BSG Reports

The debate in Australia

Our recent report on the value of next generation broadband created a minor debate on itWire in Australia following a good blog article from Stuart Corner. The article captures the essence of our message on next generation broadband deployment from our recent research: it is more important to do this right than to do it now.

The size of the investment required to roll out next generation broadband in any country, the irreversibility of that investment, and the likely importance to that country’s economy and society of superfast broadband mean that the costs of getting it wrong could be significant, and that investment should occur at the most optimal time possible in order to maximise the benefits.

For the UK, our report suggests, the most optimal time is not necessarily now. There are a number of uncertainities for investors that create a large value in waiting, such as a lack of evidence of consumer willingness to pay and the current regulatory uncertainty. Over time, this value will reduce as evidence emerges and some of the uncertainties are resolved – we believe over the next 18 months or so.

Ultimately, we still believe the market is best placed to decide when and how investment in next generation broadband should be made. But this doesn’t mean we should be complacent. It is important that the work that is being done continues, including Ofcom’s work to provide regulatory certainty, the Caio review, and the work of the BSG, so that in 18 months’ time we really do have a clearer picture.

Will next generation broadband deliver next generation benefits?

New report examines economic and social value of next generation broadband and concludes there’s more value in doing it right than doing it now.

The UK could reap significant social and economic value from the wide-spread deployment of next generation broadband, according to a new report that studies how to weigh up the costs and benefits, from the Broadband Stakeholder Group (BSG), the government’s leading advisory group on broadband and digital convergence.

By looking at the potential private value (value accruing to commercial investors and consumers) and the wider economic and social value, the BSG has found that the long-term benefits to the UK associated with the wide-scale deployment could outweigh the cost of deployment, which could be as much as £16bn (to reach 80 per cent of UK homes).

However, the report does not conclude that operators should invest now. There is still real uncertainty about the extent to which investors will be able to realise enough of this value to justify investment. The BSG believes that in the short-term, there are unlikely to be significant costs associated with delaying deployment and there may actually be considerable value in waiting for a limited period in order for more information to emerge, before investing.

But the value in waiting will diminish over time and the report recommends that commercial providers, government and regulators continue to work to create an environment that is conducive to timely and efficient investment.

Antony Walker, CEO of the Broadband Stakeholder Group explains: “Next generation broadband has the potential to transform the way we do things as individuals, businesses and as a nation as a whole. It is tempting to jump in feet-first but it matters more to do this right than to do it now. There is a lot of uncertainty about issues on both the demand and supply side and much that we can learn from experience elsewhere without adverse affects in the short-term. On the other hand, the UK can’t wait too long. If widespread network deployment didn’t happen in the medium term (perhaps three to five years), then this report suggests that the UK could be losing out.

The report also warns that it will take longer to deploy next generation broadband than it took to deploy the current generation and that some areas might be beyond the reach of market forces. Communities and individuals that remain beyond the reach of commercial deployment in the long-term will be disadvantaged. Close attention must therefore be paid to the emergence of a new digital divide.

The report follows the BSG’s Pipe Dreams report published in April last year which said the UK needs to start preparing for next generation broadband by 2009. The current report, along with another on models for public sector intervention in the deployment of next generation broadband, will be launched at the BSG’s conference: Beyond Pipe Dreams in London on Monday 9 June.

CORRECTION – 23 June 2008

Please note that the version of the report launched at the conference contained an incorrection calculation of the value of spectrum efficiency. This has been recalculated as £5bn, rather than the £9bn stated in the launch version. The tables and charts refering to this figure have been altered, and the corrected report is now available on the website.

BSG report – A Framework for Evaluating the Value of Next Generation Broadband

Press release in full

BSG identifies models for public sector intervention in next generation broadband

The Broadband Stakeholder Group (BSG) – the government’s advisory group on broadband – will today publish a report identifying potential models for efficient and effective public sector intervention in the deployment and take-up of next generation broadband in the UK. It makes several recommendations for public sector bodies that might be considering such projects.

Next generation broadband has the potential to deliver significant social and economic value in the long-term. However it will be costly to deploy and will only become available progressively, leading to an uneven distribution of broadband capability across the country. If predictions about the benefits associated with these new services prove correct, then this could have a differential impact on consumers, dependant on where they lived. If this became a critical concern for policy makers, public sector interventions could be required in the future to support deployment to areas that would otherwise remain unserved.

The BSG does not advocate wide-scale public intervention in next generation broadband at this stage. However, a number of pilot projects have been proposed in the UK and these could provide valuable insight into different models of intervention. These pilot projects should however conform with the report’s suggestions on best practice.

Antony Walker, CEO of the Broadband Stakeholder Group explains, “Next generation broadband could be of real value to families, communities and businesses across the UK. Even though we are at the beginning of this transition, we need to be vigilant about the risk of new persistent digital divides opening up. That’s why this report is important. By testing out models of intervention now, the UK will be better prepared to intervene efficiently and effectively if it needs to in the future.???

Having examined various projects across Europe the BSG report identifies six critical success factors, which if met, should help to ensure that interventions prove efficient and effective. The report also makes several recommendations including a call for greater co-ordination at national level between public and private sector organisations involved in broadband projects.

Walker continues, “There remains a lot of uncertainty about next generation broadband and there is much that we can learn through well designed pilot projects. However, we’d like to see better sharing of experience at a national level – from planning to evaluation – and more cooperation on common ways of doing things, like technical standards and the development of wholesale products. We don’t want to see a patchwork of disjointed networks emerging that lack the scale to succeed.???

The BSG believes it is appropriate to encourage next generation broadband deployment in areas of new build, regeneration and redevelopment, but argues that pilots must have a clear rationale and must attract multiple service providers in order to offer choice to consumers.

The report begins with a practical definition of efficient and effective public sector intervention. It then examines various public sector interventions in next generation broadband across Europe. Based on this analysis the report categorises the main reasons for intervention and different approaches to it. It finds several common issues in the projects it examined from which the critical success factors and recommendations made in the report are based.

The BSG, with the support of the South East England Regional Development Agency (SEEDA), commissioned Analysys Mason to write the report in early spring this year. It will be launched alongside a report on the social and economic value of next generation broadband at the BSG’s conference, ‘Beyond Pipe Dreams’ in London today.

BSG report – Models for efficient and effective public-sector interventions in next-generation broadband access networks

BSG identifies models for public sector intervention – full press release

Prospects for next generation broadband

On Monday, 16 April 2007, the Broadband Stakeholder Group (BSG) launched a report on the prospects for next generation broadband deployment in the UK.

Broadband is already the critical enabling infrastructure of our modern, knowledge-based economy and is an integral part of many people’s lives. Next generation broadband is widely regarded as a key enabler for our future economy and is expected to bring significant benefits to the economy including improved productivity and innovation.

The report examines the potential demand for high bandwidth broadband; the factors likely to affect market development and network requirements; the likely developments in capability and capacity of access network; the constraints to investment in next generation networks, content and services; the transition from the current model to future; and the role of public sector intervention. It also makes several recommendations to government, Ofcom and the industry.

BSG Report: ‘Pipe Dreams? Prospects for next generation broadband deployment in the UK’

Press release in full