Broadband New Deal - Too Little, Too Late

This week Gordon Brown hinted that the government could be prepared to fund the development of a next-generation broadband network for the UK. It was a move welcomed by ISP’s shareholders, who are fearful of the impact that financing such a network would have on their dividend, and rank and file employees who are fearful for their jobs.

It was also embraced by economists on the grounds that the government is displaying foresight to recognise the importance of a next-gen network to the nation’s economic health and is ensuring the UK’s competitiveness in the global economy in years to come. Prudent Gordon we’re invited to believe is some sort of economic next-gen visionary who sees high-tech industries as the salvation of our economy. You’ll forgive me if I demur.

Surely if this were the case he’d have impressed upon telecomms the importance of a fibre-optic network more vehemently over the past five years. Instead they’ve been offered scant financial incentive to invest and have come under even less in the way of coercive strong arm tactics. The result is that the much-touted roll-out of a fibre optic network has been a total non-event. What’s especially galling is that had they been legally compelled to start committing money to the cause at a time when their incomes were booming it would have been less of a challenge to meet the £30 billion cost of construction.

Instead what’s happened is that we’ve had to wait until the country is on the verge of economic meltdown before any action has been taken. This leaves taxpayers bailing out companies who until recently had been enjoying huge profits from us as a result of the UK broadband boom.

These developments have however left one ISP looking like a shining model of virtue next to its peers. Virgin Media has funded its fibre optic network at huge expense and is now offering 50Mb to over 1.5 million homes with 12.6 million in line for the service by summer this year. In contrast, its larger rival BT, which has repeatedly dragged its heels over committing funding, emerges with its reputation, for me at least, eternally sullied.