APPENDIX 13
Memorandum submitted by Balfours Chartered
Surveyors (S23)
EXECUTIVE SUMMARY
There is a demand for Broadband in rural areas,
especially from the many rural businesses.
In the past internet technology has enabled
many businesses to operate from rural locations. With the current
lack of Broadband, it is this very technology that is now preventing
such businesses from operating in rural areas.
Lack of Broadband in rural areas is adversely
affecting the rural economy, stifling diversification initiatives
and creating uncertainty as to future occupancy levels of rural
business parks.
Broadband installation need not necessarily
be expensive, but a critical number of users are required to underwrite
the capital and running costs.
Broadband is only likely to be available in
many rural areas through subsidy.
BT in particular have been irresponsibly advertising
Broadband when it is simply not available to most rural communities,
and will remain unavailable for the foreseeable future.
Marketing of Broadband has to be proactive to
ensure that critical numbers are reached, not the reactionary
marketing being currently undertaken.
Through Government subsidy, Balfours may have
found a model for the installation of Broadband that will work
in a particular scenario and can be replicated, but at present
this remains unproven
1. Introduction
The lack of Broadband facilities in rural communities
is already adversely affecting the rural economy. Irresponsible
advertising of Broadband facilities leads to the impression that
Broadband is widely available. The fact remains that for those
living in rural areas, Broadband is not currently available and
there is no indication of when it will be available. Even when
it does become available in these areas, many people will still
remain beyond the reach of Broadband, as limitations through conventional
wire mean that it cannot be extended beyond a certain distance
(typically considered to be about one mile) from an exchange.
2. Terms of Reference
This submission has been prepared on behalf
of Balfours Chartered Surveyors by Richard Bayliss. Balfours are
based in Shrewsbury and Craven Arms in Shropshire and are largely
involved in the estate management of rural estates in Shropshire,
the surrounding counties and Wales. With the firm's exposure to
the rural community and particularly to commercial developments
in rural areas, Balfours are ideally placed to comment upon the
consequences of a lack of Broadband. Further, as managing agents
of rural estates, this submission is made on behalf of the many
landlord's and rural estates whom Balfours represent.
3. Outline of the Problems
3.1 The Requirement for Broadband in Rural
Areas
Rural areas require Broadband as much and arguably
more so than built up areas. In the past internet technology has
enabled many businesses to operate from rural locations. With
the current lack of Broadband, it is this very technology that
is now preventing such businesses from operating in rural areas.
3.2 Disadvantages Faced by Rural Areas without
Broadband
The rural economy has shrunk: farm incomes have
dropped dramatically and foot and mouth has severely damaged both
farming and other rural businesses. The Government has acknowledged
that the rural economy is failing, and initiatives such as the
2001 Rates Act are intended to stimulate rural areas. Far-sighted
landowners and farmers are seeking to diversify their incomes
through the development of redundant agricultural buildings into
income producing assets; but the lack of Broadband is restricting
these diversification ambitions. Balfours' has first hand experience
of the detrimental effect that the lack of Broadband has on the
rural economy.
3.2.1 Case Study one: North Herefordshire.
On behalf of a landlord, Balfours were in advanced negotiations
for a pre-let for offices on 5,000 ft2 of former agricultural
buildings. The deal fell through due to lack of Broadband.
3.2.2 Case Study Two: Staffordshire. An
occupier of a rural business park established from converted farm
buildings (and managed by Balfours) has indicated that they will
be leaving at the earliest opportunity as Broadband is not available.
3.2.3 Case Study Three: Shropshire. Occupiers
of an award winning rural business park (managed by Balfours)
at Upton Magna have been requesting Broadband. It is feared that
without such provision, the occupancy rate will drop, making the
business park unviable.
3.2.4 Case Study Four: Herefordshire/Welsh
Border. A landlord whom Balfours represent was on the cusp of
committing to the development of 10,000ft 2 of former agricultural
buildings into offices, but is withholding due to concerns that
the lack of Broadband will make them unviable.
3.3 Cost of Broadband
The cost of installing Broadband to rural areas
are such that either business would have to be extremely wealthy,
or a number of businesses and residential users would have to
be found to make such an initiative worthwhile. A rural development
of less than 10,000ft 2 is unlikely to be able to shoulder the
costs of Broadband. Businesses occupying 10,000ft 2 or more may
well be able to shoulder the costs, but this will depend upon
the availability of grants and the ability to redistribute Broadband
to outside users, from a central hub, to help cover running costs.
3.4 Marketing of Broadband
Balfours believes that Broadband can work relatively
easily in rural areas, although the profit margins for operators
will be slim. There are many firms with the ability to install
Broadband. However, there seems to be little in the way of marketing
Broadband except to businesses and residential users in urban
areas. When it comes to the countryside nobody seems interested,
as there are better margins in urban areas. BT are operating a
reactive marketing initiative whereby a threshold of registrations
is set, which has to be reached for the subsequent enabling of
an exchange to Broadband. Balfours believes that a more pro-active
marketing campaign would reveal a higher demand for Broadband
in rural areas and make it a more attractive commercial proposition
for Broadband enablers.
4. A Possible Solution
Balfours, in conjunction with another firm (who
have the necessary technical expertise), are planning to install
a Broadband capability at Upton Magna Business Park (see 3.2.3
above). It is intended that this will also include business users
from beyond the Business Park and also include nearby residential
occupiers. It is hoped that through radio technology the Upton
Magna hub will be able to reach most people within a seven kilometre
radius. At this stage no contracts have been signed, but the scheme
forms part of a pilot project by Advantage West Midlands to facilitate
Broadband in rural areas. Furthermore a grant has been submitted
and verbally accepted by Advantage West Midlands. Due to the uncertainty
of take up, this scheme is only viable through Government grant.
If it proves successful, it may be possible to undertake similar
projects with a reduced grant, or even without a grant.
5. Conclusion
Broadband is as important to rural areas as
it is to urban areas, but the sparser rural population makes the
returns less certain. Balfours hope to prove that Broadband can
be economically installed into a rural business park and benefit
other nearby business and private users. The success of the scheme
is likely to be known by the end of April 2003.
Balfours Chartered Surveyors
20 February 2003
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