Examination of Witnesses (Question Numbers
180-199)
RT HON
STEPHEN TIMMS
MP AND MS
RACHEL CLARK
24 NOVEMBER 2009
Q180 Mr Oaten: And when will constituents
of mine who have slow broadband get quicker broadband?
Mr Timms: It depends how slow
is slow. If they can access a service of 2Mbps at the moment then
they may not see very much change by 2012. If they are in the
areas—and there are a number of these—that can only
get a service at the moment of only 256kBps or 512kBps then they
can expect to see a better service by 2012.
Q181 Mr Oaten: If the Procurement
Group has not yet set the criteria is 2012 really realistic?
Mr Timms: I think so. They have
got to work hard on this. This is a big job and it has to be delivered
quickly, but I think it is feasible.
Q182 Mr Oaten: And do service providers
say to you that there is a cut-off point at which you need to
get this in place if you want to deliver 2012?
Mr Timms: I have not been presented
as yet with deadlines by service providers, but clearly we do
need to get a move on and we will.
Q183 Mr Oaten: The potential to use
very small local providers to fill in these gaps, how interested
are you in that? We have heard of some examples I think in Cornwall
and, I cannot remember, was it Derby? There were some other examples
where this was being used and it was great, it was filling in
the gaps but in terms of big procurement projects they may fall
outside of that. Is there a danger that we could lose these very
local solutions?
Mr Timms: I hope not. We have
seen those local solutions providing a very important role in
UK broadband since broadband started and the Community Broadband
Network brings those initiatives together and I spoke at the conference
in Leeds last week that the Community Broadband Network convened.
I take my hat off to what they have achieved over the last decade
and I think they have a very important contribution to make in
the future as well. That is one of the considerations about the
size of the packages that the Procurement Group puts out to tender
because we do want to make sure we capture the full potential
of innovative service providers like those.
Q184 Mr Oaten: I cannot see how a
national procurement system is going to put a package together
that would allow a very small local group to be able to compete.
I cannot get my head around that, unless you were to define literally
packages which broke down into small communities.
Mr Timms: I would not—and
this is a matter for the group when it is in place—envisage
there being a national procurement. I would not expect them to
say, "Here is one project to procure the services needed
for all 10% of the households that do not get it at the moment".
I would expect it to be broken down into geographical packages.
How large those will be would be a matter for them to determine.
The other possibility, of course, is that some of those small
local providers might be able to group with others to provide
a consortium bid for an area which is larger than the one that
they serve.
Q185 Chairman: Just before I bring
in Roger who wants to deal with some of the digital inclusion
issues, I just want to roll back a bit and test the underlying
hypothesis of all this just a little more rigorously because I
still do not see how Government can know better than the market
what broadband speeds will be needed in the future. We have just
had Ed Richards in and Ed said if he knew that he would be out
in the private sector actually making money out of making those
judgments himself. The BBC iPlayer needs, what, 0.6, 0.8Mbps?
So 2Mbps gives you iPlayer, gives you ITV Player, gives you Sky,
and gives you interactive video; it gives all kinds of things.
It is more than an order of magnitude better than the old dial-up
connections used to have. To get 2Mpbs is a fantastic achievement.
Half the country can get access to super-fast broadband now, if
it wanted, over cable network. These are fantastic judgments that
you are making as ministers from Whitehall double guessing the
market when we do not even know what the applications are that
are being delivered over the network.
Mr Timms: What we do know, as
you say, is that certainly half the country is going to have next
generation broadband. Almost half of the country has it already
through Virgin and BT is committed to rolling out to ten million
homes. So that is going to happen. I think the question that ministers
can answer is, is it acceptable for us to end up in a position
where half or two-thirds of the country has access to these services
and a third of the country does not?
Q186 Chairman: But most of the country
does not live within commuting distance of a high-speed rail line.
Your government is about to build another high-speed rail line—my
party is committed to it to—to go up to Birmingham and Edinburgh
and that is fantastic; but poor old Worcester loses out, it is
nowhere the railway line. You have to take these decisions. A
lot of us are too far out from the emergency departments so if
you live in certain places you cannot have the same things that
all of us have, and is there not a real risk that you can distort
the market? We heard in the last evidence session with Ed Richards
that Carphone Warehouse suddenly appeared in the broadband market
and transformed it and it is added competition and added rollout.
We cannot know the future. If we did you and I would not be sitting
here taking flak from the media without their making money out
of it. So are you really, really sure that you know better than
the market?
Mr Timms: I agree that we need
to make these judgments and we have made the judgment that I have
set out, which is that it is not acceptable to end up with only
two-thirds of the country having these services and the rest of
the country not having them.
Q187 Chairman: Do you know the future
of satellite technology? Will satellite actually deliver super-fast
broadband across the whole country at some stage in the future?
Mr Timms: It could do now if everybody
had a sufficient satellite dish and were prepared to buy them
and so on.
Q188 Chairman: We had a satellite
company in here about two weeks ago and they talked about a second
satellite they could afford it. They are there, they are doing
it. I do not understand why you know that this is going to be
a third. Our witnesses two weeks ago said they had no idea how
many would not get it; they had no idea what the applications
were; they had no idea how much it would cost and yet you seem
to be gifted with this wonderful perfect vision of the future,
which, I tell you, for someone who has followed technology over
the years we all know that we do not have. There could be some
completely new technology coming down the track that none of us
know about in this room.
Mr Timms: That is possible. I
do not think it is likely. I think that we do have to do some
hardheaded economic analysis and Rachel has described what we
have done. There is a judgment here, I agree with you, and our
judgment is that it is not acceptable to end up with only two-thirds
of the country having services to which others are already getting
access. If one was to take the position that the Conservative
Party currently takes then we will end up with a third of the
country, basically rural Britain, not getting next generation
broadband any time in the next decade.
Q189 Chairman: We are getting a fantastic
service of over 2Mbps almost all the things you want—BBC
iPlayer is available; all except the fastest interactive gaming
is available at those 2MB speeds. Get that 2MB delivered properly,
at a definition—and we still do not know what it is, by
the way -and then why not let the market do the rest of it?
Mr Timms: If we were sitting here
ten years ago, and I may well have been pressed on this in the
past, what is wrong with everybody having 9.6kBps? In ten years
we have discovered that actually we do need those higher speeds.
One can take the view that those demands are not going to carry
on increasing but my view is that they will.
Q190 Chairman: What advantages have
the very high speeds brought to South Korea?
Mr Timms: I have been to South
Korea and had this discussion with people there and they would
certainly point to substantial economic benefits. By the way,
I am not sure that Japan has enjoyed quite such the high scale
of benefit that South Korea has, and actually if you look at the
comparison of broadband take-up between the UK and Japan there
is higher broadband take-up here than there is in Japan. A point
that was made to me by the minister.
Q191 Chairman: A great public policy
achievement with more room to go and Roger will talk about more
room to go. What I heard about South Korea is that the only impact
has been that the movie industry has had to withdraw entirely
from South Korea as it is now impossible to control piracy of
movies. These very super-fast download speeds mean that Hollywood
Studios can no longer make money out of flogging films in South
Korea, it has just become a pirate's paradise.
Mr Timms: If you look at online
computer games Korea is the centre worldwide for the development
of computer games.
Q192 Chairman: So when you have masses
of public money you tax pensioners to enable people to pay computer
games?
Mr Timms: No, my point about South
Korea is that there is a substantial industry developing those
games in South Korea which has been enabled because South Korea
has such good broadband.
Q193 Chairman: There are people out
there listening to all this who think I am a complete Luddite.
I love super-fast broadband and I want everyone to have it as
soon as possible. I think it is a fantastic thing and I can see
the advantage that it brings commercially and personally. I will
move on otherwise I will get obsessive. I will gnaw away at the
bone but we just get the same questions and the same answers.
I am still not persuaded that you in Government can foresee what
is necessary to be done better than the market will deliver it
because content will drive demand for broadband.
Mr Timms: I think it is a simple
question: is two-thirds of the country enough or not? If it is
not you should not support it; if it is not then you have to support
it.
Chairman: That is very clear, thank you.
Q194 Roger Berry: Chairman, I do
observe market failure on a pretty regular basis and actually
think that Government has a role to play.
Mr Timms: I do agree with that.
Q195 Roger Berry: Can I come to the
50 pence levy? Minister, do you agree that the 50 pence levy will
fall disproportionately on older people, on people on lower incomes,
whereas the benefit will be the early adaptors to NGA who are
undoubtedly going to be better off?
Mr Timms: I think that you need
to evaluate the levy in the light of what we have seen happening
in telecom charges over the last few years. If you look at Ofcom's
analysis, an average household's telecommunications bill has fallen
by more than 50 pence per month in the last year and—
Q196 Roger Berry: I am happy to come
to that question but that was not the question I asked.
Mr Timms: What I am attempting
to do is to give a justification for the measure that we are proposing.
Q197 Roger Berry: I was not asking
for justification; I was asking do you accept the suggestion that
the 50 pence levy will fall disproportionately on older people
and on people on lower incomes and that the beneficiaries are
going to be those who are better off? A number of people who have
given evidence, for example, have observed that as being self-evident
and I must confess that when you look at it it would seem difficult
to deny, but I thought we would give you the opportunity of commenting
on that.
Mr Timms: I would not entirely
agree. We, as you know, have said that there will be a number
of exemptions from the levy: people, for example, receiving the
pension credit guarantee will not pay the levy, or people on Jobseeker's
Allowance; and other very low income households will not be affected.
So I think we would be able to design this in a way that does
protect those on the lowest incomes whilst also ensuring that
we have the resources to—
Q198 Roger Berry: There would be
a policy paper somewhere that would be able to demonstrate that
it is not true that this will disproportionately hurt people on
lower incomes and benefit people on higher incomes?
Mr Timms: Those on the lowest
incomes will be protected, as I have said.
Q199 Roger Berry: Yes, any exemption
for people on lowest incomes will help them, absolutely. I am
just trying to get to what seems to me a pretty important conclusion:
is it or is it not true that this will be a regressive way of
funding the package because the people it will hit disproportionately
are those on low incomes and it will benefit disproportionately
people who are better off, even with the exceptions to which you
have referred?
Mr Timms: I think it has been
set at a sufficiently low level for that not to be the case.
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