London is one of the world’s greatest cities, and arguably the pre-eminent global financial centre. The UK has 17 of Europe’s 40 tech unicorns (startups valued at $1bn or more), and all bar three of these are in London. And yet, compared to other European cities, its broadband infrastructure – the vital sensory network of a modern metropolis – is pitiful. The UK’s capital ranks twenty-sixth on broadband speeds, below rivals such as Paris, Berlin, Amsterdam and Madrid, but also below relative minnows Bucharest, Vilnius and Bratislava.
Today, on a leap day, the IoD is calling for a giant leap forward in broadband speeds for the UK. Currently, the government aims for all households to have a connection of 10 megabits per second by 2020. We want an ambition 1,000 times higher: 10 gigabits per second, by 2030. This is bold, but it is far from impossible.
For us to achieve these speeds, the UK will have to replace its copper network with the much faster fibre-optic cable. That we haven’t done this yet is, in part, the fault of the Victorians and Edwardians who nationalised the telegraph and telephone companies over 100 years ago.
De-monopolisation only began in 1979 and was never truly completed. BT may have been privatised, but it is now not only the major broadband provider but it also owns Openreach, which controls the ducts, poles and cable which make up our communications network.
It is a bizarre situation where the incumbent doesn’t have to pay to access its own legacy network but can extract a rent from competitors that do. No wonder BT has gained 74 per cent of the superfast connections and 84 out of 91 government contracts to deliver the current 10 megabits per second target. Last week, Ofcom rightly took steps to improve competition, and said that it would keep its eye on the situation to make sure things improved.
The lack of telecom infrastructure competition in the UK is holding back what should be one of our most dynamic industries. But it can be different, and Lithuania shows us how. In 2004, this small Baltic nation mandated open access to the physical infrastructure of the telecom incumbent and dramatically lowered the cost of this access. Twelve years later, it has among the fastest internet in the world because of the competition created by AltNets – alternative network providers – who built 61 per cent of the new network capacity, and generated a burgeoning IT sector. Across Europe, in fact, a number of countries like Spain are lowering access charges and focusing on fibre to the premise.
In the UK, in contrast, we are being left behind. With 5G, virtual reality, self-driving vehicles, drones and AI all becoming reality, there is a very real risk that we will simply not have the network capacity to join the future. In addition to the higher target, the government must set itself three tests to prove it is heading in the right direction: is BT’s market share decreasing; is fibre being deployed, rather than just improving the old copper network; and is the UK moving up the international league tables? Only when the answer is yes to all three can we be sure that London’s status as Europe’s most commercial and dynamic city is secure.