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Public Data Corporation Killed

Dec 15th, 2011
by Dominique Lazanski.
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Today I attended the Government’s meeting on their open data plan. The measures were announced in the Autumn Statement and include opening up more data, allowing for the releasing of transport and health data as a priority, and the creation of the Open Data Institute. The Government made even more of a commitment to open already created data that it holds in various forms. This is good news for many reasons, including public service efficiency and the growth of the innovation economy.

The most important aspect of the Autumn Statement was the omission of the Public Data Corporation. A consultation was launched late in the summer to discuss the proposal to set up a fee charging organisation which would aggregate government data and charge for open data which we the taxpayers have already paid for. The Public Data Corporation proposal would also seek out private sector investment to eventually privatise a public body with open data. There were many other details discussed in this consultation, but the bottom line was that the government sought a way to seek direct revenue from open data instead of indirect revenue through innovation of free and freely available open data.

In our consultation response we made the argument for the free release of open data and discussed the fact that the Public Data Corporation did not need to be created. We cited a number of compelling case studies in our argument – further details can be found in our report here.

So today at the Government meeting Francis Maude said that the government itself is moving away from the charging model proposed in the Public Data Corporation consultation. Instead, the Open Data Institute has been created to bring together academia, public sector, and private enterprises so that new ways of opening up data can be discussed and implemented. We will need to keep close watch and make sure that any vestiges of the Public Data Corporation don’t creep into the Open Data Institute or the newly announced Open Data Group. But for now the Public Data Corporation will not be created.

OFCOM sets BT Broadband Wholesale Prices

Jul 20th, 2011
by Dominique Lazanski.
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OFCOM announced today that it will require BT to reduce the cost of wholesale broadband to areas of the UK in which it is the only provider of fixed Internet access. The price reduction is another important step in the process to provide more broadband access to rural areas in the UK. The government has set a target date of 2015 for the rollout of 90% of the next generation of superfast broadband in the UK.

BT offers wholesale broadband to Internet Service Providers who often bundle and reuse the broadband in their consumer offerings. OFCOM has set the pricing now to 12% below annual inflation for just under 12% of the country where BT is the sole provider – or monopoly – in certain areas of the country (see here for a map of broadband competition in the UK). OFCOM hopes that the price cuts will encourage more competition in regional broadband markets.

This is clearly good news. OFCOM’s remit as a regulator is to manage monopolistic issues in the telecoms and Internet sectors. By setting wholesale pricing lower, one would expect to see more competition or at least new entrants into markets in specific regional areas. But this proposal alone can’t spur on rural broadband coverage.

OFCOM needs to complete negotiations with BT on duct and pole pricing. Negotiations between BT and other ISPs have been going on for months now with no sign of agreement. Allowing for the use of ducts and poles owned and used completely by BT for the laying of fibre by other companies would only boost competition in rural broadband. This would also dispel any fears that BT might not make future investments in rural broadband infrastructure because the lower wholesale pricing would bring in less income and, thus, less money to invest. Fujitsu, for one, is prepared to lay even more fibre if these negotiations can come to a reasonable agreement in the near future.

And of course the spectrum auction is happening in early 2012. More spectrum purchases by mobile carriers will hopefully mean more options to use either fixed or mobile broadband in rural areas. With any luck, this time next year we will see a competitive race to roll out both fixed and mobile Internet to rural areas which, in turn, will drive down the costs to consumers. So over the next 12-18 months we should see better options for consumers in rural areas. The OFCOM announcement today is a good start.

Rural broadband is necessary, but doesn’t need to be government funded

May 19th, 2011
by Dominique Lazanski.
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In a debate today in the Commons, Rory Stewart MP will argue that the government target for rural broadband deployment needs to expand to include an additional 2 million people. The motion that will be introduced says, “rural businesses and rural communities across the UK are isolated and undermined by slow broadband … (we) urge Ofcom to increase the coverage obligation attached to the 800MHz spectrum license to 98%”.

Rural broadband rollout – both fixed and wireless – is a priority of the Coalition Government. They are committed to supporting and funding the rollout out by investing £530 million. £300 million of this will come from TV license fees while the rest will be made up from the government’s own purse.

Access to broadband is an absolute necessity to ensure growth, innovation, and economic success in this country. The Government, however does not need to pay for rural broadband. By creating a competitive market environment in which broadband operators can compete, broadband rollout would come through private sector investment.

Coming to a rural community near you, eventually

There are three key factors for private sector investment in broadband rollout. First, the government needs to lift the burdensome fibre tax. As I discussed in a previous post tax is collected for the laying for fibre and for the ‘lighting’ of dark fibre. Considering the taxes that these firms are paying to operate in the UK, it would seem a simple solution to remove the fibre tax in order to allow for more fixed line broadband access. Second, coupled with this issue, the access to ducts and poles owned by BT should be offered for a low or no cost to other Internet Service Providers (ISPs). Currently ISPs and BT are in discussion to set a market price for this access. To date the discussions have been unsuccessful and Ofcom is set to intervene and set the price itself. Ed Richards of Ofcom said recently that if this happens then access to ducts and poles would be delayed because Ofcom would be required to manage the entire process. This delay is something the UK economy can’t afford.

Third, access to next year’s mobile spectrum auction should not be limited to four major companies, but should be open to all who want to operate mobile broadband. Ofcom is attempting to deal with many various and complex issues around the spectrum auction and in doing so they are trying to correct distortions from previous spectrum allocations. In doing this, though, they have set spectrum caps which may limit the rollout to certain areas. The opening up of this auction and licenses provided in it could improve competition and speed up mobile broadband rollout.

I have only touched the surface of the complexity of fixed and broadband rollout in the UK. There are many other factors impacting the rollout. However, it is clear that if competition increases in the fixed and mobile broadband market we would not need government to pay for new broadband. Private sector companies from the UK and abroad have the technology and the investment needed and they are ready to participate only if and when the Coalition Government makes the environment more business friendly.

Net Neutrality and basic economics

Mar 15th, 2011
by Dominique Lazanski.
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In the run up to the UK Government’s round table meeting on net neutrality tomorrow, there has been a great deal of scaremongering over the fact that key stakeholders, ISPs, consumer rights groups and others in the UK will probably adopt an industry-driven code of transparency over one of net neutrality. The Guardian claims that Internet Service Providers (ISPs) discriminate on purpose or entirely arbitrarily. The BBC’s Rory Cellan-Jones claims that if content providers have to pay even a little to get their content distributed over the Internet, new and innovative companies like YouTube would never ever happen. Our friends at the Open Rights Group claim that ISPs are “evil”. And even Al Franken has weighed in by saying, “The one thing that big corporations have that we don’t is the ability to purchase favourable political outcomes.” But one thing is missing from all of these passionate, emotional outcries – basic economics.

Net neutrality is the idea that the Internet needs regulation in order to keep it free and open. It is based on the intuition that all Internet traffic should be treated equally without discrimination or management. The problem is that the open and free Internet that we see and use today exists because of the creation of ‘smart networks’ or networks that engage in Internet traffic management. These ‘smart networks’ prevent end users from experiencing more network congestion, stalling or any of the other issues one might experience on a ‘dumb network’. There would be no ‘smart networks’ if all Internet traffic was treated equally.

ISPs are the companies that have created and invested in these smart networks and, in spite of what the Guardian and the BBC might say, ISPs are businesses and exist because they serve customers who are happy to pay for them to provide a service. And ISPs have a financial incentive to offer customers what they want. They don’t exist to be evil or to be gatekeepers or to hoard power. ISPs provide a service that customers pay for. In turn ISPs invest in new network infrastructure, pay their employees, pay their shareholders and, yes, provide access to the Internet. I know that this might comes as a shock to many Guardian and BBC readers, but any business – including ISPs – can’t exist unless they offer something that customers need and are willing to pay for. After all, the market in the UK is very competitive and transparency will reinforce that. And in order to compete ISPs strike content deals to differentiate their offerings from each other. So that consumers can actually watch YouTube and iPlayer videos smoothly, by giving them priority over an e-mail where a delay of a few seconds isn’t an issue. Not all data is the same and ISPs can deliver a better service if they don’t treat it as if it were.

Dumb Network Business Plan

The 'dumb network' business plan

So here is my suggestion to all of the pro-net neutrality folks weighing in with their emotional scaremongering – start your own ISP. That is right, why don’t you start your own co-op, not-for-profit Internet Service Provider? Go ahead, light up dark fibre or lay your own. Pay the fibre tax. Hire network engineers. Buy switching devices and other hardware. Don’t strike content deals. Don’t partner with Akamai. Don’t manage network traffic. And try and make money. Prove us all wrong and provide customers with the alternative ‘dumb network’ that does nothing but provide Internet access. If there is a customer base for it, then the rest of us who don’t want Internet regulation will be proven wrong. Go for it! Quite frankly, I am going to leave my Internet connection with an already established ISP who has given me quality service.

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