Hamish McRae: Now the broadband revolution is almost complete, how will it change our lives?

What matters will be to use the capability of broadband to increase productivity

The broadband revolution is almost complete. According to figures released yesterday by the Office of National Statistics, at the end of June 72.6 per cent of UK internet connections were broadband. At the present rate of new connections, the proportion will have risen above the three-quarter mark some time this month.

So, over the past three years, the UK has gone from being overwhelmingly dial-up to overwhelmingly broadband (see the pie charts). But while this is an evident fact, it is much less evident what the social and economic consequences of such a development will be. How will we change our habits as consumers and how will our work patterns change? And what are the implications for national competitiveness?

As far as that last point is concerned, it is hard to get comparable up-to-date statistics but the OECD numbers for the G7 to the middle of last year are shown in the graph. As you can see, all the lines are shooting up, but in recent months the UK has been creeping up the league. With the surge over the past year we may now have caught up with the US in terms of broadband penetration, though we are still behind some of the smaller OECD countries such as the Netherlands, Korea and the Scandinavian countries.

The implications for us as consumers are perhaps the easiest to glimpse, for we are already in the early stages of migrating from the TV set to the internet. Most people under the age of 55 now spend more time on-line than they do watching TV. On Tuesday YouTube announced that it was launching the first of its branded channels carrying advertising material, with Warner Music to use it to promote the debut album of Paris Hilton.

YouTube, in case you are not up to speed with such matters, started just 18 months ago and has become the main site for people to put their own videos on the web. Most of the stuff is home video quality - simply a market place with hardly any quality control - so it is intriguing that it should be chosen as the vehicle for this new channel. This is the first time a new "TV channel" has been launched on the net and it would have been completely impossible to do so without near-universal access to broadband. Expect more examples in the future.

But I think the impact of broadband on the consumer side of the equation will be less significant than the impact on the producer side. This is not just because most people now have as fast an internet connection in the home as they do at the office, but also because fast mobile internet connections are booming too. Both Vodafone and T-Mobile are pushing mobile broadband, with the latter starting a pre-pay mobile phone access service this month.

As with all new technologies the market will decide what it wants. I personally find the idea of being able to flip on the laptop anywhere very attractive but then as a writer this is a normal way of working. But fortunately not everyone is a writer and it is important not to generalise from one specific craft. There are and will remain many work functions where physical proximity remains vital.

Nevertheless it is clear that we are in the very early stages of a seismic shift. There are already several forces encouraging the growth of people doing more of their work away from the office.

Some of these are obvious and have already been widely noted. These include the growing use of part-timers and of older workers (with the latter currently accounting for nearly half the increase in the UK workforce). There seems also to have been a significant shift towards greater use of freelancers and out-sourcing to small businesses, though the figures are harder to find. We do know that in London and the South-east teleworkers account for some 12 per cent of the workforce, and that phenomenon occurred when most people were still on dial-up. So expect the trend towards teleworking to speed up now broadband is the norm.

What we don't know is how far the teleworking revolution will go, just as we don't know how far outsourcing will go. We can be pretty sure that the limits to teleworking will principally be social and managerial rather than technical.

From an individual point of view it will be a question of whether people work more efficiently - and enjoy it more - from a shared central location, or whether the advantages of no commuting time and home location offset the loss of social interaction.

From an employer's perspective it will be whether it works out cheaper to run virtual offices than to run the real sort, whether the quality of the output it higher, whether it is possible to manage people you can't see - and so on.

The key thing to appreciate here is that we are still in the very early stages of developing the new work patterns that will evolve from the technical possibilities. We are still stuck with the idea of a working week of 40 or whatever hours, with people being paid by time rather than output. That will not change suddenly, but already a lot of people are opting for more flexible terms of employment.

The more you can measure output the less you need to worry about hours. So the present work contract, with people having specific tasks to be performed at a specific place and with specific holiday entitlement, will migrate to one that specifies the amount of work to be done, the quality of it, and the time by which it has to be done. Seen in factory terms this would be akin to a return to piece work rather than time work, but of course the work now is white-collar rather than blue-collar activity.

A move to a new piecework model would have a profound impact on the relationship between employers and employees. It will be less hierarchical. It will give more individuals a direct opportunity to increase their earnings, something that happens to some extent at the moment (for example through commission for sales staff). And it will blur the distinction between employed and self-employed.

If all this is right, there will be implications for international competitiveness. The more flexible a country is in creating new employment relationships the better it will be at getting the most out of the new technologies.

Ultimately what matters will be to use the capability of broadband to increase productivity. Within five years countries will have near-universal access to broadband. So what matters is not the technology itself but how effectively it is used.

Up to now the US has proved the leader in applying new technology in the workplace, while progress elsewhere has been disappointing. But the US advances were principally applying IT in the business environment, not exploiting universal broadband. The task for other countries, including our own, will be to deploy the latter more effectively to increase output - and improve lifestyles at the same time.