Broadband: Communications Committee Report

Baroness Deech Excerpts

Monday 18th March 2013 Lords Chamber

[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 One example is our widespread use of soon to be outdated copper wire rather than fibre optic.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.