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.
SUMMARY OF
THE BCC POSITION
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.
SPECIFIC QUESTIONS
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 ISPreview.co.uk
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 ISPreview.co.uk, 29 July 2009, http://www.pr.com/press-release/168106 Back
8
"UK ranked 9th for broadband speeds", 1 October
2007, Broadband News, www.broadbandchoices.co.uk Back
9
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