Examination of Witnesses (Questions 20-39)
MONDAY 31 MARCH 2003
DR PETER
RADLEY AND
MS VALERIE
CARTER
20. That is huge, when you are talking about
villages, when they are trying to get their numbers up on their
exchanges. It means every household in the community has to sign
up and that is not realistic.
(Dr Radley) The technology being deployed in Lyndhurst
for example serves as few as 16 customers. Indeed the wireless
technologies—and I am sure you will be hearing more about
that from Blewbury Broadband after this—mean that small
communities can find a way of getting what they want. One other
point I should like to make is that I am sure all of us would
wish to see all public services being delivered into those small
communities just like they are into urban areas. One of the things
I would stress and I stressed a year and a half ago to Douglas
Alexander and Patricia Hewitt is the role government can play
as customer for broadband and seeing broadband as a way of delivering
healthcare to everybody, library services to everybody, as well
as maybe tele-working opportunities to people in villages. I think
government can play its role more actively in encouraging those
sorts of things in the small communities.
Mr Drew
21. Can we get to the crux of things now and
look at your relationships with BT amongst other suppliers. What
is your view on the strategy of BT of introducing ADSL? Is it
the right strategy, is its targeting fair, is that the appropriate
way to ration the introduction?
(Dr Radley) BT, like its competitors, is a commercial
organisation. It has to have a sustainable business which is going
to generate a return for its shareholders, otherwise, as we see,
as has happened in the telecoms industry over the last year or
two, companies get into deep difficulties. Their pockets are not
that deep, despite what was felt previously and a number of the
companies, including BT, the cable TV people like NTL and Telewest,
have difficulty these days in finding the investment. There are
clearly different scales of that. BT has done what you would expect
a commercial organisation to do, to try to make profits and to
make a return for its shareholders. If we were to return companies
to the public sector it would be a different story, but they are
private companies and they are trying to do the best for their
business. The history we have seen throughout the telecoms industry
over the last ten years or so, with very rapid developments, has
been companies cherry picking where they can do business. Yes,
rural communities are not areas you would willingly go to, which
is why the stimulation of demand, yes, through local champions
and finding others to support them when there is no local champion,
creating demand, is an extremely powerful weapon so that the commercial
organisations, which have to be sustainable because if they collapse
that is no good, do have the demand to address and can make business.
The demand side is something we can all support, would be an objective
of Defra rural advisers for broadband, certainly the various programmes
which have been put in place by the RDAs' attempt to address that
demand side issue as well as supply side and government itself
can be a really big customer.
22. May I be clear? Who are the other suppliers
in this market? Who are the other main players?
(Dr Radley) BT is clearly the big one because it has
the copper loop—so-called—connected to the telephone
exchanges right across the country, except for Hull of course.
We have had the build-out of cable TV networks as a result of
the liberalisation of that segment of the market in the mid-1980s.
So we have NTL and Telewest who are not largely in the rural areas
but in the urban areas. There are several smaller companies, companies
like Fibrenet, Easynet and Bulldog, who are examples of companies
who are seeking to utilise that BT copper even in small communities,
provided they can identify they are going to make a return on
their investment. There are the satellite companies which provide
the services everywhere. There are several small companies, one
of which I believe is supporting Blewbury Broadband with the so-called
wireless LAN, WiFi schemes, which create wireless coverage across
village communities. There is a variety of organisations, the
very big one is BT, two bigger ones, NTL and Telewest and then
the rest are relatively small companies.
23. We are indebted to our notes, which are
always very interesting. According to the latest research, BT
makes available local loops to other operators and there was some
tension, I presume before this was made available. By July 2002
600 local loops had been unbundled out of a possible 28 million.
(Dr Radley) Yes.
24. There is some imbalance there. It more or
less says that BT can unbundle them as fast as they get the interest.
Why is there no interest or is that a misunderstanding?
(Dr Radley) What we are trying to do across a lot
of the RDAs is bring those potential suppliers together with the
buyers where there is demand. This is why the stimulation of demand
is so important. I dealt with a number of these smaller companies
who are trying to address that business. I know one is still trying
to get its funding from its backers. The backers ask to be shown
where the customers are and say then they will give the backing.
Some of the customers are asking to be shown they are backed and
then they will do business. We are trying to make sure that loop
is broken so that things move ahead. What has happened particularly
in the telecoms industry in the last two years—sorry to
mention it again—is that a lot of people are not willing
to put money in to a number of these smaller companies. We can
play our role by showing there is demand and by helping to encourage
that local demand and also, I think, on a rural community basis,
under the de minimis rules of state aid something like
£50,000 or £60,000 goes a very long way to kicking that
business off.
25. There is presumably still a role for third
parties like local authorities. Is there any good practice out
there where local authorities have taken a lead?
(Dr Radley) Right across the country local authorities,
particularly county councils, have taken the lead in creating
what they largely call community networks, networks of capacity
and interconnectivity across their counties. At the moment, there
is a lot of uncertainty as to whether they can provide any of
the capacity they invest in into the private sector. That is something
of an issue at the moment and clearly needs some clarification.
At the moment people are fearful of crossing these boundaries
between public and private sector.
Mr Curry
26. We do not have mains drainage yet.
(Dr Radley) I do not in my home either.
27. A private water line. I do not know in what
decade we are going to get broadband and I have not actually learned
to text on my mobile yet, so I am not foaming at the mouth. Is
this a wonderful market-led initiative and allowing thousands
of flowers to bloom, or are we just talking about a good old British
muddle?
(Dr Radley) I do not know about good old British muddles,
but I do know that this is something people are seeing as very
important for their lives and for their communities. I am not
on mains drainage either, nor am I on broadband, unless I afford
a satellite dish for it. I cannot get NTL and Telewest down my
lane, nor BT to equip the local exchange. I am one of the great
unwashed in that sense. I should love to be connected.
28. Could it not all be connected together?
(Dr Radley) Do you mean the phone line and sewer together?
In some cases people do put fibre optics up sewers, so it is not
so far-fetched actually. The requirement of broadband is very,
very clear. From those who have it, they would never want to do
anything else. It is like the difference between going down to
the village pump for your water or having it on tap. That is almost
the kind of difference one sees from people who are disadvantaged
and seeing their advantaged colleagues with it.
29. Let me explain why I find some of these
things puzzling. In my constituency there is a town called Settle
and Settle is where the North Yorkshire foot-and-mouth outbreak
pretty well started. Businesses tell me that they would love to
come up from the South East, after all the South East is a pretty
crowded, ghastly, high cost sort of place, pretty nondescript.
They would love to come up to Yorkshire and set up there, but
there is no broadband. Of course Settle High School and Community
College has got broadband and the primary schools have broadband,
but businesses next to them do not. Is it just something about
me which finds this bizarre and curious or is this what I call
the great British muddle?
(Dr Radley) It is, yes, in some senses bizarre. The
schools in Settle have broadband because of the regional broadband
consortia, so-called, which were set up by the DfES as part of
the NGFL programme. They have undertaken to connect a certain
level of broadband to all secondary and primary schools, but there
is a lot of misunderstanding today, a lot of concern, that you
cannot piggy-back on top of what can be provided to the public
sector provision to the private sector. That is an issue which
I should love you to be active on and to help resolve, because
that is stopping a number of things happening at the moment. I
should love to see that interconnection, which happens into Settle
schools and hopefully to the libraries and so on as well, also
available to the private sector. I believe that some people are
being too pessimistic about what can be done here, too concerned
about state aid rules, but if people like you can help resolve
that issue, remove the uncertainty, that would help us all forward.
30. What needs to be done to do it then? Is
this a problem of state aid, is it a problem of technology or
capacity?
(Dr Radley) No, it is not a problem of technology.
31. What is it?
(Dr Radley) It is "nowt so queer as folk".
32. What do you do technologically then? Tell
me what you do technologically to do this and then tell me what
you do in your area.
(Dr Radley) I am not going to talk about the technology,
I could bore you for hours, but there is a whole variety.
33. I shall not understand enough to be bored.
(Dr Radley) Exactly. There is a variety of technologies
which can deliver broadband into those schools and the businesses
next door. The broadband for the schools is under the provision
of a DfES programme. They believe that they cannot, because they
are a public sector organisation, sell extra capacity on to the
private sector. I was talking to one of the county councils about
this the other day. They said that under their remit as a county
council they were not allowed to do it. I thought this was their
interpretation of state aid rules. They said no, it was part of
the statute of a county council. I believe, if one takes the holistic
view, then we can find ways through, but it needs some clarification
from the government side as to what is possible, what is not possible
and so on.
34. There is a piece of legislation going through
the House which is laughingly called the local government freedom
Act or something like that which allows local authorities to set
up commercial businesses in fact, to be able to say—
(Dr Radley) That would significantly help some of
this concern which there clearly is at the moment and which is
slowing things down, yes.
35. If you were recommending to us what would
be one of the highlights of our report, it would be what? To address
in a serious analysis the regulatory problems which appear, which
the public sector believes are preventing it allowing private
sector access into the infrastructure which exists.
(Dr Radley) Correct.
36. Just focusing on the public sector, has
the broadband task force been effective in helping public sector
procurement?
(Dr Radley) That has just started.
37. Basically you go to a local authority, especially
a county council, and you know very well that if they buy anything
it is going to cost an arm and a leg more than it is going to
cost if it is sold to anybody else.
(Dr Radley) That depends. I shall not rise to that
particular bait. The broadband task force does seek to address
that. We have been asked by the DTI, each of the RDAs and devolved
administrations, to set up what are called special purpose vehicles,
for aggregation of demand for broadband at the regional level
and that we are doing. However, the way that the various government
departments are looking at this, the NHS, the DfES, etcetera,
is what I called the interconnect for the back office of those
organisations, the connection between their own sites. One of
the things which is important is to encourage, as a part of the
delivery of broadband to the citizen, to all citizens, that delivery
of the front office, that is patient care, library services, lifelong
learning, etcetera. Today, what I find across all of the SPVs
I know of—and I know of those going on in Scotland and Wales
as well as some nascent ones in the English regions—they
are largely focusing on the back office interconnection between
government sites and I like to broaden it, particularly because
it is a way of addressing rural communities with lifelong learning,
patient care at the cutting edge and so on.
38. So government is quite good at talking,
at talking to itself.
(Dr Radley) Government has not yet caught on to the
notion of how much more effective public service, as well as private
service, can be delivered by broadband. There have been some great
programmes, for example stimulated by the NHS over the last couple
of years. One which sticks in my mind is in West Midlands from
Telewest, which showed how patient care, particularly old people,
could be so much more effective by giving them access to broadband.
They actually access the doctor via broadband more than trying
to go to see him or her. There are things we can do and I should
like government to grab hold of service delivery to citizens by
broadband, not just connecting sites together.
Ms Atherton
39. There is an awful lot of technology and
companies and interested organisations and individuals and government
and in the midst is the person trying to run a local company,
trying to decide which one to go for. I had a situation in my
constituency where a small to medium-sized company approached
BT and Act Now for broadband access and was told £100,000
for his relatively small company to be activated to broadband.
He came to me and said it was ridiculous, how was he meant to
work in Cornwall and provide a business and employ my constituents.
It took my involvement to get it down to £10,000, because
he had been mis-sold or mis-offered a package. How much is that
going on because people are bamboozled and told they have to have
it and this is what it is going to cost? How much is that going
on?
(Dr Radley) The honest answer to that is that I do
not know how much of that is going on, how much mis-selling there
might be from one party or another. I do not know. What we can
do from the RDAs is make sure that people are aware what their
options are and give them active advice on those options on a
case by case basis. That is why the DTI advisers we now have in
each RDA are very helpful and why I should love to see some advisers
specifically addressing the rural issues, stimulated by Defra.
That would help so that in front of an eager salesman, people
are not bamboozled.
Ms Atherton: I think it is happening.
Chairman
|
