Wednesday 17 September 2008

Superfast Broadband

It would be very good, of course, to have the new superfast broadband which BT's Chief Executive has been touting this week. But there is likely to be some cynicism in these parts. In Llanpumsaint, for instance, BT has so far failed not only to deliver the ordinary broadband service which most people are now taking for granted – they don't even provide a reliable telephone service. And they seem to have no intention of doing so, unless 'the government' or somebody else – anybody – pays.

The thought that they are ready to start ploughing their money into an investment which will leave rural areas such as this even further behind is not likely to be well-received around here. And there will be a great deal of scepticism as to whether they will be willing to roll out the new facilities to the rest of Wales once they have provided the facility to all the areas where they can make the most profit.

And that's the nub of the issue. Wales should not refuse the opportunity to lead on this new technology – that would be plain silly. But we should be seeking a clear agreement that all of Wales will be treated equally, and that BT will not simply cherry-pick in the interests of its own profits and shareholders.


Anonymous said...

I'm unclear how you imagine this agreement will operate. BT are a private company; you can no more demand they provide equally for each and every citizen than can you compel Esso to put a petrol station in every village.

The cold reality is that BT and others will invest where they think they can get a return. If you make them invest everywhere, including those areas where they will not get such a return the upshot is likely to stop them investing anywhere.

John Dixon said...


BT have what is called a 'public service obligation', which obliges them to provide certain services in all areas of the UK. At present, it applies only to basic telephony; I have argued in a previous post that it should be extended to cover broadband. That would require legislation, but I don't see any fundamental obstacle to extending the obligation.

On the superfast broadband, the artlce was less than entirely clear on what they were expecting from the Assembly Government. At one point, the article indicated that they were not seeking funding; but at another it talked vaguely of what the Assembly Government might want to do to speed up the rollout. I took that to be a reference to seeking money. So the second way in which BT can be mandated here is by putting strings on any monies given by the Assembly Government.

Last time round, BT were allowed to take the money and roll out broadband in a way which left wide swathes of rural Wales behind. If the Assembly Government is conidering for one moment giving this hugely profitable private company any more of our money, I would argue that they should make absolutely certain that all of Wales benefits, and not repeat the mistakes of the previous administration.

Anonymous said...

but I don't see any fundamental obstacle to extending the obligation.

I do. BT are not the monopoly provider they were when the public service obligation for basic telephony was imposed. Indeed, fixed line telephony is not the only way to deliver super fast broadband, and may not be the most cost effective in the more remote parts of Wales.

John Dixon said...


Fixed line is not the only way to deliver telephony either, but the obligation remains on BT. The fact thet they are not a monopoly provider has not been seen - to date, anyway - as a reason to remove the obligation on them (although, no doubt, the company might quite like that to happen).

I agree that fixed line may not be the most cost-effective way to deliver super fast broadband in rural areas; but BT's technology is not restricted to fixed line either.

Clearly, you have raised an 'objection' to extending the public service obligation; but an objection is not necessarily the same thing as an obstacle. And that's not just splitting hairs.

Anonymous said...

BT own and operate the copper wires that deliver the basic telephony services that we all enjoy. That is why the obligation for the provision of basic telephony rests with them.

Putting in superfast broadband would require an entirely new network of fibre optic cables. Why should that automatically fall to BT as opposed to, say, Virgin or Cable and Wireless? They are all essentially equivalent players in a wholly new infrastructure project.

My point is that the public service obligation is the legacy of a time when a state owned monopoly provided and operated the only available telephony service. Neither condition holds today, therefore the idea that BT should carry out a new broadband public service obligation needs more careful consideration than you are giving it.

John Dixon said...


You make some good points. I'm not sure about "They are all essentially equivalent players" though. I see BT as being in a rather different league.

At heart, I've always been highly sceptical about the privatisation programme, especially so when it come to the management of 'infrastructure'. Having two sets of pipes or cables in any area because there are two supply companies makes no sense to me at all.

I accept the validity of the argument that creating a new fibre optic network doesn't necessarily have to be the responsibility of BT; the point you make on that is a fair one. But my underlying argument is that whoever builds that network should not be allowed to cherry-pick. (But at the moment, it seems to be BT who are lobbying in a way which looks awfully like asking for government funding.) We need a comprehensive and inclusive programme which includes the whole of Wales. We haven't had that for ordinary broadband, and we should not make the same mistake for superfast broadband.

You argue that we shouldn't be using the 'public service obligation' to achieve that objective - so what would you suggest? It is entirely legitimate to argue that there should be no such obligation at all - those of us who choose to live in rural areas should simply accept a lower level of service in consequence. That is, in simple terms, the almost inevitable consequence of a completely free market. But then, I don't think anyone would ever accuse me of being a supporter of allowing the market to determine such things.

Anonymous said...

You are clear about what you want: universal provision of superfast broadband. But I think some more thought is needed about how to get there.

As I've said, imposing a public service obligation on a a telecoms operator runs the risk that they will decide that the whole project is not worth doing. As the state, you can offer the inducement of monopoly status (although how you would define this given the existence of wireless technologies is less straightforward than might be supposed) and this may make the proposition profitable enough to enable the project to go ahead. But... you now have a state-sponsored monopoly making a healthy return (like the rail franchises, only on a much longer contract). That is not a happy outcome, both on the basis that you are giving Wales's money away to shareholders at very little risk to them, and that state-sponsored monopolies have a very poor track record of innovating, which in an area like telecoms could prove to be very bad indeed. You might initially get a state-of-the-art network, but without the stimulus of competition my guess is that it would fall behind other such networks very quickly. The result is that Wales would be less competitive and her people less able to participate in the digital world: the opposite of the original policy goal.

What then is the alternative? I think you should allow the market to develop the network where it believes it can make a return. At the same time, and on the basis of what we now know about standard broadband availability, public subsidy should be focused to fill the gaps. You could even go one stage further and develop these areas first, before the profitable bits, thus giving their local economies a boost. As the technology matures and the incremental costs fall, even remote parts of Wales may become profitable. At this point the subsidy can be withdrawn (or it could be maintained to ensure rapid deployment of the next technological iteration).

There is an upfront cost attached to this. But that cost is, I suggest, far lower than the cost to the economy and to citizens of a vanilla, state-sponsored fibre optic network.

John Dixon said...


Some more good points.

What I think I said on the specific of the public service obligation was that it should be used in relation to delivering basic broadband on the copper network, and I stand by that. There are two sorts of 'notspots' in rural West Wales - individual homes and very small settlements where the distance from the exchange causes a problem, and whole villages where a lack of willingness to invest on the part of BT leaves significant communities with very limited access. In the first case, we will often need to look at a range of highly individual solutions; in the latter, I think it entirely reasonable that the owner of the network should be obliged to provide a defined level of service over that network, even if that means upgrading the network. We may well disagree on that, but then I don't expect to agree with everyone about everything.

On the superfast network, my basic point was simply this. BT went to the Assembly Government seeking some sort of support for what they want to do. I think any such support - particularly if it involves public money - should be contingent on an agreement that the whole of Wales benefits, not just parts. Is that really so unreasonable, at the level of principle at any rate?

My objective is exactly as you say - parity of provision of superfast broadband across the whole of Wales, rather than some areas getting it and others being left behind. The discussion between us is, fundamentally, about the right way/ best way to achieve that.

I take your point about giving monopoly rights to one company - but isn't that effectively inevitable in any given area? It's possible to parcel Wales up and allow different operators to operate in different areas, but within any area, isn't it inevitable that there will be only one fibre-optic network? It makes no more sense to have two than it does to have two sets of gas pipes, water pipes or electricity cables. Infrastructure is different from other types of services in this respect.

If that new network is to be developed by a private company (or companies), the question is whether we allow them to pick and choose in which areas they develop it. (They can't put a network like this anywhere without government agreement and permission.) The alternative is that in return for allowing them to develop it, we specify where they must provide such a service. One option enables them to maximise their profits; the second allows them still to make a profit, but a smaller one.

As a sort of a parallel (not an exact one, I grant, because we're dealing with an already existing infrastructure), we would never allow the electricty company to look at a map and say "we make all our profit in the towns and cities, so we're going to take villages like Llanpumsaint off the grid". We do not, of course, impose similar expectations on the gas suppliers (or a host of other services, come to that) - so how do we decide in which category a particular service falls?

I actually find it quite hard to define objective criteria which I can use to make that decision. But I think that modern high speed telecommunications fits under the 'must be universal' heading.