Broadband: Communications Committee Report
Lord Inglewood
That this House takes note of the Report of the Communications Committee on Broadband for all—an alternative vision (1st Report, HL Paper 41)
Lord Inglewood
My Lords, it seems a very happy coincidence that the House will now consider the report of the Communications Committee, Broadband for all—an alternative vision, just after the debate about aspects of Leveson, not least because of the point raised by my noble friend Lady Wheatcroft about the impact of the internet on the provision of news in this country. Of course, it is broadband and the technology on it that are driving forward that particular phenomenon.
There is an old joke about the man, normally in Ireland, who, when asked for directions, replies: “If you want to get there, you don’t want to start from here”. For me at any rate, this became a recurring theme of our inquiry and I hope that my remarks will make clear why.
The first reason is historical. The UK has various legacy communications infrastructures that do not reach some areas, overlap in others, and were built by companies, often for entirely different purposes, in previously unconnected sectors such as telecoms, transport, energy and cable television. There was no overall plan; none of them was conceived and built as part of a general-purpose communications infrastructure. This means that the UK does not start from scratch, as some other countries have been able to. It has had to start from where, ideally, you would not want to begin if you were setting out now to provide the whole country with world-class, state of the art connectivity.
The second reason why the old joke chimed with me, if I might be forgiven for labouring this old favourite, is that the Government’s strategy started from the wrong place. We believe they did not ask the right questions at the outset. This may have been due partly to the context I have just described, and possibly to financial constraint as well, but in our view, the Government’s strategy lacks just that. There has been insufficient proper strategic analysis, which in particular has led to a failure to recognise the real requirements of rural and dispersed communities, which in many ways have most to gain and hence the greatest need—but more of this later.
As your Lordships will know, there is hardly an aspect of our daily lives that is not touched in some way or other by the internet. It is simply extraordinary, indeed almost miraculous, how in really quite a short time the internet has utterly revolutionised “the way we live now”. It has had a transformative effect on commercial and social transactions, creating an information world sans frontières. The possibilities seem limitless: from telemedicine to the so-called internet of things, and everything in between. In fact, I note that just today, speaking at a conference in San Jose, Cisco’s Rob Lloyd, president of sales and development, stated that the company’s predictions indicate that the “Internet of Everything” will create £9.6 trillion of value for companies over the next decade, with the number of connected devices predicted to rise to 50 billion by 2020. In this regard, I welcome the news that the Universities and Science Minister, my honourable friend David Willetts, has recently announced that £6.2 million of government money will be set aside for a competition focused on the “Internet of Things”.
To give credit where credit is due, the Government are to be congratulated on making enhanced broadband provision a public policy priority. Progress is clearly being made. Certainly it was a relief when, shortly before Christmas, the European Commission finally granted state aid clearance for the BDUK scheme. As I say, it is indisputable that, in many respects, we are moving forward and more and more of our citizens are able to access better broadband. However, we found during our inquiry that there is a very real possibility that some people and businesses are being left behind badly and a digital divide will ensue. Inadequate access to the internet and all its benefits is causing great uncertainty, anxiety and frustration that the benefits of the information revolution are not going to be available for all.
We contend that the Government have proceeded with a flawed prospectus and that some of what looks like progress may prove illusory in the longer term. As I have already said, we believe that there has been an insufficient focus on rigorously thinking through questions of first principle, and an absence of an overall vision and understanding of pervasive broadband connectivity and its implications which are an essential component of national infrastructure in the 21st century. Broadband is not an optional extra; it is not a “nice to have” luxury. It is essential and must be thought of in the same way as we think about the road and rail networks as essential components of today’s economy and society.
Government policy appears to have become preoccupied with and derailed by the almost mono-focus on the delivery of speed to consumers. The Government’s specific target is to provide superfast broadband—defined as 24 megabits per second, although that figure has seemed over time to be a bit variable—to at least 90% of premises in this country by 2015, and to provide universal access to standard broadband with a speed of at least 2 megabits per second by 2015.
In our view, this preoccupation has had a detrimental effect on policy-making and the long-term national interest. I can readily understand that committing to the delivery of certain speeds was an attractive way to badge the policy with the public. However, in our view, the delivery of certain speeds should not be the lodestar of policy. What is most important is the long-term assurance that as new internet applications emerge, everyone—and I mean everyone—will be able to benefit, be they inhabitants of inner cities or residents in the remotest areas of the country.
In our report we proposed an alternative vision for UK broadband policy which is not target driven but identifies the establishment of the national broadband network as a national strategic asset which has got to be built in a way so that everyone can connect in different ways according to their own needs and demands. This, we believe, should be the policy’s focus.
In operational terms, we believe that the Government’s strategy has focused on the wrong part of the network—broadly speaking, the outer edge and margins and not the centre. We argued that the Government should be focusing on delivering a high-specification infrastructure which is future proof and built to last. I refer, of course, to fibre-optic cable, the most future-proof technology, which has got to be driven out as close as possible to the eventual user. Once that has been achieved, as well as mandating open access on fair, reasonable and non-discriminatory terms to this optical fibre from the cabinet to the exchange, we need to ensure that there is the same open access to links between the exchanges that feed the cabinets and to the higher level links into national and global networks.
Just as there is national planning for the national, regional and local hubs of our transport network, so there should also be national planning for a communications network of local, regional and national internet exchanges, all linked by ample optical fibre that is open to use by competing providers, on which different operators can site equipment and exchange traffic and develop their own services.
The model that the Government have fixed upon for rolling out broadband has led to BT dominance: it is now effectively the only show in town. This lack of competition is a concern because competition is a driver of value for money, innovation, excellence, and consumer services. Indeed it surprised us that a partly Conservative Government have designed a scheme which has led to so little competition. In saying this I hasten to point out that I am not in any way chastising BT, which is a very effective, sophisticated, world-class business which is behaving exactly as you would expect such a business to behave. Indeed, it must be commended for the investment it is making.
Certainly it has been a bit unfortunate that our report has been seen by some as an attack on BT. This suggests that they may not have fully understood what we were saying. No, our criticism lies with the Government’s strategy and the way in which they have set up a framework insufficiently open and available for competition of all kinds and have paid insufficient attention to bridging the digital divide that is opening up.
Our report has argued that broadband policy should have three key elements. First, it should be driven, above all, by the need to arrest and ultimately eliminate the digital divide. Secondly, it should also be driven by an avowedly long-term, but also flexible view of the infrastructure’s future. Thirdly, it should also strive to reinforce the robustness and resilience of the network as a whole. The spectre of a widening digital divide is a profound source of concern. We believe that that obliges the Government to address their cause with greater commitment and vigour than we believe is currently the case.
As I have already pointed out, our alternative vision is simple. It is of a robust and resilient national network linked primarily by optical connectivity, which in turn brings open-access fibre-optic hubs into or within reach of every community. This would enable diverse providers, both large and small, to contribute to the reach and resilience of our national connectivity and allow each and every individual to benefit from services, both private and public of whatever kind, which will run over it in time to come.
In addition, in order to realise this vision, it is our view that the country’s future broadband infrastructure should deliver the following. First, every community should be within reach of an open-access fibre-optic hub. Secondly, every such hub should be fed by ample fibre-optic cable, providing open access to optical links back to the exchange, and from it back to the public internet. This, of course, will not be free, but it will be made available to all on fair, reasonable and non-discriminatory terms, allowing anyone to build their own local access networks out from the hub as long as they meet appropriate technical standards, using whichever technologies they choose. Thirdly, at the very least, we expect a hub to be able to provide backhaul for a wireless network where there is demand. In this way all premises would be able to gain access to a wireless internet service from at least one of these hubs, assuming that they can afford to do so.
The Government set their course long ago but I hope that our model will inform their plans for the future. The Government’s response to our report was a disappointment; it did not, it seemed to us, engage substantively with our arguments. I hope that my noble friend the Minister can say something more today.
A crucial point is why there seems to be more focus in government policy on so-called superconnected cities at the expense of improving broadband in rural communities. Let me make it absolutely clear: I am not claiming that the superconnected cities programme is without merit; and it is very important to recognise that there is some very poor provision in some built-up areas, just as there is in rural areas. It is, however, mystifying to us that superconnected cities appear to have trumped improving provision in our remotest communities. Let us be clear, businesses in rural communities could and would tap the enormous opportunities presented by the internet and instant worldwide communications. For many it would be a real game changer. This would in turn contribute to economic growth generally, and more particularly to the diversification and strengthening of the rural economy, which seems to many to be being marginalised.
I read with interest the recent Institute of Directors’ survey of its members about broadband, which makes for worrying reading. It found a wide and real divide between rural and urban internet services, with satisfaction rates significantly lower for IoD members in rural areas. Only 34% of members in rural areas are satisfied with the speed of their fixed-line downloads while 45% are dissatisfied; a mere 13% of rural business leaders are satisfied with mobile download speeds while 60% are dissatisfied; and 21% of IoD members in rural areas are satisfied with the reliability of their mobile internet service compared to 46% who are dissatisfied.
In a similar vein, I note that Digital Business First, a campaign group made up of businesses from Buckinghamshire and Oxfordshire, recently released a report in which it calls for,
“better broadband and mobile infrastructure”.
It states that,
“the Government’s present course is paved with good intentions, but failing too many communities”.
It argues that a 10% increase in broadband reach could generate a 1% increase in GDP per capita—a significantly better rate of return than other infrastructure projects.
As I have already said, fast, reliable internet connections are vital these days for businesses, but clearly the existing infrastructure is falling short. Of course I appreciate that there are difficulties in reaching remote areas, that everything cannot be done at once, and that the availability of public money is especially limited at the present time. Nevertheless, public spending is a question of priority and I hope that more attention can be paid to those parts of the country that are missing out. In this regard, I am particularly interested to hear the Minister’s view on the important role of fixed wireless in areas where it is very difficult to get fibre-optic cable close to people. In those circumstances, fixed wireless offers real opportunities.
As I mentioned, the Government’s specific target is to provide universal access to standard broadband with a speed of at least two megabits by 2015. To explain what that means, two megabits per second is the speed required to watch the BBC iPlayer. There is some way to go to achieve that. I urge the Government to go further as they ponder the next phase of their strategy. They must ensure that nowhere in this country becomes a broadband ghetto. The real risk is greatest to those parts that are most marginalised now in the availability of public services, and hence most vulnerable to further marginalisation. This includes making rural Britain a priority. As a final thought, I wonder about the emphasis placed on grand projects such as the HS2 high-speed rail scheme, which involves multibillion pounds of public expenditure. That might have been better spent on broadband provision. I will just leave that there for now.
Finally, I thank our specialist adviser, Professor Michael Fourman, for the expertise and enthusiasm that he transmitted to all of us, both members and clerks. The jargon used in this field is endless and utterly bewildering at times. For some of us at least, the technology is not far behind it and Michael was adept at guiding us through the jungle. I look forward to the debate and the Minister’s response. I beg to move.
Lord Haskel
My Lords, I congratulate the committee on and thank it for its report. I welcome the committee’s higher ambitions for broadband. The Government’s concentration on practical limits expressed in their reply, although understandable, is hardly inspiring. I agree with the committee that a vision for broadband is more than just speed and targets.
There is no doubt that fast broadband promises jobs, growth, new businesses and new business methods—all things that we are trying to achieve to get some life into the economy. There are also the social promises of broadband: health, education, skills, training, social and cultural elements, entertainment, and, as the noble Lord, Lord Inglewood, reminded us, news. It is the promise of this digital oxygen that makes broadband the infrastructure of the future. But I have a nightmare: a nightmare that we will build this infrastructure and then find that it is not used to its full extent, that the promise falls short not only because of the “not spots” but also because of the non-use.
I remember more than 30 years ago when we all got our first computers. Mine was a BBC Micro—a wonderful bit of technology at the time. You switched it on and there on the screen you got the “>” prompt. Then you were on your own. We had to wait for user-friendly software to come along before ITC became a real benefit. Can something like that happen again, by concentrating on the delivery of broadband without at the same time concentrating on its use and application? New uses are being discovered every day but will we take advantage of them?
Last week, I attended the Digital Business First presentation of its report on high-speed broadband for Britain. The response was given by vice-president Neelie Kroes, who is responsible for the digital agenda for Europe at the European Commission. Incidentally, we were also promised a response from the Secretary of State for Culture, Media and Sport, but neither she nor somebody from her department turned up. Vice-president Kroes told us that 98% of the population of Denmark has access to fibre, but only 10% take full advantage. She contrasted this with Estonia, where things are the other way round and the country has gone completely digital. She told us that 40% of Italians never visit the internet. I think that her message was that even if you provide the broadband, do not assume that people will automatically take it up. It needs a positive effort. I agree with her. Does the Minister agree? If so, what are the Government doing to encourage the use of broadband so that the infrastructure that we are building is fully utilised and reaches its full potential here in Britain?
Yes, I know that there are initiatives. We get a bit off our income tax if we send in our returns electronically. Farmers get their payments electronically. We can receive TV and radio broadcasts over the internet and a start is being made on smart metering, education and monitoring health. But all these things happen slowly because, as we all know, social changes take time. Meanwhile the technology is racing ahead, and so is mobile technology. Will the technology leave the users behind?
New concerns are emerging. How can we ensure that mobile technology and fixed line can work together? What will the structure of the market be to accommodate this? Vice-president Kroes told us that she hoped that we might be able to use several operators on the same equipment as we moved around. There are other concerns, such as confidentiality. It is getting more and more difficult to protect confidentiality regarding our health, personal lives and finances. People are concerned about that.
I was in the US recently and was closely questioned on the proposed European rules regarding privacy, because there is talk there of a consumer privacy Bill of Rights. I was introduced to a company that had a database of 190 million US citizens. It offered me lists of people classified by profile. There is concern about the way that the data companies access this information and market it. This ties in with concerns about big data and the use of secret algorithms that do everything from making money on the stock market to finding love. Hand in hand with this, broadband development must campaign on how to be connected, free from worry and concern. Content should encourage participation, indeed, demand it, but we must also know what our rights are when we are online.
Surely these are matters on which the state and the market have to work together and innovate together. If we are to get the full benefit from our investment in broadband, and if our ambitions for broadband connectivity are to be realised, all this has to be combined in a single vision. Do the Government have one?
Lord Clement-Jones
My Lords, first, I declare an interest as a former member of Huawei International’s advisory committee. It is a pleasure to follow the noble Lord, Lord Haskel, and his thoughtful speech. He clearly needs to join the Communications Committee.
The economic and cultural benefits of broadband are considerable, as stated by my noble friend Lord Inglewood, who was our tireless chairman during this inquiry and who continues to be tireless on further inquiries. It was a pleasure to serve under him on the committee. I congratulate him on his lucid introduction to what is a very complicated subject.
Connecting Communities, the study by Dr Tim Williams, describes in a light-hearted and amusing way the various activities that now can be conducted. He can do these, as he says in the study, all before breakfast from my living room in Hackney. He puts it in graphic ways:
“Organise a street party with people I’ve never actually talked to before”;
“Libel fellow professionals and other enemies”;
“Complain bitterly about potholes in Birmingham”;
“Watch councillors in Kent make budget-decisions live, whether wisely or not”;
“Campaign against new development anywhere”;
“Petition, in an act of ‘crowd sourcing’, national government to change the law”;
and finally, an example that demonstrates the age of this document:
“Participate in the worldwide community of long-suffering Welsh rugby supporters”.
You could not write that now.
The internet, broadband, has become indispensible for both private and public use. In certain areas there has been a great acceleration in its use, not least in the area of entertainment, where increasingly over broadband people access iPlayer, YouView, Netflix, Lovefilm and so on. Smartphones and tablets have made us demand better, faster and more reliable broadband, whether fixed line, wi-fi or mobile. However, the key aspect that the Communications Committee addresses, as my noble friend made clear, is that it is important that no one should be left out of getting the benefits of broadband.
I welcome an early success for the Secretary of State in her new role as regards the Government’s securing the consent of the EU for state aid requirements in their investment of £530 million in rural broadband deployment last November. However, of the two preferred bidders in the government scheme, only BT—as again mentioned by my noble friend—has received any money so far. However, it seems that currently some 7.5 million taxpayers are still not online. Much of the rollout of the new services will cater for them in the plan to reach 90% of homes with 24 megabits per second or greater. This is all designed, in the words of the previous Minister, to create the best superfast broadband network in Europe. However, the key question is increasingly: can we provide adequate services for the last 10% who not receive superfast broadband? Will the target of at least 2 megabits per second be enough for them? Are we creating a digital divide?
Broadband is clearly vital for communities, but even with mainstream business the temptation to be self-congratulatory should be resisted. As my noble friend mentioned, we should look at last year’s IoD survey of internet infrastructure. I welcome provisions in the Growth and Infrastructure Bill, as recommended by the Communications Committee, to ensure faster broadband infrastructure rollout with fewer planning restrictions for five years, subject to new guidelines agreed between local authorities and the digital stakeholders’ group. I also welcome the Government’s acknowledgement that speed is not the only factor; choice, coverage and price are important, too. There is also the Law Commission review of the Electronic Communications Code. When will that come to fruition?
I welcome those developments. That said, there is a difference of philosophy between the Government’s vision and the committee’s recommendations. As my noble friend made clear, the Communications Committee would prefer to focus on open access fibre optic hubs initially—cabinets, essentially—which we believe would have the best chance of eliminating any digital divide and delivering the final 10% more effectively through attracting innovative solutions to delivering higher broadband speeds to rural areas. Network access conditions do not by themselves go far enough. The Government, in their response, talk about the expectation that consumers will be able to benefit from competitors deploying competing networks using BT’s ducts and poles, but this is only an expectation. What obliges the opening up? Likewise, we believe that the opening up of dark fibre is crucial and that the adoption of common standards to allow bespoke local solutions should be adopted.
Secondly, there is the question of whether Ofcom should have the additional duty given to it of ensuring the efficient utilisation of existing capacity to provide affordable access to wholesale and retail connectivity. Is that not exactly what Ofcom should exist to ensure?
Thirdly, there are the deficiencies in the procedures for the Rural Community Broadband Fund, particularly the requirement to raise 50% of the funds up front. Surely this is a serious criticism, and communities are finding it difficult to raise the necessary funds.
Now, after the publication of the report, we see that the Government have allocated a further £300 million to be spent after 2015 on broadband infrastructure. The recent Carnegie UK Trust paper, Going the Last Mile, discusses a number of options for how this should be best spent. The options include superfast broadband rollout to the final 10%, promotion of the community enterprise approach, the provision of greater infrastructure competition and the attraction of additional investments, all of these solutions using specialist investment intermediaries.
Have the Government yet formulated how this expenditure will be allocated? Can the Minister reply on that? I look forward generally to the Government’s reply.
Baroness Deech
My Lords, in my view, we stand at a moment comparable to the start of the provision of universal electricity, water, phone lines or railways, where we have to consider the future of the whole country, a future beyond even that which we might envisage today. For so fast are the developments in the field of internet that in 10 years, let alone 100, there will be usage that could not have been envisaged today, and for that it is the duty of our generation to lay the solid foundations. We need a nationwide communications structure.
As with railways and manufacturing, we in this country risk paying the price of being one of the first in the field and commencing our infrastructure without the benefit of today’s insights. Countries that have started from scratch after us have, rather irritatingly, been able to do better. One example is our widespread use of soon to be outdated copper wire rather than fibre optic.
Anyone who has followed scientific developments in the past few decades will agree that there is no need to justify greater access to the internet and faster broadband speeds. If they are available, innovation will follow. It would be tragic if the recent clamp on blue skies science thinking—that is, government demanding instant impact if grants are sought—were to spill over into broadband provision.
The internet is as essential to a new home as electricity and plumbing, and broadband connection should be an integral part of all new housing developments, preferably fibre to the house. If we see broadband connectivity as a facet of the national infrastructure, then there must be coverage for rural communities, and coverage matters more than speed. Speed is less important than getting a national network constructed with an eye to the future. For as long as some in our community have no access to broadband at all, or the very minimum, the Government’s ambitions for speed remind one of the unfeeling remarks wrongly attributed to Queen Marie Antoinette. When told that the peasants had no bread, she said, “Qu’ils mangent de la brioche”—let them eat cake. Or one is reminded of the ancient Chinese Emperor Hui of Jin, who, on being told that his subjects had no rice, commented that they should eat meat instead. If you have no coverage at all, the availability of speed is no substitute.
The Government’s target is for the UK to have the best superfast broadband in Europe by 2015. It is now available to about 60% of households, and we are the 16th fastest in Europe. The final 10% of the population is the difficulty where they are spread thinly across a large terrain and it is not profitable for operators to install broadband. That could be 2.5 million households. Ofcom reported recently that the actual British broadband speed had risen by one third in the six months from May to November 2012 as take-up of the superfast service increased. It has trebled in the past four years from 3.6 megabits per second in 2008 to 12 megabits now.
Why does coverage, let alone superfast speed, matter? It matters for economic and social reasons. The internet economy accounts for 8% of UK GDP and a quarter of our economic growth. The internet creates 2.6 jobs for every job made obsolete, according to McKinsey. We are a nation of online shoppers: 23% of UK retail is likely to be online by 2016, so the contribution of the internet, not necessarily superfast, is very significant.
On the social front, we must take account of the needs of the deprived and of rural communities. There are the poor who never use the internet at all and rural communities which cannot access broadband. The Government themselves are a leader in placing services online, whether it is tax returns or NHS Direct, but the benefits cannot be realised if there is no fast broadband and, a fortiori, if there is no internet access at all. Many of the population who must use and need the government offerings of benefits online are those who have no access and are therefore doubly deprived. Eight million people in the UK have apparently never been online; they are the older, the disabled and the non-English speakers.
This is a good opportunity to welcome the appointment of Martha Lane Fox, the UK digital champion, to your Lordships’ House, and we look forward to the contribution she may make in elucidating the internet needs of the nation. A PricewaterhouseCoopers report undertaken for her estimated that there are 4 million adults who are digitally, as well as socially, excluded. Without internet, they are missing out on annual savings that might amount to £560 per household. Their children, who have no internet or computers at home, risk falling behind in educational performance and may fail to find jobs that are advertised only online. The whole population, but especially the less well off, need to make the savings and profit from shopping and paying online, getting educational and job opportunities and thus helping the Government to make the savings they envisage from increased internet use. Of course, there are the running costs of internet and the purchase price of computers to contend with; arguably, some of the funds set aside for superfast broadband might assist certain groups to get set up online.
The Select Committee on Communications, on which I am privileged to serve under the brilliant chairmanship of the noble Lord, Lord Inglewood, discovered that simple county and local loans are needed to enable rural communities, whose needs are so urgent, to set up superfast broadband. In Wales and Scotland, only 30% to 40% have superfast broadband. Rural communities are in particular need of broadband because travel presents more difficulties, and they can save money and journeys by going online for business and social purposes. The purely commercial approach will not work: it has to have an element of the universal and social. Our committee heard too many stories of difficulty in accessing such loan money as there is because of inflexible and arbitrary rules. It was alleged that Defra’s Rural Community Broadband Fund was confused in ambit and that it requires communities to spend on the network first and claim a refund later, which is not a practical proposition. Reaching everyone in the most far-flung corners would cost several billion pounds. There are differing estimates about how much it would take for the national provision of hubs and then on to the home. Whatever the sum, it will be too much for the public sector to bear right now, and it is not realistic to expect normal commercial providers to operate it because of the risk. Rural deprived communities offer low financial returns because of the sparse population and distances from existing fibre. If, as our report suggested, there were to be open access fibre-optic hubs within the reach of every community, local groups could access broadband in the short term by their own organising and upgrade over time to faster speeds.
Our committee was clear that superfast broadband requires fibre optic, not copper, and that what is important is not speed but getting fibre-optic hubs near every community and getting the entire nation online. We trust that the Government will agree with our recommendations and recognise the future investment value of the great infrastructure building that we have commenced.
Baroness Fookes
My Lords, I, too, want to pay tribute to my noble friend Lord Inglewood, not only for his excellent chairmanship of the Communications Committee but for the wonderful summary he gave of the work of the report we are discussing tonight.
I listened with great care to the noble Lord, Lord Haskel, particularly when he suggested—I hope I have this right—that the technology is perhaps galloping ahead but use is not necessarily following behind. I differ from that. As far as I can see, the take-up in this country—apart from in the pockets the noble Baroness, Lady Deech, mentioned of those who are not connected at all—is enormous and galloping. Our concern must be to make sure that the technology catches up with it.
I shall give one small example. I am a governor of a school in Devon. I was there for a governors’ meeting and, yet again, we were discussing electronic communications, their use in the school and how we could make sure that we had good services. In the morning, we went to two lessons. In one lesson that I went to, the electronic side was a key part. It was a history lesson looking at the rise of Nazism; the electronic part was very cleverly integrated and used, and the preparation would come in that format. That, therefore, is one example of how it might be used in education, and there are endless other ways of doing it.
I must confess that when we first embarked on this I was not a little alarmed. There was a whole range of jargon with which one had to become familiar, such as “dark fibre”—which sounded positively evil although it simply means that it is not being used—cabinets, copper wiring and fibre-optic wiring. All this became slightly clearer after we had paid a visit to a division of BT where we saw an example of a cabinet—which looked like a cabinet—copper wires and the amazing fibre-optic wires, which are the size of a human hair. What one can get through them is beyond my real comprehension, but I realised the immense capacity of this form of communication, which, even by the way in which we are now going forward with technology, looks as though it will be useful to us for decades to come.
That is why I am so keen, along with other members of the committee, that the Government should embrace the idea of fibre-optic cabling and not rely on more outdated technologies that will not be able to meet our needs, both now and certainly in the future. I share with others this desire that fibre optics should be taken as near to people’s premises or homes as possible, as a prudent way of developing broadband. In connection with that, I hope that the Government will go so far as to introduce regulations to require every new building to be given the ducts and requirements that are needed for this to be introduced. Installation in existing buildings will be difficult enough but this is absolutely essential, and I hope that when the Minister answers tonight he will be able to give us some assurance on that point.
This is an amazing new technology that represents immense opportunities for us as a nation. Others have indicated the varying uses towards which it is already put, and one cannot see that there will be any lack of new opportunities. Some of us went to what I suppose you could call the BBC’s future technologies department, where a teenager’s bedroom had been set up with all the various things teenagers like to use. It was very instructive and, for someone as old as me, exceedingly frightening. However, at least it gave an indication of the manifold uses to which all these modern tablets, televisions and interactive TV sets can be put. We are entering what the heroine of The Tempest might have called a brave new world—one that I am seeking to embrace as best I can.
Lord St John of Bletso
My Lords, I join in congratulating the noble Lord, Lord Inglewood, on his able chairmanship of this very topical inquiry, and in thanking our specialist adviser, Professor Michael Fourman. All too often, excellent Select Committee reports from your Lordships’ House get scant media coverage, but it was encouraging that this particular inquiry received extensive coverage.
While I welcome the Government’s target of having the best superfast broadband network in Europe by 2015, I fear that it is a bit of a pipe dream. It is well known, from the raft of current statistics on broadband availability, that the UK is currently 16th in Europe on average connectivity speeds, and 21st globally on percentage of connectivity above 10 megabits per second.
The noble Lord, Lord Inglewood, referred to the recent IoD broadband services report, which concluded that faster internet services would improve the productivity of companies by some 83%—a staggering statistic—and would encourage 13% of businesses to hire new staff.
Both this survey and our report concluded that there is, sadly, a very wide divide between rural and urban internet services and connectivity. I entirely agree with the recommendation in our report that if Her Majesty’s Government or indeed private enterprise are serious about providing a fast, resilient, reliable and cost-effective broadband service to consumers, including businesses, we need a long-term and flexible approach to broadband infrastructure policy. I also agree with what the noble Baroness, Lady Fookes, has just said: there is no doubt that the silver bullet to providing a long-term solution to the ever-burgeoning demand for superfast broadband, particularly as a result of increased data traffic, is the provision of a nationwide, point-to-point, fibre-optic network, ideally installed directly into homes.
Fibre-optic cables are cheap, long-lasting and have scalable capacity. Moreover, they do not suffer from the limiting primary characteristics of copper and aluminium cable. Unfortunately, our legacy communications have been designed predominantly using copper. This has proven to be ineffective for the demands of ever-increasing data traffic.
I concur with other speakers that the Government should not be too concerned about speed; they need to be more concerned about coverage. In this regard I wish to make brief mention of the importance of better utilisation of ducts. It is becoming increasingly evident that the best way to link fibre optic to homes is by using ducts, routed through a multiplexer cabinet situated beside existing PCPs, which are the green cabinets that we see on pavements. It is well known that the UK has a well established underground duct network, and BT and other utility providers also have extensive duct networks. If the Government are to have any chance of achieving their stated objective of providing the best superfast broadband network in Europe by 2015, more should be done to encourage the utilisation of these ducts for an improved rollout of the fibre network.
Clearly, the last mile provides a major challenge to the effectiveness of providing a superfast broadband network to consumers and businesses alike. Our report made reference to there being,
“no proposed technologies that can offer comparable data rates over long distances”.
It went on to say:
“The bandwidth limits of fibre are around 100,000 times those of copper”.
There is one radio frequency technology that has not been fully embraced, particularly in the remote rural parts of Britain, where there is low population density. White space spectrum was specifically referred to in paragraph 282 of the report. Extensive research was commissioned by the University of Strathclyde a few years ago, partially funded by the Westminster Technology Strategy Board and in collaboration with BBC and British Telecom, in which white space spectrum was used on the Isle of Bute using masts which could deliver, to residents who had previously had almost no broadband access, download speeds of up to 14 megabytes per second and upload speeds of 4 megabytes from a single mast with a three-mile radius. Unfortunately, this technology, which could provide a massive boost to rural communities in Britain, has not been embraced. I certainly support paragraph 282 of the report, which says:
“Loosening the reins a little could very quickly have the effect of bringing enhanced broadband capacity to the final 10%”.
I should perhaps also add that the white space spectrum broadband solution has recently been backed by Microsoft in Kenya, where there is a desperate need for broadband services, and is being installed right now. It is reliably forecast by the experts to provide up to 18 megabytes of broadband within a 10-kilometre radius from a single mast. Technology such as this should be embraced in the overall solution in this country.
I also endorse the recommendation in our report that the Government should incorporate open access to dark fibre, particularly as a feature of the framework agreement with suppliers. Clearly, as the Government’s response points out,
“a mix of technologies will be needed in the UK, given the topography and commercial challenges faced in the more rural and remote areas of the UK”.
While I appreciate the budgetary constraints of the Government, I wholeheartedly support the recommendation in paragraph 266 that the Government,
“should, as an intermediate step, aim to bring national fibre-optical connectivity”,
and, more specifically,
“fully open access fibre backhaul”—
these cabinets referred to by other speakers—
“within the reach of every community”.
This would go a long way to ensuring that the digital divide is not widened.
While much has been achieved, particularly in the past five years, in improving the plumbing and wiring of broadband infrastructure, as my noble friend Lady Deech mentioned, not enough support is being provided for the 7 million adults in the United Kingdom who still do not have the skills and motivation to use the internet and the inherent advantages therein. I should declare an interest as the past chairman of the charity Citizens Online, which has been promoting universal broadband coverage across the United Kingdom, as well as measures to bridge the digital divide. Very few of the new NGA contracts for high-speed broadband under the Broadband Delivery UK remit include any provision for digital inclusion or demand stimulation.
In conclusion, while I believe that a lot more can and should be done to provide a longer-term solution in the provision of superfast broadband across the UK, I found many of the Government’s responses to our report encouraging, although I do not feel that they have gone far enough in their long-term strategy for this crucial utility. Clearly, there needs to be a lot of collective working between government, regulators and industry. In this regard, I wholeheartedly support the recommendations of this report and look forward to the Minister’s reply.
The Earl of Selborne
My Lords, I join others in thanking the chairman, my noble friend Lord Inglewood, for the way in which he chaired the committee and introduced the debate today. From the speeches that we have heard, it is clear without doubt that the future of our economy will depend to a large extent on our ability to connect to broadband throughout all communities and sections of the population. It is not just about wealth creation and social cohesion. The ability to participate in healthcare and whole tranches of public activity will depend on connectivity. The Government must have a policy, and the Government are right to have a policy, but perhaps, as we have said in our report, they have been preoccupied by one aspect, which is to try to be the leader in Europe on superfast broadband.
The first priority has to be to achieve connectivity. If you have excluded populations, you will have a social divide and a lack of social cohesion. The Government need not worry about speed. That will follow. There are not very often market failures when it comes to cities. I therefore agree with those who have said that to spend money on improving superfast provision in cities is not something that the Government need to worry about if the market can do it itself. But there will be market failure in remote areas, where the costs of pushing out the broadband structure are too great. There will be market failure where the incumbents have an advantage, which inhibits other incomers who can help to provide some of the very many solutions that will be required to get this connectivity to all parts of the population. That is something that we are failing to harness—the undoubted innovation and enthusiasm from local communities, small and start-up companies, all of which would have a contribution to make. We go into some detail in the report. It gets pretty dense, I admit, when we talk about things such as passive optical networks and physical infrastructure access. But this is the key to it.
At the moment, we have what my noble friend Lord Inglewood called “the only show in town” for many rural areas. Whether we like it or not, because it is in the very nature of broadband to have high fixed costs, low marginal costs and great economies of scale, inevitably the incumbents will have a strong advantage. I think that we should be proud of what BT has done. It has improved enormously, by technical innovations, the ability to provide broadband on the existing infrastructure. Of course, it is rolling out broadband at great speed. It says that it hopes to achieve 90% coverage by 2017, but that immediately begs the question as to whether in national terms that is a satisfactory objective. I would certainly say, particularly as I am from a rather remote corner of the rural community and likely to be one of the 10% left out, that it is not satisfactory. So let us see what we can do to achieve that connectivity well before 2017. I do not think that anyone has mentioned yet the 4G mobile broadband technology, which is very soon to be with us and will certainly provide greatly enhanced mobile internet access to areas within adequate connectivity.
There are many different contributions to be made. The case for government involvement and public funds to be deployed rests, as I say, on achieving this reduction of the digital divide. The long-term solution will, ultimately, be fibre to the premises and the home. As others have rightly said, the cost of rolling out fibre to the home is exorbitant. We have a temporary solution, and a good one—the BT solution of fibre to the cabinet. It achieves the objective of reducing dramatically the costs. Usually, you have copper or some other connection from that cabinet. But whether BT likes it or not—it is in something like denial over this—it has the disadvantage that it does not provide open access, as I would understand it. In other words, as a local access network provider, you cannot simply move in with a compatible bit of machinery, stick it in there and do what you are trying to achieve. It is not an open access hub, as we have tried to demonstrate. That is where you come back to the technology of the passive optical network, which is a bit of a fix, as those will know who have read the report with great care. It certainly does not achieve what some of those independent service providers would have hoped for.
I think that the Government should ask quite firmly that, for the next tranche of money, which we hear will come in 2015, there should be proper open access. It is not beyond the wit of man. Clearly, there is no great financial advantage to the incumbents to roll out proper open access, but that is what is needed. If it is what is required, that is what will happen. It must be future proofed. We know that the technology changes dramatically fast. We know that some of the existing solutions, including the cabinet, will not stand the test of time for very long, but the fibre-optic cable will. Ultimately, it will be able to handle this vast amount of information. Therefore, we must make sure that as we improve the broadband infrastructure, we have the ability to upgrade and upgrade. That is why I say that, frankly, the cabinets are not very easily upgraded. You have to go back to the exchanges and think again. That is why we should look on them only as a temporary expedient.
When public money is distributed to extend the commercial network, as is happening at the moment, the Government should insist on the long-term solution. We took evidence from a particularly impressive consultant, Lorne Mitchell, who is setting up a community scheme in Goudhurst, Kent. I think he was the first to put it to me how important it was for local groups to be able to access the middle mile and to get the backhaul back into the infrastructure. He said that the key to the problem is the openness of the middle mile, which is the connection back to the internet. If this can be designed in a way that gives each community a chance to get to one of these community hubs, it would be a massive leap forward. That is precisely what the committee report has tried to promote. I think it makes a lot of sense. However, the government response simply quoted a report which said that it was unrealistically expensive to have hubs in every community, and so it would be if you were to launch it all overnight. However, ultimately, it would be no more expensive than the cabinets. It is the same technology but it is a question of making sure that when you roll out the hubs, you do what you are not doing at the moment with the cabinets, and that is making them available to all. To say that they will cost far in excess of the funds available to the Government at present, as the government response does, simply misses the point. If the Government can fund any hubs such as cabinets or exchanges, they should be accessible to the community and to other providers. This simply requires a change in specification, not a change in the scale of funding.
I hope the Minister will recognise that, however impressive BT’s record of rolling out broadband is—it has, indeed, been most impressive—the interests of the BT shareholder and of wider society, particularly the 10% in rural communities who will remain without adequate connectivity in 2017 if present policies are continued, are not always the same.
Baroness Bakewell
My Lords, this is a wonderful report and I endorse all its findings. I am very proud to sit on the committee that produced it and I commend the noble Lord, Lord Inglewood, for his wonderful chairmanship. I wish to add just a few points as I am not on the speakers list.
We think that we are in the middle of a revolution but we might just be at the start of it. It is important that we endorse what is going on at the moment because it is not always possible for a contemporary society to know where it is. I agree with what the noble Baroness, Lady Deech, said in that regard. Did the 18th century realise the significance of a few cotton mills in Derbyshire? Did Victorian society appreciate the global impact of the Stockton to Darlington railway? Things could be much greater than we believe them to be at the moment. I believe that the Government’s policy has the wrong priority. As we have heard, their priority is the speed of delivery, and there is clearly room for improvement in that regard. The numbers have been quoted before. The UK ranks 16th in Europe and 25th globally. However, the high level of internet use and its economic contribution to the UK’s GDP—up to 23% of total retail—shows that something is working very well. E-commerce activity does not need the top speeds that are recommended. It is flourishing at lower than maximum levels. As we have already heard, what matters is to bring broadband within the reach of all and to maximise the use of broadband across the country. That is crucial for the economy.
In his recent report, No Stone Unturned, commissioned by the Government, the recommendations of the noble Lord, Lord Heseltine, for regional growth emphasised the need for local infrastructure, singling out skills as one of the main areas to be covered. A major component of such infrastructure must surely be broadband for all. We know that the demand is there and is urgent. As we have already heard, the committee heard many examples of local communities eager to move in this direction. Things are already working well. For example, only last week Cornwall increased its target goal for fibre roll-out from 80% of premises to 95% of premises. Cornwall has 250,000 homes and 20,000 businesses that have purchased superfast services from more than 30 retailers. They even reach the Scilly Isles. This is a trailblazing county well aware that its tourism industry, worth many millions, receives huge benefits from such coverage.
This proposal would constitute an economic advantage. The numbers are great but the investment for the future is very important. We need a long-term, thought-through strategy that will transform the economic connectedness of the country in much the same way as our railways sprang from the Stockton to Darlington railway line.
Lord Stevenson of Balmacara
My Lords, I was briefly a member of the Communications Committee and participated in about one and a half reports. It was good to hear so many of my former colleagues speak today on this very important topic. I thank the noble Lord, Lord Inglewood, for his very helpful introduction to the debate which helped those of us who are not so expert in some of these issues to get a handle on what the committee had been up to and how it was expressing its concerns. I particularly enjoyed his jest—if it was one—about the expenditure on HS2. I secretly think that the Minister who is about to respond may also have some sympathetic thoughts in that regard, although, of course, he is far too well bred to reveal them to us today.
The committee report, which is a very good read, and the government response to it, which is not quite as good, raises some very good points on the way in which broadband will influence society in its broadest context, how coverage is perhaps more important than speed as a basic understanding of what the aims and objectives should be, on the problems of the rural divide and the very real difficulties of exclusion that may follow from that and on the sustainability of the initiatives that have been put forward, particularly whether or not there will sufficient commercial competition to maintain the drives that are required. The report also covered a question which was raised by several noble Lords, including my noble friend Lord Haskel, about whether uptake will be one of the biggest stumbling blocks. However, there is general agreement that broadband infrastructure will drive significant economic value for the United Kingdom and its economy and is obviously central to our future prospects of growth.
The projected explosion of data consumption over the next five years presents a huge challenge requiring large-scale investment to upgrade the capacity of existing networks and deliver new connectivity. As we have heard, consumers demand high definition video and audio content both inside the home and on the move and are using all sorts of devices. Those of us with teenage children will know how complicated it looks when you are able to get inside the bedroom of a 19 year-old or 20 year-old and discover what exactly they are doing on all the machines that they have. These are all consuming huge amounts of data. It is that sort of response and connectivity that this report is trying to arrive at. Clearly, consumers will be the driving force of that, and indeed have been driving about a 30% increase year on year in terms of usage, but how do we realise the demand for that and the economic value of it if we fail to allow private network operators to commit large-scale investment to increase the capacity that is required? These providers are operating in a market where the dynamics of investment are extremely finely balanced. Indeed, it is interesting that one of the larger suppliers dropped out recently.
Surely the Government’s central objective for broadband interventions in both rural and urban UK markets should be to create the conditions in which private-led investment and innovation can flourish. Yet the policy to date has suffered from what seemed to be fundamental weaknesses. The rural broadband programme, to which the committee drew attention, has failed to stimulate private, competing investment and will be awarding £1 billion of public subsidy to a single incumbent. The urban broadband fund risks critically undermining continued investment in broadband capacity by overbuilding existing networks, and not enough has been done, as we have heard, to promote usage.
It must be a real concern that the Government have failed through their rural broadband intervention to replicate the conditions of infrastructure-based competition that have served the urban market so well. Markets that benefit from infrastructure-based competition are better served in terms of innovation and penetration than those in which the incumbent is placed under no pressure to supply better, cheaper products. Across Europe broadband penetration in markets with infrastructure competition is nearly 20% higher than in countries that rely on service level competition alone. This is something that the Government must take into account.
Driving growth among SMEs is critical to the future success of the UK economy and increasing uptake of digital technologies among those businesses is central to that goal. Yet the potential benefits offered by digital technologies are not currently being realised by UK businesses. Only two-thirds have a website and only one-third sell goods and services online. The Government’s advisers suggest that the central barrier to small businesses realising these benefits is a lack of practical, digital skills and a shortage of resources to undertake digital training. This is hardly referred to in the Government’s response. Given the current economic climate, and a context in which recent EU budget negotiations have cut broadband funding by 90%, it is absolutely vital that the Government adopt a smart approach to broadband intervention that targets public finance where it can deliver the greatest economic gains.
I want to conclude by asking the Minister a few questions. The Government say that their key ambition is to have the best superfast broadband network in Europe by 2015. However, as we have heard, the latest figures suggest that we are only 16th in Europe and perhaps 24th overall. What is happening about this? Can we have some detail about the plans that will deliver the best superfast broadband in Europe within a couple of years?
The lack of broadband provision in rural areas is holding back the countryside, both economically and socially. The NFU ran a poll in 2010 regarding broadband access in rural areas. Around 40% of respondents said that they could not get broadband at all, while 90% who could access broadband did not get a reliable connection. What are the Government doing about this?
The Countryside Alliance believes it is important that there is competitive rollout of broadband services if the current problems of high prices and poor service in rural areas are to be overcome. There should not be one single technology to deliver broadband. Competition should be promoted between technologies, as we heard from a number of noble Lords. Can the Minister explain what the Government are doing to promote competition here?
Industry studies agree with the Government that the cost of putting together a superfast broadband network is probably going to be close to £15 billion. According to a recent freedom of information request, of the four pilot superfast broadband areas, which were named by the Chancellor in the Pre-Budget Report in 2010—the Highlands and Islands, north Yorkshire, Cumbria and Herefordshire—a couple of them have not spent a penny and two of the others were just moving towards finding local suppliers. Can the Minister update us on what is going on here?
Finally, as my noble friend Lady Bakewell mentioned, in the Heseltine report, No Stone Unturned, the suggestion is made that broadband for all is a critical step towards what the Government are doing. We have heard in recent press reports that the Budget will contain some details of that. Obviously no Budget secrets can be released but it would be interesting to know whether the Minister believes that the recommendations in the Heseltine report would be effective in bringing forward the proposals that have been made.
Lord Gardiner of Kimble
My Lords, first, I thank my noble friend Lord Inglewood and his committee for the report. It clearly identifies many key issues and challenges that we face in developing our broadband policies. The report is an important contribution to the general broadband debate. I agree with my noble friend Lady Fookes that dark fibre-optics and point-to-points have definitely now taken a new dimension. The report has indeed been stimulating and thought-provoking. What struck me were the many areas on which the Government and the committee agree, as my noble friend Lord Inglewood mentioned. We both seek improvements to the communications infrastructure so that the digital divide does not widen but narrows, and we need to be mindful of the longer term.
Communications infrastructure is recognised as a priority across the Government, with the Secretary of State for Culture, Media and Sport and the Minister for Culture, Communications and Creative Industries regularly meeting with counterparts in the Cabinet Office, the Department for Communities and Local Government and the Department for Environment, Food and Rural Affairs, as well as with the Prime Minister, to discuss progress. I want to set the record straight because the noble Lord, Lord Haskel, mentioned that the Secretary of State and her team were not in a position to be at that conference. It was reported that they were required for parliamentary Divisions on that day. It was not a case of their not turning up; they were not in a position to do so because of parliamentary business.
Lord Haskel
I thank the Minister for that but it would have been helpful if the department had sent somebody, possibly the Minister from the House of Lords.
Lord Gardiner of Kimble
I would have been delighted to have obliged. I just wanted to say that to the noble Lord.
We agree with the committee and share the common goal that a world-class communications infrastructure is something that the UK requires and deserves. Indeed, the noble Baroness, Lady Deech, mentioned infrastructure in this connection. The overriding objective of the Government’s broadband ambitions is that the economic and social benefits are available to all, as soon as conceivably possible. My noble friend Lord Selborne mentioned these benefits.
It might be helpful, in setting the context of the Government’s response, to bring your Lordships up to date on progress with the Government’s broadband ambitions—I am particularly mindful of this because it was referred to by the noble Lord, Lord Stevenson—and why we have taken the direction that we have. This is important, as it relates directly to many of the recommendations in the report. There has been significant progress since the committee first considered the matter last year, and indeed since the Government’s response was published in October. Upgrading the communications network is essential, as the report recognises. It is massively important for economic growth, both in our cities and towns and more rural areas. The noble Lord, Lord Haskel, mentioned economic growth. My noble friend Lady Fookes mentioned education, which is clearly an area on which we need to concentrate.
The £1.2 billion investment that the Government and the 41 local authority partners, as well as the devolved Administrations, are putting in place is focused on those areas to which the market will not deliver alone—a point I want to emphasise—given the higher cost of deployment in certain locations. Through this investment, and working in partnership with industry, we will see much faster speeds, millions more homes and businesses able to enjoy these speeds and a market which boasts high competition and low prices, particularly compared to our European neighbours. Already, the Government’s strategy is seeing 100,000 more homes and businesses getting access each week and 50,000 new superfast connections taken up a week.
We have the best internet economy in the world. The noble Baroness, Lady Bakewell, referred to the use of the internet, as did my noble friend Lord Inglewood. This is worth £82 billion a year to the UK economy and contributes 8.3% to the UK economy as a whole, which is the highest proportion for any G8 country. Some 71% of the UK population bought goods and services online in 2011, more than any other country. By 2015, the UK will have achieved a transformation in broadband. By 2015, average speeds will be three times faster than in 2010, at around 15 to 20 megabits per second, and 10 million more homes and businesses will be connected—an increase of 75%.
The UK’s broadband market is in vibrant health, according to Ofcom’s European scorecard. This was published recently and showed that the UK currently benefits from low prices and a high degree of competition in the broadband market, and that the UK has the best deals in the major European economies for consumers who consider taking broadband in a package with subscription television and telephone. However, Ofcom’s survey also recognises that we need to do more regarding superfast broadband access, given that Germany and Spain are ahead of us.
Perhaps I may refer to rural Britain and declare that in another life I was a board member of the Countryside Alliance and deemed to be a champion of rural Britain. Indeed, this is a matter on which many of us who hold rural Britain dear to our hearts feel strongly about. Almost every noble Lord who has spoken has raised this matter—and quite rightly so. The more remote and rural areas must not be left behind when it comes to broadband access. Our aim is for the investment of public funds to bring superfast broadband access to 90% of UK premises, and a minimum of 2 megabits per second to everyone else. Our approach is technology-neutral, and we expect to see a mix of technologies including wireless, as mentioned by my noble friend Lord Inglewood, and satellite solutions. Indeed, satellite broadband is available now to anybody who wants to take it up, although I acknowledge that it is expensive. I am very conscious of what the noble Baroness, Lady Bakewell, said about Cornwall and the Isles of Scilly. It is an encouragement to all.
However, rapid progress is being made on the rural programme. Fifteen projects have now signed contracts and are either in progress already or about to start work. The remaining projects are entering procurements at a rate of one per week, and all should have completed their procurement phase by the end of the summer. I will indeed look at the particular counties that the noble Lord, Lord Stevenson, mentioned. My noble friends Lord Clement-Jones and Lord Selborne mentioned the £300 million of additional funding. I understand that options are being assessed, but I am extremely mindful of what both my noble friends have said.
Investment is already delivering faster connections for consumers. Indeed, in December, north Yorkshire saw its first active fibre cabinet and, at the end of February, there was the unveiling of the first cabinets in Bangor, north Wales. The devolved Administrations in Scotland, Wales and Northern Ireland will all benefit from significant central government investment in their broadband infrastructure, thereby delivering a key part of driving UK growth and investment. Similarly, our £150 million urban broadband programme, by working closely with local authorities and the private sector, will ensure that our cities can compete with the best in the world. Tech City in London shows how establishing a digital hub with world-class connectivity and expertise can be so successful. It is an example for all rural and urban Britain.
It is vital that the Government provide the right environment for investment. Our aim is to remove the barriers preventing investment and innovation, and demonstrate that Britain is one of the best places in the world to do business online. We will therefore remove barriers and red tape. We cannot allow rollout to be delayed by planning refusals, by confusion when carrying out street works or by long-running legal issues over access to private land. Our goal is to provide certainty to ensure that the money invested in rollout is used to take superfast broadband further.
Delivering consumer benefit from a competitive market was a founding principle of the Government’s intervention. To this end, they share the committee’s aim to see more reliable broadband services for a greater number of people and at affordable prices. The framework process was competitive, with 13 organisations expressing interest and nine entering submissions. It was important to identify organisations that could demonstrate the capacity and capability to deliver sustainable commercial services for the wholesale supplier market and the retail consumer services market. The framework agreement requires suppliers to meet all these conditions. In addition, Broadband Delivery UK has included price controls, clawback mechanisms and an independent audit process to ensure that the value from the investment being made by the public sector is maximised.
The regulatory framework governing the telecoms sector must be fit for purpose and competitive. While this of course sits with Ofcom, we are committed to ensuring that the market fosters competition, supports multiple innovative providers, and results in greater consumer choice. I know that my noble friend Lord Inglewood and the noble Lord, Lord Stevenson, referred particularly to competition. We are already seeing a healthy market emerging. Virgin Media has two-thirds of superfast broadband connections, while Sky and TalkTalk already provide services over BT’s network. I am mindful of what the noble Lord, Lord St John of Bletso, said about ducts, but BT is required to offer access to its network on equivalent terms, and is required to offer access to its duct and pole network. Any networks built using government funds will be required to offer wholesale access. We are therefore starting to see genuine retail competition emerging at this early stage. Ofcom continues to monitor this market and has already begun the process for the next wholesale local access market review, which will determine whether stronger action is needed to ensure greater competition. Ofcom will publish a consultation later this year on this matter.
My noble friend Lord Selborne mentioned the G4 spectrum auction, which has been successful, and the winners were announced recently. This was vital. The Government directed Ofcom to proceed with the auction and brokered agreement with the mobile operators to allow this not only to happen but to happen six months earlier than had previously been thought.
We are planning for the future by overseeing the release of significant bands of public sector spectrum to the market. This is spectrum that is currently used by the Ministry of Defence, the Department for Transport and the emergency services, among others, which may be better used for mobile broadband.
My noble friend Lord Inglewood referred to the “internet of everything”. Indeed, the pace of change in the world of mobile is very fast. We are determined to ensure that Britain is ready for the challenges ahead. My noble friend Lady Fookes mentioned new build. This is clearly extremely important. The Government have already issued guidelines on ducting for developers, and I will give careful consideration to what she said on this matter.
We cannot create a world-class connected Britain just by laying more fibre in the ground or building new base stations. It is crucial that we get as many people as possible online with sufficient knowledge and confidence, enjoying the benefits presented by better connectivity. We must also encourage British companies to expand and develop their internet-based operations. Many noble Lords—the noble Lord, Lord Haskel, the noble Baroness, Lady Deech, and the noble Lord, Lord St. John of Bletso—particularly referred to this. Ultimately, it is users who will turn infrastructure investment into growth. Many of the recommendations in the report recognise this. The noble Lord, Lord Stevenson, mentioned SMEs. SMEs utilising the internet have reported more than double the export revenue of those who do not use the internet. That in itself is a very strong story.
The noble Baroness, Lady Deech, mentioned Martha Lane Fox. Her tireless work and that of Go ON UK have been vital in getting more people online and demonstrating how people’s lives can be changed for the better by embracing the digital world. We are exploring ways to encourage high-speed take-up as part of our urban programme. Demand stimulation also remains a key focus of our local rural broadband projects, with a particular emphasis on SMEs.
We have made significant progress since the publication of the report, but there is still very much more to do. There was much in the report with which we agree, such as the reform of the planning system, to which my noble friend Lord Clement-Jones referred, which directly reflected your Lordships’ recommendations. The report provides a rich resource for government as our policy continues to evolve.
I accept that there were also areas where the committee advanced a different approach, perhaps most notably in the report’s recommendation that the long-term objective should be directed towards a specific technology—universal point-to-point fibre to the premises. The report also recognised that this was a costly solution and this was acknowledged by a number of noble Lords. Certainly, at this time it is beyond available resources.
With that in mind, the Government firmly believe that our policies and financial interventions have put us on the right track to see a step-change in broadband access right across the country in an affordable manner, without prejudging the technological solutions needed to make that happen. This will lead to greater growth for the whole economy and improve the lives and well-being of millions. The nature of the enterprise is that engineers, policymakers and the public will continue to debate the best way to get there. I am sure that many of your Lordships will also continue to do so. The UK needs and deserves the very best superfast broadband network that the private sector and the Government, working in partnership, can deliver. It is an objective to which we all aspire, and the committee’s report has undoubtedly enhanced the debate.
Lord Inglewood
My Lords, I am grateful to all the speakers in this debate who, without exception, have supported the thrust of our report and its recognition of the social and commercial significance of broadband for this country. They were not applying the same arguments; that in its own way is equally significant, because we do not advocate any single solution to the problems of the last 10%. It is horses for courses, and there are different arguments for different aspects to the general approach we are advocating. I was interested that the Minister criticised the report for advocating a single technology. I do not think that is quite fair: we are advocating a single outcome from the application of whatever technology may be the most appropriate to bring it about.
We have been talking about something that is important and revolutionary. That is why I was very pleased that a number of speakers referred to both the historical and the global contexts of what we are discussing this evening. I was particularly impressed by the noble Baroness, Lady Deech, talking about Marie Antoinette and what she might have said in France. Then she moved on to talk about the Chinese emperor. I am sure it was an oversight that she did not tell us what he would have said in his own language.
The Government are doing things, and that is good. I congratulated them on this in my opening remarks, but we must ensure that what is being done is progress and that we are not seduced or misled by averages disguising areas of deprivation in a much more satisfactory landscape. We have had a good debate this evening; I have no doubt that this subject will, in the years to come, be debated again—and so it should be. I beg to move.