking some fairly vital questions in this latest round of consultation, including whether NGA should be deployed as a single UK-wide project or on a regional or sub-regional basis. They are also seeking views on whether the government should intervene to ensure high-speed broadband extends to areas that are highly unlikely to be served by the market. 

Controversially, the government appears to have decided already that the fund should concentrate on subsidising fixed line solutions rather than taking a “technology neutral” approach. However, that fixed line solution will not be appropriate in every case, and the government seems to have disregarded the role of satellite and terrestrial wireless platforms in providing a cost-effective next-generation access to remote areas. While they have less capacity, they have a role to play alongside fixed-line technologies.

The government must leave some flexibility to allow the fund to be spent on the most economic solution, and the economics change according to where in the country you live.

Throughout this debate, Intellect has maintained that the case for public intervention to support market deployment of NGA is clear. Analysis provided by the Broadband Stakeholder Group and research firm Analysys Mason has estimated that NGA deployment will only reach 60 per cent of the UK if left entirely to the market. We are firm, therefore, that to ensure that fast broadband is available to as many people as possible, some form of support will be needed.

What the industry is more flexible about is the means of raising a fund to get next-generation access to the areas that the market will not deliver to of its own accord. The proposed tax is just one way of achieving this – although it does have the advantage of being accepted by the industry as a workable solution. However, we will have to accept that it will not meet with universal approval and, while the Landline Duty has a good chance of reaching the statute books before the election, we should nevertheless prepare ourselves for the change of direction that a change of government could bring.

By John Higgins, director general of Intellect