Examination of Witnesses (Question Numbers
80-103)
MS GILL
PAYNE, MR
JONATHAN STEARN,
MR STEPHEN
HEARNDEN AND
MR PAUL
HOLOWAY
2 NOVEMBER 2009
Q80 Mark Oaten: Why is it that individuals
cannot afford to access it? Is it simply because they cannot afford
the landline?
Mr Stearn: Yes, they do not have
landlines but it is all the issues that go with it. You need a
computer and the hardware to be able to link up, and then you
need to be able to afford the charges on a monthly basis. Then
you also have the other issues of training and support. I do not
know what experiences you have of trying to get service and having
to pay for services, but it can be quite expensive to get linked
up. It is all that issue about affordability.
Q81 Mark Oaten: You do not think
that is being addressed enough on the work on the digital divide?
Mr Stearn: There have been pilots.
We had this home access pilot, which has been piloting Suffolk
and Oldham, which is trying to get Internet for school age children.
The idea is to move that out to the whole country, but I do not
think anyone has seen an evaluation of that in terms of how it
is working. As I understand it, that is using the mobile network
as a way of linking up families that do not have access. I do
not know how they are dealing with that in terms of its potential
very high cost. There are issues about how families can get linked
up and afford to have broadband and to continue to pay for it,
and get the support and education. The other group I have not
mentioned is older people. There are quite extraordinary numbers
here. There are 6.5 million people over 65 who have never used
the Internet. That is quite extraordinary in terms of what we
are talking about here: there is a whole group that is being completely
left out of this.
Q82 Mark Oaten: Does that not happen
with every bit of technology in every generation?
Mr Stearn: You can say that, but
what it means in terms of what is happening is that Government
is driving forward with DirectGov to get information on the Internet.
In years to come, and indeed now, that group will just get completely
left out and not get access to key and essential services, because
so much is now being driven through the Internet—
Q83 Chairman: — services are
available through post offices and local communities, not just
on the Internet.
Mr Stearn: Of course, that is
absolutely key as well, but it means that a group is missing out
on that potential. Let me go back again to the point: if you look
at the way the markets are working, for example in energy, you
can get much, much, much cheaper deals if you use the Internet
and direct debit to get deals. A whole group of people is being
excluded from that.
Q84 Mark Oaten: But some may want
to be excluded. I am interested to understand the figure. If we
are assuming we want to get to 90% coverage, which the Final Third
would achieve, are we ever going to get to that figure? Will there
be some individuals that just do not want to be part of this?
Mr Stearn: The research that has
been done shows about 48% of people who are not linked up want
to be linked up, and it is either because they cannot afford it,
or they plan to in the near future. Then you have this other figure
of 42%, and there is a large group of older people amongst them,
who say they do not want to get linked up. I can give you personal
experience. My mother and father were not linked up two years
ago, and my Mum kept saying, "Why do I need to bother?"
We paid for her to get on the Internet. I saw her yesterday, and
now the conversation is completely dominated by talking about
the Internet and e-mail and what she is up to. It has completely
transformed her life and she is doing all sorts of searches for
her family, and using it in a very productive way. She would not
have been doing that two years ago.
Q85 Mark Oaten: My final question
on access: if the 90% target is achieved by various things being
put in place, paint a picture of the 10% that is going to be excluded.
The Final Third fund aims to achieve access for 90%, so what is
the 10% going to be? Should we be concerned? Even with these targets,
if we achieve 90% is there going to be a crucial 10% that does
not have access?
Mr Holoway: 10% of households?
Q86 Mark Oaten: 10% of the population
is not going to have access, even under the Government's plans
to meet the Final Third.
Mr Holoway: These could be suburban
areas, not just out in the middle of nowhere, that do not have
the broadband capability of the 90%. We may have already seen
a distortion of things like house prices, because the closer you
are to an exchange the faster your broadband. We have seen new
houses knocked down next to exchanges just to build two or three
houses next to it just because it has got fast 8Mb broadband.
There are more issues than just the speed. There are other outlying
issues. Moving on, I just want to go back to what that gentleman
said. For broadband you need a BT line generally or thereabouts,
and you pay £10 a month just for the telephone number. You
should be able to get broadband without having to pay £10
a month for a telephone line. These days broadband is getting
fast enough so that you can have normal telephone conversations
down a broadband line, without having to pay extra for the cost
of having a line number.
Ms Payne: Can I come back on your
question? At the moment, for example, 17% of rural villages cannot
even get half a megabit, so there will be particular areas where
cable is not being put to the boxes, and we heard earlier on that
there will be particular issues here. We do know that satellite
can provide some solutions, but it will not provide all solutions.
We want to see a combined strategy that targets some of these
areas. At the moment it does not look as though a commercially
viable solution will be put forward. We are talking at the moment
with a couple of government departments about the huge investment
that is going into the broadband supply for schools, the JANET
system. We have raised the issue of whether we could possibly
use that investment to provide an ongoing service to the communities
where those rural schools are. We have been told that that cannot
happen because of the procurement rules at the moment, which will
not allow that to happen. We suggested a framework agreement that
would overcome that, because we think that there is not just one
solution to this, and that a number of solutions can deliver.
If we can get a combined programme that is a bit more creative
and more engaged in what we are trying to live with, then we could
hit that last 10%.
Q87 Mark Oaten: This could be quite
a useful point for the Committee to pick up on, if there were
a particular procurement issue that could be set aside to deal
with access in terms of schools. Is there a note or something—
Ms Payne: We can provide a note
on that, absolutely. We have written to a few people already,
but I can provide that to the group.
Q88 Mr Wright: Are the Government's
plans for the subsidised delivery of super fast broadband the
best use of the public's money?
Mr Holoway: I would like to think
so.
Mr Hearnden: I certainly think
so. If you look at other areas that we see at the moment like
Crossrail and London Olympics, the Government is spending money
there to give the necessary push. What we are seeing for broadband
is a similar example. It is a good use because, as we have already
heard, broadband is important to everyone in the UK, and the more
people who can get access to it the better it will be for UK plc.
We are very supportive.
Mr Stearn: There are two issues:
how money is used and where it comes from. As you can gather,
what I think should be happening here is that we should be seen
as part of a universal service framework. Yes, it is getting the
potential for access to everybody, but it is also then getting
people the ability to be hooked up. Those are all very key. We
know from what is happening that certain groups are being excluded,
and that needs to be faced up to as well. I found the report quite
thin on how the Government could use its powers, or the regulator
could use its powers, as leverage—when you get into the
techy stuff about the re-use of ducts and stuff, and the parachute
view that the Government can have. We know, for example, that
we are moving towards every household having smart metering. There
seems to be an obvious link between these two. We have two-way
communication needed, and there seem to be similar bits of technology
in both; but there is no mention in this report about how this
links into other bits of Government policy; yet I thought there
should be some cross-linking going on to see how there might be
benefits from Government policies and how they can be joined together.
Q89 Mr Wright: You are asking for
miracles there, are you not?
Mr Stearn: You can always hope,
I suppose. There are issues there about how government works and
can use its powers to have an overview of how things work. It
is very difficult when you look at the research to find out how
they have come to this figure of a third that will not be met
by the marketplace. Where it is needed we would certainly support
funding from the public, but our priority would be for it to come
from the public purse, because when you start talking about consumer
paying for consumer, as you get rising within the energy industry
and within climate change policies, it often becomes regressive.
There are issues about the 50p that are problematic in terms of
who that will fall on.
Q90 Mr Wright: Do you think the 50p
levy is a fair way of raising funds for this, or is there another
way you consider the money could be raised other than through
the public purse directly?
Mr Stearn: Again, there is not
much information on the demographics of this, but if you look
at the age profile of people with landlines, you will find it
is older people. The majority of younger people, I think 75%,
use mobiles and do not have a landline. I think I would not have
to pay this because I get broadband from cable and use Skype,
and reading it I would not have to pay my 50p. I am lucky and
one of the people with super fast broadband, 20 megabits, and
I do not think I would have to pay a penny towards this.
Mr Holoway: Instead of a flat-rate
50p tax I think it could be proportioned. I do not know, but if
you have 20 Mb broadband and did 10 gig download a month, you
could proportion it per 10 gig; so the poorer communities perhaps
would not have to pay a penny, whereas those who use 5, 10 or
20 gig a month, including businesses, would pay a proportion—I
do not know, say £1 per 20 gig or something like that. As
more and more broadband gets faster and more downloads are performed,
in that way you can get more money into the cost of the project,
into the public purse, to pay for universal roll-out.
Q91 Mr Wright: So you think the 50p
levy is unfair and it should be judged on the broadband usage.
Mr Holoway: Yes.
Q92 Chairman: I think it seems very
odd to tax an old technology to pay for a new one! It seems a
very strange approach to me.
Ms Payne: Can I come back to whether
it is a good use of public money? From my perspective, I would
look at it from a risk perspective more than anything else. If
we look at the whole farm approach and the fact that farmers are
now expected to put the movements of their livestock on the Internet,
and those who do not have access are still relying on the post—that
does mean—and I would hate to think of another outbreak
of foot and mouth or something, but that is one of the reasons
of going down the Internet route to keep more accurate up-to-date
data available. That is not happening very well at the moment.
There was mention earlier on about schools and the schools agenda
and making that available to people. You could have people in
rural areas not having access to lessons or the extra material
that is available. The other area is on health. Again, there are
some very good new technologies that are coming up to help people
enter information about their health status and go directly to
their local health centre, and they can enter it online. We spoke
to some people up in Alston Moor, who are using this service,
and they are retired people; and it has basically changed their
lives. They get immediate information and access to a doctor as
and when they need it. Online they can get through much quicker
than having to make the trip every week into the area. I would
look it as a Government investment on a risk-based approach—what
would happen if they do not and what are the potential risks to
the basic Government agenda.
Mr Hearnden: Can I come back,
please, on the comment Jonathan made regarding where the Final
Third came from. By way of background, the Broadband Stakeholder
Group, which is a big organised group, set out to do some work
last year and came up with what they considered to be a reasonable
number of up to 65% that they believed would be delivered by the
market, by a mixture of fibre, wireless and satellite. They thought
that up to 65% of homes would be covered without recourse to incentives
of any kind. We will discover in the next five years whether that
figure is optimistic or pessimistic. Another point about the levy
is that one of its benefits is that the tax is very transparent;
you know where the money is being spent; it is being spent on
upgrading the broadband network. I think that is an important
point.
Q93 Mr Wright: Coming back to what
Mr Stearn about the number of people who do not have access to
broadband, why should they pay for this upgrade to the broadband
service? There are people like my mother who has a landline and
no interest in the Internet whatsoever. Why should she pay the
levy so that other people can access it?
Mr Stearn: It is a very valid
point and goes back to the demographics of who has landlines and
who has this type of landline and who does not. As I said, it
looks as though I would be a person who would not have to pay
this, and yet I am benefiting from super fast broadband. That
is completely contradictory. The group that is likely to be picking
this up are older people who are very sceptical about broadband
anyway. It is contradictory about where the funding is coming
from.
Q94 Mr Wright: If it was on the basis
of what Mr Holoway said, about people who use broadband at the
present time, do you think that would be a fairer system?
Mr Stearn: I personally would
think so, yes. I am certainly benefiting, absolutely, from having
broadband access and fast broadband access; and I think it is
reasonable for people like me to make a contribution for others
to get a similar service, or get us to the point where everybody
else can benefit from that.
Mr Holoway: I agree. I think if
you do not make use of broadband I do not think you should pay
the levy. There is no benefit to you paying 50p unless you then
go online and start using it; and to make it fairer to the less
affordable, you do not make the fee from base zero; you make it
higher from a proportion of your monthly usage.
Q95 Chairman: We heard from Vtesse
Networks that if we just had reasonable rates and charge BT the
proper business rates, you are raising the same amount of money
anyhow—problem solved! Is it your view—and I am looking
for "yes" or "no" answers really—that
the Government's focus should more properly be, from your perspective,
on getting the 40% of people who currently could have broad band
at whatever speed but choose for whatever reason—financial
or other reasons—not to, that their focus should be there
rather than developing new fast-speed technologies for people
like you, Mr Stearn, who can access them with their ingenuity?
Should the emphasis now be on solving digital inclusion, which
might often be an economic issue for those households, rather
than a technical solution for increasing speeds?
Mr Holoway: I would like to say
that if you were to spend this—whatever amount of money
on getting someone just 2Mb broadband, how much more expensive
is it to get fibre to the household but outside of the capital
or outside of the conurbations where they have already got fast
broadband? I agree—
Q96 Chairman: The point I am trying
to make, Mr Holoway, is a lot of people choose, for whatever reason—they
may be forced to make that choice on economic grounds, I agree,
but they choose not to have broadband at present: should that
not be the focus of public policy, addressing that choice, whether
it is an economic choice or a deliberate choice?
Mr Holoway: Force them to have
broadband?
Q97 Chairman: Encourage greater take-up
of currently available technology.
Mr Stearn: I completely agree—encourage
that group and give the support that that group needs to get online
and get broadband. In terms of how that group is now being penalised,
it will continue and people are going to lose out more and more
and more in the future by not having access to the Internet. The
priority should be to get to those millions of households that
do not have access at the moment.
Q98 Mr Clapham: Can I finish off
with advertising? At the present time we know that Internet service
providers are advised that they should advertise their speeds
"up to" and that is the theoretical maximum, often never
reached. We see that the Advertising Standards Agency suggests
that you could only measure the speed as the service leaves the
exchange. Do you feel the way these things are advertised are
fair to the consumer as well indeed to the service providers?
Mr Stearn: I agree with you that
it is very confusing. Even the debate we had earlier on about
whether the two bytes we are talking about is a minimum or an
average. We have three different measurements: a minimum, an average,
and a headline; and it depends what time of day it is as to what
one you are likely to get. It is quite confusing. The basic thing
for the consumer is that they have the ability to use it in the
way they want to use it and download the information they need
within a reasonable time period. If should come up with some system
that gives people a clear idea of the truth about what they are
buying. In some of the interviews Ofcom did, there were clear
indications from people that they were disappointed when they
got their broadband because it was not as fast as they thought
it was going to be.
Q99 Mr Clapham: Given that, Mr Stearn,
you have looked at quite a lot of the research that has been done.
How do service providers measure the speed of their service? Is
it possible for you to say?
Mr Stearn: They tend to tell you
in the headline figures; they say what the headline speed is.
The speed I am told of my broadband is at 20
but I know it is roughly at 14. What is advertised is the headline
figure. Often the information from Ofcom is that people are disappointed
with what they get in the end.
Q100 Mr Clapham: Would it be helpful
if the service providers had to provide information regarding
the actual speed of their service?
Mr Stearn: It absolutely would
because you could get them to say what the average speed was.
You would have to work it out over an average day, but an indication
of the average real speed would help.
Mr Hearnden: There is a broadband
speed code that Ofcom introduced last year, which I think about
90 to 95% of the ISPs have signed up to. At the point of sale
the customer gets the opportunity to get an estimate of the maximum
he could get on his line. Certainly the ISPs do give the opportunity
for customers to try a typical number of different websites to
measure what they get themselves on average. If the figures are
significantly less, the code states that the ISP should give an
alternative at no cost to that customer if it is technically possible.
Ofcom is monitoring that. There is an organisation called Sam
Knows that has done some work on five or six different ISPs with
600 or 700 different users, and they have a very good clear view
of where the bottlenecks are and where the services are good.
As you have said, it is a very complicated business. It is very
difficult to measure. It varies according to time of day and varies
according to who else you share your resources with on the network.
The industry is aware of that and is investing in trying to make
it better. However, there are certain rules of physics that prevent
you, and the line length and poor home wiring and interference
on the line is a difficult one. One of the other technical solutions
that people have used is a thing called dynamic traffic management,
where you can increase the line speed but if you get interference
on the line the line then drops back to a lower figure. The difficulty
there is that if you are watching a video, for example, that has
the effect of an instant stutter as the network reconfigures itself.
So you have this trade-off between absolute line speed, which
we all want—we all want as many megabits as we can—but
the practical limits are that you have to trade that against giving
the customer a reliable service that is not subject to stops and
starts. That is a very difficult balancing act. Very often you
can crank the speed up a little bit more, but it would be at the
expense of the quality, and it is the quality of the product that
the industry is very keen on promoting and improving. It is not
a very easy solution.
Ms Payne: I look at that from
a slightly different perspective, as I mentioned earlier on. Businesses
and particularly micro-businesses in rural areas are not just
dependent on the download speed, but it is the upload speed as
well, because of getting information out there. It is non-symmetrical
at the moment, which means that is often considerably lower. Although
they might be getting the 2Mb, it might not be anywhere near there
for uploading information. It is a big issue.
Q101 Mr Clapham: Mr Hearnden you
referred a little earlier to this survey that is being done by
Ofcom. Will that be reported in the future?
Mr Hearnden: It is already in
the public domain. It is already on the Ofcom website. I can give
you the website details afterwards.
Q102 Mr Clapham: Does the panel feel
that there is anything else that can be done with regard to regulations
on advertising to make it much more transparent to the consumer?
Mr Holoway: It is very hard for
the typical home-user to find out their speed. I have gone into
many households and businesses and told them "you have this
speed or that speed". I can be next door to someone, and
someone has 14 Mb broadband and someone has 2Mb. I just cannot
understand why there is such variance between two households.
The thing is that the home consumers do not know it either—if
next door, over the fence, someone has got it faster, how do they
know? They do not know. Many homes now have routers, a device
like you have with the electricity and gas meters on the wall—a
display of the current speed would have a better advertisement
of their broadband service with their ISP. Then discussion would
rage amongst different people in different communities, saying
"I am getting this speed with this company". There is
no way to compare like with like in this day and age.
Q103 Mr Clapham: Is that the feeling
of the panel generally, that it is such a complex and varied issue
that to have regulations brought in by Ofcom to regulate and achieve
consistency is nearly impossible—or is it possible and,
if so, what kind of changes do we require?
Mr Hearnden: I do not think that
regulation is practical. As the panel has said, it is a very complicated
problem. There are applications you can download that put a little
meter in the corner of your screen and you can watch it; but that
is far too complicated for the average consumer; nor does the
average consumer want a little clock sitting on his desktop or
his laptop. I do not think regulation is the answer. I think a
voluntary code where the industry works with the regulator, making
sure that the customer at the point of sale gets an accurate estimate
of what he is likely to get—
Mr Holoway: Or what he is getting.
Mr Hearnden: Or what he is getting,
yes.
Chairman: Thank you very much. This is
a complex and technical area but it raises some very important
questions about poverty, about industrial competitiveness and
all kinds of things. We are grateful to you for the time. As always,
if there are things we feel we did not ask you and should have
asked you, or that on reflection there are things you would have
liked to have said but did not have an opportunity to say, please
drop us a note with that infrastructure. We would be very grateful.
Thank you.
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