Select Committee on Environment, Food and Rural Affairs Minutes of Evidence


Examination of Witnesses (Questions 228-239)

Wednesday 21 May 2003

RT HON ALUN MICHAEL MP, MR STEPHEN TIMMS MP AND DR MICHAEL DUGGAN

  Q228  Chairman: Good morning, ministers. Welcome to the final session of the Select Committee inquiry into broadband access in rural areas. Stephen, I think that your department is the lead department on the issue of broadband but obviously we are looking at it from a rural aspect which is why you are here this morning.

  Alun Michael: Firstly, I thank you for underlining that point and to the Committee for giving us an opportunity to give evidence together. I think it is a good example of joined-up government and, of course as well as Stephen, we have Michael Duggan from the DTI who is the expert on these issues. What I would like to begin by saying is that, as you rightly said, the lead on broadband lies with the DTI, but broadband is very important indeed in rural areas and I think a good example of the way in which the Government are working and developing is moving from rural proofing being the sort of tick-list approach to what other government departments are doing to a very strong engagement on issues between the different departments. New technology gives an opportunity to do business from rural areas that a few years ago could only be done in a city centre. That has developed rapidly in recent years and has helped the diversification of the rural economy in the wider sense but, on top of that now, broadband gives both an opportunity and a challenge. The opportunity is the speed/effectiveness of connectivity, the large documents that can be transferred and the access to more ambitious work in new technology, but the challenge is that we are talking about the connectivity for smaller communities, distances, technical problems to be overcome, greater costs in some cases and some very difficult obstacles to be dealt with but, it is very important for some rural business in particular, because it is not a magic wand and it is not a universal tool, not to lose competitive edge while waiting for broadband connectivity. There has been a lot of progress. There was a lot of criticism a year or so ago that perhaps BT were being slow to provide threshold information and that fed up a section of reluctance and perhaps even delay. I believe that there has been great progress and that that whole issue has now been removed from the field. The roll-out of broadband is an urban issue as well as a rural issue. I was present to open the connection in my own constituency in Penarth, which is hardly rural, a couple of weeks ago. I think there are some things that are showing a real way forward. I was talking to Candy Atherton whose constituency in Cornwall is clearly one of the areas where an amount of progress has been made. In Cornwall, I think that things like the ActNow project promoting broadband connectivity clearly depends to a degree to Objective One money and the sort of partnership of public bodies as well as private bodies that have been stimulated by Objective One, so, in that sense, it is accelerating the process in one rural area because that Objective One money is available, but that is what Objective One is meant to do, so that is far from being a criticism. I visited ActNow at the beginning of last week and I think that Stephen also visited the project a short time ago. I was very impressed. For instance, seeing that an original plan to connect some six villages grew to nine and I believe is going up to 13 as a result actually from local engagement, from people in the local village saying, "We want some of that" and then a dialogue saying, "To what extent is it possible to connect villages?" I did ask for copies of the maps that showed the way that that acceleration had taken place which had made a particular impact on me. I have to say that this demonstrates that new technology is not everything because I gather that they were not able to let us have those maps in a form that we could give to the Committee this morning although they will be sent. I had actually envisaged, rather than them being sent by e-mail, that they would actually have been put in an envelope and sent. So, you do have to keep a grip on older methods as well as newer ones. However, we do have copies of the presentation that was given while I was down there which underlines the fact that broadband availability now encompasses some 68 per cent of Cornish business which will go up to 79 per cent shortly, which demonstrates the imagination with which local communities are being engaged through an advertising approach and the sort of `can-do' approach is being brought to bear on connectivity. I think that the figures are impressive: some 1,650 businesses connected to broadband through ActNow, 14% of reachable businesses in one year and over 5,000 Cornish businesses in households in total connected to broadband. I think that some of the information that was presented there would be of interest to the Committee. However, I think it is worth making the point that that is an illustration of acceleration. I was struck talking to one of our colleagues, Peter Bradley, last night that, in the Wrekin, he has, with the local village, been running a pilot to encourage take-up and to see if the threshold could be reached and has had a very positive response.

  Q229  Chairman: Those are the general issues but I think that what the Committee wants to be clear on is what the objective of Government policy is in this area. Are the Government saying that rural areas should have as much access to broadband as urban areas? Is the policy of the Government to bring about a certain percentage of access to broadband? What is that percentage and to what extent are the Government prepared to be interventionist in actually ensuring that that policy objective is met because the impression that the Committee has had so far is that the expansion of broadband in the UK has been largely market led and obviously, in rural areas, we are beginning to come up against problems with constraints where the market is not necessarily very quickly going to deliver access. So, I would be grateful if you would just concentrate on those issues.

  Alun Michael: If I may say so, I think that is what I have been concentrating on. It is demonstrating the extent to which, firstly, there is Government commitment and, secondly, there is a great deal that local communities can do with the changes that have taken place over the last year, the change of attitude to which I referred and the sort of exemplars which I think very much show the way in which Government and local communities need to be working in partnership in rural areas. It is not easy to move rapidly everywhere. There are areas that can only be reached by radio or satellite, but I am particularly pleased—and I think that this is the way forward—about the partnership now created. There was no expertise in my own department a year ago. We now have a secondee, Helen Thompson who is here this morning, seconded to the DTI team in order that rural issues are understood by that team. Stephen is chairing the ministerial group of which I am a member. We have a secondee also to one of the RDAs. I attend the meetings of RDA chairs which take place regularly under DTI chairmanship and they have been engaging with the need to have connectivity in rural areas, which of course is very much a part of their role in the regions and I think that the opportunity that has been created by the Government's decision to invest in school and health connectivity gives a particular opportunity in rural areas which I think Stephen will want to say something about but, across Government, that reflects an enormous amount of investment and commitment.

  Q230  Mr Curry: Can I just be clear. We have had a number of witnesses and in fact almost all of them have suggested up to now that however far we push broadband, there is always going to be some sort of tier of people, as it were, too far up the path/too far up the track to be able to access it. Could you confirm for me or could you simply state for me that it is the Government's aim that every community in the UK, irrespective of location, should be able to access broadband at affordable rates within a reasonable time.

  Alun Michael: That is certainly our aim and I think that some of the technical obstacles are ones that everybody is working on overcoming. I referred, for instance, to that connection of villages in Cornwall. Just outside the area of the villages being connected, you would have seen, if we had had the map here—and, please, let me make the point—two places where there is a radio connection experiment looking at the practicalities of overcoming the difficulties. There are RDAs that are taking an initiative in relation to satellite connection as well. So, yes, the answer is that there are clearly places—and Stephen is more acquainted with the technical pros and cons than I am—where connectivity through cable or through exchange enablement is not possible but where other technological answers are possible and that is what is being experimented with.

  Q231  Mr Curry: I was not suggesting that there should be a standard method. I was merely wanting the aspirational statement, if you like, a vision thing, that it was the Government's aim that all communities should have access, and the next inevitable question is then the definition of what a community is. Is a community defined as a group of people within a certain proximity of a certain size? Will there be people at the end of all this process who it is not reasonable to expect that they will be able to access broadband?

  Alun Michael: If you hear from Stephen, the two strands of the discussion will come together. Very clearly, there are some communities where the number of subscribers would make the possibility of connectivity at the exchange remote if not impossible. There is also the limitation on distance from exchange of I think it is 6.5 kilometres—it is slightly higher for ADSL—which is a greater area that is brought in that was the case even 12 months ago.

  Q232  Mr Curry: Minister, I asked you a very general question and the response immediately goes into a whole series of micro-schemes and I am finding it quite difficult to pull all this together and get a sort of overall—

  Alun Michael: If you had listened to the introductory comments, perhaps you would be somewhere nearer, David.

  Q233  Mr Curry: Let me try again. Last November, the Prime Minister made a speech in which he said, as I recall, that, by 2004, every school and every GP surgery would have broadband and that, on the back of this, there would be enfranchisement for people in the community. The Department of Health and the Department for Education and Skills is spending a small fortune bringing hospitals and schools online. When they are told that they have to allow those lines to be piggybackable, who pays for any extra capacity that might be necessary to enable that to happen? What happens to the deadlines which have been established for those public-sector bodies and, since the Prime Minister's statement, how many contracts have been changed to permit piggybacking?

  Mr Timms: I wonder whether I could comment on that and I would like to set out some of the background before I address those points specifically. On your question about availability, looking through the position on broadband around the world, I think that 90% seems to be at the moment the highest percentage household availability of broadband anywhere. Even in Korea which I think is the country that has done the most, it is 90%.

  Q234  Mr Curry: So you can have 100% community availability but that may be less in terms of households.

  Mr Timms: It is 90% household. We want to be among the leaders. Indeed, we have set the target of being the most competitive and extensive broadband network in the world, so we need to be up there in order to achieve that target. At the moment certainly, there are people who cannot get broadband much though we would like them to share the aspiration that you have set out. I think that we can point to good progress over the last year. We expect to hit the two million broadband connection milestone this week having been at 600,000 a year ago. It remains the case, however, that there are over one quarter of the households in the UK who are not within reach of the affordable broadband service that David Curry has been referring to, concentrated particularly in rural areas, but we are now working with Alun focusing a good deal of attention on addressing the barriers that they face. I think that the main barrier is concern in the rural areas that the initial investment required to provide broadband by any technology other than satellite will get a slower return in rural areas where there are fewer people within a given distance of the exchange than in areas of high population density and also where the cost of backhaul is likely to be greater. So, those are the barriers that need to be addressed. As David Curry said, the Prime Minister said in a speech in November that the Government will be spending £1 billion on broadband to improve public services over the next three years with the health service and education in particular with, for example, broadband in every school by 2006, every doctor's surgery being wired up and so on and it is my job to make sure that we make the most of the potential for that investment to open up broadband access to customers outside the public sector as well as obtaining best value for the taxpayer. We concluded that the way to achieve that was to aggregate the key aspects of public sector demand to deliver the department's needs at the lowest cost but also to extend broadband to a wide range of dispersed locations. So, subject to some further value for money appraisal work that we are about to undertake, the Department for Education and Skills and the National Health Service will become the key anchor customers for this broadband aggregation. They account, between them, for the great bulk of the public sector demand and it is our hope that other public sector users will be encouraged to come in behind them. We are in the process now of designing exactly how this will be achieved and we expect to reach a final view next month. We are working, again picking up one of David Curry's points, to very, very tight deadlines here because that is the nature of the targets which the public services are committed to delivering. The health service has very demanding targets and the fact that the health service is part of this aggregation exercise must not delay or put at risk the achievement of those targets. We are working very closely with the regional development agencies, as Alun has mentioned—I met the chief executives of the agencies yesterday—and also we are working with the devolved administrations who have a crucial role to play whatever model for aggregation we end up using. The broadband aggregation project team is based in the DTI; it reports to the ministerial steering group which I chair and of which Alun is a member and that group met this week and reaffirmed its commitment to the aggregation approach. So, I think that project will be critical to the wider roll-out of broadband in rural areas alongside the competition between the different broadband providers and the growing demand from people all over the country for access to broadband services. David was asking questions about the contracts that have been let so far. The first health service contracts—and these really are on the critical path for this—will, as I understand it, be let in the early part of the next calendar year. So, what we are wanting to ensure is that, well before then, we have in place a procedure that will aggregate together the demand in particular from health and from education in order to obtain the benefits from aggregation for increasing broadband availability.

  Q235  Mr Curry: Minister, this is my final point though I suspect that we will come back to this later. When you were talking about piggybacking, I listened very carefully and you said that other public sector bodies will come in behind. What about non public sector bodies? If, in one of the larger villages in my constituency, the intent is to put broadband into the primary school, but what about non public sector users coming in on that and how are the contracts then framed to create that capacity and to allocate cost because public sector costs are obviously something that we need to keep under control? How does that work? Ho do those contracts work?

  Mr Timms: The way we see it working is that the public sector will put together its requirements, service providers will then invest in infrastructure in order to meet those requirements and that infrastructure will then be available for other users, private sector users as well. There are some quite interesting examples around already of places—there is a school in Cheshire which has broadband and where there is a wireless aerial which has now been set up in order to provide a wireless broadband service to the community around. That is the kind of development that I expect we will see much more widely using the infrastructure that has been put in place for the public sector but opening it up to other users, individual householders and businesses in the area too.

  Q236  Mr Curry: On the subject of infrastructure, it just so happens that yesterday a letter came to me from Scottish and Southern Energy and they argue that they are looking at ways of bringing broadband services and infrastructure to rural areas which will only be commercially viable if they can utilise the advantages presented by existing electricity infrastructure and they quote two examples: the installation of fibreoptic cables in or on the overhead electricity lines and powerline communications along the existing copper electricity cables. What they are saying in a nutshell is that the costs of acquiring the rights for the few what they call "ransom strip holders" is such that it is discouraging development of this technology but that a minor change in the Communications Bill which would affect the code powers in Schedule 2 of the Telecommunications Act would actually bring within the range of accessibility this existing infrastructure and therefore open up a new avenue for delivery. I am very happy to give you a copy of this and you may wish to reflect upon it because we will probably come back to it, but that came out of the blue and, since we are in the business of 1,000 flowers blossoming sort of thing in all this, there are presumably a couple of thistles.

  Mr Timms: I very much agree. I think that what Scottish and Southern Energy is doing is very interesting. They have had a successful pilot, I think in Crieff, and they are now moving to a commercial pilot in a couple of other locations. I am hopeful that powerline will prove to be an important additional platform for broadband alongside ADSL and cable and wireless and satellite that are already there. There were some technical problems with that technology when it was last tried three or four years ago. Those problems appear now to have been ironed out and it now looks much more promising. Whether there is change to the law needed to facilitate this, I am not convinced. I will certainly have a look at the case they have made and they have sent me a copy of their letter which I am grateful for as well, but I certainly think that we do need to consider how we can facilitate that development and that technology platform alongside the others.

  Q237  Chairman: On that specific point, would it be possible for your department to let the Committee have some further thoughts on that before we actually finalise our report because that would be helpful?

  Mr Timms: We would be very happy to do that.

  Q238  Ms Atherton: Just on ActNow in Cornwall, the Committee might have had the impression that you were suggesting, Alan, that 79% of Cornish businesses were connected up. Actually, it is 14% and I would have to say that the vast majority of these—and it is a very good scheme—are in towns. They are not in the really rural areas of Cornwall so much. I think that is the issue that we are trying to address within this Committee. They are in towns and communities: Camborne, Poole and Redruth areas has a community of something like 50,000 people. That is hardly down the end of a track and that is the challenge that I think this Committee is concerned about. In fact, it is a 14% take-up of businesses so far. I would particularly like to talk about the broadband pilot project.

  Alun Michael: That is businesses actually connected as distinct from accessible.

  Q239  Ms Atherton: Yes, I accept that.

  Alun Michael: I confirm that.


 
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