The need for better broadband

by / Thursday, 04 November 2010 / Published in Blog

A new report shows just how important the internet now is to the UK economy. The report from the Boston Consulting Group (BCG) estimates that web services contribute £100 billion to the economy – that’s 7.2% of the Broadband T-Shirtnation’s GDP. This is forecast to rise even further, to 10% of GDP by 2010, assuming that broadband access and speeds are improved.

But despite the critical role of the internet, just 15% of Britons have broadband speeds of 5 megabits per second (Mbs) or more. Britain is ranked only 17th in the list of 23 OECD counties for internet speed.

The Prime Minister, David Cameron, recently announced plans to the CBI to get more investment in broadband:

“Virgin Media is rolling out a new superfast broadband service this week. Combine that with the support we are giving in rural areas and BT’s planned investment and it will mean that within two years, over 13 million homes and businesses in the UK – including some in our rural areas – will be hooked up to some of the fastest broadband speeds in the world.”

Does this mean that, despite the public sector spending cuts, the government has money to spend on the broadband infrastructure? Looking at the detail, it appears not. Virgin Media has indeed just announced a new 100Mbs broadband service to areas with cable, but none of this was funded by the government.

‘Race To Infinity’, the BT project aiming to bring super-fast broadband to much of Britain, is struggling to connect large numbers of people due to the expense, with rural areas proving particularly costly.

Money is being put into fast broadband trials though. £530 million has been earmarked, but not from general taxation. £230 million of the money is coming out of the digital switchover fund, with the rest coming from the TV licence.

The government has only committed to a target of at least 2Mbs for everyone by 2015, and the money is coming from the private sector and licence payers. We must have a stronger commitment to better broadband if we are to boost the economy in these uncertain times.

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