Tuesday, September 23, 2008

NGA - role of government?

[ Next generation? ]

(...) The debate about having superfast access to homes has been going on for at least 25 years, when the first proposal (by BT to deliver huge capacity fibre optic threads to the home in exchange for being given a monopoly of delivering video-on-demand) was turned down by Margaret Thatcher's government in favour of competition by encouraging media companies to lay cables. Since then there have been regular cries, still heard today, that there will never be enough demand to fill the capacity" (...) 

How can we achieve the nirvana of being a world leader in superfast broadband? A recently published report by ex-Cable & Wireless chief executive Francisco Caio contained a wealth of practical proposals, but came out against government intervention on the grounds that the market solutions had so far delivered well. But today's report by Ofcom, while commending the success of the market, sensibly points out that it needed public intervention to get 99% internet capability and that if theBroadband Stakeholder Group is confident it could deliver broadband to two-thirds of the UK that would still leave a third without it, thereby aggravating the digital divide.

Broadband companies are asking the government for a stable regime so that they can plan without fear of government intervention. That is understandable but it would be a foolhardy government that decided not to intervene especially if the oncoming recession proves so deep that broadband providers start cutting back. The government has provided a lifeline to financial companies and it may find that it needs to intervene in a Keynesian counter-cyclical way to invest in superfast broadband during a recession in the knowledge that it will give Britain a competitive advantage afterwards. With the shrinking of the financial sector it becomes all the more vital to back Britain's creative industries, whose medium is the internet (...)

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