Broadband growth study rules out tax cash

A review into the future of the UK's broadband services concluded today that the case for large Government subsidy or big regulatory changes is "weak at best".

The Government should not be "complacent" about the development of next generation access (NGA) to broadband but investment by the taxpayer is not required, it said.

The report by Francesco Caio, former boss of Cable & Wireless, called on the Government and Ofcom to play an "active leadership role" in developing future broadband policies.

Mr Caio said the UK benefited from a "competitive broadband industry and a rich choice of digital communications and entertainment platforms".

Although there continued to be demand for bandwidth and strong growth in internet traffic, there was "little evidence" the UK would suffer in the short term from lacking an extensive NGA infrastructure.

In Britain the average speed of high-speed fixed line access had increased, Mr Caio said.

He called on ministers to set out a framework for the delivery of NGA, equip all the Government's planned three million new homes with the technology and amend planning laws to to allow fibre cables to run above the ground.

In the UK, operators can only bury the lines except where they already own telegraph poles.

The report's recommendations also included a call for better co-ordination of roadworks between utility firms, clarifying the position on business rates with regard to fibre and establishing standardised technical requirements for local access networks.

Ofcom should accelerate the release of radio spectrum to favour the development of new wireless broadband services and the Government should support this with further negotiations within the EU over the GSM directive, Mr Caio added.

It is estimated that to provide the UK with NGA will be at least £5 billion. This would be the cheapest option of providing fibre cables from telephone exchanges to street cabinets.

But to then wire the fibre from the cabinets into every home and business could cost as much as £28 billion, according to the Broadband Stakeholder's Group.

Mr Caio, who met Prime Minister Gordon Brown this morning to discuss his recommendations said: "Although demand for bandwidth and internet traffic continues to exhibit strong growth, there is little evidence that in the short term the UK is going to suffer from the lack of an extensive NGA network.

"I have therefore concluded that the case for a public intervention at this time is weak at best."

Mr Caio said he had spoken to Mr Brown and gone into the issues in "great detail" with the Premier.

"We had an interesting conversation going into some length the details of what I had found and I found him to be very engaged about the issues," he said.

Mr Caio's report, The Next Phase of Broadband UK: Action now for long-term competitiveness said: "There is no need for immediate major government intervention in the short term to accommodate traffic growth, but in the next five to ten years NGA will become a critical infrastructure and, as such, the Government should actively support and monitor its development."

It added: "The Government and Ofcom, as the two principal entities involved in determining the efficient and effective deployment of NGA, need to play an active leadership role in shaping broadband policies.

"This does not translate into subsidies or structural changes in regulation, but rather a set of initiatives that could support and inform the activity of regulators and industry players in their journey to NGA.

"The Government should seek to remove obstacles that could potentially delay or compromise the development of the new network."

Business Secretary John Hutton said the Government would consider the recommendations and was ready to "play our part" in ensuring there was a competitive infrastructure.

He said: "This technology will touch almost every part of the economy, it is a vital tool for the future, supporting innovation and economic success.

"We will consider the recommendations as we plan how to make sure the UK remains one of the world's leading internet economies. It is reassuring to have evidence of timely investment being made by a broad range of players.

"We want to create the right conditions for private sector investment and stand ready to play our part in ensuring the UK has a competitive infrastructure in the years to come."