broadband Business internet Regs

Stephen Timms MP to Become the New Communications Minister

Stephen Timms brings significant telecommunications industry experience to his new Communications Minister role.

I understand that Rt Hon Stephen Timms MP is set to become the new Communications Minister, with responsibility for taking forward the recommendations of the Digital Britain broadband review. The position had been vacated when Lord Carter stepped down following the publication of the Review. It is likely that the role will change slightly, given that Mr Timms will sit jointly across the Department for Business and the Treasury, whereas Lord Carter’s position sat jointly across the Department for Business and the DCMS.

A former Internet Hero at the ISPAs, Stephen Timms brings significant experience to the role having worked in the telecommunications industry before entering Parliament and having previously served as a Minister with responsibility for e-Commerce at the DTI and BERR.

Whether the treasury connection will have any relevance remains to be seen.  I see one of the biggest challenges for this Government is going to be how it faces up to the need to invest massively in the Next Generation Access network (ie fibre).

Whilst I was on holiday I visited my in laws in Liverpool. Grandad had saved me an article from the local paper describing the outcry amongst Liverpudlian councillors when they found that BT’s initial £1,5m investment in Fibre To The Cabinet was not going to be gracing their fair city with it’s presence whilst favouring local rivals Manchester.  Nonsense I cried and reached for my BT FTTC broadband rollout map (never go anywhere without it).

To my surprise, he was right. All the dots identifying the initial (spring 2010) roll out sites come no closer than Altrincham. The good burghers of Liverpool should not feel that they have been singled out, because there will be huge swathes of the UK left out in the high speed broadband cold.  I don’t for a moment blame BT, although I’m sure that competition from Virgin will in due course give them a bit of a prod in the right direction.

This is why I say that the Government has a lot to do in this space, and why I wish Stephen Timms every success in his new role.

broadband Business Regs

Digital Britain Final Report Delayed a Few Days

BERR on Friday issued a statement to say that the Digital Britain Final Report will not now be released on Tuesday as planned. Instead it is being presented to the Cabinet tomorrow and will be released later in the week.

There is also a meeting between Lord Carter and a few industry representatives tomorrow afternoon.  ISPA is being represented at that meeting so I will report back later.

There is a huge amount of expectation surrounding the publication of the Digital Britain report.  We think we know what is going to be in it but can’t be sure. However it turns out I’m sure it is going to spark a huge amount of debate.  Let’s enjoy the last few days of peace before it hits the street 🙂

Note the BERR statement isn’t actually a BERR statement. It is a Joint statement from Departments for Business, Innovation and Skills and Culture Media and Sport. I’m not politicaslly motivated but this does seem ridiculous. BISCMS ?!!! I could only just get my tongue around BERRRRRR.

Hot off the press – apparently the report will now be available on the DCMS website at 3.30 pm tomorrow.

Business internet

Internet Service Provider Tax?

Just coincidentally following yesterday’s post on the BERR press release concerning P2P regulation today the Financial Times is saying that the Government is going to establish a “Rights Agency” to coordinate the enforcement of action against ISP customers breaking the law in respect of illegal downloading.

This agency will be paid for by a tax on both ISPs and the music industry. Strikes me that this is yet more burden on an industry that is already facing growing costs. I should sensibly refrain from further comment until we see an announcement.

I will however reiterate that I believe the right way ahead is is by mutual agreement between ISPs and the music industry together with end user education and the development of easy to access lawful distribution channels. In any event whatever proposals emerge there should be no implementation of any legislation without a full consultation process.

Business internet

Anti-P2P Piracy Regulation Likely To Be Imposed On ISPs?

The UK Government has stirred up the industry today with a press release by the Department of Business, Enterprise And Regulatory Reform (BERR) that intimates it’s intention to regulate ISPs into assisting the music industry to combat illegal downloading.

BERR is saying that last year’s consultation with stakeholders (ISPs and music industry) showed that there is no consensus on how to address the problem and the suggestion is that it sees regulation as being necessary. The whole subject matter, however, is riddled with complexity.

In 2008 the music industry, under a new representative body known as UK Music, run by former pop star  Feargal Sharkey, began discussions with what are known as the “Big Six” ISPs. These are the large branded ISPs that actually represent the majority of the consumer broadband customers in the UK. These discussions were held in private and the rest of the industry has not been party to what was actually being said. My understanding is that the discussions centred purely around enforcement and have not gone particularly well.

The problems centre around being able to prove who is doing the downloading and what is being downloaded – most ISPs can’t tell and have no interest – this surely is a privacy issue. Then there are the costs of policing and finally the fact that none of the ISPs want to lose customers.

At the ISP Conference in London last November I sat on a panel with Feargal Sharkey to discuss this whole issue. At that time we arranged to meet again in the New Year so that the other , smaller, UK ISPs, represented by the ISP Association of which I am a council member could participate in the discussion. That meeting is scheduled for 9th February. So the position taken by BERR is in my view somewhat premature as discussions between stakeholders do not yet appear to me to have  finished.

The nature of talks now is centred around licensing and revenue models. There have been some high profile announcements recently where some big consumer ISPs have severed their contractual relationships with music content providers. This is being done because the existing business models do not work. For example music streaming is licensed on a per stream basis. As the number of streams grow ISPs have to increase their capacity to measure and account for them and the cost of doing so soon outweighs the income derived from selling access to the music. 

So they have to look for an alternative. The strong rumour is that a big UK ISP has already negotiated a deal whereby it can sell unlimited access to music for a fixed monthly fee per subscriber (word on the street is that this is  BT though there has been no offical acknowledgement of this fact).

The meeting on the 9th February is likely to centre around how other ISPs can adopt the same model to everyone’s mutual benefit. From the ISP industry perspective it makes more sense to make music easy to access legally than to drag everyone into complex legal processes which will only benefit lawyers in the long run.

BERR is also now saying that this subject area is also now going to be taken under the wing of the Digital Britain Review, the interim report for which is due out at the end of this month. I am not convinced that this interim report will show much progress. The likelihood is that another consultation will happen in the summer with a target date for legislation in the autumn.

This timetable, I believe, does not really provide enough time for sensible consideration of the legislation and if I were the Government would not want to be getting into an unpopular debate with industry in the run up to the election. There is a feeling on the ISP streets that the government is now looking to come up with some good news stories to take them through 2009 and into a notional spring General Election in 2010.

Time will tell, and soon enough. I will continue to report and comment on this subject. This post is a little longer than usual but there is a lot to talk about.

Business internet

The Caio Report – Next Generation Access

The Caio report is in the press at the moment. Commissioned by The UK Government’s Department for Business Enterprise and Regulatory Reform (BERR – neither full name nor acronym really roll off the tongue do they?) the report looks into whether government investment or intervention is required to keep UK plc competitive in the internet access stakes.

The question was posed in the light of fibre rollouts in other countries. The conclusions, simplistically, recognising that the report itself is 100 pages of bedtime reading, told us that due to the health UK competitive market no, Government intervention is not required. Although it might be if industry doesn’t get a wiggle on.

I went to a presentation of the report on Friday at the BT Centre, Newgate in London. The room was full of financiers, network operators and vendors all interested in a piece of the action. Exciting though the prospect of fibre to the home may be, with its resultant lightning speed internet connectivity, what was clear was that nobody in the audience could come up with a business case that would justify the £29Bn bill.

BT is testing the water with a £1.5Bn investment that notionally will reach around 10 million homes. This of course, if successful, will only lead to a problem for BERR in the future. Why should BT have to invest in reaching the other umpteen million homes that are not cost effective to reach/Why should those living in the countryside be disadvantaged.

Virgin already has a fibre network that provides partial coverage. There doesn’t seem to be any money in the pot to extend this based on anecdotal evidence that new housing estates are not getting fibre even though the general area is covered by Virgin.  Virgin is though, I have to say, a business that seems to be fast getting its act together where connectivity is concerned. Amazingly having assimilated £12Bn worth of network by acquisition and merger the company allegedly did not know where it’s connections lay. When the fibre was first put in, speed and low cost were the primary focus of attention. Not the keeping of records. This is changing and the Virgin (NTL/Telewest to business users) are now looking as if they might be a highly competitive player in the fast growing fibre connectivity game.

The mobile network operators are also likely to play a role. After all the vast majority of the costs associated with FTTH are in the digging up of the roads rather than in the network electronics. Someone in the audience quoted a figure of £100 per metre for ducting compared with two pence per metre for the fibre.

The case is, interestingly, different depending on the country you are in. For example in the USA the cable provider is typically also the content provider and experience shows that punters are willing to stump up more ARPU to justify the investment. This is not the case in the UK and indeed BT research suggests that only 20% of its broadband users would be willing to pay more for the speed that fibre would bring. Not at least, I suspect, until someone comes up with applications or content that will need the increased bandwidth.

In a sense the “highly competitive UK market” has shot itself in the foot by reducing revenues per user to a level that makes it difficult to fund new investment.

It seems to me that an element of government intervention is almost inevitable, even if it is only to unencumber industry of the red tape associated with large scale capital projects such as this. Leaving it to free market forces ain’t going to work or is going to result in a two tier internet society – the haves and have nots. 

In leaving the meeting I decided that I would have to invest both in the killer application that would drive the speed requirement (teleporting springs to mind) and in a company called Trefor Davies Fibre Layers in order to maximise my takings from NGA. My pick and shovel await.