Broadband Services (Hansard, 3 December 2001)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the Government's policies to open up broadband competition mean that 66 per cent of UK households can access broadband services, whether through telephone wires, cable modems or wireless technologies. The challenge now is for industry to get the pricing, marketing and content right. The Government have set out today how they will help by further intensifying competition, driving up demand, stimulating the production of new broadband content and facilitating broadband rollout in rural areas.

§ Lord St John of Bletso
My Lords, I should declare a non-financial interest as chairman of Citizens Online. I thank the Minister for his extremely encouraging reply and I welcome the Government's initiatives announced today. However, does he agree that broadband access through ADSL technology provides only a short-term solution? If the Government are truly committed to providing universal access to all by 2005, as well as promoting the United Kingdom as the e-commerce centre of Europe, will they consider promoting fibre optic access to all households throughout Britain, both in rural and urban areas, as well as to businesses? Have the Government plans to invest any of the £22 billion they received from the sale of the 3G licences last year in providing incentives to telecommunications companies to create such a network?

§ Lord Sainsbury of Turville
My Lords, we do not have any plans to do that. At present, around 60 to 65 per cent of the population has access to affordable broadband technology. A further announcement we have made today is that we intend to encourage the use of satellite broadband in rural areas as well as other incentives to stimulate take-up. However, as I hope I made clear in my original Answer, the main problem lies in stimulating demand for the services, which are now being provided extensively across the country.

§ Lord Avebury
My Lords, is the noble Lord aware that it was not possible to find out what is in the report 579 of the Broadband Stakeholders' Group, which was published today, or the Minister's comments on the report's recommendations, which I understand will be made available this afternoon? Can he say whether the new report addresses the question of higher investment in public sector broadband content and applications, as was recommended in the September report of the stakeholder group? In particular, does the Minister agree that if the Government demonstrated their enthusiasm for such technologies for their own use, greater take-up by businesses would be stimulated? Finally, does the Minister further agree that it would be a good idea to extend the international benchmarking scheme already being undertaken to take in the benchmarking of regulatory frameworks in order to check whether our industry is in any way being disadvantaged by the harsher regime being operated in this country?

§ Lord Sainsbury of Turville
My Lords, the noble Lord has made a good point as regards supply. Indeed, one of the four government objectives which have been announced today is the need to address the question of using broadband to deliver key public services such as Culture Online. We shall use that extensively and take the lead from the Government's stated position on that point.
On the noble Lord's point about regulation, I agree that it is a good subject for benchmarking. However, what should be benchmarked is the extent to which regulation enables the broadband market to be opened up to as many suppliers as possible. On that basis, on the figures that I have seen we do extremely well when comparing benchmark targets with other countries.

§ The Earl of Northesk
My Lords, how does the figure of 66 per cent access given by the noble Lord in his original Answer translate in terms of the actual take-up of broadband? Are the Government optimistic that the United Kingdom will not be close to or at the bottom of the league table of member states when the Commission makes its announcement later this month in respect of possible infringement procedures?

§ Lord Sainsbury of Turville
My Lords, the issue at which the Commission is looking is the unbundling of the local network. On that basis, we have done rather well. We have unbundled it. However, it is clearly a disappointment that, following the unbundling, there has not been a huge take-up by the telecommunications industry. But that is not in any way an infringement of the legislation we have introduced to make that possible.

§ Lord Brooke of Alverthorpe
My Lords, does my noble friend agree that we would be able to stimulate more interest in and demand for broadband access if prices were lower than is presently the case? What plans do the Government have to get the prices down?

§ Lord Sainsbury of Turville
My Lords, there is no question that lower prices on broadband stimulate 580 demand. However, it is also important to realise that the relationship of the broadband price must be set against Internet connection charges. In this country we have a low Internet connection charge. Because of that we have achieved a high penetration of Internet access. Other countries do better on broadband, but that is because in order to secure a lower Internet connection charge, it is necessary to go directly to broadband. When looking at the issue, while undoubtedly we would like to see lower prices for broadband, we must accept that those charges form a part of the total pricing structure.

§ Baroness Miller of Hendon
My Lords, is the noble Lord aware that his noble friend Lord McIntosh of Haringey responded to a very similar Question on 28th March this year? His noble friend then said that the delay over the unbundling of the local loop was not due to BT or Oftel and certainly not to the Government. He said that it was due to commercial interests. Can the Minister tell the House what are those commercial interests and whose position they represent?

§ Lord Sainsbury of Turville
My Lords, as always, my noble friend was entirely right in his response to the Question. It is the case that local loop unbundling can be put into the entire range of exchanges which now have ADSL. The alternative is for companies to use the wholesale ADSL service which is provided by BT at £30 per month. On that basis, a commercial decision must be taken as to whether expensive equipment should be put into local exchanges as an alternative to using the wholesale ADSL service from BT. Many companies in the telecommunications industry feel that this is not the time to make large capital investments in activities which they can buy in from elsewhere. Furthermore, it may well be that the possibility of competition has had the effect of ensuring that the price which BT offers for wholesale ADSL services has already done the job.

Lord Bruce of Donington
My Lords, will my noble friend bear in mind that there is the possibility of a quite civilised and tranquil existence outside the realms of e-commerce?

§ Lord Sainsbury of Turville
My Lords, when answering questions on ADSL, one is very aware of that.

§ The Earl of Northesk
My Lords, I apologise for coming back to the noble Lord once more, but I wonder whether he could address the first point that I put to him in my question. How does the figure of 66 per cent access translate into the actual take-up of broadband services?

§ Lord Sainsbury of Turville
My Lords, about 1 per cent of people with telephone lines use ADSL or broadband services. That figure is towards the bottom end of the international league. While Germany does very well as far as concerns broadband, if one takes broadband and the Internet together the UK does better. One must take into account the total picture.