Digital Britain plan not ambitious enough, says Ovum

17 Jun 2009

Lord Steve Carter’s ‘broadband for all’ proposal under the Digital Britain plan, while a pleasant surprise, could run into problems and may not represent value to the taxpayer, telecoms analyst Ovum said today.

Under Lord Carter’s plan, by 2012 all of the UK will be able to access a broadband connection with a minimum speed of 2Mbps through a universal service commitment. It will be funded mostly from £200m sterling of public funding, but will be supplemented by wider mobile coverage obligations on mobile operators.

Under the plan, from 2010, all current fixed copper lines would be subject to an annual tax of £6 sterling, which will make up a ‘Next Generation Fund’. This will then be made available on a tender basis to any operator and will provide a part-subsidy for the deployment of next-generation broadband.

“While attractive to people who currently don’t have a connection or anything like 2Mbps (an estimated 7pc of the UK), it is still quite significantly below the current average headline speed available in the UK, and in this respect a digital divide will continue to exist,” Matthew Howett, senior Ovum analyst, pointed out today in a research note.

As well as the 2Mbps commitment, Carter’s Digital Britain plan also outlined proposals to guarantee superfast broadband for the one-third of the country that BT and Virgin Media are unlikely to serve.

“While a pleasant surprise, Carter’s plans appear ill thought out. Firstly, the model follows a similar approach to the one originally taken in Australia, which the Government eventually abandoned in favour of building a fibre-to-the-home (FTTH) network itself, after concerns that a fibre-to-the-curb (FTTC) solution (most likely what the fund will enable) would not represent value to the taxpayer.

“FTTC would mean speeds of up to 50Mbps by 2017 – hardly futureproof when compared to other countries.

“Secondly, the introduction of a specific tax on fixed lines rather than using general taxation hasn’t been used elsewhere. It may have the effect of accelerating the pace of fixed-to-mobile substitution, which would only serve to reduce the size of the fund and provide a signal to the mobile sector, and in particular to mobile broadband, which Carter admits himself is unlikely to deliver true next-generation bandwidth,” Howett warned.

Howett went on to say the Digital Britain plan for the protection and promotion of digital rights demonstrated considerable lack of vision, particularly in relation to the issue of illegal file sharing over the internet.

“Britain has decided not to go down the ‘three strikes and you’re out’ route, instead ambitiously expecting to reduce unlawful activity by serving written notification to the abuser and then informing the content owner of their identity for them to take further action. If this proves not enough to deter people, then bandwidth restriction will be considered.

“While this might work in the very short term, ways around the restrictions would soon be found. It would have been more forward looking to reassess the whole system of digital rights and access to online content.

“Trying to apply 18th-century rules in a 21st-century world isn’t sustainable, and will not foster the creativity that is expected to make use of the digital infrastructure. Expecting this approach to work highlights one of the report’s greatest weaknesses, and almost fails to capture the debates that have been taking place, particularly around network neutrality,” Howett said.

He said that while the Digital Britain initiative was likened to the building of roads and bridges in the past, it lacks the scale, funding and ambition needed to set the UK up to capitalise on the opportunities the 21st century could bring.

“Leaving the criticisms aside, Lord Carter has evolved the way of thinking about the future approach to regulating the communications sector, and his departure from the department is a setback.

“While Ofcom is very competent as an economic regulator, it has been shown to lack the strategic joined-up thinking that some aspects of Digital Britain have managed.

“The task now is to find solutions to the recommendations Carter makes, and in many instances, this falls to those that were already doing just that – Ofcom.”

By John Kennedy

This story is part of the Digital 21 campaign to encourage Ireland to develop a National Digital Development Plan, ensuring the country and its economy are strategically well placed to thrive in the 21st century. For more stories, and to add your comments, visit