Superfast Broadband (Urban Areas)

Mark Field Excerpts

Tuesday 9th September 2014 Westminster Hall

[Mark Field (Cities of London and Westminster) (Con)]

I am grateful for the opportunity formally to put on the record the frustrations of my constituents and many businesses about the roll-out of superfast broadband in my central London constituency. I know that the hon. Member for Hackney South and Shoreditch (Meg Hillier), whose constituency neighbours mine, has similar concerns.

It may come as a surprise to many that here in central London there is a problem with superfast broadband. The perception is that this is an issue only for the rural parts of the United Kingdom, but there are some fundamental issues that I want to address, and I know that the hon. Lady will want to make a brief, broadly supportive contribution, although she does not know exactly what I will be saying.

The speeds in the centre of London are, in fact, among the slowest in the capital as a whole—some 11.9 megabits per second on average for the City of London as compared with some 20.9 Mbps for the capital as a whole. Ofcom defines superfast broadband as 30 Mbps and has recognised that the gaps in the superfast broadband coverage in Westminster and the City are particularly pronounced.

For clarity, there are three common types of connection. The slowest, and the sort that many colleagues may well have at home, is copper broadband, which uses a phone line. The fastest is the sort used by larger companies, which have a private or a leased line connection, but those are expensive and affordable only to relatively few larger businesses. To put that into figures, copper broadband costs at least £10 a month, whereas a leased line will cost many hundreds of pounds a month to install and run. The other connection option is, of course, superfast broadband, which operates between the copper and leased lines in terms of both price and performance, but is largely affordable for domestic users and small and medium-sized enterprises.

I recognise that the Government have already directly supported the supply of superfast broadband to over 1 million homes and businesses where it would otherwise not have been commercially viable. Many of those residents and businesses are, unsurprisingly, located in rural areas and the current roll-out is expected to provide a £1.5 billion boost to local economies. It is also estimated that the superfast broadband programme will deliver returns of up to £20 for each £1 invested, which would, if that came to pass, represent tremendous value for money.

My constituency—the one we are sitting in today—includes the political, business, cultural and ceremonial heart of the UK, yet a large number of residents and SMEs from right across this patch still do not have the option to connect to superfast broadband. That is somewhat surprising, given the level of investment that the Government have ploughed into improving the UK’s digital infrastructure. Needless to say, that is an integral part of the Government’s long-term economic plan.

Just last month, the Secretary of State for Culture, Media and Sport proudly announced that central and local government are investing some £1.7 billion to extend superfast broadband. Access to that has now been extended to some 78% of the UK—88% in London—and it is hoped that that will be extended to some 95% in total by 2017. The Mayor of London has also made it a clear aspiration for every resident and business in London to be able to have access to an affordable high-speed internet connection.

According to the Government’s own body, Broadband Delivery UK, if faster broadband is rolled out, it would be expected to boost the economy by £17 billion annually by 2024. As a consequence, there would be a huge economic opportunity cost to not comprehensively rolling out high-speed broadband in central London. The square mile alone hosts some 13,500 small and medium-sized enterprises. It is often thought that it is only the very big international corporate businesses that are based in the City, but that is not the case, and has never really been. There are many small businesses employing literally a handful of people that are still based in the City of London and which require this most up-to-date global broadband access.

My concern is that there is a failure in how the market currently operates. In urban environments, the approach of network providers seems to be based on a belief that there is insufficient demand to invest further. That means that large swathes of urban areas with important SME users are poorly served and restricted to outmoded copper broadband, which I referred to earlier.

UK telecommunications regulation has successfully created healthy supply-side competition in connectivity for London’s larger corporations, which are prepared to pay many thousands of pounds a month for high bandwidth connections—indeed, many of those are businesses that absolutely need the most state-of-the-art global bandwidth connection. That competition has created a rich network of wholesale fibre-optic cables across the capital, but there is a gap between that wholesale fibre-optic network and the retail network that serves small businesses and residential properties. The policy must now begin to focus on how that rich wholesale fibre core can be extended to London’s small business community and to the residential community here in the centre of London.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I concur with nearly everything that the hon. Gentleman has said; he has summarised the challenges that are also present in my constituency. Does he not agree that some of the key challenges are the length of time it takes to get connected, unreliability of speeds and the misleading maximum speeds that are often advertised, which is just not delivering for SMEs and many residents?

[Mark Field]

That concern has certainly been put to me by many of my constituents as well. In today’s debate, I am trying to focus on what the Government might do, given their ambitious programme, which, as I said, has made some real headway in relatively depopulated, rural parts of the UK, but which has left behind, ironically, the sorts of areas that the hon. Lady and I represent.

[Mike Freer (Finchley and Golders Green) (Con)]

In my constituency, we have an area called a “notspot”, in that it is a group of houses at the end of the copper line, and the speed degrades the further away people get from the exchange. In terms of asking what the Government can do, does my hon. Friend agree that we need a proper investigation into what the cause is? He is being told that there is a lack of demand, but when I met BT, I was told that BT cannot find the location to put the boxes on the pavement, so we are being misled. Does he agree that the Government need to get a grip on why suppliers cannot supply in London?

[Mark Field]

I very much agree with that. I confess that when I was doing the research, I assumed that the word “notspot” was a typographical error. I then recognised exactly what was being suggested, which my hon. Friend has rightly pointed out.

Yes, there is a particular problem for London. London is a wonderful capital to live in, but it is an absurdity that, within a few hundred yards or even less of first-rate digital broadband, individuals should find they have difficulties. Of course, we all take for granted that we will have instant access to the internet—I recall going on a holiday only 10 years ago to a distant part of Africa and the frustration one felt about the situation. Of course, we recognise that back in the 1980s and 1990s, these things did take a hell of a long time to get up and running, and all of us as consumers now have expectations that are very different from those of the past. Those expectations will only become greater as time goes by.

It strikes me that only the sort of thinking to which hon. Members have referred will enable London to continue to compete effectively on the global stage and meet the future bandwidth demands of all its citizens. My seat suffers particularly from the technology divide and it is frustrating to receive regular reports from constituents that they are caught between the cheaper, slower, copper broadband and the unaffordable leased lines. Many SMEs, in keeping with current business practice and as a way of making economies in what remains a difficult economic environment, use cloud-based services. Those services need, as an absolute essential, faster and reliable connections and the failure to provide sufficient connectivity is a fundamental issue undermining our global competitiveness.

Even the much politically celebrated success that is Tech City—based, sadly, just outside my constituency, around the Old street roundabout—is having difficulties getting the broadband speeds it needs to continue to thrive and grow. I know that those concerns are shared by the hon. Member for Hackney South and Shoreditch, who has the good fortune to have Tech City in her patch. I know that in the past, she has called for a comprehensive review of superfast broadband provision.

Closer to home here in Westminster, the West End partnership, which brings together public and private sector stakeholders in central London, has identified the poor broadband service as the single biggest threat to London’s international competitiveness. It puts at risk the continued attraction of investors and the continued growth of the digital, media, tech and creative sector, which has provided some quarter of a million jobs in central London alone.

London has the biggest concentration of digital businesses in Europe, with some 23,000 firms and over 390,000 employees, according to a Greater London authority study of two years ago; I suspect that those figures may underestimate the reality today. However, economic growth in the sector has not increased relative to other sectors in the past decade. That is likely to relate to the fact that broadband speeds are lower in London than in some of our European rivals and connection is generally of a lower standard than that available to a number of our Asian competitors.

[Duncan Hames (Chippenham) (LD)]

I am trying not to approach this debate with the green eyes of a Wiltshire MP. I think that the hon. Gentleman is right to say that our international competitiveness is a critical consideration. Does he have any insight, through his research, into other approaches that have been taken with more success to achieve really substantive, robust internet connectivity for other urban centres and which it would be worth the Government looking at afresh?

[Mark Field]

I should like to come on to that, if I may, in what I say in a moment or two.

Clearly, there is much that we can learn. Let us be honest: one of the difficulties that we face is this. It has always been the way in the United Kingdom that when a huge amount of money has been paid to put an infrastructure in place, it is difficult to dismantle it entirely. Pudong district in Shanghai, which was paddy fields only 20 years ago, is now a city of 7 million or 8 million people who live and work there. Clearly, it can have state-of-the-art infrastructure in place, because it had a more recent starting point.

[Richard Graham (Gloucester) (Con)]

My hon. Friend is generous in giving way and is making very powerful points. Does he agree with me on these two things? First, although it is great to see BT’s progress in rolling out broadband, that has been mostly focused on rural areas. Secondly, the blind spots in the urban network that he is referring to can be very frustrating for business growth, and not just in London. The Waterwells business park in Gloucester is a very good example of where growth is frustrated by not having decent broadband.

[Mark Field]

My hon. Friend’s area does not only have green fields; I expect that there are also green boots in that bit of Gloucestershire. However, as he will rightly point out, many of his voters and constituents live in a relatively urban part of Gloucester, which I do appreciate. There are some fundamental problems, and I am glad that we have had an opportunity to ensure that this is not seen just as a central London issue. It might have come as news to my hon. Friend and to the hon. Member for Chippenham (Duncan Hames) that we have a specific problem here in central London.

Many firms in London require superfast broadband as much as they require electricity or water. More than 98% of the UK’s visual effects firms are in the Soho area of London, bordering Covent Garden, which is cited as being in a broadband notspot—the term mentioned by my hon. Friend the Member for Finchley and Golders Green (Mike Freer). Not all firms, especially start-ups, are able to link into the private Sohonet, which notionally serves that part of W1. Instead, they rely on BT and the other telecommunications companies, which do not yet offer such a comprehensive service.

However, there is good news, and I want to give credit where it is due. Recent developments suggest that a number of the private sector providers are now taking a more positive approach. BT, for example, committed only last week to working with the City of London to investigate how new forms of technology can benefit local SMEs. I pay tribute to the hon. Member for Hackney South and Shoreditch. We have worked together to try to ensure that BT works on this, and that is an example of where some cross-party co-operation can work well. Clearly, these issues affect parts beyond a single constituency. That is in addition to BT’s promise of an extra £50 million of investment specifically aimed at expanding coverage further in urban areas. I hope that some of that investment will make its way into my patch.

Progress, of course, can be made through innovative schemes at local level. I should like to highlight the creation by Westminster city council and its arm’s-length management organisation, CityWest Homes, of a new partnership with the private sector called Community Fibre. The aim of the project is to install a fibre-optic telecommunications network in the council’s social housing and associated commercial property stock. That service started as a pilot of only 1,000 or so properties, but has now been extended to cover 22,000 properties in and around the Pimlico district of my constituency.

Until the spring of 2015, businesses have the option of applying for vouchers worth up to £3,000 towards the installation of superfast broadband from a range of providers, through the Government’s SuperConnected Cities programme. However, I understand that, to date, the take-up has been pretty low. I am informed that the Greater London authority has issued only 812 vouchers across London as a whole. The total funding pot for vouchers in London was set at £23.8 million.

If we assumed that all the vouchers were allocated for the maximum amount of £3,000—some, of course, would have been for a smaller sum—the total funding would account for barely 10% of London’s total allocation. There is therefore a compelling case for the Government’s extending the scheme well beyond the spring of 2015, as well as for making the application process more straightforward.

There is clearly a place for Government investment in broadband infrastructure where there is a market failure in supply, but, as responsible policy makers, we should limit the exposure of the taxpayer by first establishing the extent to which the market can address unmet demand. Physically rolling out high-speed broadband networks in urban areas provides a number of challenges for broadband providers. Some 85% of the cost associated with building broadband infrastructure is accounted for by civil engineering. On average, it costs £43 per metre to dig a traditional trench in a footpath.

Of course, digging a trench is particularly expensive in London, for a number of reasons. The large number of heritage and protected status sites leads, of course, to significant bureaucracy and up-front delays. Other reasons are the cost of permits, parking charges and the nature of surface materials, such as York stone, which makes that sort of excavation extremely expensive. The dig rate in London is approximately 25% of the rate of digging seen outside London, as a result of congestion measures such as early finishes and close-down requirements.

To aid the private sector in rolling out superfast broadband in London at minimal cost, I should like to encourage Ministers to work with the Mayor of London and local authorities to minimise the cost of providing this vital infrastructure. For example, we might reduce the cost of permit schemes for broadband upgrade works by limiting charges to A and B category roads, and consider allowing for installation via narrow and micro-trenching for broadband deployment only.

I understand that there are ongoing discussions with the Department for Culture, Media and Sport and the Department for Transport on updating the “Reinstatement of Openings in Highways” code of practice to allow such a move. Narrow trenching would cut the costs of trench deployment by about one third, and micro-trenching would reduce it by a further third, so that would be two thirds in total.

It is important that we take a dynamic and innovative approach to dealing with the coverage problem, as laying cable underground may, in the not-too-distant future, become an entirely outdated process. That will be especially true as mobile superfast broadband coverage becomes increasingly available, now that speeds of up to 50 megabits per second are physically possible. That has the advantage that there is no need for a landline and there is the ability to supply a connection flexibly and quickly. Local authorities must be encouraged to co-ordinate with superfast mobile broadband providers, as providing that service is likely to have implications on public works, street furniture and new developments. Ofcom can also keep a close watch on this market as it develops, to ensure that any technological progress provides as much benefit as possible to the end consumer.

It is widely assumed that the demand for bandwidth will continue to grow tenfold every five or six years. The legacy fibre and copper network will still be able to deliver superfast broadband to some customers, but competitive global city economies will in truth require a full fibre-optic network after 2015 in order properly to compete. I should be keen to see the Government encourage greater activity by broadband providers, in co-operation with local authorities, to press quickly ahead with the creation of affordable broadband.

[Meg Hillier]

I agree with everything that the hon. Gentleman has said about the need to ensure that this issue is a high priority. I could not have put it better myself, so I thank him.

[Mark Field]

Lovely! I shall just finish my own points by saying this. I say to the coalition Government that we need fully to harness the digital capabilities in the heart of the UK’s cities—I accept that this applies to other urban areas as well—because that is truly where that is most needed.