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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 http://uk.reuters.com/article/rbssTechMediaTelecomNews/idUKL2334840820080723

BSG welcomes BT announcement on next generation broadband

The BSG welcomes today’s announcement from BT that it plans to invest £1.5 billion in making next generation broadband available to up to 10 million homes by 2012.

In April 2007, the BSG, – the UK’s leading independent advisory group on broadband – published its Pipe Dreams Report that stated that there was a two-year window to create the right environment for next generation broadband deployment in the UK.

Commenting on the announcement, Antony Walker, CEO of the BSG said “There has been a question mark hanging over the UK telecoms sector for the last 18 months about how we move to next generation broadband. Today’s announcement is by no means the whole answer, there are still questions about the regulatory framework and how we extend services to more rural areas, but it is a very significant step forward???.

BT’s announcement comes in response to increasing competition from cable and new mobile broadband services and growing demand for bandwidth from consumers. Walker described it as “a positive sign that the transition to next generation broadband can be market-led. The key question now will be whether Ofcom can move quickly to create a regulatory framework that both enables large-scale investment and ensures effective competition???.

The BSG believes that the move to next generation broadband will be at least as important as the move from narrowband to broadband. “It will bring about a revolution in the capability and quality of services and will enable the next big development of the internet. You could think of it as the catalyst for web 3.0???.

Full press release

The broadband speed debate

uSwitch.com has collected data on the speeds received by those who visit their site, and compared them to the maximum speeds these users signed up to receive. Similar to the recent research from the BBC and thinkbroadband.com, they found that the majority of users did not receive the maximum speeds that they signed up to.

This is not a surprise, of course. The speed of a broadband connection depends on many factors, including the number of other users online at the same time, the distance of a connection from the local exchange, the tuning of the modem in the home, and even faulty electrical goods within the home, which are clearly outside of the control of ISPs (see this excellent atricle in PC Pro for tips on how to improve your broadband speed).

But is speed really the be all and end all of broadband performance? There are other aspects of a broadband service that impact on performance, as I have discussed before, and these are often overlooked.

Improvements in these factors that affect performance could make far more difference to the current broadband experience than improvements in speed alone.

So what are the benefits of next generation broadband? The economic story part II

Following the earlier piece, I thought I’d briefly set out what the economic benefits are that are identified in our ‘A Framework’ report, in order to illustrate where we think value would accrue.

The largest categories of private value in the report are: doing things that we do now, but more efficiently; doing more of what we do now; and doing new things.

Each of these categories of value has the potential to be very significant. We make no attempt to quantify the last two, as it would be difficult (if not impossible) to do so.

Doing things more efficiently we have attempted to quantify. Based on 80% coverage, if 50% of broadband users saved 3% of their time, time savings worth £0.9bn per annum would be achieved (based on a value of leisure time used by government studies).

Note this is only an assumption, for indicative purposes. We would be interested in seeing any evidence that could refine this value, such as more detailed research on the activities consumers do online and how long they spend doing them.

The largest categories of wider economic value were: resilience, adaptability and policy options; and spill-over and virtual agglomeration. Again, these were not quantified as this was not appropriate, but we think these are likely to be significant in value.

The substitution possibilities created by next generation broadband would mean that the economy would be far more resilient and able to adapt to shocks, for example an oil price shock by providing alternative to travel. This also creates an additional range of options available to policy makers, which would be highly valuable in itself.

Virtual agglomeration had been identified as likely to be a big benefit from next generation broadband. Agglomeration refers to the productivity benefits of cities and clusters of activity – London, for example, has a higher productivity level than other areas in the UK. Through virtual agglomeration, next generation broadband could achieve some of the benefits of clusters and cities, and without some of the costs of cities such as congestion and pollution.

We also identified other categories of wider economic benefit, such as: an increase in competition in the economy; network effects as consumers and businesses both in the UK and across the world move to next generation broadband; reduced traffic congestion; the value created by the re-use of land and buildings no longer required by a next generation broadband network; reduced business travel; increased online backup; video distribution; and improved connectivity for SMEs. Some of these we did attempt to quantify, such as a reduction in business travel. For our estimations see section 5 of the report.

That’s the whistlestop tour of the categories of benefits we identified. We are keen to see these categories built on over time. We hope that as evidence emerges we will be able to more accurately populate this framework, to build up a more accurate quantitative picture of the benefit of next generation broadband.

Peter Shearman, Policy Manager, BSG

So what are the benefits of next generation broadband? The economic story

Following the launch of our report ‘A Framework’, I thought it would be worth setting down a few pieces about the benefits highlighted in the report. I’ll start with a general view of the economic impact the report sets out, which although substantial in terms of benefits, may be difficult in practice for investors to capture.

First, a brief note on the methodology. We have taken a bottom-up approach, examining where in the economy specific value could possibly accrue, rather than making general estimations of the impact of next generation broadband on productivity or GDP. For more on this in the report, it is worth looking at the section on ‘pseudo costs and benefits’. We also broke down economic value in to two categories – private value that accrues to investors and consumers, and wider economic value.

The report sets out a wide variety of categories where value would accrue. Some of these benefits would be captured upon deployment; others would take time, require transformations and would accrue in the medium to long term. In addition some of these benefits may be impacted by various policy agendas – for example, the role for next generation broadband in reducing carbon emissions is potentially significant depending on whether a carbon tax was introduced that encouraged substitution for emission-intensive activities.

The report suggests that these benefits are potentially very large, and in the long term likely to be larger than the cost of deploying the network. Particularly, there is likely to be significant private value that will be captured by investors and consumers. This does not mean, however, that the business case is made, and in reality there are difficulties for investors in trying to capture this value.

The report highlights three key constraints on investors’ ability to capture private value. First, to the extent that next generation broadband is an experience good consumers may not be willing to pay a premium for the service until they have experienced it. Second, creating this value may require the transformation of value chains, which may take time and would be disruptive. Third, investors do not yet have accurate knowledge of how much consumers are willing to pay, meaning that there will be difficulty in setting the correct pricing structures in order to maximise how much of the value they are able to capture.

Generally, the report calls for further work that would address these and other uncertainties. Resolving these uncertainties will be key to creating a business case that is acceptable to investors. The BSG is continuing its work programme that will hopefully shed some light on these and other issues. We are keen that further evidence is put forward that can help illuminate these, and would be interested to see any evidence others have to this end.

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.

BSG launches new research

We’ve been absent from the blog for a few weeks as we’ve been finalising two new pieces of research that we believe moves the debate around next generation broadband in the UK forward, and putting on our 2008 Conference ‘Beyond Pipe Dreams?’. It’s been a busy time, but now that’s past we have a lot of issues to discuss.

First of all, the conference itself produced a lively and informed debate, with representatives from a wide variety of sectors and a range of speakers including Francesco Caio, head of the governemnt’s review of broadband.

The first of the two reports that we launched at the conference was ‘A Framework for Evaluating the Value of Next Generation Broadband’. This report examines the incremental economic and social value of next generation broadband over current broadband provision in the UK.

The second report was ‘Models for efficient and effective public sector intervention in next generation broadband access networks’. This report studies next generation broadband interventions across the world, and first generation interventions in the UK, to determine good practice for interventions in the UK.

These reports contain a lot of issues, which we will discuss in more detail in future blogs. For now, I can strongly recommend both reports if you are interested in the future of broadband in the UK.

A Framework for Evaluating the Value of Next Generation Broadband

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

by Peter Shearman, Policy Manager, BSG

Manchester to go down the NGA route

Digital Region is not alone. Manchester City Council recently agreed to pursue a strategy of intervention to bring next generation broadband (in the form of a fibre to the home network) to Manchester, as part of a wider digital strategy for the city-region.

The plan will see the Oxford Road area used as a test-bed, covering 400 residential properties and 50 businesses, before a phased rollout elsewhere in the area, and was agreed by the Council’s Executive in March (you can read the report here). It aims to see ‘significant progress on implementation’ of the initial rollout phase during 2008/09.

On the heels on Digital Region, and with other authorities in the UK examining investment in NGA, Manchester is seeking to be a UK exemplar, providing knowledge and learned experience for other authorities in the UK. It is the lead authority in the DC10plus group on its ‘next generation connectivity’ workstream, and it hopes that its experiences will assist other UK authorities.

It is not just local authorities that can learn from Manchester and others, however, but broadband providers too. In the UK it is often cited that there is a lack of evidence of willingness to pay amongst consumers, and little or no evidence of applications and services that require the bandwidth provided by superfast broadband. Evidence will begin to emerge, however, from projects such as this.

Digital Region, the Ebbsfleet development, Manchester and others that are considering next generation broadband will provide valuable evidence for both public and private organisations, increasing the understanding of the market and allowing better-informed investment decisions.

The Byron Review: What now for regulation of Web 2.0?

“If our children were leaving the house, or going to a swimming pool or going to play in the street, we would take all the care possible about their safety – is there proper policing, is there proper safety? When a child goes on to the computer and on to the internet or on to a video game we should be thinking in the same way.”

This was the response from the Prime Minister to the review published last week by psychologist Tanya Byron, setting out recommendations to ensure that children and young people are protected from inappropriate and harmful material on the internet and in video games.

The publication of this landmark review reflects a growing policy emphasis on how web 2.0 should be effectively regulated.

Whilst no one would disagree with the importance of ensuring child protection on the web and on video games, there is a vocal concern from industry that regulation should not inhibit innovation. The new media industry is one of the UK’s most vibrant and is constantly developing new services – the principal users of which are, in many cases, children and young people.

Byron’s report is a considered and ambitious response to this important issue. Whilst many of last week’s headlines focused on her recommendation to extend the range of age classification for video games, a closer read of the 200+ page report (for those of you with the stamina) also reveals an important proposal on how regulation of web 2.0 should be driven forward.

Her solution to this quandary is the establishment of a UK Council on Child Internet Safety to develop a child internet safety strategy, that will cover both illegal and legal (though potentially harmful or inappropriate) activity.

Built on the structure of the existing Home Secretary’s Task Force on Child Protection on the Internet, the Council will be co-chaired by the Home Office and the Department for Children, Schools and Families, involve other relevant government departments and be staffed by a cross-departmental secretariat. It will report directly to the Prime Minister.

The Council will also be supported by an expert advisory group and research sub-group and involve industry through working groups to deliver specific initiatives such as codes of practice.

Byron also strongly recommends that mechanisms should be established by the Council to effectively involve parents, children and young people.

At first glance, this seems like an eminently sensible solution. It draws the relevant stakeholders together and an over-arching strategy would arguably reduce confusion about the array of policy developments individual departments are currently pursuing in this area.

However, it is an ambitious task, and Byron’s recommended deadline of Spring 2009 for both the establishment of the Council and publication of the strategy is a challenging timescale.

It remains unclear at present who will drive forward the development of the strategy, and what regulatory issues it will cover. Elsewhere in her report, Byron throws down a gauntlet to industry to develop codes of practice on areas such as user generated content, improving access to parental control software and safe search features, and better regulation of online advertising.

This builds on the vast array of work the industry has already taken to set common standards on issues that are important to their consumer. One example of which is the Good Practice Principles on Audiovisual Content, which were facilitated by the Broadband Stakeholder group (www.audiovisualcontent.org).

However, looking forward, could further regulatory proposals emerge under the strategy as a whole? Would this regulation be developed under a self or co regulatory model? And who will police and enforce these standards?

It has to be recognised that Byron has done an admiral job in pulling a wide array of issues together in her review. When it comes down to a more detailed look at how child internet safety will be regulated, however, there is still a very long road to travel.

By Pamela Learmonth, Policy Manager, BSG

PlusNet highlight ISP costs

While discussing something broadband related (strange how I keep talking about broadband with people), I was pointed in the direction of the PlusNet blog, which I hadn’t come across before.

This particular entry discussed the costs incurred by ISPs, depending on their choice of wholesale product, peering arrangements with other providers, costs incurred using transit providers and other factors.

I found this whole blog particularly fascinating, as it is not usual to find an ISP that is this open about their business (a number of their other entries are well worth a read, particularly this one on the impact of the iPlayer on their streaming traffic).

What the entry does highlight very well is the unsustainable nature of all-you-can-eat broadband price plans. Increasing traffic is increasing costs, and ISPs will need to raise revenues to cover these. It is likely that this will push ISPs towards bitcaps, and this could become an area of competition.

However broadband pricing develops, what is important is that the price of a service, and what that service provides, is clear and transparent for consumers. The Ofcom Consumer Panel and Ofcom are already looking at current marketing of broadband speeds. If competition moves away from speed to factors like bitcaps, it will still be important for consumers that the industry continues to work towards greater clarity, accuracy and transparency in its marketing.

Peter Shearman, Policy Manager, BSG