We’re not quite so sure that Digital Britain is big news ‘ but many of the news agencies in the UK are talking it up, or down, depending upon how they view the steps the British Government is planning, to prevent the country slipping behind in digital matters.
We won’t argue the toss, most countries which have good digital infrastructure have an advantage over those which don’t, but for each country, getting to the point where there is universal broadband or universal reach for wireless broadband, are very different steps.
The US talks about it, but it has very different problems from the UK, and while France has a similar digital profile to the US (less mobile penetration, bigger rural gaps in both broadband and wireless coverage) it has done far better in the past in keeping itself on the righteous path to being digital. We could argue that where the UK goes, half of Europe follows, and where that was once completely untrue about communications, due simply to the fact that the UK completely failed to makes its environment competitive until Ofcom was formed, it may be truer now.
It was in fact Stephen Carter (now Lord Carter), the author of this report for the UK Government, who was in charge of Ofcom from 2003 to 2006, when much of the progress was made. Ofcom has gone from a set of toothless separate agencies, to a good single European citizen, echoing the European Commission sentiment on increasing competition among broadband, cellular and broadcasting, and setting a regulatory regime that has allowed the UK back into the fast lane.
Today it is true that Ofcom’s role in creating Digital Britain may become a blueprint for large chunks of Europe, whereas prior to Carter’s core career moves, the UK was a case for treatment.
Every country believes that it is in the forefront of white hot new technology, but it still remains that the Digital Britain initiatives, compared to say the new Obama Stimulus package, which includes a $10 billion fix for broadband, is still largely, underwhelming. Similar strategy plans for France and other European countries are considerably more advanced.
And the plan as previewed in February, now that it has been published this week, has been diluted somewhat, always a problem when vested interests are asked to make comments, and threats and promises are taken into account. First off, with an election coming in the UK within 12 months, and possibly far sooner, this may be a set of policies which are never enacted, and where they need discussion in Parliament, may never get the government’s blessing.
But perhaps one of the most stunning changes to the plan is the setting up of a Digital Delivering Agency, somewhat aligned with regulator Ofcom, and perhaps even reporting to it, which will be set up and asked to keep track of four key elements of the new Digital Britain Strategy. Getting ready for the digital TV switchover, getting ready to go entirely digital in radio, ensuring that everyone in the country can get broadband and looking after the proceeds of a $0.50 a month tax on fixed lines, called the Next Generation Fund.
Conservative governments have always been in favor of letting business sort itself out, and would be likely to repeal a tax that will mean that UK broadband price falls may be temporarily halted.
With some 17.6 million existing broadband line, the Next Generation Fund will be around £100 million a year to start with, and if wireless broadband gets the same levy could be considerably more. This is to be spent making sure that rural communities are able to gain access to advanced broadband technologies, not the 2 Mbps rubbish that 97% of UK homes can get today, but the 10 Mbps and 50 Mbps and beyond.
In our experience any agency created to spend £100 million ($150 million) or more, ends up spending much of that money ensuring it stays in existence, it’s just the nature of Quangos and bureaucracy, and anyway £100 million is chicken feed compared to the infrastructure upgrades which the UK needs to invest in. Cynics might say that Lord Carter has created the role in order to take up the post, but we don’t see that happening, and anyway he’d do a better job than most.
The people who decried the report, and got angry that the UK has to put up with a Universal Service Broadband commitment that every home can get 2Mbps broadband by 2012, must give Carter some credit. He has been down in the trenches with British Telecom, BSkyB and Virgin Media, trying to get deals done and he has a realistic view of what it takes to get those businesses to commit to anything vaguely difficult, or worse still, with questionable underlying profitability. The chances are 60% to 70% of the UK will get 20 to 50 Mbps broadband, the rest of the country will be lucky to get anything better than 2 Mbps.
The situation is fairly simple and will be echoed in the US and France, and other countries, when phone exchanges for sparsely populated rural territories were put into place, hugely long access routes were established and backhaul was set just for 100 or so voice calls. This might affect 30% of the population in France and 10% in the UK, but the problem is the same ‘ it is uneconomic to rewire these exchanges and fixed operators look to wireless operators to fill the deficit, simply because although it is still uneconomic for wireless operators, it is less uneconomic for them to reach these territories. Satellite broadband is no further cost at all for infrastructure, just for the CPE, the satellite dish and receiver station.
So every agency that could do the job argues either a) Someone else should do it, b) You have to pay me to do it Mr Government.
By luck the cost of providing 2 Mbps to these homes is a much lower cost in the UK than it will be in other European countries with worse terrain and different demographics, so the £200 million that the UK government will make available from direct public funding is unlikely to be copied in other European countries, which will try more of a private public partnership or tax incentive approach, we should think.
Carter’s report reckons that this will be achieved through a mix of technologies including DSL, fiber to the street cabinet, wireless and satellite infill. It would have cost less to put up a dedicated satellite and operate it for ten years, and that would have done the job, but then the UK government would not have had a carrot to throw at the incumbents.
Making WiMAX spectrum available and partially subsidizing each subscription, would have also got the job done, but as we have said, politically it is easier to use this as a carrot to existing operators ‘ read give money to BT, because BT will win all these tenders, bar a few. And actually BT may well use WiMAX to do some of this.
The government cites falling copper wire wholesale prices and the fact that the retail price for combined voice and broadband has fallen by around £90 a year, as evidence that the UK has a competitive environment ‘ and it has, which is why it feels it can fund Next Generation broadband from a levy on Broadband (We can hear the conversation ‘We want to stimulate broadband. I know let’s tax it.’). It IS small, 50 pence a month or £6 a year per broadband line. Actually it does say a tax on ALL copper lines, so if it is applied to those without broadband on them, it would be more like £140 million a year. It will be shared out, by inviting tenders to provide high speed broadband.
The other far reaching areas for this report are how the UK will deal with wireless networks and spectrum. It calls for a rapid transition to next generation high-speed mobile broadband, universal coverage of 3G and reliable coverage throughout the rail network including the London Underground.
What’s amazing is what the UK government is prepared to give for that, much of which has been proposed in the past but it’s still not less shocking. It proposes to auction 10MHz chunks of spectrum, some of it coming from the freed up UHF from the digital switchover, along with some existing 3G expansion spectrum. The plan it to make it possible to bid with a realistic aim of getting enough spectrum to build an LTE network capable of broadband speeds of 50Mbps in the main urban and suburban markets and perhaps 4-5Mbps in the more rural areas.
At the same time the Government will make existing operators’ 3G licenses indefinite, though there will be some performance payments to the government to reflect the license value. As we said that was pretty well understood from the February version of the plan. This is perhaps the one area of Ofcom inspired policy change that may well become a blueprint for Europe, from among all the recommendations of the report.
The report also provided for Digital Audio Broadcasting or DAB, a form of digital radio, to be mandated from 2015 and cars will not be allowed to be provided with analog radios from 2013.
Much of the copy in the local press went on about Ofcom being given the powers to make ISPs create a policy for the abolition of piracy, based not on the three strikes and you’re out policy, but a more gradual increase in hostilities towards file sharers, basically suing repeat music piracy offenders, followed by civil actions, much as it has been undertaken by the Recording Industry Association of America, in the past. However the government will give Ofcom the power to push ISPs to cut bandwidth or to block specific protocols on some lines, in order to dramatically cut piracy.