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Stephen Timms MPThe Politics of Bandwidth |
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I am delighted to be here tonight and let me just start by welcoming the way in which Demos has since its foundation consistently recognised the importance – social importance as well as economic importance – of this area of policy. Demos has contributed a great deal to the public debate of telecommunications policy outside the rather narrow circles within which it was formerly confined, as I vividly remember when I worked in the area in the 1980s. That broadening of the debate has been important and I welcome the chance to make a few initial responses to James Wilsdon's presentation and to the stimulating ideas in the report. When the Prime Minister appointed me to this job in May he underlined the importance he attached to the economic benefits of getting this area of policy right, and that is our starting point. We set out before the 1997 election that our first priority was to establish a new platform of stability in the economy. That has been achieved, with inflation and interest rates low and stable, and unemployment lower than for nearly 30 years – lower than elsewhere in Europe and now lower also for the first time for a very long time than in the United States. So we have a platform of stability and we need to build on it to strengthen the productivity and competitiveness of the UK economy where we still lag behind. Network innovation has in our view a key part to play in this central economic challenge of our second term of Government. I agree with the emphasis in the report on effective competition as the central feature of the right market framework. That is the concern behind the Enterprise Bill, which we expect to complete its passage Parliament this week. We have waited a long time really to see the benefits of the infrastructure competition, which UK policy has long sought to foster, but with broadband we are finally doing so. And within that pro-competition framework, we are keenly interested in promoting innovation and investment. I agree with the stress, which James placed on the importance of innovation; and on the opportunity presented by OFCOM. It is suggested from time to time that Government should fund the roll out of broadband. I can remember the same suggestion being made about ISDN and about mobile. The concern with mobile was a very similar one to the concern about broadband – how on earth was the market going to deliver mobile services even into the rural areas where they were needed. With the benefit of hindsight, it would be very hard to argue that it would have been a good use of public money to have handed out subsidies to the mobile operators. What actually happened was that the competition between the operators drove innovation in technology and in pricing and marketing, and drove also expansion of the coverage – leading to the desired outcome in a faster and more effective fashion than would have been the case if Government subsidy had been involved. That is what we want to see with broadband too. You may have seen that we published last week our response to the report of Lord Puttnam's Committee on the draft Communications Bill. I pay tribute to the painstaking work of Lord Puttnam and his colleagues, and to the quality of their report. We have not accepted all their recommendations; but what has received rather less attention than it should have done is that we have accepted a very large majority of them – over 120. I will highlight two of the points on which we have agreed with the Committee and will be improving the Bill as a result. The Committee recommended a simplification of OFCOM's general duties, and saw merit in an approach that would give emphasis to the promotion of consumer interests through competition. We did not feel able to simplify the duties quite as much as the Committee proposed. There are other regulatory objectives, concerned with the protection of the public from offensive and harmful material and to protection of fairness and privacy, which we think should not be reduced in importance, as their suggestion would imply. But we agree that OFCOM's duties should be clearly and concisely articulated so as to give certainty to OFCOM and its stakeholders. We are revising the drafting of the general duties with these principles in mind, and to clarify that the furthering of consumer interests should, where possible, be an objective to be pursued through the promotion of competition. The Committee also recommended that OFCOM should have an explicit duty to have regard to the desirability of encouraging investment and innovation. (This chimes very well with what James has just been saying about the key role of innovation.) Again, we agree with the Committee on this, and will propose a further duty for OFCOM on these lines. Now, one of the two main recommendations of the Demos report is that OFCOM should consider the structural separation of BT's network activities, or some of them. This question was raised earlier in the year by the Culture Media and Sport Select Committee in their report on communications; and the Government made clear in its reply to the report that it had no proposals to refer these issues to the Competition Commission. However, the position has now moved on. In the Enterprise Bill, Ministers are largely relinquishing the power to make such references - market investigation references, as they will now be called. That power now rests primarily with the relevant regulator – at present Oftel, and in the future OFCOM – and with the OFT. So I can now neatly pass the buck on this one! But Oftel will have the power to make a reference and in responding to the Committee, Oftel made clear that the forced break-up of BT was not on its agenda. In the light of other powers available to it to strengthen competition, and the use it planned to make of these powers, it did not see a case in the foreseeable future for such a reference. I would also make the observation that the suggestion in the report that a break up could be completed within two years of a decision to proceed struck me as optimistic. But it is an important proposal and one that merits the airing, which this report gives it. The Government welcomes the steps already taken by Oftel to ensure effective competition in the market for broadband services, and its intention to take further steps where justified. I note also that the new EC Directives, to be implemented in July next year, require the imposition of appropriate controls on market players shown to have significant market power. Recognizing that competition is the key, we are in fact relatively well placed on broadband. The report makes the point that 40% of users have a choice of supply technology, between ADSL and cable, and there are not many countries where the position is as good as that. DSL prices in the UK are now among the cheapest in the world. We passed the million mark in broadband connections a month ago and now we are at 1.1 million. But we still have many challenges to meet, and we are working closely with industry, particularly through the Broadband Stakeholders' Group, to meet them. One challenge that particularly concerns me is that of the digital divide. As it turns out, the concept is not a new one. I was intrigued, among the reading material presented to me on my arrival at the Department of Trade and Industry, to come across some remarks of the American Internet pioneer JCR Licklider that date back to 1968. He wrote a remarkably prescient article about the Internet or what he called the interconnected electronic network. In it he said this: "For society, the impact will be good or bad, depending mainly on the question: Will 'to be online' be a privilege or a right?" Licklider believed the interconnected electronic network could and should be "a boon to mankind… beyond measure", as he put it. But the resolution of the question – would it be a privilege or a right – would determine whether that promise was achieved. The concern, which Licklider expressed, is a serious concern that occupies us still, three and a half decades later. There are still too many people – in rural and remote parts of the country – who can't access an affordable and reliable broadband service. And in some cases – through technological and market constraints – they see no realistic prospect of getting affordable broadband in the near future. That does threaten the prospects for broadband to be a boon to our economy and to our society, and it presents a major challenge. We all need to work to address it. In the present context, I would note that a particularly difficult aspect of the problem is those users who are too far away from an exchange to be served by DSL. We need an even wider range of technologies than we already have. We are working to secure the widest possible provision of services. Next month, a new Regional Broadband Unit will open for business. Working closely with the Regional Development Agencies, which are I think starting to unleash the potential regional energy which we always hoped for, and with the Office for Government Commerce, the unit will aim to co-ordinate public sector broadband procurement in order to stimulate economic development and enhance the delivery of public services. The new unit will work between public and private sectors, to ensure best use is made of public sector purchasing, and identify opportunities to aggregate broadband demand within the public sector, so maximising the potential of the public sector investment to extend the reach of broadband services. But of course, in today's global economy, it is not enough to simply take action domestically. The Internet is a global medium that But network policy requires global solutions. So the UK Government has organised an e-summit on the 19th November where "e" leaders and officials from the G7 and other nations will meet to discuss the future development of our respective knowledge economies. We shall be publishing our International Benchmarking study, undertaken for us by Booz Allen Hamilton and INSEAD. It has assessed how the UK "knowledge economy" is shaping up compared to the best in the world and will highlight how successful initiatives from overseas could help us build on our strengths and address our weaknesses. Finally, a few thoughts on Demos' suggestion on spectrum allocation. As the paper says, spectrum management policy has undergone considerable change from a purely regulatory approach to a mix of regulation and market forces. The Wireless Telegraphy Act 1998, which introduced incentive pricing and auctions, was one of the first pieces of legislation we introduced after the 1997 Election. We recognise that regulatory fiat is not the best way to distribute the finite spectrum resource, although spectrum allocation cannot be left entirely to the market either. In accepting most of Professor Martin Cave's recommendations, we are continuing to develop the use of market forces to assign spectrum. I was intrigued by Demos's advocacy of the 'spectrum commons'. This approach is not entirely new. There is a longstanding policy of exempting spectrum from licensing requirements where this can be done without risking interference. Vast numbers of low power radio devices, like garage door openers and remote central locking, operate in spectrum without licensing. We have recently extended the concept to public telecommunications services in line with Professor Cave's recommendations. I hope to be able to lay new regulations before Christmas, liberalizing Bands A and B at 5 GHz. Developments in technology may well in time allow the spectrum common to be extended further. The Radiocommunications Agency, which is to be folded into Ofcom, is keeping a close eye on technology so that policy can be adjusted in line with technical progress. Pending further developments, however, it seems probable there will continue to be a need for licensing for those services that require protection from interference. The move to greater use of market forces is coinciding with the extension of exempt spectrum to public services, so a more market-based approach need not stifle the spectrum common concept. In other words, we already have a mixed approach as suggested in the paper. I very much agree with the paper's emphasis on promoting innovation and competition and I will be very interested to hear whether others think we have the right balance. The central theme of Demos' report is the need for regulatory frameworks to support innovation. I welcome that emphasis and I welcome the genuinely stimulating thinking, which the report has contributed. Thank you. |
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Other speeches by Stephen Timms MP
(the following are available from the archive) |
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