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MPs want clarity on broadband plans and to scrap 50p tax
Tuesday 23 February 2010 00:25:18 by John Hunt

The Business Innovation and Skills Committee has today published its report on broadband which evaluates the proposals being put forward by the government (largely within the Digital Britain report) to improve broadband access and speeds in the UK. Whilst strongly supporting the governments proposals to enhance the digital economy in the UK, it has a number of concerns about the way the government intend to do this.

Need for a full-time minister

The first criticism comes at the lack of a full time minister to push forward the UK's digital economy. The current arrangement sees Stephen Timms, Financial Secretary at the Treasury also acting as minister for Digital Britain. The committee, note that whilst Timms is very capable, they feel the post should warrant a full time minister, and at that, one who would be less conflicted. As his role as Financial Secretary, his duties involve raising tax revenue, whilst he would be looking to spend this as minister for Digital Britain. The committee recommend appointing a permanent minister to this post at the earliest opportunity, and one who is not encumbered by potential conflicts of interest.

Clarity for definition of '2Mbps' Universal Service Commitment

The committee are keen to support the universal service commitment (USC) put forward in the Digital Britain report, and they see the 2Mbps as a fair representation of a useful minimum speed that would benefit society by 2012. They hold concern over the definition of this 2Mbps, which through evidence given to the committee, appeared to be undefined in a way that would allow technology to be deployed to be able to meet this. The committee suggest that the Government and the Network Design and Procurement Group (NDPG) (the people responsible for delivering the USC) define the 2Mbps as a matter of urgency. They believe that a 2Mbps USC should deliver 2Mbps to all users under "normal circumstances" all the time. One would expect this to mean that bar problems, users should receive 2Mbps (not "up-to" 2Mbps).

Lack of a 'killer app' to drive demand for next generation broadband

Concern is raised over the governments proposals to help fund Next Generation Access (NGA) which aims to delivery faster broadband services to 90% of the country by 2017. The committee are worried that there is no "killer app" (other than multiple high-definition television streams) that will mean that people need NGA. Placing public money, to fund a market which currently has low take up could prove an expensive investment into unneeded technology. The market may pre-empt government funding being available thus blocking or delaying private investment. The committee acknowledges that the market is unlikely to deliver NGA to the whole country, but feels the market should be left to take the lead and government intervention examined at a later date. Indeed one proposal is to allow competitor access to BT's ducts and this is something that BT are already evaluating.

Broadband Tax: "Regressive"

The last major point covered is the 50p levy put forward to raise money to fund NGA to the 'Final Third' of consumers. They believe this to be a regressive tax which will help a minority of users whilst taxing a large proportion, and therefore judge it to be unfair. The committee also suggest setting out in unambiguous terms how it should be used. They specifically do not support the 50p levy as a way of raising revenue, but instead think this should come out of general taxation. Indeed, they also believe that charging VAT on top of this tax is unfair.

Fibre Rates

Every metre of fibre optic cabling over public land is liable to a 'fibre tax', or non-domestic rates, presenting an increased cost to operators trying to increase capacity and redundancy nationwide. The committee believes that a relaxation or temporary removal of business rates on fibre would be helpful as a method to encourage the roll out of NGA infrastructure by the private sector which it believes would be more beneficial than funding from public sector. There is also some inequality at work as BT are charged under a different model to other fibre operators and the committee suggest that this should be rectified.

"Government intervention at this stage should concentrate on changing policies to encourage investment in the NGA market. Perhaps the best example of this is the business rating system which currently discriminates in favour of BT and against its competitors. We believe that the Government should consider a reduction, or even a temporary removal, of business rates on fibre optic cable. This would be a more effective use of limited public sector funds than direct financial intervention."

Peter Luff, Committee Chairman

So generally, the committee deem that a rethink is required in many areas proposed by the government within the Digital Britain report in relation to broadband. How this will be taken forward will be interesting to see.

Update 23/02/10 11:35:

In response to the above, we received the following statement from the Department for Business, Innovation and Skills (BIS):

"The Select Committee's report welcomes Government focus on building a world-class digital economy for the UK and efforts in improving access to faster broadband speeds. Next generation broadband is vital to the UK's growth and we want everyone to access the huge social, economic and health benefits it offers. Our analysis shows that without intervention, the market will only reach up to 70% of the country so it's vital we act now to ensure no area if left behind.

The 50p duty we have proposed is modest, fair and affordable and is the best way to drive further investment in our networks. We have always said those on social telephony tariffs will be exempt. The duty will generate some £1 billion investment in upgrading our digital infrastructure, which will particularly benefit rural areas.

We're currently consulting on the most effective way to deploy this investment with public and commercial benefits in mind, and will consider the Committee's report in our final response."

BIS Spokesperson

Update 23/02/10 15:50:

Vtesse Networks, the company recently in the Court of Appeal over fibre taxes has welcomed the report having given evidence to the committee. In particular they believe that its recommendation on fibre rates and access for competitors to BT's ducting and poles is very important:

"The Committee's stance on state investment in broadband must be applauded. The report clearly supports the role of private companies in building a truly Digital Britain. Vtesse has supported rural communities with trials to improve broadband in underserved areas and we will continue to engage with government on the best way to provide universal broadband access."

Aidan Paul, CEO, Vtesse Networks


Posted by CARPETBURN over 7 years ago
And so the holes in the plans start to unravel, and not before time.
Posted by otester over 7 years ago
Well not taxing fibre could be a good start and opening up all ducts that were built when BT a national entity and maybe more if BT agree.
Posted by mikeblogs over 7 years ago
The first application for NGA is quality home working, so these MPs no longer need second homes but can make all contributions remotely and travel occasionally.

Suggesting general taxation when there is none available is not exactly a progressive step.

Timms is the best chance we have of getting some funding for NGA in market 1 areas.

Wanting to define 2Mbps and then stating there is no killer app for NGA is inconsistent, when most departments need better networking to deliver government services.
Posted by mikeblogs over 7 years ago
Suggesting the removal of rates when they have done nothing about it is a bit rich.

The Digital Britain report was a first installment as opposed to a finished piece of work.

Rather than requesting a re-write, they should ask for the next installment!
Posted by AndrueC over 7 years ago
Wow. I agree with pretty much everything the committee says.

@mikeblogs:You don't need NGA for home working. I work in an office with four other software developers. We are part of a trans-Atlantic team and we manage quite nicely with a 4Mb/s connection made from two ADSL lines.

It supports exchanging documents and source code as well as remote access to machines.
Posted by andrew (Favicon staff member) over 7 years ago
Even with this report the clarity of 2Mbps calls are still somewhat woolly if you look at them from the technical side.

Basically what is needed is a definition of acceptable connection speed, which seems to be the 2Mbps minimum, and subsequent to this an outline of what the minimum throughput speed should be at peak times. e.g. is 25Kbps acceptable in a worst case scenario. Or should it be contended at just 2:1 (50 times less than some broadband is now) to ensure video on demand would actually work.
Posted by Somerset over 7 years ago
Everyone here understands that there is the exchange connection and then the core network. The ADSL link is at a constant connection speed, beyond that is where the throughput is defined. Do the MPs understand?
Posted by mikeblogs over 7 years ago
@Andrew C

Quality home working (a proxy for advanced health care apps, video conferencing) needs more than 1-3% packet loss, 30Kbps peak hour allocation. I know we can make do, but making do does not amount to a plan for what is or ought to be critical infrastructure.

Posted by chrysalis over 7 years ago
interesting on the 2mbit should mean 2mbit of available throughput 'all' the time, if that was ever to make it into the USC then the current BTw pricing would go into chaos as some isp's barely provide a 20th of that per customer at the moment.
Posted by mattbibby over 7 years ago
An idea maybe non of the sheer geniuses at Parliament have thought of is, training a proportion of the millions of people out of work costing us millions every week in Job Seekers as Fibre Installers and then hand them out to the providers? (Pay them a Government Funded Wage, which is taxed)

Suspend fibre tax for 5 years and watch the private sector scramble to compete.

They'll put people back into the PAYE system!
They'll avoided another stealth tax for the public!
The providers would be on side with removal of fibre tax!
Posted by herdwick over 7 years ago
Talk Talk LLU provide ~40 kbits/s per consumer that doesn't mean all consumers can't get 2M if there line can take it, it just reflects the fact they don't all demand it at once.
Posted by AndrueC over 7 years ago
@Chrysalis:You don't need 1:1 contention to achieve that 2Mb/s. I think most ISPs could provide an effective 2Mb/s minimum 24/7 without breaking a sweat.

@mikeblogs:Perhaps you didn't understand my post. We are not 'making do'. Four of us spending virtually all day exchanging data with colleagues in the US and sharing 4Mb/s between us. We are developing applications for MS EXchange and SharePoint. We exchange /a lot/ of data and frequently administer each others servers.
Posted by otester over 7 years ago
So does this mean 2Mb dedicated usage wise?

That being a 648GB (30 day month).
Posted by Somerset over 7 years ago
mikeblogs - what's the packet loss issue all about? Homeworking for many does not require huge bandwidth.
Posted by Tacitus over 7 years ago
Andrue: I used to work on motorway design using a computer based in Kansas and an acoustic coupler to connect via a satellite link. That didn't mean I wouldn't have preferred something better had it existed at the time.
Posted by mikeblogs over 7 years ago

Ought to plan to do more than exchange data, I use my broadband for a great of conferencing including two way video, this should be treated as anything special, suggesting say .1% packet loss, with circa 450Kbps two-way should be planned as standard.

I am suggesting our legacy voice subscriptions ought to be the source to create better and richer broadband connectivity.
Posted by AndrueC over 7 years ago
@mikeblogs:We do manage to use a video link for important corporate meetings but then at 4Mb/s we are around the minimum you state. Most of the time we're happy with voice comms but then we're engineers. We don't see the need for face to face communication.

ISTM that what you are after is a bit more than working from home. You're after a full-blown business environment and I'm not convinced many people need that. Access to the intranet and free calls will suit most people I reckon.

I'm not saying 'don't do it' - just saying that it's optional and unlikely to drive NGA uptake.
Posted by mikeblogs over 7 years ago
@Andrew C

Semi agree, our expectations are low because the bar has been set by an industry hooked on preserving its legacy services... I consider NGA to be as much about the middle miles - and possibly a regulatory regime which motivates BT and others to recover more costs the more capacity they release -

Whole industry still organised around call conveyance based cost recovery not bits transfer.

Imagine if re-defined an efficient operator (permits cost recovery) to be one with 1Gig connections to all those exchanges!

Posted by cyberdoyle over 7 years ago
mattbibby hit the nail on the head...
we can either lead the way, or follow behind. I know what the Victorians would have done. Do we want to become a third world country? Or do we want to build a digital economy for a real digital britain? If we do then we need to lay fibre. It can deliver 2 meg or 2 gig. Whatever the customer wants and is prepared to pay for.
Posted by cyberdoyle over 7 years ago
White House estimates 50K jobs will be created with the $7B commitment for broadband.
Posted by herdwick over 7 years ago
"White House estimates 50K jobs will be created with the $7B commitment for broadband."

$140,000 per job ? That's about 10 years minimum wage. Payback seems unlikely.

Besides, 50k jobs in 270m population is neither here nor there, and certainly not measurable.
Posted by herdwick over 7 years ago
virtually every video conference set I have seen in use has been dual channel ISDN ie 128k !
Posted by chrysalis over 7 years ago
andruec I disagree, this throughput would have to be available on everything, p2p, youtube etc. Currently throttled heavily by some isps as they allocate much less then that per customer. Granted they wouldnt need to allocate a full 2mbit to every customer but clearly there would need to be a significant rethink. The only isps of the top of my head I see it not needing to break a sweat are probably be,o2,sky,uko,aaisp,zen,idnet. Out of that lot only o2 and sky been major isps.
Posted by Somerset over 7 years ago
Video conferencing has been around for years and has not taken off as expected as people discover you don't need to continually see the other end. Audio conferencing is cheap and easy.

So what will use high amounts of bandwidth?
Posted by kamelion over 7 years ago
Even they realise that you shouldn't make people pay for something they don't need.

If they do bring the broadband tax in then I'll be lobbying for cows to be imported into my street.
Posted by chrysalis over 7 years ago
somerset you thinking backwards, killer apps come after availability, not the other way round. When adsl was here in 2000 99% of websites were built for dialup users and multimedia was almost non existant.
Posted by otester over 7 years ago

Try usenet :)
Posted by Somerset over 7 years ago
Please suggest some apps. Other than downloading files.
Posted by chrysalis over 7 years ago
One such app is youtube, When I watch videos in 720p it uses about 90% of my max burst speed so my connection can only just cope and thats with doing nothing else on the line at the same time. Youtube will probably be streaming 1080p shows I expect within 18 months on the current path they taking, but as I said before you asking me what app exists when I already said its the other way round, apps will typically come after availability.
Posted by Somerset over 7 years ago
chrysalis - HD video in real time is possibly the highest bandwidth at the moment - what does it need?
Posted by chrysalis over 7 years ago
720p youtube seems to need approx 5mbit of throughput, my line will typically do about 5.4 to 6mbit after ATM overhead.
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