Jeremy Hunt – 2012 Speech on Broadband Investment

Below is the text of the speech made by Jeremy Hunt, the then Secretary of State for Culture, on 23 August 2012.

The world’s first truly digital Olympics

The last few weeks have been dominated by the Olympics. Team GB have certainly been faster, higher and stronger. But perhaps less noticed has been the technology behind the Games which has also been faster, higher and stronger. Indeed given the timing of digital switchover, this was for many consumers the first “digital” Games:

– 700 gigabytes per second were delivered from the BBC website when Bradley Wiggins won his gold;

– On the peak day, 2.8 petabytes of data were delivered – equivalent to700,000 DVDs;

– Nearly a million people watched Andy Murray win gold – not on TV but online and over 9 million followed BBC Olympic coverage on their mobiles;

– And over twenty billion views of the official London2012.com website.

Our success in digital broadcasting is fitting given both the global pre-eminence of the BBC and also our aspiration to be Europe’s technology hub. So today I want to take stock of the progress we have.

Economic impact on the UK

The impact of the internet on modern economies is now well-documented by a number of studies. Last year, for example, McKinsey said that whilst the internet only accounted for an average of 3.4% of the GDP of the 13 largest economies it accounted for 21% of GDP growth.

Ericsson and Arthur D. Little say that GDP increases by 1% for every 10% increase in broadband penetration.

And according to Boston Consulting Group the impact on the UK economy is even greater. They say it could increase from being 7% of the UK economy to 13% by 2015 and describe Britain as the e-commerce capital of the world.

Getting the plumbing right for our digital economy is not just an advantage to consumers – it is also essential for our digital and creative industries, all of whom need reliable high speed networks to develop and export their products as they move large digital files around the world.

Think of the industries who now describe themselves as producing digital content: the BBC and the world’s largest independent television production sector; our music industry, globally the second largest exporter; and our animation and video games industries, some of the biggest in Europe.

Get this wrong and we will compromise all of their futures. Get it right and we can be Europe’s technology hub, bringing together the best of Hollywood and Silicon Valley in one country with huge competitive advantage in both content and technology.

Where we started

Because of the scale of this opportunity, I have always prioritised this part of my agenda at DCMS. In my very first speech as a Minister I said that I wanted us to have the “best” superfast broadband network in Europe by 2015. In defining “best” you include factors like price and coverage as well as speed. But over the past two years it has become clear, as Usain Bolt wouldn’t hesitate to say, to be the best you need to be the fastest.

So I am today announcing an ambition to be not just the best, but specifically the fastest broadband of any major European country by 2015. Indeed we may already be there.

Before I elaborate let me explain where we have come from. Just before I came to office:

– we had one of the slowest broadband networks in Europe, coming 21st out of 30 OECD countries;

– we had a target for universal 2 Mbps access – but only half the money necessary to deliver it;

– and we had no objectives for delivering superfast broadband in this parliament, and no money to pay for it.

Progress to date

To me this combination of slow speed and low ambition felt like the technology equivalent of British Rail. So whether rashly or boldly, I decided to commit to not only to universal 2 Mbps access, but also something much more ambitious: to put plans in place for superfast broadband to reach at least 90% of the population by 2015.

Through a rapid settlement of the new BBC licence fee – for which I owe great thanks to Mark Thompson – I was able to secure £600m of additional investment, half of which is available during this spending round. Combined with digital switchover underspend and match-funding from local government the total amount available is now more than £1 billion.

When combined with the additional £150m we are investing in giving our cities some of the fastest speeds in the world, we have been able to make some dramatic progress:

44 out of 46 local authority areas now have broadband plans approved for delivering 90% or greater superfast access. Some have gone even further, with my own county, Surrey, looking to deliver one of the most ambitious programmes of all with near-universal superfast coverage. Procurement for virtually all areas is well under way, with around one moving into formal procurement every week from October. I expect procurement to be completed across the whole country by next July.

In our cities we want even faster speeds. Our £150m urban broadband fund will mean that around 15% of the UK population will have access to speeds of 80-120 Mbps along with universal high speed wi-fi.

Additionally Ofcom has announced that for the 4G auctions one of the licences will require indoor coverage for 98% of the UK population, guaranteeing a wireless high speed alternative to fixed line broadband.

For some time we have had amongst the highest penetration and the lowest prices of anywhere in Europe. But even before this new procurement has taken place we have already started to make made good progress on speed:

– Average speed in the UK has increased by about 50% since May 2010.

– In the last year alone average speed increased from 7.6 Mbps to 9 Mbps, overtaking France and Germany so we now have the fastest broadband of any large European Country.

– Two thirds of the population are now on packages of more than 10 Mbps, higher than anywhere in Europe except Portugal and perhaps surprisingly Bulgaria.

The need for speed

Probably the best characterisation of my broadband policy has been a relentless focus on speed. Let me explain why.

My nightmare is that when it comes to broadband we could make the same mistake as we made with high speed rail. When our high speed rail network opens from London to Birmingham in 2026 it will be 45 years after the French opened theirs, and 62 years after the Japanese opened theirs. Just think how much our economy has been held back by lower productivity for over half a century. We must not make the same short-sighted mistake.

But when it came to sewers, we got it right. In the 1860’s Sir Joseph Bazalgette ignored all the critics when putting in London’s sewers and insisted on making the pipes six times bigger than anticipated demand.

He could never have predicted the advent of high rise buildings – lifts had not been invented then – but he had the humility to plan for the things he could not predict as well as the ones he could.

You don’t need Bazalgette foresight to see that in the modern world, things are speeding up exponentially. Every 60 seconds there are:

– 98,000 tweets
– 370,000 Skype calls
– there are 695,000 Google searches and 695,000 Facebook status updates;
– and 168 million emails sent.

And that’s just today. To download a 4K video, currently used in digital cinemas, would take an average home user two or three days. They don’t need or want to do that today – but will they in the future? Who here would bet against it? The message has to be don’t bet against the internet, yes, but also don’t bet against the need for speed.

Which is why when the Lords Committee criticised me this summer for being preoccupied with speed, I plead guilty. And so should we all. Because we simply will not have a competitive broadband network unless we recognise the massive growth in demand for higher and higher speeds. But where their Lordships are wrong is to say my focus is on any particular speed: today’s superfast is tomorrow’s superslow. Just as the last government was wrong to hang its hat on 2 Mbps speeds, we must never fall into the trap of saying any speed is “enough.”

That is why, although we have loosely defined superfast as greater than 24 Mbps, I have also introduced a programme for ultrafast broadband in our cities that will offer speeds of 80-100 Mbps and more. And we will continue to develop policy to ensure that the highest speeds technology can deliver are available to the largest number of people here in the UK.

Our plans do not stop here either. We are currently considering how to allocate the £300m available for broadband investment from the later years of the license fee. In particular we will look at whether we can tap into to this to allow those able to access superfast broadband to be even greater than our current 90% aspiration.

FTTC vs FTTH

Whilst I am talking about the House of Lords report, let me address a further misunderstanding. They suggest that fibre to the cabinet is the sum of the government’s ambitions. They are wrong. Where fibre to the cabinet is the chosen solution it is most likely to be a temporary stepping stone to fibre to the home – indeed by 2016 fibre to the home will be available on demand to over two thirds of the population.

But the reason we are backing fibre to the cabinet as a potential medium-term solution is simple: the increase in speeds that it allows – 80 Mbps certainly but in certain cases up to 1 gigabit – will comfortably create Europe’s biggest and most profitable high speed broadband market. And in doing so we will create the conditions whereby if fibre to the home is still the best way to get the very highest speeds, private sector companies will invest to provide it.

Let’s look at the alternative: if the state were to build a fibre to the home network now, it would potentially cost more than £25 bn. It would also take the best part of a decade to achieve. We will get there far more cheaply – and far more quickly – by harnessing the entrepreneurialism of private sector broadband providers than by destroying their businesses from a mistaken belief that the state can do better.

Must be mobile

There is one further principle that needs to underline our thinking. Mobile data use is tripling every year and is expected to be 18 times its current levels by 2016. In that time the number of mobile connected devices globally will reach 10 billion – more than the entire population of the world. One survey rather scarily said that 40% of people with smartphones log on before getting out of bed in the morning. I won’t ask for a show of hands but it may not be the best thing for a marriage.

Our working assumption must therefore be that the preferred method of going online will be a mobile device – whether linked to high speed wireless in buildings or networks outside them. But that in order to cope with capacity, we will need to get that mobile signal onto a fibre backbone as soon as possible. So no false choice between mobile or fixed line, between fibre or high speed wireless: all technologies – including satellite – are likely to have a part to play, and our approach must be flexible enough to harness them all.

Next steps

So what next? Clearly the BDUK procurement process is central to our plans. After a frustrating delay, we are confident of getting state aid approval this autumn, after which the procurements will be able to roll out. But to achieve this timetable projects will need to be ready on time and they will need to be able to progress through the procurement process without delay. So I hope all the Local Authority representatives who are here today will be able to respond to that challenge so we are still able to complete the majority of projects by 2015.

We are also committed to helping private sector investors in our digital network by removing barriers to deployment wherever we can. These include:

– plans to relax the rules on overhead lines;
– guidance issued to local councils on streetworks and microtrenching;
– the development of specifications for broadband in new building and an independent review by the Law Commission of the Electronic Communications Code.

In September we will confirm the funding for the Tier 1 cities that have applied for the Urban Broadband Fund and we will announce the successful Tier 2 cities later in the autumn.

In December Ofcom hopes to start the 4G auctions, with deployment taking place as soon as the final digital spectrum becomes available.

One of the biggest successes of this programme has been to work closely with colleagues in local government. This really matters because planning issues remain very critical to the delivery of this programme, and local authorities are also planning authorities. Most have been extremely supportive – but we still have some frustrating examples of inflexible approaches to planning – not least Kensington and Chelsea, who have deprived their residents of superfast broadband investment as a result. But overall the cooperation from local authorities has been terrific and I want to thank those of you present for your tremendous enthusiasm for this programme.

Conclusion

Let me finish by saying this. Two years ago I promised the best superfast broadband in Europe. After two years, we have the lowest cost, most comprehensive and fastest broadband of any major European country. More importantly when it comes to next generation broadband we also have the most ambitious investment plans too.

Can we do it? I am convinced we can. Of course there remain plenty of hurdles: state aid clearance, planning foresight, contract management and delivery, challenges in our more remote areas. But as Shakespeare said “it is not in the stars to hold our destiny but in ourselves.” In other words, it’s up to us.

Let’s also not forget some people also said that we could not host a great Olympics either. They were wrong. We’ve just hosted the greatest Games ever. Time and again our winning athletes told us “never let anybody tell you it can’t be done”. So let’s be inspired by that, let’s aim high and make sure that broadband plays the definitive role in our economic recovery that we know it can.