The UK is in the middle of the annual round of booze ups known as the autumn Party Conference Season. High in the mindset of our political leaders will be the UK’s internet economy particularly as we await the next Communications Bill Green Paper. Stakeholders at the conference socials are I’m sure already lobbying, positioning and generally trying to get their message across.
The Eds and Daves of this world whilst being wooed by corporates with vested interests would do well to focus on basics that very much include decent and ubiquitous internet connectivity for the whole of the UK.
We are already seeing cracks in the government’s resolve to have “the best superfast broadband network in Europe by the end of this parliament” (2015). Actually it isn’t fair to call them “cracks in the resolve”. The resolve is there but the execution isn’t and anyone who thinks that we would get anywhere near this goal without a radical change in the UK’s approach to internet connectivity is kidding themselves.
The only way we are going to achieve this is if UK plc, ie the taxpayer, invests in a full fibre infrastructure for “the final third”. This is not to say give money to BT. The only sensible approach is for there to be a nationally owned infrastructure company that puts down the physical layer and sells to wholesalers in the same way that Openreach sells to BT Wholesale and other large network operators today.
This might mean no competition in rural areas. There is however competition in more densely populated parts of the country and we could use pricing in these areas as a guideline for what should be charged in rural areas. It is unlikely that UKNetCo, as I am going to call it, would ever make a profit using normal return on investment criteria. However if we take depreciation and interest on borrowings out of the equation it might break even.
Even if UKNetCo represents a net operating cost to the UK its success should be measured in terms of growth in GDP of the rural economy and potentially in the UK as a whole.
I realise that this is going to be a difficult concept for some to accept. I already hear “but we have no money” and “the global economy is teetering on the brink of meltdown”. Now is the time to invest. We can always find the money from somewhere. Whilst I occasionally write a post (here here here) about entrepreneurs in parts of the country rolling out 1Gig connections to remote communities these are few and far between and not going to have a fast enough impact on the UK as a whole.
I periodically hear noises coming from other sectors such as the transport industry calling for investment in high speed rail infrastructure. Well the internet economy is going to be far more important to the UK and UKNetCo should be at the top of the list for job creation and growth whatever the colour of your party conference tie/rosette/kiss me quick hat. UKplc cannot wait.
Discuss.
10 replies on “Superfast Broadband for All – UKNetCo”
I start from a fundamental position of dislike of public sector expenditure – taking money off companies and individuals by law (ie taxation) and handing it to the ill-qualified or misguided to blow on whatever pet scheme has never done it for me.
Given that, it’s kinda hard to agree with your proposition 🙂
It is effectively the Australian model I guess. I can see that if the economic benefits exist (discuss) but users of services aren’t prepared to pay extra for an economic priced service (discuss) then maybe the only option is to steal some of the extra economic benefit that they accrue via taxation and use it to pay off the UKNetCo investment. The resulting network build cost will be consequently massive as all public sector projects are. It may even exceed the economic benefit, leaving the country worse off.
Would you limit its scope to the NGA white areas or some other definition of “Final Nth” ?
Normally I have the same approach as you Phil – giving our money to government is not the most sensible thing to do. However there does sometimes come a time when you need to get on and do something that ordinarily you would balk at. In this case the roll out would have to be subcontracted to a successful bidder/bidders and similarly the management of the network.
The boundaries of the investment could be exchange areas not currently lined up for FTTX or similar. I’d have to spend some time looking at that but we could come up with some methodology to define it.
That sounds a lot like the network that the Fujitsu led group proposed, which will probably never see the light of day, although it was a commercial firm as opposed to a nationalised one. My main concern with your idea is where you’d begin such a concept as starting from scratch would surely be suicidal (governments just don’t know about telecoms).
You could perhaps split off “part” of BTOpenreach but that is an equally tedious (legally, technically and economically) thing to do. It would be easier to just separate Openreach entirely but there’s an idealists risk of expecting such a move to produce miracles and in reality things almost never work out like that.
There is an easier way to achieve this:
– Split Openreach from BT PLC
– Mutualise it
– Restrict it to making 5% nett profit
– Give it a target of providing 100% FTTH
– Only allow ISP (PECNs) to buy service from the company
The outcome would be a fully operational company with the required experience, a balancing of the wholesale costs so that BT would be operating to the same rules as everyone else (and costs might be more a reflection of the real costs of BB) and you create a more balanced future for all.
The hard part is to get the right ‘bits’ into the NewCo as you want it to be about the infrastructure only and not the services that run over the top.
Nationalising Openreach sounds expensive and legally impractical ?
I never believed the government when they said the were to get 90% of the UK on average speeds of 2MB back in 2006/7. Only this week some poor soul wrote into The Times supplement saying he was on dial up as that was the only service he could get and loading a web-mail page was very painful and could he disable some of the large unwanted JPG/GIF/Flash on the page to make just getting to his mail quicker.
As with the trains – the UK government will fund the money to build the trains then find out that the train cannot reach it maximum speed as the lines cannot handle the speed. No money will be found to upgrade the lines and the trains will run at the same speed at the current train, in all another great waste of the tax payers money – but then again when does the UK government not waste our money?
BE.
There would be no need to fully nationalise Openreach if you resurrected the original BP model. Prior to privatisation BT was 51% owned by the government with the rest in private hands, probably for historical reasons – I think WW2 and subsequent problems in the middle east came into it. On the whole that seemed to work pretty well.
It could be done as a joint venture between BT and the government, with the door left open to privatisation at a later date, perhaps with a proviso that OR were limited to a 49% stake. Negotiations would be tough but it might be a way of getting something moving.
Aaargh – I meant BP was 51% owned by the government…..
I would agree with your proposition but for the following things Tref.
1. For the foreseeable future we are mired in public debt which needs to be tackled run up by feckless politicians and while being a technology enthusiast and IT Professional I would like to see ADSL replaced with fibre for the same price as I currently pay for my ADSL circuit I think there are other things more pressing at this time.
2. Not having many experts in technology in Government means that those deciding on the tenders can quite easily have the wool pulled over their eyes by slick sales techniques which is why so many projects go over budget I think.
A better solution surely comes from within the ISP sector itself?
I’m talking of course about the Internet Exchange Point model, a mutually owned nonprofit company run by an independent board and operated for the benefit of its members, this company would be responsible for local access network installation and maintenance.
Wouldn’t turning Openreach into that sort of company make sense?
I think everyone should pay road tax even if you don’t have a car!