The Superfast and the Furious

The internet is central to modern life, and next-generation fixed and mobile broadband are vitally important for the economy. But the case for spending any more taxpayers' money to subsidise very fast connectivity is weak, argues Sarah Fink.

pink fibre optics

Image: CC BY-NC-SA 2.0 Flickr: bmooneyatwork

Sarah Fink is a Digital Government Research Fellow at the Policy Exchange. She is the co-author of a report which argues that politicians have become overly focused on broadband speeds.

In our recent Policy Exchange report - “The Superfast and the furious: Priorities for the future of UK broadband policy” – we are broadly supportive of the steps the government is taking to drive out fibre optic networks to the majority of the population, to accelerate the roll out of 4G wireless networks, and to deliver on a universal service commitment for broadband.

However, our research found that there are significant gaps in digital capability, for both consumers and small businesses. This may be preventing them from making the best decisions and getting the maximum benefit from internet connectivity, irrespective of the speed of their connection.

To inform our research and understand general attitudes towards connectivity, we conducted polling with Ipsos Mori of around 2000 consumers and 500 small and medium enterprises. We found that four in five people think the internet is something that everyone should be able to get access to, and two thirds of people think it is more important for everyone to have access to a basic broadband service than it is to boost top speeds in select parts of the country.

But we also found that only around one in five people is confident estimating how much data their household uses in a typical month (and this figure falls to fewer than one in ten for the over-65s), and only around a third of people are confident they can choose the best broadband package for their household’s needs (again falling to below one in five for the over-65s). Consumers need to be more confident in their interactions with broadband providers in order for competition to work effectively.

Our research also showed that the majority of small businesses are relatively conservative when it comes to adopting new technology. We found that about half of people think that most businesses should be ready to take bookings or orders online – but only about a third of small business report that they have the capability to manage online transactions. This is particularly concerning for policymakers as we know that small businesses that embrace the internet grow substantially faster than their offline peers.

This suggests that the focus for digital engagement needs to extend to cover capability for small businesses. In the UK 16 million people lack basic online skills, 4.5 million of these are in the UK workforce. Improved levels of internet capability and engagement will ensure that people are realising for themselves the best economic and social outcomes from connectivity.

In addition to basic capability, consumers also need to have enough information to help them make good decisions. In other markets, including energy and financial services, there are moves to ensure consumers have access to personalised data about their usage so that they can compare products and shop around. Many internet service providers and mobile network operators already provide this sort of information for their customers, but where this isn’t already happening, it should be encouraged.

Although we think that industry is generally best placed to articulate the benefits of broadband and to drive consumer engagement, there is still an important role for government. For most people, the prospect of engaging with the government may not be the most compelling reason to get online. Indeed, in research previously published by Policy Exchange, we found that for older people the primary attraction of getting online was highly personal, and included motivation such as communicating with dispersed family or seeing photographs of loved ones.

But government needs to be prepared to push ahead with the digital-by-default agenda. In particular, government should drive forward delivery where it will be accessible by most people, even if some people will not be able to benefit (either because good broadband infrastructure is absent or because they are not confident going online). There is a risk that innovative services are held up indefinitely to avoid delivering a service that fails on universal accessibility. And for those who do remain offline, digitisation may still have important ancillary benefits. By innovating and driving the majority of interactions online, efficiency savings can be unlocked and used to enhance the offline service for the (decreasing) number of people who are not able to access online content.

Getting the core infrastructure in place will be important for future competition and innovation, and will be necessary to support mainstream take up. But when it comes to any further spending in this arena, however, we think policymakers need to reflect carefully before allocating any more funding to large subsidies for superfast infrastructure. Instead the government should focus on helping the 10.8 million people not online - half of whom are over 65 - and do more to help small businesses make the most of the opportunities presented by the internet.

You can learn more about the Policy Exchange and follow them on Twitter at @PXDigitalGov and Sarah at @SarahFinkPX.

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By Sarah Fink on Jan 22, 2013

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