Sunday, 15 June 2008

Stuck in the broadband slow lane


Britain's broadband is lagging behind, and no one wants to spend the money to bring it up to scratch

Bernhard Warner, in Rome

In Nuenen, a mid-sized town in the centre of the Netherlands, there is a statue of Vincent Van Gogh, who lived and briefly painted there, and it is famous for a decisive Second World War battle in September 1944. Today, the town is seen as a high-tech model, the ultimate wired community that is being studied by urban planners and policy wonks around the world, and particularly in the UK, as it picks a course for the upgrade of its broadband backbone, creaky as it is today.

Residents of this town of 7,500 zip along the net at speeds of up to 100 megabits per second. They get a triple-play package of TV, phone and broadband for €39 per month (£31). For another fiver, there is an e-learning offer for students and young children. And because the town is wired from end-to-end with fibre-optic cable, Nuenen has attracted the interest of big business. Philips has launched an e-health pilot program and Dutch banks have set up a variety of online banking initiatives on the next-generation network.

The broadband provider that makes this all possible is OnsNet, a public-private co-operative. Subscribers don’t just pay a monthly fee and grumble about service: they are members with voting rights. They have a say in the future development of the network. As a result, broadband penetration in the town is more than 80 per cent (down from 97 per cent in 2005 and 2006, when OnsNet dangled a year’s free subscription).

If a community-funded ISP sounds like a wacky European socialist plot, consider this: OnsNet generated an operating profit of about €1 million on revenues of €4 million in the past financial year – and that’s after a massive upgrade in which it wired the entire community with dual-fibre capability. What has your ISP done for you lately?

The OnsNet model and a scattering of other public-private arrangements in the Netherlands, France, Spain and Scandanavia are being studied by the Broadband Stakeholders Group to determine how Britain, one of Europe’s most puzzling broadband laggards (in the UK, the broadband penetration rate is near the top of the EU charts, but average speeds are near the bottom), can launch itself out of the slow lane. The Stakeholders Group reports its findings to Ofcom, offering a cost-benefit analysis on how Britain can best proceed in upgrading its moribund network and emerge as a dynamic IT force.

Its findings? The Broadband Stakeholder Group concludes that the private sector is simply not investing enough on its own to bring Britain into line with its more dynamic neighbours. It is, admittedly, a big bill for cash-strapped telcos and ISPs: the BSG calculates that the cost of upgrading the entire nation would come to about £16 billion. For that investment, though, the BSG expects big benefits that go well beyond the IT industry, including reduced transport costs and an economic stimulus for the outlying regions. The expected social benefits are equally impressive. Improved access to lifelong learning, greater social inclusion and more flexible work schedules are cited. In other words, the return on the investment would probably far outweigh the £16 billion price tag.

The conclusion? To paraphrase: There are benefits to upgrading the UK’s broadband infrastructure, we see, perhaps tremendous benefits. It’s hard to say though. Let’s not rush things.

Huh? For £16 billion, there’s a chance the trains might finally run on time, that Britain’s rural economy could avoid impoverishment, that we would all have 100Mbps net connections, and the advice is, in the words of BSG Chairman Kip Meek, “there may actually be significant value in waiting.” Not waiting forever, mind you. Chairman Meek thinks Britain ought to do something within the next five to ten years.

Compare that with the attitude of the Dutch.

In 2003, the Dutch Government anointed Nuenen a special IT zone, enabling the community to find an infrastructure partner to build a state-of-the-art fibre network that has turned this town into a high-tech test bed of ideas. The municipality of Amsterdam too, an outlying portion of the city, has a similar public-private ISP that provides 40,000 homes and businesses (and eventually, 420,000) with a 50Mbps triple-play connection for between €40 and €60 per month. There are scores of communities around Europe that are unveiling or have already flipped the switch on similar public-private high-speed networks, providing super-fast and affordable broadband services that are attracting the attention of IT investors, entrepreneurs and educators.

The public-private ISP is a model that has its detractors. In Nuenen, the commercial broadband providers vanished from the market almost overnight. They simply couldn’t compete with what the town’s ISP was offering. A similar community-by-community build-out across the country would be disastrous for Dutch telcos and ISPs. No regulator, even in the heart of socialist Europe (and the Netherlands can hardly be described as socialist), would want to see the state or regional authority emerge as the sole broadband provider.

But you have to ask yourself, what is the alternative? If the incumbent telcos and ISPs have neither the desire, cash nor foresight to wire up your town, what is a community to do? Wait it out, as the BSG suggests? Or urge the town officials to go into the high-speed broadband business themselves. The benefits could be tremendous.


Bernhard Warner, a freelance journalist and media consultant, writes about technology, the internet and media industries. He can be reached at

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