Case for public intervention in next generation broadband weak
Friday 12 September 2008 13:31:42 by Andrew Ferguson

UK Broadband has always been a largely commercially led beast, but there are parts of the UK where government and EU money has helped when costs meant that private companies would otherwise have ignored the area.

The much anticipated report by Francesco Caio for the Department for Business Enterprise & Regulatory Reform has now been published, a short summary can be read on nds.coi.gov.uk, with the final report available as a PDF download.

"The UK and its consumers and businesses benefit from a competitive broadband industry and a rich choice of digital communications and entertainment platforms.

Although demand for bandwidth and Internet traffic continues to exhibit strong growth, there is little evidence that in the short term the UK is going to suffer from the lack of an extensive next generation access network. I have therefore concluded that the case for a public intervention at this time is weak at best. But it is the right time to create the conditions that will deliver a competitive NGA infrastructure in the next five years"

Francesco Caio commenting on the report

It seems that the approach recommended is for government to keep a hands off approach to the next generation network roll-out, so whether this will have an impact on the regulatory authority Ofcom is unclear. To date Ofcom appears to be taking the position that the BT Group should offer some form of equal access to any fibre network, and even Virgin Media appear to be under some pressure to provide wholesale access. What seems likely is that the regulations on equal access from Ofcom will fall into the area of creating the right conditions, i.e. there will be controls over how the private companies operate their networks to avoid the emergence of an all powerful monopoly.

A number of recommendations are also contained within the report:

• Supporting the development of local access networks by helping them organise and develop common standards;
• Allowing NGA to be delivered over new overhead lines, by relaxing rules that currently prevent this;
• Working with the construction industry to ensure all new homes have next generation broadband; and
• Supporting Ofcom to ensure spectrum auctions take place soon.

The UK as a whole spends some £46.6bn a year online, which is around 15% of the total retail spend in the UK. So to some extent it would seem current broadband model is working since we can spend so much money using it. Perhaps it is part of our national psyche to just moan about broadband speeds, with broadband complaints replacing weather as the national moan topic. We spend some 34.4 hours a month online compared to 24 hours in Europe and 31.4 hours in the United States.

So what can we expect in terms of broadband in the next five years? Well it looks like if you live in what is largely defined as an urban area that you'll have the choice of at least a 50Mbps connection but whether the price will be attractive to millions is a great unknown. For those living in market towns, then they may see some efforts by local bodies such as councils and RDA's subsidising infrastructure in an effort to compete with other towns. For those in villages or more rural areas, then it seems it will be a case of waiting for it to be proved that commercial operators will never bring faster connections, so the message is either move your business or home to a nearby town with better connectivity if you need it, or roll your own in the form of a community broadband solution.

For those wanting a very short summary, if you can only manage a 0.5Meg or maybe 1Meg connection now, and don't already have the option of an ADSL2+ provider in your area, then your broadband speeds are not likely to improve for some years.