Industry news

Broadband – flavour of the month

It may have been the holiday season, but broadband was rarely off the news cycle in one form or another, so here’s a round-up of some of the most interesting stories from the Christmas period.

Most interestingly, David Cameron yesterday committed the Conservatives to fibre optic ‘high speed broadband’ for the majority of the population within five years, and, ‘to as near as possible, universal coverage within ten years’. A bold promise, although we are still waiting to see the detail of this policy. This followed Gordon Brown suggesting in an Observer interview that high-speed broadband could play a similar role to investment in infrastructure during previous recessions. Prior to this, also in the Observer, Professor Christopher Bishop, chief scientist at Microsoft Research Cambridge had suggested that the government could ‘do no better than rewire the nation with fibre optics’ if it was looking for an infrastructure project to stimulate the economy.

At the same time, we were given an indication of what could be included in Stephen Carter’s Digital Britain report. In an article in The Times, a universal broadband service of 2Mbps was suggested, alongside a comprehensive reform of the existing universal service obligations. Carter’s interim report is due to be published this month, with the full report later this year.

Gordon Brown wasn’t the only global leader to reference broadband over Christmas. President-elect Barack Obama spoke of his plan to provide a stimulus to the US digital economy, including improving broadband and increasing take-up. He described the US performance on broadband as ‘unacceptable’.

Staying in the States, the Recording Industry Association of America has decided to abandon its strategy of suing individual downloaders of copyright material. Instead it will adopt a more constructive approach, working with ISPs to identify those who upload copyright material in a move similar to the approach being taken in the UK.

Coming back to the UK, Culture Secretary Andy Burnham made headlines with an interview in the Telegraph in which he suggested that cinema-style age ratings could be applied to the Internet, and said he wanted to work with Obama’s administration to develop international deceny rules for English-language websites. This has caused an interesting debate to occur, with many comment boards filling up in response, and the majority not in favour.

Finally, fulfilling one of the recommendations of the Caio Review, the Valuation Office Agency set out how it will rate fibre in next generation broadband deployments. This is a timely clarification by the VOA, and although containing few surprises, helps to remove some of the uncertainty facing potential investors in NGA.

Peter Shearman, Policy Manager, BSG

NGA underway in the UK

Virgin Media today announced that they are offering a 50Mbps service to 5m homes on their network, with plans to offer the service to their whole network of 12m homes by Summer of 2009.

The BSG has issued a statement welcoming this announcement. The next generation broadband debate has now moved from the realms of theory to reality. How this service impacts on the market will be a key indicator of the likely deployment of next generation broadband more widely in the UK.

Focus will now be on the success and take-up of this service, and the responses of other market players.

Peter Shearman, Policy Manager, BSG

BSG welcomes Virgin Media launch of 50Mbps service

BSG welcomes Virgin Media’s announcement of its new 50Mbps service, currently available to 5m homes on the Virgin network. This is the first major commercial rollout of next generation broadband, and represents a significant step in the development of the UK’s knowledge economy infrastructure.

Commenting, Antony Walker, CEO of the BSG said, “This is a very significant development in the context of next generation broadband deployment in the UK. Over the last two years the debate has moved on significantly, and this last year has seen intentions to deploy expressed by both Virgin Media and BT.

“With the launch of this service, Virgin have moved the debate on again. The impact this service has on the market will tell us a lot about how next generation broadband will develop in the UK.???

iPlayer Day

To celebrate the iPlayer’s first anniversary since its soft launch, the BBC’s Internet blog has been blogging on a variety of iPlayer issues for iPlayer Day.

The blog has produced some interesting discussions, particularly their developments for delivery on multiple platforms, such as games consoles and mobiles as well as over broadband and cable networks. It was interesting to note that views over Virgin Media’s cable service accounted for a third of all iPlayer programmes viewed in September.

iPlayer has had a successful first year, with over 180m programmes watched. It has not been without controversy, however: data from one ISP suggested that iPlayer was responsible for 5% of all traffic on their network, and the BBC came under increasing pressure for its impact on ISP and consumer costs.

The debate about the impact of iPlayer on the network seems to have calmed down (or perhaps it is just simmering under?). Either way, it is here to stay, and perhaps its continued popularity will catalyse further debates that need to be held across the value chain.

Peter Shearman, Policy Manager, BSG

The role for public sector intervention in next generation broadband

Ofcom’s Super-fast broadband blog recently raised the issue of ‘when and where?’ public sector intervention in next generation broadband would be required. This is a key issue, and something that the BSG has examined.

The BSG’s position has been, and continues to be, that next generation broadband deployment in the UK should be market-led. The market is most likely to achieve efficient and timely investment. This said, there will likely be a role for public sector intervention in the future, such as there has been to date, for example in South Yorkshire.

What is important to remember is that next generation broadband is very different to first generation broadband, in this instance for two key reasons: the length of time required for deployment; and the magnitude of the costs involved.

Deployment could take many years, particularly if FTTH was deployed, and so it could be 5 or 10 years, or more, before the market has finished its deployment. This is significantly longer than first generation broadband.

Therefore, the question we need to ask is this: can we afford to wait this long before addressing areas the market doesn’t reach? Given how quickly the digital divide has developed since the deployment of broadband (not yet 10 years old), it would be difficult to see how this would be acceptable.

The costs involved also change this debate. We can be more certain about where the market is likely to deploy to – we recently published a report showing how the costs breakdown across the UK, and how the deployment costs increase as you reach more rural areas. We also have experience from first generation broadband, and know where those places are that were the last to receive broadband, or still cannot access it.

Given what we know, we need to have the debate about how we bring superfast broadband to those areas unlikely to be covered by commercial deployment. This is not to say that the government should write a cheque – this is not necessarily the way forward at this time. But thought needs to be given to finding creative solutions to address the looming digital divide on the superfast-broadband horizon.

Peter Shearman, Policy Manager, BSG

Obama and the growth of broadband

Much has been made of Barack Obama’s successful use of the Internet in organising and coordinating his campaign, and in engaging (and soliciting donations from) his supporters, with many refering to him as the first candidate to successfully do this.

This is true, but it is worth remembering that he and John McCain were the first candidates with this opportunity. Currently, the US has 64% household penetration of broadband, which is sufficient critical mass for an organisation like Obama’s to flourish. However, in previous election years the same statistic was at 25% (at the start of 2004) and 0.25% (at the start of 2000).

Broadband growth has been exceptional, in the vast majority of markets. Growth has generally been faster than the mobile phone experienced, the spread of PC usage in the home, or even the take-up of tv. That broadband has been one of the fast growing trends in recent memory is worth remembering if the pace of the debate around many of the issues today feels slow – keeping up with such a fast-moving trend provides many challenges.

Obama made excellent use of broadband during the election. However, his extensive network may now be causing his transition team some problems. Apparently 290,000 applications have been received through his website for the 8,000 posts available, with the number of applications expected to rise to 1m by January.

By comparison in 2000, George W. Bush received just 44,000 applications. And this doesn’t include the bombardment of Obama staffers’ email accounts or social networking profiles. Information overload, perhaps? Sounds like a familiar debate…

Peter Shearman, Policy Manager, BSG

Pakistan to create their own Broadband Stakeholder Group

News came through today that the Pakistan Telecoms Authority is to take the lead in a newly formed Broadband Stakeholder Group in Pakistan. The group have identified a range of issues that, on the surface, appear very similar to those that the BSG were tasked with addressing back in 2001.

Pakistan are not alone in examining the BSG model. There is already a Broadband Stakeholders Group in the Lebanon (which has produced a Broadband Manifesto), and other countries such as Chile have shown an interest in the concept.

For me, these developments highlight two things. First is the acceptance of the central role and importance of widespread coverage and take-up of broadband for the economic and social wellbeing of a country and its citizens. Markets across the globe are developing at different speeds, starting from very different positions and at different times. However, the issues they are facing are similar and the conclusions reached in response are broadly aligned – certainly no-one has said that broadband is not important.

The second point is that many of these issues require a collaborative effort to be addressed. They are too big to be solely the responsibility of a competitive industry, or a government department, or a regulator. Lebanon, Pakistan and others are finding this to be true of first generation broadband; in our experience, so it is true of next generation broadband.

Peter Shearman, Policy Manager, BSG

The broadband vision

As someone who spends a lot of his time discussing the importance and value of broadband, in all of its forms, to the economy and wider society I’m struck by how few manage to articulate a worthy vision for the impact of broadband.

A recent example of this was Ofcom’s timid attempt at a vision in its recent superfast broadband consultation (see section four). The Caio review made a good effort with broadband as an ‘essential digital utility’, but still didn’t quite capture it to my mind.

So it was pleasing to read, in an article in the Guardian early last week, that Stephen Carter is able to set out a vision superior to most efforts, referring to broadband as ‘commercially, socially, culturally, economically and politically transforming’.

This is about as good as I have heard, and hopefully bodes well for the future of Digital Britain.

Peter Shearman, Policy Manager, BSG

Government to undertake Digital Britain Report

On Friday last week the government announced it would be undertaking a Digital Britain Report, led by the new minister for technology, communications and broadcasting Stephen Carter. This represents an opportunity for Government to tackle a range of issues in a coordinated, strategic way. Hopwever, doing so requires that the report is not a stock-taking exercise of ongoing issues, but a proactive plan of action that provides strong government direction.

The value of this report would be in bringing together the various activities going on in the area of convergence, across different departments, in a coordinated, strategic way. In doing so, government can provide a strong direction, with the ultimate aim of ensuring that the UK’s digital infrastructure (and the surrounding policy and regulatory frameworks) is fit for a world-leading knowledge economy.

Commenting on the report, Peter Mandelson stated that ‘the digital economy will be central’ to Britain getting through the worst of the current crisis and preparing for the upturn; with this focus the report could be a valuable contribution to the health of the sector and the economic activity that it supports.

Looking at the issues identified for the report, there are already numerous initiatives either completed or underway that are tackling these. Indeed, one key issue for government is how this report interacts with these ongoing activities such as the Convergence Think Tank or the implementation of the Audio Visual Media Services Directive. A report that simply reviews these various policy debates will be of limited value.

The opportunity here is to bring together a range of ongoing issues that all relate to convergence but often sit across a number of government departments and lack an overall coordination. Addressing these at a strategic level, with government providing strong direction and leadership would be of benefit to the development of the converging industries.

It is rare that a new minister already has a command of their brief upon entering a new role, but in Stephen Carter this is exactly what has happened. With his knowledge and experience he should be able to hit the ground running, and use the Digital Britain report to drive government action, rather than simply set the scene for further reviews.

Peter Shearman, Policy Manager, BSG

A busy month for next generation broadband

September has been a busy month in the world of next generation broadband. Government reviews, UK and EU regulatory consultations, not to mention our report on the cost of fibre-based next generation broadband, have certainly moved the debate on in the UK.

The month started with the BSG publishing its report ‘The costs of deploying fibre-based next generation broadband‘. This report used geographic and cost data specific to the UK, allowing us to model the cost of deployment across a variety of geotypes. The long and the short of this is that the report suggests that fibre to the cabinet will cost up to £5.1bn, and fibre to the home up to £28.8bn.

The total costs are interesting, but the purpose of the report was to breakdown the various cost components, to examine where the real costs lie. Unsurprisingly, this was in the civil infrastructure elements of the network – 42% of total costs for FTTC, and up to 80% of total costs for FTTH. Any steps that could be taken to reduce these costs would obviously help reduce this barrier to investment, and the report modelled how various actions, such as if higher duct re-use was possible, would impact the overall costs.

The report also clearly set out that there is a definite difference in the cost of deployment between urban, rural and remote areas of the UK. For fibre to the cabinet, for example, the cheapest 58% of households would cost £1.9bn to deploy to; the next 26% would cost £1.4bn, and the most expensive 16% would cost a further £1.8bn. Clearly, deploying beyond the first 60% of UK households will be a more challenging case for investors to make, which has a number of implications for government and the regulator.

This was closely followed by the launch of the final report of the Caio Review – ‘The Next Phase of Broadband UK: Action now for long term competitiveness‘. The Review suggested that, while we shouldn’t be panicking about a lack of NGA in the UK, the government could take actions to reduce the barriers to investment, and set out the need for leadership from the government and the regulator. A range of initiatives were recommended, including providing certainty for investors and reducing the costs of deployment, while increasing the competitive pressure on copper-based services, and benchmarking our performance against other countries while considering the ‘batstop’ remedies should the market fail to deliver NGA.

We welcomed these recommendations at the time, and look forward to hearing the government’s response to the Review. Certainly, our reports over the last 18 months have supported the conclusions and recommendations of the Review.

What followed was then followed by a flurry of regulatory activity. First, the European Commission set out its long-awaited draft Recommendation on the regulation of NGA. The Recommendation sets out how the Commission would like regulation to support investment and competition in next generation broadband, and makes for interesting reading for Ofcom and the operators, who will no doubt be submitting their views to the Commission before the 14 November deadline.

This was swiftly followed by Ofcom themselves publishing their latest consultation on the regulatory environment for NGA, ‘Delivering superfast broadband in the UK‘. The consultation discusses a range of issues and, although differing in depth of detail across the issues, certainly moves the debate on from its previous consultation last September. Positioning itself as a ‘framework for action’, the regulator will further progress these issues through a range of activities with stakeholders.

And, just to add to the fun, the Commission has also now begun its second periodic review of the Universal Service Directive, as well as launching an EU-wide broadband performance index.

Quite a lot to absorb for those of us who spend their days working on next generation broadband. So where has it left us? Well, the Caio Review has set out a number of options for government if it is serious about trying to reduce the costs of deployment. The government response will be interesting, and whether they are actually able to implement some of the suggested changes (such as to the way fibre is treated in the rating system) is up for debate. Caio’s recommendation that government and the regulator take a strong lead on NGA is one that we support, and are keen to see.

Our report has added further to the evidence base for policy making that we are committed to creating, to ensure appropriate policy is developed. It adds numbers to views that were likely already held, but also raises interesting questions, and the granularity of our figures should be of real use to those interested in local or regional broadband projects.

The Commission’s Recommendation, and Ofcom’s consultation, take us closer towards regulatory certainty than we were before, although a number of questions remain unanswered and this is unlikely to be the end of Ofcom’s process for creating the right regulatory framework. Certainly there could be a sense that every time you delve deeper into an issue, the list of questions a regulator needs to answer gets longer.

One issue worth noting is the change of view towards public sector projects. Sympathies certainly appear to have shifted within Ofcom, and possibly within BERR given the Review’s recommendations, since the DTI/Ofcom Best Practice Guide for Public Broadband Schemes was put out in 2007, and this is a welcome development.

This is one of many issues raised this month, however, and stakeholders will be watching with interest to see how these are played out in the coming months.

Home broadband improves GCSE results

According to the latest UK Internet Access Report from the Office of National Statistics those students with home broadband access are likely to do better in their GCSEs.

This is not really surprising. Broadband provides students with access to a wealth of resources that previously were simply unavailable. It can aid independent learning by encouraging independent research and discovery, and increase collaboration not just within schools, but across schools, countries and continents. At its most effective, it can completely transform the learning experience.

In 2003 the BSG published a report highlighting the opportunities that broadband presented to the education sector in the UK, and the barriers against wider take-up and use within the education system. It is good to see that broadband is having an effect, and we hope that this will continue as schools and teachers continue to understand how broadband can be utilised to enhance their students’ experiences.

There is still a long way to go, however. There is a big difference between those that do make effective use of broadband, and those that don’t, and particularly between students with access and students without. Progress is continuing in the right direction, with the Home Access To Technology programme within DCSF, and it is important that all concerned continue to work towards realising the full benefits that broadband access can offer education in the UK.

Peter Shearman, Policy Manager, BSG

One small step from BT, one giant leap from Virgin Media?

Virgin Media’s statement today that it could be offering broadband speeds of 200Mbps by 2012 certainly puts the cats amongst the pidgeons in the ever noisier debate surrounding next generation broadband.

Last month, BT announced that it would invest £1.5bn to bring next generation broadband to 10 million homes by 2012. The speeds that would be available were quoted in BT’s release as 40Mbps to 60 Mbps for those homes serviced by a Fibre to the Cabinet (FTTC) deployment. Fibre to the Premises (FTTP) could, it said, offer speeds up to 100Mbps.

Although BT stated that the exact split of FTTC and FTTP was still to be determined, it did state that FTTP would be primarily focused on new build sites, whilst FTTC would be more “prevalent” elsewhere.

However, even in the unlikely scenario that it pursued a 100% FTTP deployment, delivering speeds of 100Mbps, the 200Mbps speed quoted by Virgin Media today knocks that straight out of the water.

The potential next generation broadband speeds that can be delivered depend on the technology being used. I could take this opportunity to harp on about the different potential capabilities of BT’s network as oppposed to the cable network owned by Virgin. I could point to the fact that the technology Virgin Media is deploying to deliver faster speeds, DOCSIS 3.0, uses channel bonding technology to (as the name suggests) bond channels together to achieve these super-fast speeds.

Yet a discussion purely on the technical capabilities doesn’t tell the full story. Indeed focus on these headline speeds alone misses the main reason why these announcements are interesting to the next generation broadband debate as it stands now.

The point is, the fact that such announcements are being made is exciting in itself.

Next month we expect to see the publication of a range of documents that will move the debate forward – the independent review on next generation networks being led by Francesco Caio, Ofcom’s regulatory statement on next generation access and the European Commission’s recommendation on the regulatory framework for a next generation environment.

Operators and investors need clarity about the regulatory framework before they can really get going on deployment.

The signals from both BT and Virgin Media are significant and welcome.

They and the rest of the industry now need regulatory clarity to make next generation access in the UK a reality, and not just a pipe dream.

KPN to open its FTTH network to competitors

Rather under the radar this week, KPN, the Dutch incumbent, announced that it would be opening its FTTH networks to its competitors, in order to maximise the utilisation of their network.

In a deal with Reggefiber (a fibre network construction specialist) KPN will take a share in existing local FTTH projects and build on these as they deploy their FTTH network.

This is an interesting development in the EU context. The majority of incumbents within the EU are less than enthusiastic about opening up their networks having made such a large investment, but KPN have positioned this as an appropriate way to share the risk and ensure utilisation of the network. It moves KPN closer towards a civil utility-type of model, with many providers offering services over the network, owned by a single operator.

The local/community projects are also an interesting aspect of this development, as it shows that these can play an important role in demonstrating that these networks can be efficiently deployed – Reggefiber’s assets in the local networks they have built out are included in the joint venture with KPN.

KPN announcement

On Wednesday KPN, the Dutch incumbent, announced that they would be opening up their FTTH deployments to their competitors, in order to maximise utilisation of the network.

This announcement builds on KPN’s announcement in May that they were setting up a joint venture with Reggefiber, a fibre network construction specialist, to build out their FTTH networks. KPN will hold a minority 41% share of the JV, and both KPN and Reggefiber will add their existing FTTH assets to the venture.

Reggefiber were responsible for building the network in Nuenen, and own 5% of the Nuenen network along with other local networks.

This approach is very different to those of other European incumbents. It is also interesting to note the process by which they have arrived at this announcement, as it builds on a number of local projects that have already been deployed, and moves KPN towards a civil utility-type arrangement.

For more information on this announcement see

BT announce £1.5bn fibre deployment

BT today announced that they plan to spend £1.5bn to provide superfast broadband to around 10m homes by 2012. The BT press release can be found here.

The BSG has issued a statement welcoming this development, which can be found here.