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Competitive broadband could add £22bn to UK economy

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The widespread take-up of broadband could give the UK economy a £22 billion shot in the arm, according to research published today.

The centre for economics and business research (cebr) found that UK productivity could rise by 2.5 per cent by 2015 - the equivalent of workers toiling for an extra hour each week.

Not only would people benefit, cebr reckons that government borrowing would be down by £13 billion by 2015 through lower public sector spending and extra tax revenues from a faster growing economy.

However, there is an "if". And that "if" is that the UK will only reap these economic benefits "if" there is greater competition, greater wholesale competition within the UK's broadband market.

The research was commissioned by the Broadband Industry Group (BIG) a new lobby group made up of Brightview, Cable & Wireless, Centrica Telecommunications, Energis, Freeserve and Tiscali.

BIG has been formed to campaign for greater competition in the UK broadband market through BT cutting the wholesale cost of broadband.

Said Energis boss John Pluthero: "If we want an innovative, dynamic broadband market delivering huge economic benefit to the UK, genuine wholesale competition is needed.

"The time for action is now. We look forward to working together with Ofcom and other operators, including BT, to make this happen."

Earlier this month David Edmonds, head of soon-to-disappear telecoms regulator, Oftel, indicated that there is little need for further regulatory interference to force down the wholesale cost of broadband.

The regulator is due to publish next month the findings of its latest review into high speed Net access in the UK. Oftel is concerned that any further cuts to wholesale prices would dissuade BT from investing further in broadband. And it also believes that further cuts in wholesale charges for ADSL would also make it even more difficult for operators to introduce other technologies - such as satellite or wireless - into the marketplace.

It seems Oftel is happy with the current state of the broadband market. Whether its successor - Ofcom - shares this assessment of the UK's broadband market remains to be seen. ®

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