Examination of Witnesses (Question Numbers
240-252)
RT HON
STEPHEN TIMMS
MP AND MS
RACHEL CLARK
24 NOVEMBER 2009
Q240 Chairman: I said you were a
nice man!
Mr Timms: As I understand what
has happened with the BT rates bill, the valuation, which was
very carefully and meticulously carried out, has reduced partly
because of local loop unbundling and partly because of the kind
of issue you have raised—exchanges being disposed of, and
so on. But it is all done on an objective basis and the same rule
is applied everywhere and that is an important strength of the
system.
Chairman: Valuation has always been an
art form and is not objective, as well you know—it is an
art form. Mark Oaten?
Q241 Mr Oaten: Just on this point
of rating, did the DTI not have a report recommending that there
should be a de-rating of fibre in the past? Have government departments
actually not recommended that?
Mr Timms: I do not know whether
government departments have. I have seen suggestions of it from
time to time, not from government departments but from those outside.
My case is that introducing anomalies into the rating system would
not be a good idea. I do not think it would be a sustainable way
of supporting what all of us want to see.
Q242 Mr Oaten: You are not aware
of a Government-commissioned study which has recommended de-rating?
Mr Timms: I do not think I am
familiar with any study to which you might be alluding.
Q243 Chairman: I have to say that
I am becoming uncharitable now. I think that you are defending
the status quo and the Valuation Office rather than defending
the roll-out of Digital Britain, and I think that is quite
serious. I really think that the Valuation Office over the years
has been Neanderthal, Luddite in its attitude to telecommunications
and I think you have to challenge them very hard. Another anomaly,
for example—and this comes from the Guardian, February
of this year—"Dark days for fibre start-ups".
This is not a quote; it is a summary of what it says. "The
current rating system does not differentiate between how fibre
is used. A prominent example is Sohonet, whose network services
the film industry and has run projects between Sydney and Los
Angeles out of London. Sohonet's fibres are exclusively for this
and consequently spend large portions of time inactive, unlike
telecommunication companies whose networks are always busy. Therefore,
the network, while essential, is not as profitable as the same
cable owned by a telecommunications company, but nevertheless
is rated the same." So there is another anomaly in the rating
system affecting Digital Britain.
Mr Timms: You are putting me in
a slightly difficult position. Again, this is a case with which
I am not familiar. All I can say is that I do think there is an
important strength in the rating system in the UK and that it
is based on pretty objective criteria. It may be in some instances
that the criteria used are incorrect and then they can be challenged,
and there have been challenges in court over this and the courts
have upheld the view of the VOA. But if there are errors in how
things are done then they certainly should be looked at.
Q244 Chairman: There are lots of
anomalies here and I think that big changes are needed in the
rating system. I think that it discriminates against innovators;
I think it favours the incumbent; I think it will choke Digital
Britain unless you are very careful. Can I ask one thing?
BT rates bill is down—why? If you cannot tell me now I would
be grateful for a note afterwards as to why BT's bill has fallen.
Mr Timms: My understanding is
that it is primarily due to the value of BT's assets falling;
that is in consequence of greater use of local loop unbundling.
You made a point which may well also be correct, that some exchanges
have been disposed of and so on.
Chairman: It does seem though to be quite
a large reduction while their competitors face quite large increases.
I think we will leave it there. I have serious reservations on
this aspect of the Government's policy towards digital Britain.
Lembit Opik: It seems fairly obvious
to me that the problem here is that the rating system is about
solid bricks and mortar and stuff like that, and we are living
in a virtual world today and trying to rate a virtual world on
the stuff that carries it just does not make sense.
Chairman: And satellite providers of
course will not be paying business rates on their link—up
links and down links, I imagine. That is another thought.
Q245 Lembit Opik: Smart metering
obviously is very important and it ties in with feed-in tariffs
and everything that goes with it. Given the potential synergies
here, has there been any consideration as to how smart metering
and Digital Britain projects might work together?
Mr Timms: I think this is an important
point and there has been some reflection on this. I think that
there could well be some synergies to be taken advantage of. Smart
metering roll-out is going to be a huge project—a difficult
one, a challenging one; so will the roll-out of next generation
broadband and we are looking in the Department at how those two
initiatives could complement each other and be mutually supportive
to each other's objectives.
Q246 Lembit Opik: Wireless
technology is obviously a natural consideration, not least because
you do not really need to have a very high speed connection to
do what they need to do with this. It is also being considered,
as we have discussed before, for providing broadband in places
where wireless is too expensive. Could the two programmes be merged
so that if you can do the smart metering with the smallest modifications,
you can also do so with broadband?
Mr Timms: I think that the objectives
of the two are rather different and so I would not favour merging
them, but I do think that there is scope for them to work quite
closely together and to benefit from each other.
Q247 Lembit Opik: There is
also the JANET project with which you will be familiar, about
connecting schools to the network. Is there a way that you could
use the JANET project to also provide the communities around those
schools with broadband?
Mr Timms: As I understand it,
JANET is about universities rather than schools. One of the reasons
that we have done so well on the first generation of broadband
has been the use of public sector demand to drive out services
into areas that otherwise might not happen and schools have been
very important to that, along with hospitals and doctors' surgeries.
There could well be scope—and I imagine that there will
indeed be the possibility of that happening in the future with
next generation broadband as well. JANET, as I understand it,
is an academic network for universities and so there could be
circumstances in which bits of that infrastructure might help
a wider purpose, but I would have thought that that would be fairly
limited. I am speculating only.
Lembit Opik: I am not an expert
on JANET and so you could well be right.
Chairman: That is one lady he is not
an expert on, then!
Lembit Opik: I am a specialist
in other areas as well; if you want I can start asking questions
about aerospace, Chairman, if you provoke me! I am not completely
clear about the role within schools myself and I am not going
to busk it because I do not know for sure. It does nevertheless
seem in a general sense that if a provider of networks which takes
information quickly from one place to another has an infrastructure
that there could well be some opportunity to freeload off that.
Chairman: We understand there is a scheduled
roll-out to schools of JANET and if there is such a scheduled
roll-out then it seems a good opportunity.
Q248 Lembit Opik: The very
heavy and exciting commitment to roll all this out by 2012 will
be great news for all my villages and all the individual communities
and so forth. I do also observe that in 1997 the Government said
that every house would be connected to the National Grid by 2000.
We have talked about JANET; there are an awful lot of houses that
are still using "gennies" to get their electricity.
I wonder how assured the good people of Staylittle et al can be
that really by 2012 we will be getting at least the capacity of
2Mbps, however remote their living conditions?
Mr Timms: I think that they can
be very confident about that and we are determined to achieve
that. I think that there is quite an interesting analogy between
the roll-out of mains electricity and the roll-out of next generation
broadband. The roll-out of mains electricity took some decades.
I think that without public support the roll-out of next generation
broadband will take some decades as well. My view is that we need
to move much faster than that and that is what the levy will enable
us to do.
Q249 Lembit Opik: There is
a gentleman in my constituency who said that he was involved in
using the National Grid, such as it was, for radio communications
in the past. However outlandish it seems, I feel obliged to reflect
that what he would want me to say is that there may actually be
a practical way to use the electricity network to communicate
information as well, and I am sure that there will be a lot of
people willing to make some compromise in terms of the line speed
to have line speed at all.
Mr Timms: There have been some
projects of this kind. I visited one that Scottish and Southern
Electricity was piloting and, as I understand it—and Rachel
might know more about this than I do—that ran into some
technical difficulties of interfering with other things and so
it has not made as much progress as was hoped, but there could
well be potential there in the future.
Ms Clark: It is one of the technologies
that they are considering in relation to smart metering because
obviously there is a direct synergy there.
Q250 Chairman: Can I ask you to flesh
it out, about the possibility of using smart metering roll-out
to deliver a low level broadband service universally because there
is a relationship there.
Ms Clark: There is certainly a
dialogue between ourselves and the smart metering team. I think
that there is not an ideal synchronicity of timing in that we
are aiming to have reached everyone by 2012 and I think that the
smart metering project deadline is 2020, and they are expecting
to actually be rolling out more 2013 onwards. I am not sure what
the exact timings are but I am not sure that we dovetail as nicely
as one might hope.
Q251 Lembit Opik: I used to
be very involved with energy policy. The energy companies are
very, very keen on smart metering and on the feed-in tariffs.
Their frustration is that the government really needs to prescribe
what system you want them to use and they will use it; but what
we cannot have is the same as we had when videos first came out
with VHS competing with Betamax and then the industry deciding
which was best to invest in and to commit to. So this is one area
where the industry would be grateful for a directed steer.
Q252 Chairman: If that practice had
come in a couple of years ago of course there might have been
synchronicity from the two programmes but we may be too late for
that, but I understand that point. We are up against the wire
in terms of time and I just observe, by the way, talking about
electricity roll-out that my constituents would love to have gas
in many parts of my constituency and the same energy you are showing
for broadband would be very welcome on gas. But we are grateful.
We have been a little provocative sometimes today and I apologise
for that.
Mr Timms: No apology required.
Chairman: But these are important questions
and what I would like to say in conclusion—this is our last
evidence session in this inquiry—is that we do actually
share your enthusiasm and the Digital Britain enthusiasm
for next generation access and we understand its transformative
power; but if sometimes we challenge and question it is to make
sure that we get it right. But the principle of as wide access
as possible is one that we all share in this Committee. Thank
you very much indeed.
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