Science and TechnologyWritten evidence submitted by Groupe Intellex

Declaration of Interest and Background Notes

This submission is not founded upon any immediate or significant commercial interest.

Groupe Intellex is an international publication and business development agency specialising in technology transfer, networked services and new venture incubation. We lead several innovative projects within three streams: Networked technologies, Creative Media and the Environment.

The author has been a champion of several innovative technologies, not exclusively limited to his long-standing experience in the telecommunications sector, and is a member of the IET, the CMA (a subset of the BCS) and the RSA.

He has also served for seven years as a board member for a leading Further Education College. Between 1990 and 2003 he was a Council member of the Parliamentary Information Technology Committee (PITCOM) and more recently was a member of the advisory panel for the (then) DTI’s “Sciencewise” initiative to promote better dialogue between Scientists and Citizens/Enterprise to facilitate policy development.

In 2011 he led a “Community Study Tour” to Sweden to gain a better understanding of the business impacts of infrastructure investment.

Response

1. General Observations

1.1 The Select Committee’s terms of reference, expressed in seven questions, places the general emphasis on “bridging”—the issue of easing (and funding) the translation of potentially valuable research outcomes into commercial applications and reducing the probability that many worthwhile ideas fall and die in the process.

1.2 The questions posed are largely focused on building better bridges. An alternative approach is to consider options and initiatives that reduce the depth of the so-called “Valley of Death” (or at least minimise the impact on fallers) to reduce risk and encourage venturing.

1.3 There are many suggestions available—not least those from “Angel” investors assembled by NESTA a year ago to consider a broader issue associated with start-up ventures. Some of those suggestions have been shown to be addressable by policy adjustments but many others remain.1

1.4 In one key respect the Science and Technology fraternity has a problem in common with every sector of the UK economy and one that has received insufficient governmental attention despite the implications for economic growth.

1.5 The UK’s digital infrastructure is in poor health relative to our nearest competitors (see interactive graph)2 and, despite Ofcom’s reassuring notes on domestic progress, we must all concede that in this digital territory we are “a developing nation”. The remedies have long been apparent but largely ignored in countries with excessively dominant Telco’s. Presentation by Dr. Peter Cochrane refers.3

1.6 The extent to which this relative digital deficiency impacts on innovation, enterprise growth and public sector costs, has been widely researched and, although broadly understood, has not yet moved policy makers and regulators to re-appraise their positions in any way other than to hope for a gradual get-well plan. In an increasingly digital world the quality factors (ease of use, flexibility, affordability, functionality and openness) of access networks makes a vital contribution to enterprise growth and, within that, the speed and efficiency of the commercialisation of research outputs.

1.7 What has not yet been fully understood is that “next generation access” should not be viewed as an “upgrade” to existing “last generation” networks based on copper technologies but is far more akin to a radical infrastructure transformation such as the nationwide conversion from DC to AC electricity that was finally completed in the 1950s.4

1.8 The prevailing “upgrade” approach (BT’s FTTC/ADSL2/VDSL and Virgin’s DOCSIS3) both represent compromises in functionality—claiming (unjustifiably in many cases, according to the Advertising Standards Authority and Ofcom) improved headline download speeds but doing very little for the many characteristics that can vastly benefit innovators and smaller businesses. Nor is there much reassurance in promises of future developments when these are already the norm elsewhere.

1.9 The list of local access network characteristics that (in a transformational approach) could be enabled include vastly higher upload speeds, customer-controlled service supplier switching, lower latency and packet loss, improved reliability, the flexibility of dark fibre availability, easier competitive “unbundling” and innovative local hosting capacity for, say, media and community services. These are just a few of the more-technical connectivity characteristics that have transformed innovative endeavor in other countries where “next generation access” is treated more as a high-quality but essential utility giving connectivity to a greater range of competitive services.

1.10 But beyond these technical features, and for innovative science-led enterprises engaged in the commercialisation of research outputs, the design characteristic of local access networks that is a key to collaborative endeavour lies in its local management. This is more-clearly seen in clustered environments such as science/business parks but, in the plans of the dominant incumbent players, there is alas no sign yet of any willingness to adopt local management and customisation to local needs. The default assumption is that Access (as distinct from services and content) is an undifferentiated national product with no local perspective.

1.11 Looking at Sweden, with a total population barely equal to that of Greater London, the number of Service Providers is almost equal that of the whole of the UK—the principle difference being that in Sweden many more of these are intensely local and this diversity is fostered by local access network management.

1.12 Whilst this Select Committee—just like in any other specialist sector focus—must necessarily stick to its brief, there is no reason why it should not observe that these causes are connected and that in an inversion of John Donne’s sermon we should ask for whom these digital bells are ringing! More frequently they are ringing in extremely well-connected places overseas. New venture ideas also connect in places where business failures significantly inform subsequent ventures and the essential digital infrastructure that supports them can easily be re-purposed.

1.13 With far easier, more affordable and better managed connectivity between enterprises and the research communities, innovation can be made easier and the “Valley of Death” be made far less terrifying. For example, within the JANET facility, universities and research institutions (and even schools) are well connected and yet the benefits of that well-managed public sector digital network investment are not consistently available to enterprises engaged in the commercialisation of research outputs.

2. Responses to Specific Questions

2.1 Q1: Funding the commercialisation of research—leastways in the earliest stages of “proof of concept”—calls for relatively small amounts of money in an environment where future prospects are unquantifiable. “Angel” funding can play a key part but the vital contribution made by these small investors needs to be valued much more highly by policy developers. This is not a simple question of equitable treatment of mainstream financial services and “Venture Capital” funds but needs to take into account the significant additional value (experience, mentoring, supervision and collaborative networking) added by the Angel investment community.

2.2 Q2: Experience suggests that science and engineering projects that raise issues of public concern (eg in bio-physics, nuclear energy and some aspects of health services delivery that demand societal/behavioural changes) require intensive educational dialogue and engagement of the media and citizens in order to make reconsideration of policy possible. Scientists and researchers are not renowned for their communications skills and common solutions might include greater training and better, more-easily accessible, funding of dialogic exercises where these issues are not only matters of public concern but also impact on investor attitudes.

2.3 Q3: Intensive lobbying for particular research areas (for example in wave-power) without strong centrally-directed informed views of alternative techniques can lead to funding of second-rate proposals and the loss of commercialisation to other countries. It must be recognised that some countries have stronger motivation for particular research (in the case of wave power the Atlantic coasts of Portugal and Ireland and the Pacific-facing west-coast states of America hold greater opportunities for realisation) and in many respects our R&D effort is too often focused on domestic perceptions of need and is insufficiently international.

2.4 Q4: TSB initiatives are not very highly rated in either the science or investment communities. Where however planning has encouraged the development of clustered knowledge-transfer ventures (eg in Cambridge and the Northern Ireland Science Park) the outputs are impressive. Generally speaking the active involvement of government agencies purporting to have commercial expertise (eg for inward investment) has a deadening impact on investment motivations.

2.5 Q5: see earlier footnote reference 43.

2.6 Q6: Yes. See answer to Q1.

2.7 Q7: See general notes in section 1. The complexity and ill-informed processes currently aimed at remedying infrastructure funding deficiencies suggest that without clearer direction of regulators towards achievement of national objectives and the development of mutual markets in areas of public utilities the scope for venturing will remain constrained by established forces. It should be recognised that fresh ideas and innovation will always run counter to convention and therefore government support should place a high priority on what many would regard as “disruptive” developments. The alternative was outlined in a radio script written in 2003—“Sticking to the straight and narrow”.5

February 2012

1 www.groupe-intellex.com/editorials/18-gi-global/320-angels-find-devils-in-details.html

2 www.google.com/publicdata/explore?ds=z8ii06k9csels2_&ctype=l&strail=false&nselm=h&met_y=avg_download_speed&scale_y=lin&ind_y=false&rdim=country&tdim=true&hl=en&dl=en&iconSize=0.5&uniSize=0.035#ctype=l&strail=false&bcs=d&nselm=h&met_y=avg_download_speed&scale_y=lin&ind_y=false&rdim=country&idim=country:SE:LT:GB:DE&ifdim=country&tdim=true&hl=en&dl=en

3 See conference keynote Munich 14-02-2012: www.slideshare.net/PeterCochrane “FTTH @ Last”.

4 www.groupe-intellex.com/projects/19-broadband/214-this-is-not-an-upgrade.html

5 www.groupe-intellex.com/editorials/18-gi-global/93-broadband-infrastructure-investment.html

Prepared 11th March 2013