Broadband (Tech City)

Meg Hillier Excerpts

Wednesday 4th February 2015 Westminster Hall

[Emily Thornberry (Islington South and Finsbury) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Crausby. I have come to this Chamber with a very important issue. The Select Committee on Environment, Food and Rural Affairs published a report yesterday on access to superfast broadband. In large parts of the UK, fewer than 50% of households can access superfast broadband, and it is clear that some rural areas are being left behind.

Although 90% of London households are able to access superfast broadband, many Londoners are left out. Surely central London should have 100% coverage by now. We should certainly expect Tech City—or Old Street roundabout, as we used to call it—to have full coverage.

I am not the first MP to raise this issue. The hon. Member for Cities of London and Westminster (Mark Field) raised it in a debate on superfast broadband in September. He referred to Tech City, which borders his constituency. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), who is here this afternoon, also raised this issue at Prime Minister’s questions and at business questions.

Tech City is home to a large number of new and innovative businesses—film companies, public relations companies, property companies and pollsters—which all need fast and reliable internet access and download and upload speeds. We might assume that BT is able to provide that infrastructure, and that it and other providers can offer high-speed connections to all those companies, but they are not doing so.

The Prime Minister has been bigging up Tech City for a long time. In November 2010, he said:

“British Telecom has agreed to bring forward the roll-out of superfast broadband in the area, so you have some of the fastest internet speeds in the whole of Europe…we can help make East London one of the world’s great technology centres and sow the seeds for sustainable growth throughout the economy.”

A Tech City business without a high-speed broadband connection is like a city without a road going to it, or a port without a river or seafront. Superfast broadband is vital infrastructure. It is like a fourth utility; it is Tech City’s lifeblood. I was therefore very concerned when 38 businesses from Tech City signed a petition, which was sent to me in May, complaining about the slow, unreliable broadband in the area. I took a sample case to BT, assuming that I would be assured that the problem would be ironed out without delay, and that my constituent would get the service he needed. I was shocked and surprised when BT said that although other users in the area have high-speed broadband, it was not commercially viable for it to connect up my constituent to the green cabinet outside his premises.

I raised the case with the Mayor, and I am still waiting for a complete response. I know that he cares about the issue but, as my Nan used to say, warm words butter no parsnips. I would be happy to work with the Mayor on this issue, because we simply have to do something about it.

Recently, I was contacted by other businesses in EC1 and EC2 that had exactly the same complaint. I went to see a company called Proudfoot TV—a small company that makes short films, which have to be very good quality, and which it uploads and sends around the world. It recently uploaded a two-and-a-half minute film to send to Ford. I have been asking people to guess how long it took to upload that film all day. Extraordinarily, it took nine hours.

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

Does my hon. Friend agree that one of the big problems is that advertised download speeds are an average, and that they do not take into account the important problem of uploading? That is also a problem for Shoreditch companies, because it slows down their businesses. We need to change the way that speeds are advertised.

[Emily Thornberry]

Absolutely. Tech City should be exporting, and if a two-and-a-half minute film cannot be exported without taking nine hours to upload, it should not be called Tech City.

Tech City serves not only the UK. Companies in my constituency have clients throughout the world, who expect those companies to have fast, reliable connections. Mr Proudfoot told me that although his business has evolved in the past 10 years, his connectivity has not improved in line with his work. He said that to send a high-quality sound file to Covent Garden, it is quicker to put it on a USB stick and cycle it round. Perhaps giving the USB stick to an owl, like Harry Potter, or sending it by carrier pigeon or even a raven, as they do in “Game of Thrones”, would be equally effective. He said that some of his employees get better broadband speeds on their domestic home connections than they do in the heart of Tech City.

[Meg Hillier]

I am sure that my hon. Friend will be interested to know that the editor of Tech City News, Alex Wood, each week produces a video rounding up the news in Tech City. The connection is so slow that he cannot upload the video from Old street; it has to be sent to his home address to be uploaded. Does my hon. Friend agree that that is a national disgrace?

[Emily Thornberry]

It speaks for itself. I understand that things are difficult in central London; we have historical, narrow streets that are already full with all sorts of wires. It may well be easier to introduce superfast broadband in Bromley than in central London, but we need it in central London, and it should be a priority.

I visited another small enterprise, a company called YouthSight, whose broadband is so slow and unreliable that its 17 young employees struggle with everyday tasks such as research and communication. The company has complained on numerous occasions, and it has been visited by lots of BT engineers, but it has seen no improvement. It has a copper line, so it must put up with the speed of copper—plod, plod, plod. It is not in the Outer Hebrides; it is a two-minute walk from Old Street roundabout. The fact that the centre of London—the City and its fringes—has less access to superfast broadband than the suburbs seems contrary to common sense.

If BT remains intransigent and refuses to supply superfast broadband to that business, its only option is to buy a dedicated leased line, which can cost £5,000 for the connection and £400 per month, and there may be provisions locking it into the contract. That is not good enough. Why should small businesses in one street have to pay those huge costs when businesses in the next street get superfast broadband at a reasonable cost?

[Meg Hillier]

I thank my hon. Friend for her generosity in giving way. There are alternative forms of technology, but there are barriers to them. We can do two things to help. First, companies should be forced to share their infrastructure—to be fair, BT and Openreach do that in many cases. Secondly, we should change planning regulations to require landlords to ensure that their buildings have the capacity for certain technologies.

[Emily Thornberry]

I agree, although there are problems even with that approach, which I will come on to. If someone is willing to pay for a leased line, there is no guarantee that they will get it when they want it. Another company, also a few yards from Old Street roundabout, moved in two months ago. The previous occupants had a leased line, and that company applied to have it switched over in November. When I visited it last Friday, its staff were using mobile phones and were waiting for the leased line to be connected.

What must be done? My hon. Friend has made some proposals, and I have a suggestion. When British Telecom was privatised—it used to belong to all of us—it was given infrastructure, such as cables and cabinets, and it still has an effective monopoly. It should accept responsibility for installing superfast broadband to all existing cabinets in Tech City, and arguably across the UK. Aiming for 95% connectivity by 2017 is not ambitious enough.

I understand that London has particular problems. There are some cabinets missing, and there are some places where street cabinets cannot be installed. Some street cabinets have been taken out because they interfere with burglar alarms. I know that this is a historical city, but it must move into the 21st century. As my hon. Friend said, there are other options, such as connecting hubs inside buildings. It is not beyond the wit of man or BT to overcome those difficulties.

BT says that the Government should give it more help, that the state funding available to rural areas should also be available to cities, and that the European Union rules on state funding should be changed to allow that to happen. However, where Tech City is concerned, we need to look hard at BT’s arguments. Is it necessary for state aid to subsidise BT? After all, Openreach generates £5 billion of revenue each year.

I understand that BT has data indicating the areas where only copper lines are available. It is essential that that information is made publicly available, and I urge the Minister to ensure that BT makes it available, because frankly, if BT cannot change those copper lines to superfast broadband, it should get out of the way and let its competitors do so instead, but they need that information first.

Of course, in Tech City there are fibre cables to exchanges, but there is still no guarantee that individual small businesses can have an affordable high-speed connection. There are streets with fibre going down the middle, yet it is not connected to all the buildings on that street. That is an extraordinary situation. If we think about Victorian times, when sewers were built, can we imagine a sewer being built down the middle of the street and the company or organisation putting in that sewer refusing to connect up the buildings on that street to the sewer? If that would have been ridiculous in Victorian times, it is even more ridiculous now, is it not? Why are we going backwards, not forwards?

We should not allow this situation to drift. We have to change our attitude. This is infrastructure. Superfast broadband is not some sort of lifestyle choice for these businesses; it is their lifeblood. It is absolutely right for the Government and the Mayor of London to big up Tech City around the world and encourage it to do well, but if it is not given its absolute essence—its lifeblood—it will not thrive. There are many of these businesses, and I have met many of the youngsters involved with them. They are forward-thinking, innovative, great entrepreneurs and bright kids who will do well, but they are being held back by a company that is simply milking them, and it is about time that it stopped doing so.

Tech City cannot be built simply on hyperbole. The Mayor and the Prime Minister can continue to travel the world and tell everyone that London is a 21st-century city, but let us make sure that they lean on BT to give Tech City the tools it needs to get on with the job. We cannot make Tech City one of the world’s great technology centres and sow the seeds of sustainable growth, as the Prime Minister has said, when it takes nine hours to upload a 2.5 minute film. Tech City should not be relying on “Game of Thrones” ravens.

--- Later in debate ---

[Mr Vaizey]

As I was saying, my understanding is that these sectors are separate parts of BT’s business. So, a residential customer who wants a BT line will get a BT line, but that line will also be open to BT’s competitors, such as TalkTalk and Sky, to run their service across that line. The business market is different, and BT is under no obligation to share its commercially sensitive data about which business customers it has and which business customers it is targeting. BT is a private company; it is not a national company. It is not running a not-for-profit service; it competes vigorously with other business providers. It is important to stress that in most areas there is a very vibrant business market, with a lot of different suppliers supplying it, whether that is in central London, Manchester or elsewhere.

Because we could not get state aid directly to subsidise the build-up of fibre, we wanted to support individual businesses to get the connections they needed. So we have made available, for example in London, connection vouchers, which would allow a business such as Proudfoot TV to apply for a voucher and to have the connection charge met by that voucher. In London, 2,500 businesses have taken advantage of that scheme. The other interesting thing we learned from that exercise was that the total number of potential suppliers—bearing in mind that the service was available in 22 cities—ran to something like 500 or 600 companies.

I hear a lot of criticism about BT in debates such as this one, and I sometimes feel that I am BT’s spokesman in the House of Commons because I am constantly having to defend it, either on customer service or on the grounds of competition, but it is interesting to note that where money, and a good margin, can be made, there is a competitive market. So, if someone is in the centre of a city such as London, with a lot of SMEs, they will find a lot of suppliers willing to build up networks and supply that marketplace. However, if someone is in a village in a very rural area, the only game in town tends to be BT. That is the problem we are addressing.

[Meg Hillier]

rose—

[Emily Thornberry]

rose—

[Mr Vaizey]

I will give way to the hon. Member for Hackney South and Shoreditch.

[Meg Hillier]

There is hot competition to challenge the Minister on that.

I thank the Minister for his comments, and for the move to reduce the cost of Openreach prices to some of the competitor companies. I say that because one of the issues is the overall cost of superfast broadband, both for businesses and residents. Would he, along with the Department for Communities and Local Government, look into this issue about changing planning, for wayleaves—to gain access across property—and to allow other technologies to be installed on or in buildings, because currently the planning rules make it harder for competitive technologies to enter the market?

[Mr Vaizey]

I am certainly happy to look at the planning regulations. Through the Infrastructure Bill, we were proposing some changes to the electronic communications code, mainly to help those erecting mobile masts. We withdrew those amendments when it became clear that there was some concern over whether mobile operators could use them to go on to each other’s masts and make changes. We will consult and are keen to make those kind of amendments. We would certainly look at any other planning changes that could make life easier for anyone who wants to build a mobile network, a fibre network, or something between the two.

While I am talking about mobile, it is important to remember that in most urban areas, and in particular in central London, the roll-out of 4G is continuing apace. We have the fastest take-up and roll-out of 4G of pretty much any country in the world. It is important, however, to stress the difference between the business market and the residential market. When you or I are at home, Mr Crausby, we will want a connection of 2 to 3 megabits and probably of 7 to 8 megabits, and with that connection, we would want do the normal things that one would expect, such as watching something on iPlayer or sending a document back to our office by e-mail. We would not necessarily, however, be uploading a very data-heavy two-and-a-half minute film. If a business has at its core the transmission of huge packets of data, one would expect it to be prepared to invest in the kind of business lines that are legion in London. An ethernet line is available in St John street in Islington. Virgin Media is in that street. It would cost that business perhaps £200 to £300 a month, once it had the connection established, to run it.

Another key point is that although we have some of the lowest broadband speeds anywhere in the world—the lowest compared with the EU5 and the USA—it will not astonish the Chamber to learn that the faster the speed, the higher the cost. Sometimes, my hon. Friends and colleagues say to me, “I have just been in such and such a country. You know what? The bloke I was staying with had a 1 gig connection. It was amazing. They could download a film in two minutes. It was incredible.” They never bother to ask that bloke how much he is paying for that 1 gig connection. If someone wants a 1 gig connection, they will pay more than if they want a 1 meg connection.

[Mr Vaizey]

We are getting to the crux of the matter. Fundamentally, this debate is not about whether broadband is available, but whether businesses that use a huge amount of data should get a cheap broadband service. My contention is that, first, broadband is available and, secondly, it is a highly competitive marketplace. I will, however, highlight some of the changes.

The hon. Lady is quite right; there may be an established business with 10 or 20 employees that understands the need to invest in a leased line, because it is moving large amounts of data. A start-up business with one, two or three people may, however, find those kinds of costs prohibitive in the early stages. Is the market competitive enough to give them the kind of broadband speeds they need to get going? The championing, if I can put it that way, of this issue by the hon. Members for Hackney South and Shoreditch and for Islington South and Finsbury and by my hon. Friend the Member for Cities of London and Westminster on at least three occasions in the House has led to progress, so they should take pride in that. It is a good reminder to us all that it is sometimes worth raising these issues in the House, even if we sometimes think that no one is listening. Virgin Media Business is working closely with the Tech City team and is offering businesses a 50 meg symmetrical service for around £200 a month and a 100 meg symmetrical service for £249 a month. You may still say, Mr Crausby, that that is too much money, but it slightly takes the heat off BT, as it illustrates what a competitor that would dearly love to take all of BT’s business has to charge to make a return.

[Meg Hillier]

I appreciate the Minister’s generosity in giving way once more. He suggested that the argument boils down just to cost, but let me be clear that there are still companies in Shoreditch that cannot easily get a physical connection. My hon. Friend the Member for Islington South and Finsbury has told me that there are also such companies on her side of the roundabout. Alternative technologies would open up the market, make it more competitive and help drive down the price.

[Mr Vaizey]

Our speeches almost seem to be synergising. The next point I was going to make was that thanks to the campaigning of the hon. Lady and others, Virgin and BT have said that they will increase their footprint. Virgin will cover an additional 100,000 premises in east London and BT is aiming to cover an additional 400,000 premises in cities, with 250,000 of those in city centres and 100,000 of those in central London. UK Broadband is launching a superfast wireless broadband service across central London, including the Cities of London and Westminster. CityFibre and Hyperoptic are looking at delivering those kinds of services in other cities outside of London.

On planning, we are seeking to reduce red tape by introducing legislation to permit the installation of broadband, street cabinets and new overhead lines without prior approval from local planning authorities for five years. We also introduced changes to streamline the process to support the deployment of mobile infrastructure. Those are areas where we have made progress.

The City of London has talked about building its own network. Thanks to campaigning by the hon. Members for Hackney South and Shoreditch and for Islington South and Finsbury and my hon. Friend the Member for Cities of London and Westminster, we had a meeting with the City of London corporation and BT. BT is trialling “fibre to the basement” technology to try to overcome some of the technical obstacles in providing broadband for multi-dwellings. I am also pleased to say that the Mayor and the London Assembly are taking ownership of the issue. He has set up a connectivity advisory group, which has been formed to bring actors together to improve digital connectivity across London.

A great deal of progress has been made, but I sympathise with any business that is looking at the kind of costs that have been mentioned. Ofcom is due to launch a consultation on business-leased lines in spring that will report, we hope, in early 2016. It will look at competition on business-leased lines.