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back to article Broadband gov subsidy should end in 2015 -Tory think tank

The government's current fixation with pushing for the deployment of faster broadband connections to most of the UK's population by 2015 should not shape its future policy, a leading Tory think tank has argued. Policy Exchange - which published its The Superfast and the Furious report (PDF) this morning - added that, while it …

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Article is TL;DR

But I love the name of the report!

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Anonymous Coward

Google prefers to have a further 8 million Brits online

...rather than providing competitve broadband with decent connectivity and speeds to help us compete with Asian countries. Now why would it be better to have 8 million more people online? Surely this report could not be biased and the thought of another 8 million people to flog ads to being the driver for the conclusion?

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They probably haven't addressed the issue of how PCs will be bought for those that don't have them because they're so obsessed with moving all government services online that they either don't see or don't care about the obstacles in the way.

Incidentally when it comes to government spending and where the 'snooper's charter' is concerned people here may be interested to read this:

http://www.guardian.co.uk/politics/2012/dec/28/snooper-charter-fail-treasury-backing

Specifically as far as current arrangements are concerned spending on this would have to come out of existing police budgets. Never mind that half of the police stations in London are already set to close and police forces around the country are beginning to fall apart. There seems to be a belief in some circles that the £1.8 billion estimated cost has been understated by billions of pounds, so even this is likely to be far worse.

How anybody can trust the civil service with the nation's finances given past cockups and the apparent failure to hold anybody to account really is beyond me (can anybody here say 'west coast mainline'?).

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Broadband = New British Rail?

Why do I get the awful whiff of British rail from this?

ie. Governments plan to exit from subsidising = Massive above inflation price hikes, and maintenance/investment/reliabilit/performance minimised and profits maximised.

Lets hope our polititians have our best interests at heart with this....<snigger>.

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Re: Broadband = New British Rail?

I've said it before:

Early 21st century Broadband should equate to early 20th century National Grid.

Scrap HS rail London to Birmingham and use money to do broadband properly.

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Re: Broadband = New British Rail?

But why? And more importantly, why?

How does an electricity distribution network compare in any way to broadband? I've spent five minutes thinking about it and I can't come up with a network topology that looks in any way similar.

The two networks face different challenges and serve different purposes. It just doesn't make any sense. What are you defining as broadband? The national grid is a wholesale network, consumer broadband is an end-user delivery technology. In Internet terms, the national grid you talk of already exists (if you don't mind stretching a few metaphors) - but it has nothing to do with broadband.

To introduce another analogy - it's like claiming that Tesco and Sainsburys would open lots more convenience stores if only the government would fund a national network of warehouses. The warehouses already exist today and the lack of a Tesco Express in your town is down to the number of likely customers and their willingness to buy the products it sells. Increasing the size of Internet backbones and peering centres, or re-arranging how such things are funded, has zero impact on whether or not an ISP thinks that they can make money from deploying high speed broadband in any given community.

Do you really mean what you say about the national grid or have you picked a really, really bad analogy?

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Anonymous Coward

Re: Broadband = New British Rail?

I'd love to see who is making (or could make) massive profits from broadband.

The commercial problem for any operator is that people don't value high speed broadband enough to pay the prices that would make anyone invest, apart from in the biggest, wealthiest cities.

If the subsidy given to currently subsidised services was withdrawn, the services would be too. They'd be loss making without the subsidy and consumers won't pay higher prices. There's no regulation or law compelling companies to sell loss-making services to customers.

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Unhappy

Re: Broadband = New British Rail?

"I'd love to see who is making (or could make) massive profits from broadband."

As a general rule, nobody makes vast profits from infrastructure unless there are no alternatives and an abusive monopoly exists. So the majority of the UK rail network was privately built by companies that in aggregate never covered their cost of capital on the assets they built. Even as a nationalised industry British Rail (or subsequently privatised) the market can't support the costs of rail and a credible return, requiring continuous state subsidies. The same thing happened with infrastructure like the Channel Tunnel. Electricity and water both started out likewise as private investments that didn't often pay, but were deemed sufficiently useful that the state acquired/copied the early investments and built the network out.

A key problem with most infrastructure is simply that the annual benefits have a modest annual value, the asset life is very long, but at prevailing interest rates the investment doesn't make financial sense. In theory, a sensible government would be able to take a long term view and choose to prioritise and subsidse those infrastructure projects that do have value, unfortunately the idea of the government making sensible choices is so laughable that it isn't worth imagining.

So, as somebody else has suggested, there's apparently £20 billion available for the wholly unnecessary HS2, to shave fifteen minutes off the journey time between London and Birmingham, and continue to move corpulent businessmen and civil servants for face to face meetings, when a wholesale upgrade of the infrastructure could encourage people to use non-travel solutions. Neither will generate a conventional economic return, but I think I'd rather have the comms upgrades than ruin a bit more countryside which then delivers nothing for me, and will additionally require operating subsidies for the remainder of of its life.

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It is not the "BBC licence fee"

It is not "BBC licence fee". The TV licence for reception equipment is, indeed, a hypothecation tax (a rarity in the UK), but there is nothing in the legislation which defined the revenues as actually belonging to the BBC, whatever the corporation might want us to believe. The revenues are apportioned according to the annual appropriation act for the Department of Culture, Media and Sport and there is nothing that requires it to be only allocated to the BBC. It could, for instance, be used to fund other public broadcasting should there ever be a political will to do so. For instance, C4 is a public service TV broadcaster (which is a largely advertising funded publicly owned corporation, and not a commercial company). Of course it's in the BBC's interest to represent the licence fee as somehow belonging to it, but that's not what the statutes say. One might argue that it would serve the public interest if more public service broadcasters were supported.

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Re: It is not the "BBC licence fee"

Or it could be taken and given to BT to install fiber to compete with Virgin. Or given to Virgin to install fiber to compete with BT.

Or given to the police to monitor facebook.

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Re: It is not the "BBC licence fee"

>Or it could be taken and given to BT to install fiber to compete with Virgin. Or given to Virgin to install fiber to compete with BT.

Or better still change the rules concerning the unbundling of the local infrastructure, so that BT et al can use Virgin etc. or more importantly pay me (the community operator) to use my network!!!

This simple change makes it worth my while putting in a funding bid and deploying a network to the villages in my "not spot" in the knowledge that if users want a better service from say Sky then can contact Sky and be transferred to receiving service via my network - Sky then pays me the line rental...

Without this change there is little point in me making the investment as I am unable to offer Sky, Virgin, BT services over my infrastructure (all those added value services customers really want) and am left selling pure internet access and VoIP as a competitive proposition to these services, which over time is not a winning business proposition...

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Anonymous Coward

report

also includes some dubious statements "the UK does not have same population density as South Korea so it's not comparable". No indeed, some parts of the UK have higher population densities than South Korea, some have far lower. Broadband subsidies - if any - should be spent according to where the most people need service: if Brighton's population density is higher than South Korea's as a whole, which it is, yet Mid-Suffolk's is a fifth of South Korea's as a whole, and Dumfries & Galloway a quarter of that, don't compare UK as a whole with South Korea as a whole. Compare like for like.

Silly generalisations do not make for good policy. No matter what this or all of the other governments this century would have us believe.

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Anonymous Coward

Re: report

The point is though that the higher density parts of the country don't need any subsidy as there are enough potential customers in economic reach of a deployment to make it worthwhile. It's the more rural / less dense areas that won't get it without subsidy as there's no way for a private business to make a return.

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Anonymous Coward

Re: report

then they should focus deployment on the higher-density areas, and when they are all covered, with South Korean speed broadband, /then/ ask for subsidies for lower density areas, and then ask the people of the entire country to vote on whether that's a good use of public funds. It's ridiculous that parts of Central Birmingham, Central Manchester, Central London, Central Edinburgh are waiting because of market-distorting subsidies - the rollout order is completely skewed.

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FAIL

Overheard conversation

In a garage in Portsmouth, two old dears talking to each other. Conversation is as genuine as I can recall.

Old dear 1: "I pay my bills on the internet now"

Old dear 2: "I won't do that. I won't use it. People use the internet for terrible things. It's disgusting."

I wish I'd had asked her what the terrible things were but I was earwigging.

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Facepalm

Re: Overheard conversation

Terrible disgusting things?

And yet they probably watched "X facta" and "Strictly no brain activity"? Oh the hypocracy.

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Re: Overheard conversation

@C Hill - For some reason I can't shake this passage from Pratchett's 'The Fifth Elephant' from my mind:

'Not natural, in my view, sah. Not in favor of unnatural things.'

Vetinari looked perplexed. 'You mean, you eat your meat raw and sleep in a tree?'

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Headmaster

Re: Overheard conversation@Silverburn

"Oh the hypocracy"

Go on then, I'm interested: What's a hypocracy?

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