Outside Oftel: The road to Broadband Britain

By Stephen Timms, e-Commerce Minister

Broadband is now a regular feature of TV, newspaper and billboard advertising. New subscriptions are running at over 20,000 a week - which puts us on track to hit 1 million connections well before the end of the year. This is a sure sign that after a slow start, broadband Britain is emerging.

Broadband has the potential to increase productivity, enhance competitiveness and enable new markets to be reached. It can help rural and remote economies -- geographical location will no longer be a restriction to competing with urban rivals.

But with this new found optimism and enthusiasm, comes the realisation that there are still a large number of people, especially in rural areas, who cannot access affordable broadband.

One of the things that has struck me in my relatively new role as e-Commerce Minister, is just how much of a call there is for broadband in those rural areas. Letters written by MPs on behalf of constituents, e-mails from people across the country, and calls from various campaign organisations regularly pass across my desk.

And rightly so. At its most basic, broadband makes the Internet a more satisfying experience: less waiting; more surfing; greater benefits. This is good news in itself.

But that's just the start. Broadband - whether it's delivered down a telephone line, through a cable TV system, satellite or terrestrial radio antenna - has a key role to play in promoting the UK's economic development.

It opens up a world of new value-adding services, such as video on demand, teleconferencing and interactive multimedia experiences. New products with hugely valuable applications.

Broadband will allow the smallest companies to compete on a far more level playing field with their larger competitors. It will allow businesses to set up virtual private networks (VPNs) with branch offices for off-site workers.

And it will allow businesses to access new software or the services of sophisticated Application Service Providers at the press of a button.

In order to extend this opportunity across the nation, Government's policy has been to foster a highly competitive market to drive broadband. There are already an impressive number of different operators and technologies. In the Spring BT responded to a challenge from my predecessor and lowered its wholesale prices. There are now nearly 100 companies operators reselling BT's ADSL product. BT was following the lead of the cable companies which has seen ntl and Telewest supplying broadband to more than half the nation's broadband customers over their networks.

Competition is working. Just six months ago, UK broadband prices were amongst the most expensive in the G7. They are now among the cheapest - for both cable and ADSL. With this as a foundation subscriptions are now running at over 20,000 a week - a faster take-up rate than mobile phones at an equivalent stage.

Around 66% of the population now has access to affordable broadband and 40% of households have a choice of service providers. With broadband deals for as little as £20 per month and self-install products that save time and money, broadband no longer has to be a distant dream.

But Broadband Britain is not just about cable and ADSL. A competitive environment means that competing technologies, as well as providers, are emerging. New technologies are evolving all the time. Already, satellite broadband reaches the entire country. At the moment prices are high, but as we have seen with cable, prices will come down as the market develops. BT is currently offering wholesale asymmetric satellite broadband at £10 / month.

Wireless broadband also has enormous potential. This market is in its early stages of development but it has a growing number of customers. There are operators working to develop networks in other frequency bands and further frequencies for the delivery of broadband services should become available in the next few months.

With any new telecommunications provision - and broadband is no exception - there are calls for Government subsidy to speed up roll out. Past experience underpins our view that inappropriate use of taxpayers' money can distort the market and - in the long term - delay widespread availability of the most up to date services. Competition is a much more effective driver.

More competition in the longer term means more competitive pricing, more consumer choice and a faster rate of innovation. The longer term view is important. Broadband is not just about ADSL or cable modems providing 500 kbps. Today's services are just the first step on a journey. For small businesses and then consumers, I am convinced that we will see demand building for faster services. We need dynamic competition to allow this demand to be met, whether by established operators or new entrants through local loop unbundling, radio or new Ethernet networks.

Even in our thinking about rollout in rural areas we must not be too quick just to throw money at the issue. Most of us will recall the arrival of mobile phones in the 80s. Pressure for Government intervention was then, as now, a familiar cry. Non-urban areas were poorly served and many maintained that ubiquitous coverage would only come about through placing financial incentives on providers. Looking today at the UK's vibrant and fiercely competitive mobile market, it is very difficult to argue that this would have been either an effective solution or a reasonable use of public funds. Indeed we are continuing to see market-driven rollout of broadband services with both BT and ntl making announcements in recent weeks.

That is not to say that Government is sitting back and idly awaiting a broadband breakthrough. Far from it. The £30 million fund for regional broadband projects has already seen some resounding successes. Projects range from Broadbanding Buckfastleigh - wiring up the local town hall, hospitals and schools, to a demand registration site that builds the demand case in a local area and communicates this to providers. All of these projects are designed to be scaleable - so the real success stories can be repeated elsewhere.

Some of the more deprived regions - from Cornwall to Merseyside - see that strategic investment in broadband can be part of the solution to economic regeneration. They are using funds which they already have from the EU or Government to design schemes which suit their particular needs.

The Government's commitment to broadband comes from the highest level. Last autumn the Prime Minister tasked the Treasury to look at what can be done to help public sector organisations buy broadband more effectively. Pioneering local authorities have already seen that aggregation of their local demand can make sense in wider value for money terms. Seeing that broadband can help them deliver better public services more efficiently.

As a result, we have recently announced a new broadband unit and network of dedicated regional broadband advisors who will use the public sector's spending power to boost availability and takeup in unconnected areas. Last month's Spending Review saw the Chancellor announce almost £3 billion for the development of e-services. Broadband is likely to play a major role in this.

One of the Government's major commitments is to create a dynamic economy and a fairer society. To me, getting Britain networked is a significant contribution to both. The UK has made a slow start, but we are turning the corner.

Broadband will become the backbone of the UK economy. Ensuring that more people and businesses can take advantage of this - regardless of where we live or the size of company we are involved in - is a major priority.