Kate Bulkley, Media Analyst.

Carter set to deliver broadband britain

By Kate Bulkley

Cue Entertainment

January 2009

Minister of Broadcasting Stephen Carter

Minister of Broadcasting Stephen Carter

Minister of Broadcasting Stephen Carter (pictured) is due to map out the future of Digital Britain next year. Kate Bulkley reports on Carter’s latest thinking about the ‘knowledge economy’ and higher speed broadband roll out.

The future success of Digital Britain is clearly about broadband access and speed; how fast should the downloads be and who should be able to receive them, and, of course, at what cost? At least that’s the premise that the new Minister for Communications, Technology and Broadcasting Stephen Carter has been repeating to a variety of audiences over the last month or so and it’s what his Digital Britain report, due out next summer, is all about.

Given the subject, it should come as no surprise that the speed of change within the digital broadband industry is moving apace and Carter is trying to stay ahead of the curve.

In his newly-created role, Carter, who is a self-confessed “infrastructure junkie”, is going to be one of the leading figures in the government’s response to the “express train” speed of change from the growth of the internet. The government is attempting to work out the next steps to making sure Britain’s digital future is protected, while market giants like BT, Virgin Media and Sky, are keen to make sure it is also profit-making.

At 60% broadband penetration, Britain is at a “tipping point” in its broadband infrastructure, says Carter, so the next few months and years will be crucial both on an economic and socio-political front. “If we want to be the best low carbon economy and the best knowledge economy then we have got to get the answers right around the communications sector,” says Carter.

“The questions are important not because I am an infrastructure junkie but because infrastructure allows you to do all sorts of things. It is only when you have got the infrastructure do you realise what it can do. It is fantastically democratising.

It transfers power, information, knowledge and control to people. It is potentially transforming in lots of areas.” The impact of digital infrastructure is not simply economic. There are repercussions on social mobility, educational performance, household wealth and well-being, all of which are “significant citizen questions” around inclusion and access.

Carter’s background as a former MD of cable operator NTL (before it merged with Telewest to become Virgin Media) and as former (and the first) head of regulator Ofcom, makes him a wellinformed choice to figure out how Britain will keep pace on the digital superhighway. He is certainly not an ivory tower thinker, given his industry experience he believes that industry must be part of the solution.

For a little over a year before being named the first Minister of Broadcasting, Carter worked directly in Number 10 for Prime Minister Gordon Brown as head of strategy, polling and media.

The way Carter tells it, when he brought up the importance of broadband and the need for some kind of government initiative, Brown said ‘Okay, so why don’t you head it up?” which is how the new ministerial post was born. Crucially Carter reports to both the Culture Secretary Andy Burnham and the Business Secretary Peter Mandelson, which should allow him to make both the economic and socio-cultural points about broadband.

Carter is still gathering information to go into his Digital Broadband report but it is already clear that he has a baseline that includes the ideas of Universal access with a minimum speed likely to be 2 Megs, which is the speed at which video can be effectively delivered. “I think it is critically important to frame every thought about Digital Britain with the idea of a country that has a Universal service for video capable broadband of 2 megabits, “ says Carter.

The second tipping point, according to Carter, is around the funding issue. Clearly the free-to-air TV advertising model is under pressure — just look at ITV— and 2009 will not show much improvement.

Carter believes that one way to help the traditional content creators like ITV is to make broadband delivery an important discussion point beyond the ICT and telecoms sectors because it is will play a crucial “underpinning role” for the entire knowledge economy.

He says: “To be a competitive economy you need infrastructure, you need access, you need interoperability, you need competitive pricing, you need high quality content and you need an IP regime to allow people to have some protection so people can make a return. You also need some sense and preservation of the cultural conversation and you certainly need significant focus on the preservation of impartial news and discussion.” However, one of the potential Achilles’ heels to making Digital Britain from a nice report to an active and workable policy is the lack of time in the legislative schedule before an election. Carter concedes the point but he also thinks that a lot can be achieved without any new legislation. He also thinks that the government should not be in the business of underwriting the build out of broadband.

“State intervention in markets distorts markets and that is why there are strict rules about what you can and can’t do,” says Carter. “I think the role of government is to set the vision and set the framework and in some instances to nudge. But it’s a reach to say the answer is large-scale check writing. You need to examine long and hard at that because often the sweet taste of the initial (state) investment can be followed by a sour taste from the lack of follow on competition and innovation.” So far the private companies are moving ahead with their broadband rollout plans with Virgin Media launching its 50 Mb broadband service on Dec. 15, saying it will be available to all 12.6 million of its cable homes by next summer (2009).

Meanwhile Sky is negotiating to buy broadband supplier Tiscali and has recently begun offering a PC-only broadband delivered TV subscription service called Sky Player.

BT reiterated in November that it would be upgrading its infrastructure committing some £1.5 billion to bring fibre optic cables to around 10 million new British homes by 2012.

But the margins on broadband — in what is one of the most competitive markets in Europe — will put the squeeze on operators and how much people are willing to spend on faster broadband speeds is also largely unproven.

Virgin Media CEO Neil Berkett did say that, in November, 5% percent of new customers to Virgin Media’s broadband service paid for the higher speeds of 10Mbs or 20Mbs.

“People are voting with their wallets,” says Berkett. “ I see the start of an exciting and radical new phase in the internet’s development. The 50Mbs launch is the beginning but by no means the end of that.” Virgin Media is already testing 100 Mbs and 200Mbs speeds in its labs.

Carter is eager to get all the broadband providers on board, especially because he sees broadband as the crucial underpinning of the knowledge economy.

“If we want to get there at some speed then we need to create some common cause among the infrastructure providers about how to produce Universality,” he says. “I don’t know all the answers yet but I think it is a minimum ambition to get to Universality.”

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