Broadband: Communications Committee Report

Lord Gardiner of Kimble Excerpts

Monday 18th March 2013 Lords Chamber

[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.