Are ISPs the problem or the solution to getting broader broadband?

We need fast broadband, and we need it everywhere. But is it harder to do with one company controlling a third of the market?

One of the most exciting things about growing a business in the 21st Century is that thanks to the Internet, you have the ability to reach an infinite audience. In the UK we're particularly good at it. We generate 8 per cent of our GDP, £120 billion, through the Internet.

But of course, to start a business on the Internet, you need have to have access to it first. That's why the Lords Communications Committee report into the Government's plans for Superfast Broadband has struck a chord with so many. Current Government plans are to install 25Mbps high speed broadband across 90 per cent of the UK and a minimum of 2Mbps broadband for everyone by 2015. They hope to achieve this through the Broadband Delivery UK (BDUK) Project. But the Committee's report argues that Government is too focussed on speed, and it needs to change its focus from a 'high-speed' network to a 'high-spec' network. A core part of the concern is the affect the project, and the way it has been run, will have on competition in broadband provision.

According to Ofcom's figures the market is currently split between four key players BT (29.3 per cent), Virgin Media (20.2 per cent), TalkTalk (18.5 per cent), Sky (17.9 per cent) and the rest split up between smaller providers (14.2 per cent). But there are concerns, both at home and from the European Commission, that the BDUK project will serve to exacerbate BT's dominance in the market. Currently only BT is the only provider that has successfully bid for regional funding as part of BDUK, with the nine other interested parties withdrawing due to concerns over costs and the complication involved in providing fibre connections.

The problem of providing ensuring competition in the broadband market is by no means easy, particularly with the historical position of BT. Many other countries across the world are coming face to face with the sheer cost required to invest in this technology, versus the need for competition. As suggested by the Lords report there are a number of changes that could be made to the BDUK project to improve this, including potential open access fibre-optic hubs and public money only being awarded should be dependent on installing fibre to a local level rather than to the cabinet. They also propose "fibre hubs", which would allow neighbourhoods who set up their own networks to retain control rather than being required to hand ownership to BT and could connect the BT exchanges at a set price.

Apart from changes to the BDUK project there are other measures that could be taken to encourage competition that do not involve additional funding to the BDUK project. Ofcom has done good work in getting BT to reduce the cost of wholesale broadband and allow other ISPs access to its local exchanges in areas where BT is the sole provider, and ideally the cost would be reduced further. The Government can also, in light of its goals to deliver a better broadband, reconsider its decision from 2010 to scrap the review into the fibre tax which disadvantages other providers who must pay per metre of "dark fibre" to be lit.

Providing good competition to allow consumer choice is not just important for levels of service, speed and reliability as there are a number of wider issues that mean competition is increasingly important. Running parallel to the discussion over investment in broadband infrastructure we have the net neutrality debate. After many months of discussion ISPs have recently signed up to a voluntary “Open Internet Code of Practice”, which commits to them to providing full and open internet access and not block access to legal services which are bandwidth heavy, such as iPlayer or 4OD in the name of traffic management.

Most of the ISPs operating in the UK have signed up, including the dominant provider BT. Unfortunately Virgin Media, the second largest provider have not, citing issues with the wording of the code. The implementation of a voluntary code of practice relies upon consumers having real choice in their broadband connection, and the option to leave their provider if they do not comply with the code. Were the BDUK project to endanger future prospects for increased competition this would undermine the provision of an open internet.

And increasingly ISPs are being asked to take on more and more issues. While we want them to focus on providing us the best provision ISPs are currently being asked to look into; enforcing the Digital Economy Act and policing Internet users through a system of reports and warning letters; cooperate with the Government consultation looking into implementing 'default on' blocks for adult content; cooperate with the Home Office plans as part of the Communications Data Bill; and all while trying to put into place a better network for their customers who pay them for reliable access and good speeds.

We need to ensure that the UK has good enough Internet infrastructure to support our ambitions and not only compete with Europe, but with the world. The Government needs to decide where ISPs priorities should lie and consider whether it truly wants a broadband network fit for the future.

Sara Kelly is the Policy and Development Manager for the Coalition for a Digital Economy.

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The Brexit Beartraps, #2: Could dropping out of the open skies agreement cancel your holiday?

Flying to Europe is about to get a lot more difficult.

So what is it this time, eh? Brexit is going to wipe out every banana planet on the entire planet? Brexit will get the Last Night of the Proms cancelled? Brexit will bring about World War Three?

To be honest, I think we’re pretty well covered already on that last score, but no, this week it’s nothing so terrifying. It’s just that Brexit might get your holiday cancelled.

What are you blithering about now?

Well, only if you want to holiday in Europe, I suppose. If you’re going to Blackpool you’ll be fine. Or Pakistan, according to some people...

You’re making this up.

I’m honestly not, though we can’t entirely rule out the possibility somebody is. Last month Michael O’Leary, the Ryanair boss who attracts headlines the way certain other things attract flies, warned that, “There is a real prospect... that there are going to be no flights between the UK and Europe for a period of weeks, months beyond March 2019... We will be cancelling people’s holidays for summer of 2019.”

He’s just trying to block Brexit, the bloody saboteur.

Well, yes, he’s been quite explicit about that, and says we should just ignore the referendum result. Honestly, he’s so Remainiac he makes me look like Dan Hannan.

But he’s not wrong that there are issues: please fasten your seatbelt, and brace yourself for some turbulence.

Not so long ago, aviation was a very national sort of a business: many of the big airports were owned by nation states, and the airline industry was dominated by the state-backed national flag carriers (British Airways, Air France and so on). Since governments set airline regulations too, that meant those airlines were given all sorts of competitive advantages in their own country, and pretty much everyone faced barriers to entry in others. 

The EU changed all that. Since 1994, the European Single Aviation Market (ESAM) has allowed free movement of people and cargo; established common rules over safety, security, the environment and so on; and ensured fair competition between European airlines. It also means that an AOC – an Air Operator Certificate, the bit of paper an airline needs to fly – from any European country would be enough to operate in all of them. 

Do we really need all these acronyms?

No, alas, we need more of them. There’s also ECAA, the European Common Aviation Area – that’s the area ESAM covers; basically, ESAM is the aviation bit of the single market, and ECAA the aviation bit of the European Economic Area, or EEA. Then there’s ESAA, the European Aviation Safety Agency, which regulates, well, you can probably guess what it regulates to be honest.

All this may sound a bit dry-

It is.

-it is a bit dry, yes. But it’s also the thing that made it much easier to travel around Europe. It made the European aviation industry much more competitive, which is where the whole cheap flights thing came from.

In a speech last December, Andrew Haines, the boss of Britain’s Civil Aviation Authority said that, since 2000, the number of destinations served from UK airports has doubled; since 1993, fares have dropped by a third. Which is brilliant.

Brexit, though, means we’re probably going to have to pull out of these arrangements.

Stop talking Britain down.

Don’t tell me, tell Brexit secretary David Davis. To monitor and enforce all these international agreements, you need an international court system. That’s the European Court of Justice, which ministers have repeatedly made clear that we’re leaving.

So: last March, when Davis was asked by a select committee whether the open skies system would persist, he replied: “One would presume that would not apply to us” – although he promised he’d fight for a successor, which is very reassuring. 

We can always holiday elsewhere. 

Perhaps you can – O’Leary also claimed (I’m still not making this up) that a senior Brexit minister had told him that lost European airline traffic could be made up for through a bilateral agreement with Pakistan. Which seems a bit optimistic to me, but what do I know.

Intercontinental flights are still likely to be more difficult, though. Since 2007, flights between Europe and the US have operated under a separate open skies agreement, and leaving the EU means we’re we’re about to fall out of that, too.  

Surely we’ll just revert to whatever rules there were before.

Apparently not. Airlines for America – a trade body for... well, you can probably guess that, too – has pointed out that, if we do, there are no historic rules to fall back on: there’s no aviation equivalent of the WTO.

The claim that flights are going to just stop is definitely a worst case scenario: in practice, we can probably negotiate a bunch of new agreements. But we’re already negotiating a lot of other things, and we’re on a deadline, so we’re tight for time.

In fact, we’re really tight for time. Airlines for America has also argued that – because so many tickets are sold a year or more in advance – airlines really need a new deal in place by March 2018, if they’re to have faith they can keep flying. So it’s asking for aviation to be prioritised in negotiations.

The only problem is, we can’t negotiate anything else until the EU decides we’ve made enough progress on the divorce bill and the rights of EU nationals. And the clock’s ticking.

This is just remoaning. Brexit will set us free.

A little bit, maybe. CAA’s Haines has also said he believes “talk of significant retrenchment is very much over-stated, and Brexit offers potential opportunities in other areas”. Falling out of Europe means falling out of European ownership rules, so itcould bring foreign capital into the UK aviation industry (assuming anyone still wants to invest, of course). It would also mean more flexibility on “slot rules”, by which airports have to hand out landing times, and which are I gather a source of some contention at the moment.

But Haines also pointed out that the UK has been one of the most influential contributors to European aviation regulations: leaving the European system will mean we lose that influence. And let’s not forget that it was European law that gave passengers the right to redress when things go wrong: if you’ve ever had a refund after long delays, you’ve got the EU to thank.

So: the planes may not stop flying. But the UK will have less influence over the future of aviation; passengers might have fewer consumer rights; and while it’s not clear that Brexit will mean vastly fewer flights, it’s hard to see how it will mean more, so between that and the slide in sterling, prices are likely to rise, too.

It’s not that Brexit is inevitably going to mean disaster. It’s just that it’ll take a lot of effort for very little obvious reward. Which is becoming something of a theme.

Still, we’ll be free of those bureaucrats at the ECJ, won’t be?

This’ll be a great comfort when we’re all holidaying in Grimsby.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Brexit. You can find him on Twitter or Facebook.