Broadband (North of England)

Jason McCartney Excerpts

Tuesday 8th April 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

It is a great pleasure to serve under your chairmanship, Mr Sanders, and to respond to this important debate, called by my hon. Friend the Member for Harrogate and Knaresborough. I am delighted that he is happy with our programme. It is always a great pleasure when one of the asks from someone introducing a debate is for us to keep on doing what we are already doing so successfully, but that is not to say that I will not take into account the other serious points that he made. I also thank my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) for his contribution, which was perhaps more of a critique than that of my hon. Friend the Member for Harrogate and Knaresborough.

Let me begin by giving an overview of the national programme. I have to say, without wishing to attract too much opprobrium, that as far as our programme is concerned, my glass is very much half full, as opposed to half empty. The Government came into office in 2010 determined to do something about the digital divide—determined to bring broadband to millions of homes that were not going to get it under a commercial deal. Let me explain that BT itself has delivered superfast broadband to something like two thirds of British homes commercially, without a penny of taxpayers’ money. In addition, its main competitor, Virgin Media, delivers very fast broadband to millions of homes—it covers about 50% of the country—without a penny of taxpayers’ money.

However, we are talking today about delivering broadband to areas where commercial companies simply will not go, because they would not get a return on their investment. That applies not just to BT, but to Virgin and any other competitors. We therefore put £530 million on the table. That is not an insubstantial sum and it has been matched by local authorities. It has also been contributed to by BT, which is putting its own money into this programme; it is not simply taking all the taxpayers’ money and spending it without any contribution of its own.

BT expects a return on its investment in about 14 or 15 years. This is not a get-rich-quick scheme from BT. It is true that it has won every contract. We went into partnership with local authorities, because we thought that local authorities were best placed to help to co-deliver this programme with us. They would know the best places to go and be able to do the joining up on the ground, particularly in relation to planning.

On the commercial roll-out, we have had numerous cases in which BT and others have wanted to go where local authorities simply were not prepared to give planning permission for the cabinets, so to have the planning, the power and the local co-ordination on board was going to make a difference. I think that it does make a difference.

When we put together the original framework contract, we had nine potential competitors lining up against BT, but most of them dropped out. At the end, when the first contracts were being let, there was a significant competitor—a consortium led by Fujitsu—but it did not beat BT on those contracts and it has now fallen away, although it provided useful competition.

Why did those people drop away? If Virgin Media, for example, already has 50% of the market, in terms of footprint, why did it not compete? The reason is state aid rules. State aid rules require that if people accept public money, they have to accept certain obligations, and the obligation that lies on BT as it rolls out this network is that it must provide access to any other retail telecoms provider. In shorthand, that is, for most consumers, TalkTalk or Sky, which are the most well known providers, but obviously there are numerous others as well. If people compare our market with any similar market in Europe or elsewhere, they will see that BT, as the incumbent operator, the former nationalised state monopoly, has the lowest market share of any incumbent operator. People can compare with Deutsche Telekom, France Télécom and so on—BT has the lowest market share.

We recently overtook Germany in broadband roll-out. We now have more availability and take-up of superfast broadband than Germany—and, in fact, all the other major European economies. The reason is that we have competition as well; we have not only the infrastructure, but competition, which keeps prices down. People can look across at America. There, they will pay twice as much as they will here to get the same broadband. That is because BT is regulated by Ofcom. Retail providers’ access to BT’s network is, and will continue to be, regulated. When BT builds out under the rural broadband programme, the customer will not be obliged to take a BT service. They can take a service from TalkTalk, Sky or any other retail provider that uses the network.

I happen to think that the rural broadband programme is going very well, and the Chancellor agrees with me, because he put in an extra £250 million. We are accused of moving the goalposts, but that is not the case at all. We have a £530 million programme, which is actually some £1.2 billion when local authority and BT money is taken into account, to bring superfast broadband, by which we mean about 24 megabits a second, to 90% of British homes. We want to go further, so we have found another £250 million. With match funding, which we expect most councils to be able to provide, we expect that 95% of British homes should get superfast broadband by the end of 2017.

Finally, there are the remaining 5% of homes, such as the isolated farmhouse or the house in the middle of a moor, which could cost thousands and thousands of pounds to connect up to superfast broadband. We could do a rough, back-of-the-envelope calculation of that cost, and we might end up with a figure of £1 billion or even £2 billion. We do not want to do such a calculation; we want to try out different technologies and see what will be effective. We have set up a £10 million fund, for which we have asked people to bid, to trial the latest and newest technologies that might bring down the cost of reaching the final 5% in the hardest-to-reach areas.

[Jason McCartney (Colne Valley) (Con)]

I think the Minister is describing my constituency. Milnsbridge and Slaithwaite have already benefited from the BT fibre broadband roll-out, which is fantastic. Villages such as Hade Edge, Marsden and Holme, which have been isolated by heavy snowfalls in recent years, are, we hope, on track to get the broadband that they need. The Minister’s statistics are absolutely right. We have a broadband take-up of 83%—one of the highest in Europe. I believe that we are on the right track, and it is great to hear his plans for our rural communities.

[Mr Vaizey]

I thank my hon. Friend for that intervention. Although some of us may disagree about the detail of the Government’s plans, we are all united in understanding the importance of broadband, and we are doing our very best. Believe me, if I could wave a magic wand tomorrow and deliver superfast broadband to every home in the country, I would, but it is an engineering project and cannot be done overnight.

We are hitting our targets. Let me explain that we measure superfast broadband homes passed on the basis of those who actually receive it. So it is not about simply putting up a cabinet and saying, “That is delivering superfast broadband to 2,000 homes,” because some of the homes in that cabinet area might be 1 km away and not get such speeds. We audit every quarter, and we estimate that by the end of February we had passed 370,000 homes with superfast broadband. We are well on track to get into seven figures some time this year. We were passing 10,000 homes a week and we are now on track to pass 40,000 homes a week, so the programme is accelerating all the time.

North Yorkshire is a brilliant example of how well a programme can be run when there is a go-ahead local council with a real appetite for it and it works very well. As I understand it, there are now 118 live cabinets in the constituency of my hon. Friend the Member for Harrogate and Knaresborough, which serve almost 34,000 premises. In North Yorkshire, we have met all seven of our time and deployment target milestones. We have deployed 462 cabinets out of an overall programme of 673, and more than 120,000 premises have been passed, 100,000 of which receive superfast broadband. We also have significant take-up. My understanding is that the average take-up is some 20%, with two cabinets exceeding 30% take- up. In the next phase, we expect to reach another 17,000 premises under the superfast extension programme. Those programmes are going well.

Another area that has been mentioned is Lancashire, which is receiving £10 million under the broadband delivery UK programme. We are aiming for 95% superfast coverage under the existing programme. In North and North-East Lincolnshire, we are aiming for 90% coverage and targeting almost 40,000 premises. It would be a travesty to say that we have forgotten the north of England; nothing could be further from the truth.

The hon. Member for Bishop Auckland (Helen Goodman) mentioned the super-connected cities programme, which is separate from our rural broadband programme. It is perfectly possible for the Government to run two programmes at the same time. We set aside £150 million for the super-connected cities programme, which is designed to help our small and medium-sized enterprises to connect to superfast broadband. At the most recent party conference in Manchester, I was lucky enough to visit a local business that had received superfast broadband through the scheme, and to visit a business broadband provider that had benefited from selling connection vouchers to businesses and developing an ongoing relationship with them. We estimate that up to 30,000 small businesses will benefit from the programme, and it is well on track. Another important aspect of the programme is the support it provides for public and community wi-fi, which we are installing in 21 areas and which will benefit, for example, libraries, museums and art galleries.