Superfast broadband will add stg£18bn to UK economy

9 Jun 2010

Jeremy Hunt, the new culture secretary for the UK, has identified next-generation broadband as integral to adding stg£18bn to GDP to the UK economy and creating anything between 60,000 to 600,000 new jobs.

In a speech given yesterday in London, the new secretary for culture, media and sport warned the UK has so far failed to capitalise on the digital economy which he described as a “missed opportunity.”

He described the 2Mbps universal broadband commitment of the previous labour government as paltry and said he is in favour of government interventions to jumpstart the UK’s digital economy to catch up on advanced economies like the US and South Korea.

He said: “A combination of recession and rapid technological advance has brought what should be great British industries to their knees – whether commercial TV, national newspapers or local commercial radio and newspapers. In an age of localism we have virtually no local TV stations in our major cities, and Channel M in Manchester – one of the very few – has recently been forced to shed most of its employees.

“We are now ranked 33rd in the world when it comes to broadband speed, with an average that is nearly five times slower than South Korea’s. Some of our biggest creative companies – including the world’s largest advertising agency WPP – have chosen to relocate abroad. We’re in danger of allowing ourselves to be once again defined by the old truism – that we provide the creativity and the rest of the world makes the money.

“Rather than accepting this as inevitable, we ask why it was we developed such creative strengths in the first place. The answer is because at critical moments we have faced up to technological change and not run away from it,” he said.

Rapid rollout of superfast broadband

Hunt pointed out that many countries are already moving ahead with the rollout of next-generation, superfast broadband based on fibre optics rather than copper. “The USA, France, Germany and Australia have all announced comprehensive national initiatives with ambitious headline targets.

“Singapore wants universal access to superfast broadband by 2012, by which time Korea plans to have provided 1 million homes with 1 gigabit per second connections – a speed which can download a two-hour film in just 12 seconds.

“But in this country, the legacy was – in the same timescale – a commitment to a paltry 2 Mpbs universal connection. Necessary, of course, but pitifully unambitious compared to a Korean goal 500 times faster.

“It is a scandal that nearly 3 million households in this country still cannot access 2 Mbps broadband speeds, and less than 1pc of the country is able to access the internet using modern fibre-optic technology – compared to an OECD average of around 10pc.

“Some people ask why we need these speeds when the iPlayer can manage on less than 1 Mpbs. They are missing the point.

“Superfast broadband is not simply about doing the same things faster. It’s about doing totally new things – creating a platform on which a whole generation of new businesses can thrive.”

Hunt pointed to a forecast by the Federation of Small Businesses which has estimated that a superfast network could add £18bn to GDP and create 60,000 jobs. NESTA thinks it could be 10 times that – 600,000 new jobs.

“We may not know the precise number, but no one is any doubt about the economic impact. A country that is so good at creating digital content has an enormous amount to gain from developing the infrastructure over which it can be distributed, bought and sold.

“But it isn’t only about business. Next-generation broadband will open up new opportunities to improve public services, such as education and healthcare.

“The biggest driver of high speed broadband in Korea, where I was in January, is children getting help with their homework. Telemedicine is next – and already patients undergo heart surgery on the remote island of Guam supervised remotely by surgeons in Hawaii.”

In terms of the costs of building the next-generation networks, Hunt welcomed BT’s announcement to invest a further stg£1bn in upgrading its network to reach two-thirds of the population as well as Virgin Media’s extension of superfast broadband – including its trials of a 200Mbps service in Coventry – as another positive step.

“But I have always recognised that there has to be a role for government, as well as the market. Both in driving up demand for broadband by putting as many services as possible online.”

He added that government must ensure we do not open up a new digital divide between the urban areas most attractive to infrastructure providers and rural communities where superfast broadband may never be viable.

“So today I am announcing a first series of actions that will lead to the UK having a broadband infrastructure that meets the needs of all its citizens and businesses, and that will stand comparison with anywhere in the world. 

“First of all, as mentioned, the government supports the commitment to ensure a universal service level of 2Mbps as the very minimum that should be available. We will use a proportion of the underspend on digital switchover to fund this.

“Promoting a digitally-enabled Britain is one of the core purposes of the BBC, and this will bring services like the iPlayer within the reach of many more people,” Hunt said.

“Secondly, I am announcing three market testing projects that will bring superfast broadband to rural and hard-to-reach areas. These are projects that will not only benefit those living in these areas, but that will provide us with vital information about how we can best target government intervention and make next-generation broadband viable in even the most challenging areas.

Access to infrastructure

“But thirdly, I also want to address the biggest cost involved in rolling out new fibre optic networks: digging up the roads. Cut these costs and, straight away, investing in superfast broadband becomes a substantially more attractive proposition.

“That’s why I want companies to be able to take advantage of the infrastructure that already exists – the ducts and poles of telecoms companies, the sewers and other utility networks.”

Hunt welcomed Ofcom’s proposals to open up access to BT’s ducts and telegraph poles to promote further investment – and the positive and constructive attitude BT has shown to this development.

“But I would like to go further. If legislation is necessary to require other infrastructure providers to open up their assets as well, then – as announced in the Queen’s speech – I am ready to bring it to the House as soon as parliamentary time can be found.”

Hunts words are refreshing and realistic. He talks about Government intervention in the broadband crisis in his own country as positive action, rather than leaving it up to market forces to decide. Irish policy makers, take note.

Photo: Jeremy Hunt, the culture secretary for the UK

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years