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UK business chiefs call for higher broadband ambition

UK business leaders have accused the Government of a ‘poverty of ambition’ regarding UK broadband speeds, and called for a new target for households and business to have access to speeds of 10 gigabits per second (Gbps) by 2030, 1,000 times faster than the current official aim of 10 megabits per second (Mbps) by 2020.

In a new report, Ultrafast Britain, the Institute of Directors (IoD) said that while UK was a world leader in the Internet economy, with Britons enthusiastically taking to online shopping and the sharing economy, it was lagging behind many European nations when it came to installing the fibre optic cables that allow for the fastest broadband connections.

The potential benefits to businesses of better broadband are massive, a survey of IoD members included in the report suggested:

  • 8 in 10 (78 per cent) directors surveyed said significantly faster broadband speeds would increase the company’s productivity
  • Three-fifths (60 per cent) thought it would make their business more competitive
  • Significantly, over half (51 per cent) felt that faster broadband would enable them to offer more flexible working to their staff.

Dan Lewis, Senior Advisor on Infrastructure Policy at the IoD, and author of the report, said:

“Now is the time to set a bold new target for genuinely world-beating broadband. We have the leading internet economy in the G20, and yet download speeds are mediocre and the coverage of fibre optic cable is woeful. The demand for data is growing exceptionally fast, and with Virtual Reality and the Internet of Things just around the corner, about to grow even faster. But our network is behind the curve. Unfortunately, the Government’s current target displays a distinct poverty of ambition.

“We expect them to meet the Universal Service Obligation of 10 mbps by 2020, but only because they’ve set themselves such a low bar. Instead of spending money two or three times over on incremental upgrades to the historic copper network, politicians need to look ahead at how we are going to provide the physical infrastructure needed to maintain Britain’s position at the forefront of digital innovation in business.”

The IoD notes that Lithuania, whose economy is only a third the size of the UK’s per head, has fibre connections reaching a third of premises. In Britain, the figure is a fraction of one per cent. Most of Lithuania’s fibre network was put in place by small providers, or Altnets, after the country’s telecoms regulator gave them cheap access to the poles and ducts which carry the cables.

The British Government claim to want to give Britain the ‘best’ broadband in Europe, but the focus so far has been on hitting a Universal Service Obligation of 10 Mbps by 2020. The USO is a distraction, the IoD said, because the average speed enjoyed by users is already nearly triple that figure, at 28 Mbps. Instead, politicians should be aiming to future-proof the UK’s digital infrastructure against the massive data demands of future consumers and business.

A target of 10 Gbps would be a step-change from the current speeds, the IoD conceded, but argued it was more than possible given improvements in technology. Citizens of Minneapolis in the US can already access speeds of 10gbps. Such services are currently expensive, at $400 dollars a month, but going back to the beginning of the century, UK consumers were paying the same as they do now for connections which were over 50 times slower.

The IoD noted that last week, the telecoms regulator, Ofcom, published its review of the digital communications market. It found that Openreach, the arm of BT Group which owns the UK’s broadband infrastructure, had “an incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems”. Ofcom ordered Openreach to make changes, including giving BT’s rivals easier access to its network of poles and ducts, and making it more independent from its parent.

A survey of IoD members included in the report showed that only about a third of IoD members who have had interaction with Openreach, for instillation or repairs, were happy with the service they had received. Directors were also more likely to think BT’s ownership of Openreach has been negative, rather than positive, for the quality of UK broadband.

“Ofcom has taken some positive steps forward, and we have seen in other countries that opening up ducts and poles to other providers can lead to a rapid expansion in fibre coverage,” suggested Lewis. “But BT Group will still be able extract value from competitors paying to use Openreach’s network, so Ofcom must keep a watchful eye on the situation, and consider asking the Competition and Markets Authority to do a full market review if they don’t see significant improvements.” He concluded.

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