There is no straight answer to this question. The scale of the risks and opportunities for the telecoms industry depends on the future relationship between the UK, the EU and the rest of the world. The ramifications of decades of EU legislation, policies and initiatives in the UK system are difficult to untangle. However, it is possible to identify immediate concerns for the industry and how these could be tackled.
Ofcom today published their technical advice to Government on the design of a broadband Universal Service Obligation. Ofcom were instructed to deliver its “views, evidence-based analysis and…recommendations” by John Whittingdale, then Secretary of State for DCMS, in March 2016. It has certainly delivered on the first two although in making clear that designing a USO is complex, it only offers a few recommendations. It will now be up to Government to make some of the thornier policy choices.
The Government has briefed that it will be unveiling two new programmes in tomorrow’s Autumn Statement to make good on its view that the future is fibre (to the premise variety) and 5G. The BSG welcomes this focus on digital connectivity. All BSG members believe that good quality broadband underpins, drives and improves our society and economy.
The first lines of Matt Hancock’s speech to Broadband World Forum last week weren’t shy in setting out the general theme. Hancock’s previous speeches had shown that more than most, he ‘gets’ the role that technology can, does and may play in all of our lives. So did his predecessor Ed Vaisey. But what marked this speech out was an unapologetic focus on fibre; as he described it, the future.
The Valuation Office Agency (VOA) announced last week a fourfold rise in business rates (taxes on the value of real estates) on some major infrastructure providers’ bills. The revaluation was judged “excessive” by BT, whose Bill increases from £165m to £743m per annum, who added that the increase in rates will likely lead to higher prices for consumers and businesses. Virgin Media echoed BT’s concerns on the likely negative impact of the increase on future investment decision in telecoms infrastructure.
A recent study (h/t Computer Weekly) on the economic impact of London’s superfast broadband connection voucher scheme shows that it could bring a £3bn boost to London SMEs within two years. Carried out by Adriot Economics, and supported by Point Topic, The Fifth Sector and Manchester University, the evidence comes from around 500 of the 12,000 London businesses who benefited from the scheme.
The SME Connection scheme was launched in late 2013 as part of the Super Connected Cities scheme. Despite some initial teething problems it quickly picked up speed, benefiting from an advertising push and a streamlined application process that included the ability to aggregate vouchers. When it closed in October 2015 55,000 vouchers – a one-off grant of up to £3000 – had been issued to SMEs in over 50 cities with over 700 suppliers taking part.
This report is the first to attempt to undertake an economic analysis of the scheme – something which the BSG called for in our Small Business Connectivity Requirements Report last year. London’s scheme allocated £18m over the two years with an average cost of £1,500. This resulted in an average speed increase from 15.9 Mbit/s to 86.6 Mbit/s. The range of services delivered can be seen in the graph:
In the short to medium term this resulted in increased efficiency and sales. It also resulted in productivity gains from staff time savings and increased ability for home and mobile workers. The report also identified longer term gains in terms of using this time to increase skills – and having better access to online courses.
On a conservative basis this should provide a boost of £3bn in the first two years and an additional £4bn over five years if the latent productivity gains are realised. In terms of Gross Value Added, the economic benefit is estimated to be £430m for Greater London and an additional 8,118 jobs. That’s an extremely impressive £23 GVA per £1 invested and a cost per job of £2,200.
The report doesn’t cover additional economic benefits such as those delivered to the suppliers, nor the extent to which it stimulated the market to deliver superfast broadband services (in fairness a non-trivial task).
Whilst the report was just focused on London and, by the author’s admission, survey results are still coming in – it does seem to beg the question of should Government have stopped the scheme when it did?
In fairness, Ed Vaizey made clear to the CMS Select Committee’s Inquiry into World-Class Connectivity he wanted the scheme to carry on – he was just unable to get the Treasury to agree. That’s not to say the scheme was perfect – whilst it was born out of the Super Connected Cities Programme, SMEs in rural areas would arguably benefit even more from such a scheme. But it was still a scheme that seems to be delivering economic benefits, popular amongst SMEs and broadly welcomed by the telecoms industry. With loud noises of industrial strategy and regions pushing the message that they are open for business, don’t be surprised if we see this revived in some form…
Getting as many people online and enjoying the benefits of that the internet can bring is an incredibly complex task involving digital skills, attitude and awareness among others. But in many ways the first step is ensuring that the underlying connectivity is available to them. In this light the Government’s desire to “make sure that every home and business can have access to fast broadband by the end of this Parliament” is to be welcomed.
The latest Broadband Performance Indicator report published by Government shows that superfast broadband has now been made accessible to nearly 3 million premises in the UK (an increase of 500 000 more premises since May 2015) thanks to projects funded by the Broadband Delivery UK Programme (BDUK).
Ofcom today published their annual Communications Market Report which as usual is packed full of figures and data on the state of play in television, radio, telecoms, internet content and postal sectors. Most of the headline have focused on the number of selfies we are taking and the realisation that smartphones are now the most popular device for getting online.
“Productivity is the challenge of our time” – that is the stark opening of the Government’s ‘Fixing the Foundations: Creating a more prosperous nation’ which is billed as the second half of the Budget. The plan outlines the scale of the challenge facing the UK and sets out specific measures in order to overcome it, including practical measures that should help implement its goal for a “world-class digital infrastructure in every part of the UK”.
Consumers’ purchasing choices are driven by quality of experience, choice and transparency of traffic management, reports BERECmatthewevans
The Body of European Regulators for Electronic Communications (BEREC), have published and adopted a timely report on net neutrality and which traffic management policies influence consumer’s purchasing decisions. The headline finding is that consumers unsurprisingly tend to favour packages that align with Open Internet principles*and that as long as “there is transparency, and consumers are able easily to switch provider, such services seem likely to predominate”. This supports the BSG’s view, backed by the UK Government and Ofcom, that transparency and effective competition are the best guarantors of the Open Internet.
The main motivations for people to connect to the internet are: shopping (the UK ranks first in the EU for E-commerce), finding a job, connecting socially, and engaging with Government services… so nothing too important then!
The ever increasing importance of the internet – and the increasing cost, either to the individual or the State, of being offline has led to an expectation that everybody is or should be online. However, a research report recently published by Plum Consulting (and commissioned by EE) estimates that around 7.4 million people are still offline. 86% of which are aged over 55.
BSG Comment – Reaping the benefits of the digital revolution – HoL Digital Committee’s recommendations to the next Governmentsamiragazzane
The House of Lords Digital Skills Committee published today a report entitled “Make or Break: the UK’s Digital Future”. It outlines the digital revolution that is taking place and states that the UK is at risk of being left behind. The Committee calls on the next Government to take a more ambitious approach in the development and delivery of digital policies.