Why UK shouldn’t invest in upgrades to broadband infrastructure

This post is incredibly overdue.  It comes about long after Charlie Leadbeater’s excellent response to the original Digital Britain Interim report, and Mark Earls’s equally erudite response.  It also comes way after the Digital Britain seminar to which I was invited in April, and indeed long after I collated responses from the survey I developed in response to a NESTA breakfast on the subject earlier still.

My only excuse for the delay is that I wanted to devote enough time to the post to properly articulate and defend my statements, and I’ve been getting so much consultancy work lately that I have not prioritised something that few will read.  I did, however, write a very short piece for the Computer Weekly some weeks back and I am putting this down here so I can refer to it in future.

It would be fair to say I have done a fair amount of research into broadcasting and telecommunications policy.  In fact, it’d probably be accurate to say I was consumed by it as a research subject for several years. So when people ask me why the Digital Britain report shouldn’t focus on expanding the UK’s current broadband infrastructure (usually with a degree of surprise), I feel I can speak with some authority about the implications of an infrastructure-only strategy for Britain.  It’s not that infrastructure isn’t important – citizens should have broadband as a universal service to readily participate in the opportunities the information revolution has on offer – it’s just that once the state has provided basic infrastructure to everyone, then it should be the (generally) enormously profitable telecommunications players that have the expense of upgrading access.

But in order to defend this position I need to go through some of the issues associated with the changes to broadcasting and telecommunications technologies and the regulations which have guided them.

In the past it was easy to distinguish between broadcasting (wireless) and telecommunication (wired) communications. You did so by the technology used to receieve the signal.  Radio (originally called ‘wireless’ by some older citizens) and television were received with an aerial and signals travelled through the air.  Telecommunications was associated with ‘Plain Old Telephony’ (POTS or voice) systems and later fax messages, and you needed telegraph poles in the streets to deliver connections, and wired plugs and phones in residences and businesses to engage in conversations. But from the mid 1970s, the technical distinction between these platforms began to merge.  Television began to be delivered by a wired subscription system.  Mobile telephony began to emerge.  And satellite system for dual telecommunications and broadcasting signals became more common.

But as the technology began to converge, the legislative differentiation between these platforms remained the same.  That is, telephony content was not subject to censorship codes or minimum hours of local content, and broadcast signals were not concerned with the privacy controls or policies on reach and maintenance of the networks that applied to telecommunications.

And so the technologies came to be distinguished less in terms of technology and more in terms of models of communication.  Broadcasting was a ‘Few to Many’ communication tool, and telecommunications was ‘One to One’ (or at the very most, ‘Few to Few’ in the case of teleconferencing).

But then along came the internet, delivered by telecommunications networks.  Up until Tim Berners Lee invented the World Wide Web in 1989 (originally as a footnoting system, by the way), you would probably have regarded the early internet as ‘Few:Few’ communications too, because whilst bulletin board services and USENET were technically available worldwide, not many people actualy were connected to the net to engage with them.  But when there was a platform for visual engagement and delivery of ideas, there was mass adoption in the mid 1990s, and you could define this new internet thing as many people delivering messages to many other people.  What’s more, there wasn’t just one-way communication.  It was interactive.  So you could effectively have 1:Many:1 communication relationships.

Now back in the mid-1990s to the turn of the century, we were all pretty much on dial-up connections.  The speed was such that in 1995, if you were downloading a 30 second video advertisement for a television series episode which played back at the size of a postage stamp, it could take more than half an hour for the video to load. (Yes, it’s sad I know this.  Yes, I was downloading promos for Star Trek episodes. GEEK!)  But the thing about dial-up was that we were using our existing phone lines.  So we didn’t need additional infrastructure to engage (however primitively) with the emerging information superhighway.

But eventually our taste for all things internet began to expand and our pitiful twisted-pair copper cabling which carried our dial-up connections was insufficient, and we felt we all needed broadband. So governments and telecommunications companies throughout the world invested on a massive scale to ‘wire up’ the nations.  Some broadband was delivered through hybrid fibre-optic and coaxial cabling, some through satellite.  But most was using a piece of technology called Asymmetric Digital Subscriber Line or ADSL, which is basically a piece of software that expands the old telephony network to deliver more content.

It’s taken some time, but by this year, ADSL is available to more than 98% of UK’s telephony exchanges.  In most regions, there’s 100% coverage.  Only, that’s not what people will tell you when they start quoting statistics of broadband takeup in the UK.  The most common statistic quoted is that only 65-70% of people in the UK “have broadband”.  Actually what this statistic refers to, is that 65% of home residents have taken up a broadband connection and/or have been connected to the internet in the past 3 months.  But it’s not because the network isn’t there that they have not adopted.  It’s because they either cannot afford it, or they don’t have sufficient literacy in the technology to adopt.  And some just don’t want to adopt.  And I must admit, much as I love my technology and get such value from it, I feel very conflicted about the notion of forcing people to adopt broadband just because it’s there.

But if you read the Digital Britain interim report, the focus is always on ‘wiring up the nation’ with fibre-optic cabling to meet the growing broadband needs of the UK community.  Indeed, the relatively ‘slow speed’ (up to 2Mbps) of ADSL is often given as a reason why people are not adopting broadband and why British businesses are ‘not competitive’ with the rest of Europe, let alone the rest of the world.

Now there’s no doubt about it: in Scandinavian countries you can get a faster broadband connection than here in the UK.  But even with the UK’s slower ADSL connections, you can still get full screen video on demand, and a perfectly reasonable internet connection.  I should know.  I experienced speeds of less than a quarter of UK connections in Australia, priced at nearly double what I pay here.  You guys have it good here in the UK.  Stop complaining, because it’s nowhere near as bad as you think it is.

What’s more, there is a blindness in the calls to upgrade existing networks to the massive profits currently being accrued by the telecommunications carriers operating in the regions.  Okay BT hasn’t done well in the last year, with the company posting a £134 million annual loss.  But last year the company made £1.97billion.  Revenues are actually up for this year, and as confidence returns to the global economy, BT’s projected job cuts and cost saving will probably send the company back into a comfortably profitable position by this time next year.  And in the meantime, they still have several billion in the bank and they are still paying dividends to shareholders.

And BT isn’t the only telco with a healthy bank account. Most of the mobile networks are doing okay and several are investing in more transmitters to increase both coverage and network services to mobile phones – delivering what amounts to internet content, wirelessly to mobile devices.

Yet the Digital Britain interim report, and several commentators on the subject of Digital Britain policy are suggesting that the UK government – meaning the UK tax payer – should pay for upgrades to the existing broadband infrastructure so that it can carry 100Mbps connections.  Telecommunications carriers then get what amounts to free or at least very low cost access to this upgraded network and then continue to charge high rates for access to premium, high-speed services.

What I find extraordinary about all this is that no-one has even suggested that the existing telecommunications carriers should be responsible for this upgrade, if indeed it is needed in the manner suggested by commentators. Because telecommunications carriers are private enterprises, no-one even seems to consider the possibility of forcing them to carry the cost of upgrades.  But if we force ourselves to buy new tools and upgrade our household systems and technology devices when they become redundant, why can’t we do the same to the service providers who already deliver simple broadband access?  And why can’t broadcasters be forced to work with telecommunications network service providers to come up with ever-better ways of fitting content down our existing ‘pipes’?

This is not a matter of wiring up a nation.  The nation already has existing infrastructure.  It’s about an incremental upgrade to existing infrastructure. In an economic climate where the government don’t actually own the networks anymore, and there is not really the spectrum scarcity that characterised broadcasting in a bygone age, it should fall to the existing carrier/service providers to carry the cost of upgrading the networks. Yes, this might mean they have to charge us a bit more for connection, but this ought to be regulated and capped, and perhaps the government would be better off considering subsidies for those who can’t afford a premium service, rather than chucking a lot of money at upgrading a network infrastructure just so that telcos can accrue profits from us, their customers.

As much as I admire and believe in the need for investment in infrastructure, and believe truly in universal access to information services, I am also conscious that there needs to be a recognition that technology does not and should not determine outcomes.  And I’m afraid the interests of the few (inability to access) are blinding us to the agenda of the mainstream players – to maintain control over the networks and shirk their responsibility for upgrading infrastructure.  I agree the state should provide the basic infrastructure – ensuring 100% availability – but after that, it should be a matter of ensuring that the carriers and carrier service providers don’t simply cream-skim from the investment of the state, and they should be pressured to reinvest the revenue they derive from consumers back into that architecture.  You don’t do that by imposing taxes on telcos, you do it by regulating that a percentage of total revenue (not profit – revenue) be reserved for network upgrades and infrastructure maintenance.  And then you ensure that prices are capped to ensure affordability.  Of course the telcos would all cry ‘intervention!’ and the stock prices would tumble. But if you want to ensure ‘universal access’ it’s not a concept which can be achieved by laying cable to the home, nor by allowing market forces to ensure a ‘fair’ or ‘competitive’ market.  It is a public interest concept, not a technical characteristic.  As such, intervention is not merely necessary, it is obligatory.

While we may decry it, this is exactly the same approach that is pursued in other public services – health and education, security and emergency services.  We don’t permit the medical profession to charge what they like to offer services or to fatten the wallets of stock holders.  We don’t allow investment in education to be determined by those with majority sharehold.  And we don’t expect government to pay for all these services and then have private companies decide how much we’re going to get of that service.  Where any private services (schools, private health care, private security services) are available, there is an expectation of responsibility for maintenance and improvement of the service offering, and there are strict rules which apply to minimum standards of service.  I am recommending nothing more than what is being applied in other sectors.  This is not unreasonable, nor short-sighted.

We are living in a time where the distinction between broadcasting and telecommunications services is now virtually defunct.  There’s still a place for public service media, and there’s a place for strong regulation of telecommunications infrastructure.  We’re just not thinking about why these are needed, and why people still are not participants in a digital economy, and UK digital businesses are not getting the recognition they deserve.  Instead we are focusing (in rather a technologically determinist fashion) on infrastructure and we are treating private telecommunications businesses as untouchable, in spite of the fact that we now regard broadband access as a universal service obligation.

Several of the banks have stuffed up recently and had to be nationalised, leaving shareholders without their precious dividends.  If UK residents and businesses need better broadband, then the UK government has every right to force telecommunications carriers to upgrade their networks at their own expense, regardless of the impact on profits and shareholders.  Because we’re not just dealing with money here.  We’re dealing with participation in the digital economy, and UK’s future capacity to generate economic wealth.  As a policy to realise those ends, Digital Britain needs to facilitate creative production, literacy and engagement. And if a few shareholders miss their dividends for a few years, because state investment has gone the way of innovation rather than infrastructure, so be it. In the longer term it can only be in the interests of such shareholders to have a creative economy.

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