Broadband - Business, Innovation and Skills Committee Contents

Memorandum submitted by the British Chambers of Commerce

  1.1  The British Chambers of Commerce (BCC) is the national body for a powerful and influential network of Accredited Chambers of Commerce across the UK, a network that directly serves not only its member businesses but the wider business community. Representing 100,000 businesses that together employ five million people, the BCC is the Ultimate Business Network.

  1.2  The BCC is pleased to have the opportunity to submit evidence to the Business and Enterprise Committee's inquiry into broadband speed in the UK. As a leading national business organisation, companies within our network operate across all sectors and sizes and include many SMEs. The consistent message we receive is that the availability, speed and reliability of their digital communications has now become an essential factor for conducting business. Our comments focus on the issues of greatest concern to our members as business customers.


  2.1 Businesses across all sectors and sizes increasingly rely on effective communications and technologies to operate, communicate, and deliver services for their customers and the broadband speeds they can access are critically important. Going forward, as more and more business is conducted online and global competition increases, the desire for higher bandwidths and faster more reliable, higher quality services will only escalate. Our ICT infrastructure will need to keep pace with this demand if the UK is not to fall behind.

  2.2 For this reason, the BCC is pleased that government have grasped the nettle of tackling the broadband issue through its Digital Britain report. Specifically:

    — We recognise why government have set out a Universal Broadband Service Commitment and it is important that access to broadband is made available to businesses in areas which do not currently receive it. We are however concerned that the universal target of 2Mbps by 2012 may be insufficiently ambitious given the speed at which technology and demand will advance.

    — Because average broadband speed available for UK businesses is a significant factor for our international competitiveness, significantly higher levels of private sector investment need to be levered in to upgrade our broadband network. Issues of actual download speeds, reliability, quality and consistency must also be considered.

    — In order to achieve the Universal Broadband Commitment we do not think that a tax on copper wiring is the best solution. If private sector solutions really cannot be found, then government must re-align existing priorities in order to ensure funding through re-examining existing spending commitments and taxation policies.


Is the target for universal access to broadband at a speed of 2Mbps by 2012 ambitious enough?

  3.1  A target for universal access to a minimum broadband level would help address concerns from our members in regions and localities (often but not exclusively rural or remote areas), who currently struggle to access the necessary internet speed for their business needs. For these businesses, achieving a universal target of 2Mbps now—rather than in 2012—is a top priority. Focusing on the companies who cannot meet this target should be a priority and the Network Design and Procurement Group and the Digital Inclusion Taskforce should have a strong SME focus and work with stakeholders in this area.

  3.2  The broadband speed necessary for many businesses now, and particularly in future, will go much further than the universal access target of 2Mbps. Indeed an survey found that 83.7%[7] of respondents believed the minimum broadband speed of 2Mbps was too low. Even taking into account the difficulty to predict future speed of technology development, the 2Mbps target seems unambitious and a stronger longer term target is needed.

  3.3  Universal access is an important objective but typical broadband speed for UK businesses is particularly important for our international competiveness. The UK currently lags behind a number of other countries in Europe for average broadband speed, being ranked ninth, with first-placed Finland enjoying average speeds of 21.7Mb.[8] This in itself is moderate compared with South Korea, whose digital agenda for 2012 includes a target broadband speed of 1Gbps, 500 times faster than the UK. Given the importance of broadband, as more and more business is conducted online, a more ambitious strategy for dramatically improving the speed of broadband typically available is needed.

  3.4  Speed is also only one part of the overall equation of broadband provision for business. Actual upload and download speed levels, reliability, resilience and consistency are often as important for businesses and must be ensured. These factors are as important for businesses trialling services such as cloud computing or in the broadcasting sector—as those who just want a simple, cheap package.

Is the Government right to propose a levy on copper lines to fund next generation access?

  4.1  There is great potential for wireless technology and other technologies for improving our broadband infrastructure. We support the current discussions around allowing other mobile broadband providers to access the 900MHz wireless spectrum. Our fixed line infrastructure will however continue to be critical for future broadband delivery. The extent to which the UK remains highly dependent on what is rapidly becoming outdated technology—copper wiring—is very concerning. The reason that Finland and Sweden rank first and second respectively in European comparisons of broadband speed access is due to the investment of these countries in fibre-optic networks.[9]

  4.2  The UK also needs to upgrade our broadband infrastructure, replacing copper wiring with fibre-optic cabling to deliver higher bandwidths. While progress has been made, there is still a long way to go in order to ensure typical speeds increase in line with our international competition. This improvement should be delivered through investment by the key private sector players in the market with copper wiring replacement work resulting in fibre-optic cabling installation.

  4.3  If there is a need to go beyond increasing average broadband speeds to introduce a Universal Access Requirement then government should look at why companies are not choosing to invest in providing adequate broadband infrastructure in low density areas. If, in order to deliver this objective, some government funding is needed to kickstart this investment, it would be preferable for these funds to be found through the reallocation of spending priorities or efficiency and efficacy savings before new tax proposals are considered. These funds should also be made available to whichever provider can deliver the agreed extension of the network.

  4.4  If it is not possible to deliver this incentivisation through existing funds, it may be that some form of taxation could be needed. However a tax on copper wiring is not the best possible option as it will unfairly penalise businesses and individuals who currently rely on copper wire fixed telephone lines. If additional taxation is needed for such a public good of universal access then government should look at its existing spending commitments and taxation policies to achieve a fairer spread of the taxation burden.

Are companies providing the speed of access which they promise to consumers? To what extent does the current consultation strike the right balance between ensuring fair competition and encouraging investment in next generation networks? Any other views?

  5.1  Reducing broadband usage capacity at peak times to best manage resources is a widespread practice. In itself, this activity is not necessarily problematic, providing business consumers are fully informed about the package they are paying for through open and transparent information. Unfortunately, this is not always currently the case.

  5.2  Whatever activity they are conducting online, businesses need to know they can rely on the marketplace to deliver a consistent, quality broadband service without disruption that can create direct financial losses. The market needs to deliver consistency and reliability of service, allow businesses to know how faults will be resolved, what alternatives might be provided if the service is disrupted and whether there will be any compensation for downtime. There is currently insufficient awareness among businesses about what service levels are guaranteed, and what recourse businesses have if these are not being met.

  5.3  It is also important that business customers have sufficient choice of broadband providers to ensure pricing remains competitive and consumers are valued. Lack of competition ultimately leads to a lack of investment, lack of innovation and higher prices. Providers should also welcome the challenge of local competition.

September 2009

7, 29 July 2009, Back

8   "UK ranked 9th for broadband speeds", 1 October 2007, Broadband News, Back

9    Ibid Back

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