Broadband Britain: the inside truth

Has the govt got the stomach to deliver it?

Who would want to be in Peter Radley's shoes today? In the FT yesterday the Government advisor and head of Alcatel UK aired his views about the future provision of broadband services in Britain.

He said nothing new in his suggestion that broadband infrastructures - be it DSL, satellite, cable or wireless - could be run by just a handful of companies. After all, the capital costs of creating and maintaining such huge networks exclude all but the most committed players.

Competition, he said, would occur with different companies employing different technologies providing broadband services directly to consumers.

He told the FT: "Maybe for any specific infrastructure there would be only one or two players. You can argue about monopoly or duopoly, but what matters is competition at the retail level."

Today, the FT rounded on Mr Radley warning the Government to ignore any move to a monopoly or duopoly.

"Mr Radley's comments should not be a blueprint for wider broadband policy," said the FT's leader column.

"Tony Blair's government has been a vocal champion of competition in the broadband market. So far, it has had little success. If Downing Street now adopts Mr Radley's faith in regional monopolies, it will look like policy-making after the fact. The government will appear to have caved into BT."

"...endorsing a national policy to create a handful of broadband champions smacks of old-style industrial policy. In the interests of consumers, government should still be seeking a competitive market, not monopolies," it said.

Unfortunately, the premise of the FT's argument is flawed since Tony Blair's government has not been a vocal champion of competition in the broadband market - only part of it. Instead, the Government has concentrated its efforts almost exclusively on seeking competition among the provision of DSL services over fixed lines.

As the FT quite rightly points out, local loop unbundling (LLU) has failed to deliver the promise of competition. Foot-dragging, obfuscation, bureaucracy and high costs - courtesy of BT and Oftel - have helped to reduce the number of operators interested in providing DSL services direct to consumers from 30, to under ten, with some of the biggest names in the telecoms industry throwing in the towel.

The current cash problems at Redstone and the decision to call in the liquidators at OnCue last week is yet more proof for those who believe that LLU in Britain has been little more than a costly mistake.

Mr Radley's comments effectively acknowledge this. As someone charged with coming up with proposals and solutions for the broadband problem, Mr Radley and his other advisors in the Broadband Stakeholder Group would be remiss if they failed to examine other avenues of thought, even if these were seen to be politically backward by some observers.

However, this is not the case. If broadband services were only delivered via one technology - ie DSL - then Mr Radley's critics would have a point. Except that DSL is not the only broadband technology on offer. The choice for consumers shouldn't solely be about a choice of DSL providers. It should be about choice of broadband services - whether it be satellite, wireless, cable or DSL - and which of these offers the best value for money.

After all, once BT has finished the planned upgrade of its exchanges in September, by its own admission 40 per cent of the UK population will live outside a DSL-enabled area, unable to get broadband. What choice do consumers have then?

Last week Tiscali announced it would be launching broadband services over satellite in the autumn. Dutch company, Aramiska , will announce details of its satellite offering later this week. Apart from the fact that both these services are not hamstrung by geographical limitations, once up and running both will be providing competition against the cable companies and providers of DSL.

Companies such as Reading-based Tele2 are beginning to offer broadband services using its fixed wireless broadband network. As these technologies and sub-sets of the broadband market develop so too will consumer choice - and with it, competition.

Are we really expected to believe that if BT operated a monopoly of fixed line DSL services, say, it would keep its wholesale prices artificially high - even though it might be undercut by broadband over satellite or fixed wireless?

After all, if you take the FT's argument, BT would be a monopoly supplier of DSL services and therefore free to charge what the hell it likes. It would have no need to cut costs. And if, for the sake of argument, it maintained this pig-headed, high-priced monopolistic approach, would not consumers simply move to other, cheaper broadband services? Is that not competition - and the market - at work?

Far from expressing an opinion that "smacks of old-style industrial policy", Mr Radley's views show an understanding of the broadband market and a willingness to attempt to solve the broadband problem.

When the Broadband Stakeholder Group delivers its findings to the Government in September it will have some interesting issues to report.

It will, no doubt, lament at the failure of LLU (although that's not to say that it might not provide an option for the longer term) and perhaps advise that Government intervention is necessary to kick-start broadband. Whatever the outcome, it seems the Government will be faced with some challenging decisions. Faced with a series of difficult scenarios to kick start broadband in Britain, it may even decide that the simplest way out this mess is to ditch its goal for the UK to have the "most extensive and competitive market in the G7 by 2005".

It remains to be seen if the Government still has an appetite for broadband. ®

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