Memorandum submitted by Avanti Communications
Group plc
Avanti welcomes the opportunity to contribute
to the inquiry into broadband speeds.
Avanti is Europe's first satellite broadband
operator. It will launch a satellite next spring to provide broadband
at speeds of up to 10Mb all over Europe. Consumers in remote and
rural areas of the UK need never be without low-cost high quality
broadband again.
Our technology emerged as a result of foresight
from BIS/DIUS which through BNSC funded the development by Astrium
in the UK of the cutting edge new space processors which we use.
Avanti has already worked with government on
interim satellite services. Our customers include the Scottish
Government and the Department of Enterprise, Trade and Investment
in Northern Ireland.
Avanti is listed on the London Stock Exchange
with total capital deployed in excess of £200 million. It
employs more than 70 highly skilled people in the UK and
expects to grow its employee base by at least 100% in the next
three years. Avanti is creating a high value UK supply chain,
with its satellite, major ground components and finance sourced
in the UK. It is a prime example of a high technology enterprise
creating sustainable UK wealth, employment, tax base and international
competitive advantage.
Is the target for universal access to broadband
at a speed of 2Mbps by 2012 ambitious enough?
Avanti supports the target for universal access
to broadband at 2Mbps as a floor, not a ceiling since rural consumers
should not be disadvantaged relative to urban services if it can
be avoided. Based on the Digital Britain report, approximately
11% of the UK population are unable to receive broadband at this
minimum speed, an issue which can only be economically overcome
by the deployment of satellite broadband services which will provide
service at up to 10Mb from spring 2010.
Whilst headline speed is currently the chosen
measure for broadband capability, our view is that throughput
is a more appropriate and effective measure. Customers judge their
broadband connections on their ability to use the internet effectively,
a perception rather than a finite measure.
Is the Government right to propose a levy on copper
lines to fund next generation access?
Avanti agrees that a fund is essential to invest
in next generation broadband to provide services at speeds up
to 50Mb. We are ambivalent about how this fund should be raised.
Without this, a new Digital Chasm will emerge between urban and
rural. Satellite can offer speeds of up to 50Mb, and Avanti plans
the Hercules system to do this. But the capital markets will not
fund this level of future proofing and so some government intervention
is required to de-risk the market.
Avanti believes that the fund should be targeted,
in the first instance, at customers in areas that cannot get a
broadband service at 2Mbps, or those that cannot get any broadband
service at all. It seems unwise and unwarranted to invest government
money in broadband services in densely populated urban areas first,
as the only outcome will be an escalation of the Digital Divide.
Will the Government's plans for next generation
access work?
Avanti is broadly supportive of the Government's
plan, providing emphasis is placed on serving those that have
limited or no service first. Avanti's HYLAS satellite, launching
in spring 2010 will provide consumers with speeds of 10Mbps.
The market will provide more satellite capacity, and Avanti has
plans for more satellites, but the capital markets are cautious
globally at the moment, so government could accelerate the deployment
of satellite solutions by taking some steps to correct this market
failure.
The role and charter of the Network Design and
Procurement Group (NDPG) requires further clarification for Avanti
to comment in depth.
Are companies providing the speed of access that
they promise to consumers?
Broadband headline speed is a poor measure of
the promises that broadband service providers make to their customers.
Speed is a perception and is dependent on a complex range of factors,
including network contention, the bandwidth available in the backhaul
network and the capability of the server of the site being visited.
Of the factors effecting broadband speed only
network contention is within a service provider's control. However,
network contention is essential to provide economically viable
pricing for consumers. We contend that the industry does not miss-sell
to its customers, but perhaps a better job can be done to explain
the cost-benefit tradeoffs.
To what extent does current regulation strike
the right balance between ensuring fair competition and encouraging
investment in next generation networks?
The regulatory environment has promoted competition
within urban and other areas of high population; however, it has
not significantly addressed the needs of rural and remote areas.
Avanti is confident that the overwhelming advantages of the new
satellite broadband technology will address the needs or rural
markets. But more satellite capacity will be needed to complete
the job, and although that is planned by Avanti it may not be
completed by 2012 subject to market forces. Public intervention
could speed this up by correcting capital markets' failures.
30 September 2009
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