HC Deb 25 March 2003 vol 402 cc31-56WH

2 pm

Sir George Young (North-West Hampshire)

I am grateful to the Minister for abandoning his visit to Wales to reply to this debate. I have heard him speak many times on this subject and not only is he in total command of his brief, but he speaks with commitment and enthusiasm on the subject.

Many issues fill the rural MP's postbag, but the non-availability of broadband is elbowing its way up the political agenda, certainly in Hampshire and, I suspect from looking around the Chamber, elsewhere. It is a reflection of the changing nature of rural life that the absence of the latest technology is such an issue. The blood pressure of many of my constituents has been further raised by the high profile campaign urging them to sign up for broadband when they have already tried to do so and been told that they cannot have it.

I have three objectives for rural broadband: to increase accessibility and affordability, to promote greater openness from infrastructure providers on the options, and to obtain some answers from the Government in areas where they hold the key. The internet is to wealth creation in this century what the roads and the railways were in the last two. As the exchange of information becomes as important as the exchange of goods and services, the information highway—the internet—is a key element of a country's infrastructure. Just as countries that have prospered needed an efficient transport system to carry people and goods quickly, so the growth economies of tomorrow need an efficient highway for information to move around quickly. Broadband provides that efficient highway. A computer using a standard phone connection can download up to 56 kilobits of information a second. Broadband, however, allows it to download information at rates from up to 512 kilobits to more than 20 megabits per second, some 400 times faster than a standard connection. The services now being marketed to consumers are what I call introductory broadband at up to 512 kilobits, approaching 10 times the speed of a standard phone connection. Other advantages of broadband are that it is always connected and comes at a flat rate price, meaning that the user pays a standard price per month or year, regardless of the time spent online.

The Government are seized of the importance of broadband. In his letter to me of 26 February, the Minister said: If the UK is to succeed as a world-class place for e-business, public service delivery and online participation, it is essential that we develop a world-class communications infrastructure. The Government have set a target to have the most extensive and competitive broadband market in the G7 by 2005. If that is the right target, we are a long way behind the leaders. Japan had more than 5 million ADSL subscribers at the end of last year and was adding no fewer than 300,000 a month. We have about 750,000.

Two options are available to the Government to enable them to hit that ambitious target. One is to decide that broadband is a universal service, like water or daily delivery of mail, that everyone should have it and that, if the revenue from the service does not cover its cost, the Government will make up the difference. That subsidy to the universal supplier can be justified by invisible benefits, such as equality of opportunity or international competitive advantage.

The other option, which has been adopted in this country, is not to rely on a universal obligation, but to promote a market with alternative suppliers and means of access, and then to let competition ferment away, moderated by regulation. That has certainly proved more economical. Less than $5 per head has been spent by the UK Government to support broadband infrastructure, compared with $25 in France and $90 in Japan.

That policy has worked well in city centres, where people and companies are being offered faster and faster internet connection at lower and lower prices by a variety of competing suppliers using a range of different technologies. Around 50 per cent. of broadband is provided not over BT's wires but over cable. That policy is working less well in rural areas and gives rise to a policy issue for Ministers. Are they content to see that differential provision and, if not, does their current approach need adjustment?

Mr. Anthony Steen (Totnes)

Is my right hon. Friend aware that Devon's topography is hilly and that BT has not invested the necessary money to enable people who want to work at home—they increasingly want to do that—to access broadband? Is he also aware that structural funds from the European Union and Government funding for broadband facilities are being dispersed to the regional development agencies rather than the providers of broadband? Why is the money not being used to encourage BT to widen broadband facilities instead of being used for wasteful bureaucracy?

Sir George Young

As a fellow cyclist, I am aware of the topography of Devon and that it is not a flat county. My hon. Friend asked a good question and although he seemed to direct it at me, I know that he was directing it at the Minister, who will, I am sure, take it on board in his response.

Rural areas play a vital role in the life of the nation, accounting for nearly 25 per cent. of its population, 30 per cent. of its employment, 30 per cent. of its gross domestic product and 80 per cent. of its landscape. According to the Country Land and Business Association, whose activity in this area I applaud, only 20 per cent. of rural areas have access to broadband. The broadband stakeholder group gives a lower figure of less than 10 per cent., emphasising the point that there is no definition of a rural area. Such a situation puts rural business at a clear competitive disadvantage compared with urban business. There is an urgent need in rural areas to diversify from agricultural employment and to develop home-based employment to discourage travel. In Hampshire, many farmers are diversifying into other income areas. I visited one recently who has the UK franchise for a solar-powered swimming pool purifier. Folk like him need broadband, because without it it is more difficult to compete. They cannot get broadband because they live too far from an exchange or it is unviable for BT to enable the exchange, and the costs of alternative provision are very high.

People living in many of the small towns and villages in Hampshire may, if they are lucky, be on an uncertain path towards what I call introductory broadband in the form of either ADSL or the more restrictive satellite services. However, large parts of the country have no choice at all. They are told to use satellite services, or to form local co-operatives to put up more radio masts and take the risk of investing in local community wireless systems, or to club together and risk £55,000 for BT's new exchange activate proposition. They are busy folk who are trying to run their own companies. They are confronted by a mosaic of agencies that are falling over one another to offer potential and sometimes conflicting help and advice on rural broadband. It cannot be right when developing a national infrastructure that is critical to the future of the country's economy and a foundation for important social and public service developments to ask those busy people to get broadband to their village as well.

Lembit Öpik (Montgomeryshire)

Does the right hon. Gentleman agree that that haphazard approach to something with strategic importance—it certainly has that in mid-Wales—risks enabling the Government to abdicate? It is the Government's responsibility to recognise not just the economic benefits for rural areas, but the environmental benefits for all of us in having a strategic approach that is transparent and affordable for rural communities.

Sir George Young

I agree with the hon. Gentleman. If one wants to conserve energy and minimise the need for travel, the better the communications infrastructure, the more progress will be made. The moral is simple. People who live in cities have access to an information motorway. In villages they have access to a footpath. Without change, there will be a drift to jobs in the cities.

The main broadband provider in rural areas is BT. As of 21 March, only 1,158 of 5,500 exchanges had been ADSL-enabled, which is just over one fifth. Both the Government and BT stress that that covers approximately 71 per cent. of homes. However, that is the mean of 90 per cent. of city homes and less than 10 per cent. of rural homes. Another 179 exchanges are currently at the build stage, having reached their trigger levels, which is bringing the percentage of enabled exchanges to around 25 per cent. A further 102 exchanges will have trigger levels published on Monday. I declare an interest—as Chairman of the Standards and Privileges Committee, that is a wise precaution—because I live in an area served by an unenabled exchange, along with my near neighbour, the chairman of British Telecom.

Mr. Hugo Swire (East Devon)

If my right hon. Friend moved from his constituency to Devon, he would be in good company because, by the end of the year, 45 per cent. of the population of Devon will be unserved by broadband compared with the national figure of 20 per cent. That shows the problems that we have.

Sir George Young

My hon. Friend reinforces my point about the risk of a digital divide between rural and urban areas.

BT has reduced the price of broadband, introduced a rolling programme to enable exchanges, set targets and, in some cases, reduced those targets. I commend it for the progress that it has made, but too many people are still left out in the cold. That means that businesses that need broadband will have to consider more expensive options if the trigger level cannot be reached or if no trigger level has been set for that exchange. The director general of Oftel told me on 25 February: Where no trigger levels have been set, BT does not believe it to be commercially viable to fully enable the exchange using current cost information and its existing business model. ADSL coverage will never reach many parts of rural areas. The Minister told us in the debate in the House on 4 March: It is clear that it will reach 80 per cent. over the next year or two, but the big challenge will be how to get from 80 per cent. to 90 per cent. and over."—[Official Report, 4 March 2003; Vol. 400, c. 738.] BT is working hard to find ways of extending broadband availability to rural areas through marketing initiatives and through working with interested public and private sector bodies. However, its plans have to be made within the current commercial and regulatory framework and it is clear that, unless there is dramatic change in the economics of broadband provision, the remaining 10 per cent. of areas will require a different public-private partnership model or a different technological platform. Are the Government prepared to put together the right combination of interested parties and give the appropriate encouragement and support, so that rural broadband in those areas becomes a reality on a time scale that will benchmark against key competitors?

Mr. David Drew (Stroud)

I know that this is a reprise of the earlier debate, but there are two key issues that should be raised with BT, through the Minister. First, BT often sets the highest targets in the most rural areas, which seems unfair and counter-productive. Secondly, take-up in rural areas is very low, even where there is ADSL. That is because we have not provided the proper packaging to make it clear to people what they are signing up to. Does the right hon. Gentleman agree?

Sir George Young

Yes, I entirely endorse that. I agree that we should tackle not only the supply side, about which I have been talking, but the demand side. We need to explain to small and medium-sized enterprises exactly what the benefit of broadband is.

Mr. George Osborne (Tatton)

I congratulate my right hon. Friend on securing the debate. Does he agree that one problem has been that people have expected to have broadband available, have gone through a process to get that service but have then found that they could not get it? The trouble with the demand side of the argument is that demand is stimulated where the service cannot be provided.

Sir George Young

My hon. Friend is exactly right. If he raises that problem with BT, it will tell him that it is anxious to increase demand in areas where broadband is already available but take-up is low. That is why it is promoting broadband as a concept, but the downside to that, which my hon. Friend rightly mentioned, is that it irritates those who want broadband, dial in their exchange number and are then told that it is not available, that there is no trigger level and that there are no plans to bring it within reach.

In fairness to the Government, they are worried about the digital divide. Some £30 million of grant has been given to the regional development agencies so that a digital divide in high-speed internet access does not open up between urban and rural communities. The Minister said on 4 March that he was working on that problem "energetically". I want to find out how that reservoir of energy is being applied.

In particular, I want to know how the prime ministerial commitment given last November will be met. I make no apologies for returning to that question a fourth time. The last time that the Minister spoke, he said: It would not be sensible, however, for me to announce from the Dispatch Box precisely how that will be determined"—[Official Report, 4 March 2003; Vol. 400, c. 739.] With respect, I disagree. It would be sensible for us to know how that commitment was going to be delivered, because it goes to the heart of the issue under debate this afternoon.

The Prime Minister set the Government targets of 8 megabits per second in broadband connections in secondary schools and 2 megabits per second in primary schools. In non-broadband-enabled areas in my constituency, such bandwidths might be provided through a private circuit, which helps the school but does nothing for the rest of the village. An alternative, bolder and preferable method would be for the Government to specify a delivery mechanism for schools that would bring opportunities for the school and automatically pull through additional broadband infrastructure to the surrounding area—somewhere that might otherwise have to wait a long time for broadband under normal commercial conditions.

Until there is clarity on that issue, there will continue to be blight and uncertainty. Children will learn in one environment at school—proper broadband—and go home to a more basic form of delivery. How that commitment is delivered is of enormous interest to communities large enough to have a school or GP practice but not large enough to have their telephone exchanges enabled. In my constituency, that includes Whitchurch, Overton, Kingsclere, St. Mary Bourne, Hatherden and Abbotts Ann.

In the debate on 4 March, the Minister was pressed on that subject by the hon. Member for Sheffield, Hallam (Mr. Allan), who asked whether the Government would draw up contracts with added public benefit, or … end up with tight contracts"? The answer was straight from "Yes, Minister": I am confident that we will be able to achieve suitable contracts".—[Official Report, 4 March 2003; Vol. 400, c. 739.] Can the Minister shed more light on that this afternoon? His letter to me on 26 February said: The public sector as a user of broadband will be a major driver for the introduction of broadband services throughout the country. Later, speaking of the £1 billion that the Government are going to spend on broadband connectivity for public services during the next three years, the Minister said: We will make sure that the potential benefit of this spending is maximised and takes full account of the benefits of broadband. The primary objective of the UK broadband taskforce is to support the aggregation of public sector demand for broadband and to ensure that through such aggregation, there is an extension of broadband availability, particularly in rural areas.

Mr. Richard Allan (Sheffield, Hallam)

The right hon. Gentleman may be interested to know that concern is being expressed in some public sector organisations that are demanding to be aggregated, that that is causing problems. That applies particularly to the national health service network. The contracting for NHSnet has, in effect, been put on hold while the demand aggregation process takes place, and it feels that it is losing time and capacity that it desperately needs. There are problems across the piece.

Sir George Young

That underlines the need for joined-up government and a cohesive approach that looks at the broader benefits of public sector aggregation. As the hon. Gentleman has just implied, there is some cynicism outside this place over whether we will get the broader benefits potentially available.

Some people living in rural areas will need a wireless solution, on which I want to press the Minister. Wireless broadband is based on a network of a central transmitter and a series of receivers. The clear advantage of wireless broadband is speed. At up to 11 megabits per second, it is far faster than other forms of broadband, and the roads do not have to be dug up for it to be installed.

However, wireless has a number of disadvantages. First, the technology in the UK is still very much in its infancy. With the wireless spectrum currently allocated in the UK, connection fails if there is no clear line of sight, just as mobile phone signals can be lost in a valley. Secondly, unless there is external funding, the local community—by definition, the village—has to fund the cost of installing the service and stand the risk that enough people may not subscribe, while each user has to pay for individual receivers' equipment. Thirdly, the issue arises of connecting the community wireless network to the main internet, known as backhaul. There have already been two failed attempts to auction the spectrum suitable for that, but even where the licence was taken up there was no obligation on the successful bidder to deploy. As a result, fixed wireless networks are springing up all over the country, but they are all in towns—unlike in the USA, where they are also in the countryside.

Mr. Andrew Lansley (South Cambridgeshire)

Those solutions, and the technologies involved, need to be linked to the aggregation of public sector demand. If the public sector uses leased lines where a wireless solution might be developed, that will not help the community generally.

I have further questions on the allocation of spectrum for that purpose. The 28 GHz auctions did not deliver the demand levels anticipated. My right hon. Friend may know, as we have briefly discussed, that the technology and equipment used by a company such as Cambridge Broadband—an equipment supplier rather than an operator—is successfully in use in other countries, operating at 3.5 GHz. Some problems with the use of wireless solutions, to which he referred, would not apply to the use of that spectrum to the same extent. The question of whether that spectrum is to be licensed is, therefore, real and immediate.

Sir George Young

I want to probe the Government on their taking account of broadband issues when they make their decisions on allocating the spectrum. As my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) said, the Government have not released the sweet spot, which is the 2 GHz spectrum. He implied the question, which I shall pose again, whether the Government will optimise public benefit through conditions that actively encourage rural deployment or whether they will maximise income regardless of broader policy imperatives.

In its annual report to the Government last November, the BSG said: The Government should give priority to the support of broadband services when deciding policy on spectrum allocations on the basis that wireless schemes offer the most attractive means of providing broadband facilities to large sections of the population and their timely deployment will be crucial to the achievement of Broadband Britain objectives". The Government released their response to the BSG's report on 20 March and said that the Radiocommunications Agency would be making additional spectrum available this year. Whether that will be the right spectrum under the right conditions remains to be seen, but the price is obviously important. The BSG's response states: Unleashing the potential of wireless is absolutely essential for Broadband Britain, but there are some real commercial regulatory barriers that need to be overcome, particularly around the provision and assignment of suitable spectrum". I hope that I have conveyed to the Minister my constituents' mood and that he can give me a message to take back to them. They feel a little bruised by some of the Government's policies. They have an appetite for the new technology and are frustrated that they cannot get it. I hope that the Minister will help to bring it within their reach.

2.21 pm
Mr. David Drew (Stroud)

I am delighted once again to respond to the right hon. Member for North-West Hampshire (Sir George Young). I am sorry that we are a double act, but the issue covers the whole rural area. I shall be brief, to allow other Members to contribute.

The BSG's report is a useful position paper. The group is obviously made up of many hard-working people in the field, although it is unfortunate that all the references to rural areas are at the end of the report. I get the feeling that it was written to draw in different aspects of the issue such as business needing to get on to broadband and the broadband needs of institutions, including public services and others. It discusses the rural dimension at its end, which is where we read for the first time about RABBIT. That, if I can get it right, is the remote area broadband inclusion trial—but we can all talk about RABBIT. There are many good initiatives, but I would like to hear from the Minister how they are being taken forward to ensure that good practice is widely explored.

In an intervention on the right hon. Member for North-West Hampshire, I explained the two key problems on which I want to spend a little time. There was probably no way to allocate the resources fairly other than by setting targets. I have worked with Giles Deard at BT and, in the main, have found BT to be helpful and responsive. From my area, I congratulate Mike Cowley in Stonehouse, where I live, on leading a campaign to get on to broadband. In my constituency, there has been a similar campaign in Dursley, and I am sure that there will soon be one in Nailsworth. I understand why the trigger mechanisms were set, but there should be a clear implication that broadband will go as widely as possible and that the form of rationing is a means to an end. Broadband should go forward wherever it can, notwithstanding the difficulties over cost.

If people are located just outside an area covered by ADSL, they will be in a frustrating situation because a next-door business can get ADSL while they are highly unlikely to get it unless they happen to overlap with another, more urbanised area. In those circumstances, they are likely to be excluded unless they can find another technology, which is an important point to explore.

To follow up on those who are on broadband, there is a need for—I hate this term—capacity building to ensure that the process is about not only the trigger mechanism. I am aware from my discussions with BT that it gets about 10 per cent. follow-up in real terms to information service providers once the ADSL has been put in place. That cannot make much sense and much more needs to be done.

I would like to see an evaluation of the benefits of the other means available. There are clear advantages if people can get on to ADSL: if they are in the fortunate position of being on cable, it does not need to be part of the evaluation process. I would like to see a comparison between satellite and wireless conducted by means other than cost to allow people to know where they are going. As the right hon. Member for North-West Hampshire rightly said, people are being asked to pay up front and they want to know how long their competitive advantage will be in place. If they have to change technology, they will lose money.

Will the Minister say what progress is being made on the institutional side in terms of health and education, and how that backwashes into the business world and wider community ventures? Greater co-ordination seems sensible, and I congratulate the Government on setting up the BSG. Its report is good and it shows that there is an attempt to co-ordinate and monitor progress. The number of people coming on to broadband in one form or another is pleasing.

I cannot think of an organisation that could co-ordinate the situation better locally than a local authority. There should be a way to ensure that the different public sector bodies are in touch with businesses and the wider community to see how they can achieve economies of scale by building the critical mass and negotiating communally with BT and others to ensure that the best service is obtained. I am not sure whether such co-ordination is happening. Perhaps my area is less developed than some others, but I have seen little evidence of co-ordination. It is down to the enthusiasts to keep e-mailing people, including their local MP, to get enough names on their trigger lists to reach their targets, at which point everyone can relax and the next town or village has to follow suit.

It would be better if there were greater cohesion locally. The debate has come at a fortuitous time and the Government have plenty to do. They have made a good start, but we have to be honest and admit that some areas are unlikely to get on to broadband. We must have the satellite versus wireless debate and we must make some decisions. We should also make the situation clear to allow people to pursue their hunches on the best way forward.

2.28 pm
Mr. Keith Simpson (Mid-Norfolk)

I congratulate my right hon. Friend the Member for North-West Hampshire (Sir George Young) on securing a debate on such an important subject. My constituency, which is largely rural, although it contains some of the outer fringe suburbs of Norwich and some dormitory villages, has mixed access to broadband. For the majority of my constituents, access to broadband is problematic if not some way off, which will discourage established small businesses. The majority of small businesses in my constituency employ fewer than 10 people, and I suspect that limited access to broadband will deter others from setting up businesses in rural areas.

Like other Members, I have been approached by a number of small businesses, which frequently consist of one man or woman. They say that if they cannot have broadband it will be a severe disadvantage and that they will consider moving to an area in which there is broadband. I have spoken to the chief executive officers of both my district councils, Breckland and Broadland, and they are very enthusiastic about the potential of broadband for the public and private sectors. In fact, they emphasised the importance of broadband access in a rural area such as Mid-Norfolk because of the need to support sustainable communities.

I do not have to tell Members that many rural constituencies are undergoing a massive sea change as their economies move from traditional farming and food industries to much more complicated industries—often tourism, for example—which frequently use the internet. The internet will be an important stimulus for the economic growth of many of those areas and broadband will be absolutely key to promoting sustainable communities in them.

Constituencies such as mine are often considered to be wealthy and idyllic. They are idyllic, but the Countryside Agency received a report from the New Policy Institute in which the whole of Norfolk was classified as "remote rural", with the exception of Norwich and Great Yarmouth. Some 20 per cent. of the people who live in the countryside live in poverty, so building sustainable communities is absolutely crucial.

I wish to pick up on points that the Minister made to me in a letter dated 8 January, in which he responded to questions raised by a constituent. He noted, as my right hon. Friend the Member for North-West Hampshire said, that £30 million has been allocated to help with the development of broadband through regional development agencies. BT has joined forces with the East of England Development Agency to test a new approach that could bring broadband ADSL technology to small exchanges where previously it was not commercially viable. Can the Minister tell me whether the trials have been completed and whether they focused on any exchanges in my constituency?

The broadband brokerage is a pilot scheme that allows companies and public sector bodies to register their interest in broadband and that brokers an aggregated solution for them. It has been expanded to the connecting communities competition, which offers communities a chance to apply for a substantial contribution from EEDA's dedicated £5.8 million fund. How many communities in Mid-Norfolk are eligible, how many have applied and how many have been successful? I do not expect the Minister to provide the figures off the top of his head, but I would be grateful if he wrote to me later.

My final point, which is crucial, relates to what my right hon. Friend the Member for North-West Hampshire said. The remote area broadband inclusion trial is examining alternative broadband internet access, using wireless and satellite, for small businesses in rural areas. The Minister's statement of 7 January 2003 highlighted the importance of wireless technology in delivering broadband to rural areas. Several innovative schemes have already been developed by local communities. For example, EdenFaster is a local community organisation that is bringing broadband internet connections to the entire Eden valley, which is on the border between Cumbria and the Yorkshire dales, and several trial schemes are being developed in Norfolk. I commend to the House the scheme of Richard Ellis and his son, James, which aims to provide broadband service for local communities in my constituency.

Noel Coward once said, "Very flat, Norfolk." That is not completely accurate, but, in large parts of my constituency, tall structures such as closely linked church towers can be used to provide a useful network. However, I wish to draw a technical constraint to the Minister's attention. Mr. James Ellis has asked whether it would be possible to have a dispensation to increase the legal effective radiated power limit between specific point-to-point links in rural situations. The Minister is aware that there are major problems in such areas. Mr. Ellis believes that there would be considerable advantages to establishing wireless technology in remote rural areas and providing the development that we want for sustainable communities, but the ERP limit must be addressed.

This is an important debate. Establishing broadband on a wide basis in Mid-Norfolk, which is a rural area, would secure the economic future of my constituents and bring a wider world to them.

2.35 pm
Mr. Brian Jenkins (Tamworth)

I congratulate the right hon. Member for North-West Hampshire (Sir George Young) on securing a debate on this important issue. One can tell how important it is by the number of hon. Members who have turned up this afternoon.

Most people think of me as a Member of Parliament for an urban area, but the vast majority of the Tamworth constituency is rural. There are pluses and minuses to living in a rural environment. I do not expect a motorway to run to every village or a supermarket at the end of every street. However, I do expect the information highway to run to every village and rural location. I shall explain the grounds for that in a very short contribution, so that other hon. Members are able to speak.

The hon. Member for Mid-Norfolk (Mr. Simpson) mentioned sustainability. Information technology is necessary for sustaining our communities. We all know that farmers have gone through hard times recently. We asked them to diversify. Some farmers—they are businesses—would like to diversify into alternative businesses and run them from the same site. How can they do that if broadband is not available to them? How can they sell their concept or bring in money and investment?

That environment has certain advantages. Many people would like to live in a village and do not want to travel into towns or cities. If we maintain communities that are more sustainable and create work in the rural economy, people will not have to travel to towns and cities, or sit in traffic jams causing costs for the person who is behind them. It would be a win-win situation. The advent of broadband in the rural economy should not be seen in isolation. It should be considered by all Government Departments.

Mr. Swire

Does the hon. Gentleman agree that access to broadband can be hugely beneficial not only to those who are in work but to those among our population who are retired and wish to continue studying through, for example, the Open university? They, too, are penalised if access to the internet is not available in rural areas.

Mr. Jenkins

There is no doubt that the matter affects the whole community. I was simply advancing an argument about why it is so important that Government Departments should interact with each other to show that the cost can be offset. For example, the cost of providing extra traffic management facilities could be avoided if the traffic were not generated in the first place.

I congratulate BT on its work as a main provider. I understand that, as a commercial enterprise, it may have a problem in funding a large amount of work at any given time. It must raise funds, and we know what the stock market has done to its value and how difficult it has been for the company to raise money. However, we should not walk away from the problem and say that we cannot solve it if the matter is simply one of securing extra funding.

In my area, we must deal with enablement and trigger points for the local exchange, as does everyone else. One would think that that was easy. However, I shall run through a case that shows the difficulties. It involves Mr. John Metcalf of Shenstone, who was told by BT that the Shenstone exchange required 150 people to register to trigger enablement. Being a community-minded individual, he wrote to the local paper, put up posters in the village, and encouraged people to sign up, so that the exchange could be enabled. He has been getting there slowly—96 people have now registered interest.

A new development in Shenstone involves the building of an office block of 36,000 sq ft and the creation of up to 400 jobs in a rural economy. That will be a tremendous boost to my constituency. Mr. Metcalf suggested to BT that with a big office block in place there would surely be enough people to enable the exchange to be triggered. The developers cannot sell the office block to potential customers if there is no broadband access. No one will move from an area that has broadband to an area that does not. I was a bit amazed—I suppose that the Minister would have been too—to be told by BT that only BT account holders can register an interest. It is a Catch-22, chicken-and-egg situation. There will be an office block of 36,000 sq ft, and it is obvious that the exchange will be triggered and that the need is there, but BT will not even take that into consideration. How does that support the Government's plan to diversify and bring sustainable economies and communities together? BT is working on a different route map.

Mr. Bill Wiggin (Leominster)

One of the dangers that we face is telling BT how to run its business, when what we really want is the Government to release the 2 GHz bandwidth. Once people can get broadband by means of radio, we will not have to worry about telling other people how to run their businesses or about commercial decisions. Does the hon. Gentleman agree that with radio delivery of broadband, everybody would be happy?

Mr. Jenkins

I believe that radio has an important part to play in the delivery of broadband, but people should walk away with the idea that most broadband in this country will be delivered by cable. It will come mainly through copper cable. I hope that later it will come through optic fibres, but it will still be cable-delivered.

I know that my hon. Friend the Minister has taken such issues on board and has been working quite hard in this area for many years. I am sure that the problems are not new to him. I would like some guidance on when my constituents can expect the delivery of the system. The Government target of 2006 is fast approaching. Will the Minister assure us that he will meet that target? I would love to take that message back.

2.42 pm
Mr. Peter Atkinson (Hexham)

I congratulate my right hon. Friend the Member for North-West Hampshire (Sir George Young) on instigating the debate. We have had such debates before, but we cannot have enough of them because we need continually to highlight the importance of extending broadband to rural areas.

It is a pleasure to follow the hon. Member for Tamworth (Mr. Jenkins). If nothing else, his constituency has a great reputation for pigs. I support what he said about farmers diversifying to get an income. Many farmers are desperately trying to diversify and without modern information technology and broadband communications, they cannot do that. There is more to diversification than running bed and breakfasts, and farmers are looking forward to that.

BT has behaved very well in my constituency, which is the most sparsely populated in England—that is what we claim. I certainly have the least populated district council in England. In the market towns and larger villages, we have reached the threshold and exchanges are being converted. I suggest that hon. Members who are worried about the matter should encourage their local paper to run a campaign. My local paper, the Hexham Courant, ran a successful campaign that alerted people to the idea that they must register. People registered in droves and, as a consequence, the exchanges will be enabled. However, a vast area of my constituency has no prospect of a traditional link-up. People in those areas will be able to access broadband only by satellite or wireless technology.

I want to give a brief example. I can claim another record: my constituency contains the most remote village in England. It is called Kielder. Believe it or not, six workshops were developed there with help from the regional development agency and the local authority. They were supplied with satellite broadband courtesy of the regional development agency. As a consequence, within weeks of the buildings being completed, five out of the six had been let. It was clear that if there had not been access to some form of broadband communication, those premises would not have been so easy to let, so broadband is extremely important.

Malcolm Bruce (Gordon)

The hon. Gentleman has made several important points about how we will lose businesses in rural areas if they do not have connections. In my constituency, I have a business centre in a rural area. It has 12 tenants, all of whom have told the owner of the business centre that if they cannot get broadband in the next 12 months, they will have to move to a town. That is the kind of problem that rural areas face.

Mr. Atkinson

That is an important point. It was pointed out earlier that if some areas are enabled for broadband and others are not, there will be a migration of people from areas that are not enabled to those that are.

Earlier today, the Countryside Agency issued an extensive report on rural economies called "Stepping Stones to Healthier Futures". It is worth telling hon. Members about some of the key facts and statistics, because that should go a long way towards informing the debate. The Countryside Agency states: 80 per cent. of the rural workforce is employed in either manufacturing, distribution, financial or public services—not farming or tourism. Those areas rely hugely on broadband communication. It continues: 5.53 million employees and self employed work in rural shops, offices, workshops, factories and farms. One can see that there is a considerable amount of manufacturing and industrial activity in rural areas. In fact, 17 per cent. of total rural employment is in manufacturing and not farming, which some people will find surprising.

One further point, which many people in villages will not be happy to learn, is that it is village incomers who start up businesses. Apparently, many of them move to villages simply because they want to live in the lovely countryside, but they go on to start up businesses. The Countryside Agency estimates that two thirds of all start-up businesses in rural economies are started by incomers. Such people are familiar with, and rely on, modern technologies. If they cannot access them, they will not move to such areas and will settle elsewhere.

I want to reinforce the message conveyed by my right hon. Friend the Member for North-West Hampshire and others. It is vital for the Government to take a lead in addressing the problem of how to roll out the network into the countryside.

2.47 pm
Mr. Wayne David (Caerphilly)

I was saddened to hear that the Minister has been unable to visit Wales today. He should not be too concerned because the examples that I shall cite are exclusively from Wales.

No one taking part in the debate minimises the importance of broadband to the economic development and prosperity of our country. Over the past few years, Wales has seen a number of examples of good practice, which have been successful in themselves but have also served as models for development elsewhere in the United Kingdom. I cite the example of the Strand 6 initiative, which was completed in December 2001. It was a partnership between BT, the Welsh Development Agency and the Llwybr Pathway. Essentially, the project addressed the supply side of communications in rural Wales. It ensured that, in a short space of time, ADSL broadband was installed in 10 exchanges. That was extremely important for the communities in question and it also served as a model for what could happen elsewhere.

Lessons were also learned from some of the initiative's shortcomings. For example, Strand 6 paid very little attention to demand stimulation. Subsequent initiatives, such as Opportunity Wales, show that that lesson has been learned. Opportunity Wales has been directed primarily at small and medium-sized enterprises in Wales and has encouraged them to get the best out of ICT. The Opportunity Wales initiative is one of the largest objective 1 projects in Wales; some £21 million has been allocated over three years. That is enormously important. West Wales and the valleys are categorised as objective 1 because they have a very low GDP. Although there are many other ways in which GDP can be increased in the short term, investing in the long term, through broadband, is one of the most effective ways of ensuring the vitality and wealth of the local economy.

We have seen other examples in Wales as well. One of the most socially worthwhile instances of success has been the partnership established between BT and the national health service in Wales. Broadband connections have been provided to some 500 GP practices, hospitals and home workers, and an enormous social benefit has been derived from that. We are seeing the rolling out of the Broadband Everywhere initiative, with some £100 million earmarked for the development of a partnership involving BT, the National Assembly for Wales and the Welsh Development Agency with the objective of achieving nearly 100 per cent. broadband coverage throughout Wales.

Lastly, and perhaps most importantly, I would like to focus on developments in the Caerphilly county borough, 40 per cent. of which I have the privilege of representing. In that area, a grass-roots public-private partnership has already proved to be very successful. Its aim is to increase the availability of broadband in some of the less commercially advantageous parts of the Caerphilly borough, which includes most parts of the borough. Initiatives are already under way in many parts of the borough, and the success of the partnership is reflected by the fact that in one or two pockets of the borough that are not covered there is already a hue and cry, and people are asking why they do not have access to broadband as well. A local momentum has built up to encourage the maximum amount of coverage.

Mr. James Gray (North Wiltshire)

Would the hon. Gentleman agree that one of the things that we can do as Members of Parliament is to encourage that kind of activity? For example, there is a link on my own website www.jamesgray.org to BT so that people can register through the site. Does the hon. Gentleman agree that that is a good idea?

Hon. Members

Declare an interest.

Mr. David

The hon. Gentleman has not declared an interest yet, but he does make a very good point. I am sure that many hon. Members—myself included—can cite instances of members of the public getting in touch because they want us to make representations and facilitate access so that they can get the benefit of broadband. We can make a practical contribution where that is concerned.

The initiative in Caerphilly is designed to stimulate demand and to provide investment on the supply side. It is an extremely important partnership because, through the good offices of Caerphilly county borough council, there has been co-operation with BT and the Welsh Development Agency. Funding has come from the Corus regeneration partnership, where resources have been provided because of a slimming down of the Llanwern steelworks; Caerphilly county borough is part of that catchment area. Money has come from the partnership to stimulate marketing and encourage demand, and BT has provided four or five extra exchanges to cover much of the area. The initiative is proving to be extremely successful and there is no doubt in my mind that it will be a success, followed by others elsewhere in Wales in the near future.

Broadband is absolutely essential for economic development in the Caerphilly county borough, in Wales and throughout the UK. I am hopeful that by the middle of 2005 availability will rise to nearly 90 per cent. throughout the UK. That will come about not least because the Government have the right support policies, and the vision and perspective necessary to ensure that broadband makes a significant contribution to the future prosperity of this country.

Mr. Deputy Speaker (Mr. Edward O'Hara)

Order. I remind hon. Members of the importance of starting the winding-up speeches at 3 o'clock.

2.54 pm
Pete Wishart (North Tayside)

I start by declaring a depressing fact. I have probably the only mainland constituency that has no BT exchange enabled—[HON. MEMBERS: "No."] I said probably, and I said it cautiously.

Matthew Green (Ludlow)

I can confirm that my constituency has no BT broadband-enabled exchanges, and I believe that there are none in the constituency of my hon. Friend the Member for Gordon (Malcolm Bruce) either.

Pete Wishart

I am sure that tomorrow's record in Hansard will show that I said "probably". When I said probably, it was likely that I would be challenged.

I have the fifth largest constituency in the UK. That means that some 525,000 hectares of south central highland Scotland—most of Perthshire and Angus—have virtually no broadband access. Listening to some of the contributions of other hon. Members today, I can see that my constituency is not untypical in that respect.

I looked at the BT website today to see what type of exchanges were enabled for broadband, and I could not find any exchanges that could be described as rural enabled in Scotland. We hear that in the next few years broadband will be brought to the south pole. It now looks likely that the south pole will have broadband access before my constituents in Pitlochry and Aberfeldy. [Interruption.]

Mr. Deputy Speaker

Order. We seem to have several competing debates going on at once.

Pete Wishart

On its website, BT also stated that it is rolling out ADSL upgrades to some 200 new exchanges. Only one of them is in Scotland, in South Queensferry, which lies in the Scottish central belt. Rural Scotland is not benefiting from the technology and looks unlikely to in the medium term because of the massive infrastructure investment required to enable rural exchanges. BT is doing all that it can to enable such parts of the country, but leaving broadband provision to market forces simply is not working when it cannot provide broadband to rural areas. BT has set improbable trigger threshold levels, which are almost impossible for small disparate communities to meet in constituencies such as mine. There are 12 exchanges in my constituency. Only three of them have been set a threshold level.

I believe that BT is serious and sincere when it says that it wants to bring broadband to rural areas. I have had several discussions with senior BT members and executives. They have even gone so far as to lower the threshold in the three exchanges in my constituency—not sufficiently to enable them—and BT staff have been prepared to sit down and discuss the problems and issues with the many campaign groups that have been set up to push for broadband in their localities.

BT understands, as many hon. Members do, that if we do not deliver broadband to such areas we are in great danger of creating a technological divide with the fault line separating urban and rural communities. Many small and medium-sized enterprises and small family companies in my constituency already feel technologically disadvantaged. Perthshire and rural Angus may be great places to stay, but they are rotten places to do business if one requires the latest in information technology and e-commerce.

My constituents get—I will use a Scottish word—fair scunnered when they see glossy BT or Freeserve campaigns knowing fine well that they will never get broadband in the short or medium term. The only way that my constituents will acquire broadband will be if they up sticks, move out of my constituency and resettle in one of the cities or towns in central Scotland.

Why is broadband so important to rural areas? I will give an example from my constituency. Highland Perthshire is almost entirely dependent on tourism. As everyone in this Chamber knows, tourism is a very competitive business. Broadband can enable a better net profile for tourism businesses and attract a worldwide audience, which such businesses require. Broadband means more information on services and accommodation, quicker access to that information for customers worldwide and more rapid handling of complex booking and ordering tasks and payment transactions.

I understand that there are problems in rolling out broadband, not just for the UK but for all the developed countries. Most people who currently receive broadband get if from cable or ADSL. ADSL has problems; it can be supplied only to homes that are up to 5.5 km from an exchange. If every single exchange in the UK were enabled by BT, a significant amount of the population would still not have access to broadband. We have to consider other mechanisms for delivering broadband to rural communities, but we must approach some of the alternative technologies with a great deal of caution.

I looked at the BT website today, and it floats the option of what is called midband. I think that BT sees midband as the solution for rural areas. However, midband is little more than glorified ISDN. It only gives half the operating speed of broadband, but people are charged almost the same.

Mr. Robert Key (Salisbury)

The midband myth must be dispelled. BT has said: Midband … will provide faster internet access and hopefully sensitise people in relevant areas to the benefits of broadband and thereby stimulate the demand which will then support full broadband upgrading. Does the hon. Gentleman agree that that is a con trick?

Pete Wishart

I agree with the hon. Gentleman. I think that midband has been floated to get BT off the rural hook. That is unacceptable.

However, there have been a couple of experiments in operation of mini-DSLAM in highland Scotland. There have been trials in Drumnadrochit and Muir of Ord. Mini-DSLAM enables small communities to have smaller exchanges at a much more competitive cost. When we see the results of the experiments at the end of June 2003, we might learn more about the possibilities in that particular technology.

I refer now to the old chestnuts of satellite and wireless. Initially, satellite was paraded as a solution for rural communities, but it is an expensive option. It costs £1,000 to install. The running costs of satellite are between £60 and £500, depending on the bandwidth required. Clearly, that is not an appropriate solution for the domestic user in rural areas. I have only four or five businesses that are enabled with satellite in my constituency, and even for them it is an expensive solution. It is a far from ideal technology. The time delay in signals travelling to and from the satellite can cause serious problems. Internet browsing is slow—in some cases, as slow as dial-on.

Wireless access offers a solution for rural areas, although it is beset with regulatory and political problems, which have been barriers to its entry and stop its adoption. Power lines have not been mentioned today. They are another attractive option for delivering broadband. A couple of interesting experiments are now taking place in the south of Scotland and at Stonehaven in Aberdeenshire. Power lines have the advantage that they can be delivered to each home. Each home is connected to the grid. Such technology has enabled large parts of Scandinavia to deliver for their rural communities. Will the Minister comment on what he regards as the potential use of power lines to deliver broadband?

Securing broadband in each locality in the United Kingdom should become a mission for the Government. We are still at the bottom of the G7 for broadband access and that must be dealt with. We are looking for resources and a commitment from the Government to deal with such matters, so that I can tell my constituents in Blairgowrie that they will receive broadband before it is received by people at the south pole.

3.2 pm

Mr. Richard Allan (Sheffield, Hallam)

It gives me pleasure to return to this subject. I congratulate the right hon. Member for North-West Hampshire (Sir George Young) on raising it again. I want to talk about broadband services as a process, not a specific event. It is important that a process is in place whereby the network can develop, instead of our thinking that it is a single challenge to put out ADSL to many more people.

The right hon. Gentleman was right to use the development of the road and railway networks as an analogy. We are discussing the scale of the development of transport networks. They have never been frozen in time, but have continued to develop. We are seeing something that is equivalent to the canal, road and rail systems being developed at lightning speed, but people are feeling left out along the way. Unlike the transport network, the information network has the great advantage that its development is generally not seen to have huge environmental downsides. It is welcomed, particularly in rural areas, whereas motorways such as that planned up to the Humber bridge was not welcome as it would have been built through the middle of Lincolnshire. Indeed, it was never built, for that reason.

We must remember that the process should be driven not by technology, but by what functions people want from information networks. We should not be thinking about requiring a specific technology. We do not require broadband as such. We are looking for services and benefits that will derive from it. Broadband is not important in itself, but the services that it will deliver to people are. There is no doubt that the ADSL network over BT wires will be the network that satisfactorily delivers to most people in the short term, specifically to those in rural and semi-rural areas who have not been able to receive the same benefits as people in urban areas.

A range of solutions has already been mentioned. We could be wrapped up in a lot of technical jargon, but it is worth referring to the ups and downs of different technologies. ADSL broadband is often talked about. It is advertised by BT, which focuses on the fetching creature that flies through the living room. As has been said, the normal speed of that is 500 kilobits per second, but it can go faster. BT is offering business solutions that go up to 2 megabytes, which gives some scope for expansion.

Satellite has a slow uplink and is thus unsatisfactory for many people, especially those in business. Many of the requirements are business requirements, and people need to send documents to their customers and receive documents back. Having a fast downlink to the computer is fine if a person wants to surf the internet, but a fast uplink is essential if a person wants to transmit material to customers.

Cable broadband has a high potential and is a most satisfactory solution. However, I do not think that we are discussing cable networks rolling out to broadband areas. There is no serious prospect of that happening. It will have an important role to play in urban areas, but we should not be thinking of it delivering in rural areas.

Wireless networks are important. As has been said, they have a fast local loop. However, when we get off the local loop, we have the problem of how to get on to the mainstream network. We particularly need some imagination from the suppliers of the wired loop, especially BT. It could either encourage or discourage the kind of community initiatives that we have heard about. One, in Bottisham in Cambridgeshire, is talked about at length. We would expect such things in Cambridgeshire, but I have also heard about them in Norfolk when people have got together and created a wireless local loop. Clearly, the terms of their contract do not enable broadband services to feed all that through one ADSL connection in someone's bedroom.

BT could come up with imaginative and helpful community contracts that would allow people to develop such services at reasonable cost to each of their customers. I am not arguing for it to be a free service, but it could be reasonably priced. I hope that the Government will, through Ofcom, give a clear steer that they want to encourage such innovation. We must bear it in mind that discouragement could arise if the suppliers of the onward link want to hold back in order to sell their own single-user contract at a later date.

Wireless also raises the matter of potential interference with satellite. The Minister sat through debates on the Communications Bill in Committee, as did the hon. Member for Hexham (Mr. Atkinson), who must have been itching to talk about broadband, but could not because he was in the Chair at the time. The spread of wireless seems attractive, but there may be a downside to it. The Minister was arguing that the logic behind asking satellite providers to pay to protect their spectrum was to do with the potential for future interference. Wireless has scope for growth, but we may reach a limit simply because of interference.

The final important network that has not been mentioned is the mobile phone network. It has been slow to develop its third generation services, but one of the major logics behind that is the provision of faster internet services to points anywhere within the mobile phone network. That has a much greater potential reach than the wired broadband network does at present. The third generation mobile services have been developing slowly.

Costs are being highlighted at present. A person can buy a pig in a poke. He may sign up to buy 3G services, but he does not know what he will get; all that he knows is that services are likely to get cheaper. That is interesting for people who want to take up technology quickly, but we cannot argue that the third generation mobile services are an adequate substitute for wired broadband access. A range of solutions will offer broadband access, but we should not be under any illusions that the market will deliver to everyone at the speed that we need.

The demand for ever greater speed will always create a further technology gap. People may be on the information super-highway as it is currently defined when they have access to broadband at the speeds that come through BT and ADSL, but in five or 10 years' time that may no longer be sufficient and they may feel left behind because an even quicker technology is being rolled out to urban centres, from which they are excluded. We need to consider mechanisms through Ofcom, which is the Government's primary mechanism for delivering the services, to raise the floor for which a universal service needs to be provided. The current legal requirement imposed on BT is that it should deliver data access at a speed of 2.4 kilobytes per second. It has a self-imposed requirement to meet a speed of 9.6 kilobytes, which is slow. There is scope within Ofcom's remit to require all the providers of communications networks that it regulates to raise the floors—the slowest speed at which they provide services successfully. There would be benefits across the piece of sticking to that type of mechanism rather than one that is technology-specific.

We must also continue to sell the benefits of broadband more widely. I have just changed over to it at home and it is revolutionary—I cannot sing its praises highly enough. Although the slogan is trite, it is true because broadband "Works at the speed you work at". I can now go home and access the latest news update, using my BBC Online service in preference to Teletext. It is quicker and better. There is no way that one would do that using narrowband, and the more I use it, the more I understand the very rich layer of functionality that can be accessed only through broadband.

We must continue to get that message across. As we tell everyone about the wonderful stuff out there, the Government and their regulators—especially Ofcom—have a responsibility to ensure that the infrastructure is in place for everyone to receive broadband, wherever they are in the UK.

3.10 pm
Mr. Andrew Robathan (Blaby)

I too congratulate my fellow cyclist, my right hon. Friend the Member for North-West Hampshire (Sir George Young), on his good fortune in securing this debate, his tenacity in pursuing the issue and his extremely comprehensive and excellent speech, which the Minister will wish to address in his winding-up comments.

There have been some useful and varied speeches. Unusually, I would like to comment on that of the hon. Member for Sheffield, Hallam (Mr. Allan), who brings great personal knowledge to the debate. During the passage of the Communications Bill, he referred to himself by a rather self-deprecating term that I do not intend to repeat. He brings knowledge to the debate that is useful, as does the Minister. Not everyone knows that in 1986 or 1987 the Minister wrote a paper on broadband communications, which was probably before most of us had even heard the term.

This is not a partisan debate. We all genuinely want the Government to deliver for the sake of the country. We know that it is not easy. Hon. Members who have followed the problems of Deutsche Telecom, or those of France Telecom reported in today's newspapers, will know that broadband delivery can bring commercial difficulties.

In my home town of Lutterworth in my constituency, I have to ring people up to encourage them to register. We had a trigger point of 500, in common with many other hon. Members' constituencies. That figure has now been reduced to 350 and we have got as far as 344. I am not sure that it should be the purpose of a Member of Parliament to lobby for a commercial company to register with the local exchange, but that is the point that we have reached.

Also in my constituency is an example involving the public sector, to which my right hon. Friend the Member for North-West Hampshire referred. The East Midlands Broadband Consortium delivers broadband to a school that I visited on Friday, as well as others in the constituency—as do other consortiums throughout the country, I understand. Sapcote library, I was surprised to discover, receives its broadband through the People's Network, another public sector delivery point. If the public sector can get broadband, surely that can pull through additional broadband infrastructure for the private sector, as my right hon. Friend said.

We have discussed the huge importance of broadband to business—especially in rural areas, as my hon. Friend the Member for Hexham (Mr. Atkinson) mentioned. It is of huge importance throughout the country that the UK is not left behind in the development of the information or knowledge economy. Various people have come to see me with their concerns about that. The number of hon. Members present for the debate testifies to the importance of broadband to rural areas. There are 11 Conservative Members present, who represent areas from the Scottish borders all the way down to South Hams in Devon. That signifies the importance of what might otherwise be a quiet debate in Westminster Hall on a Tuesday afternoon.

Rather than covering old ground, I turn to two specific issues. One has been termed the broadband tax by Vtesse Networks in Hertford, a company that has written to me. I am sure that the Minister also received a letter from Vtesse. It states that rates are, in our view, applied unfairly to the leasing of dark fibre which creates a Broadband Tax inhibiting the development of Broadband Britain. Will the Minister comment on that in his winding-up speech? Exactly the same issue was raised by Thus, a company that sprang from Scottish Telecommunications. Thus raised the issue in a meeting with me yesterday. It considers that the broadband tax is a tax on investment and a tax on its network. The tax is also counter-competitive because British Telecom does not pay the same rates as Thus for its network. In Vtesse's view: The development of a market in dark fibre is in our view the key to the development of a leading edge Broadband infrastructure in the UK. The second issue concerns what the CBI would like to see—incentive-based regulation. The CBI believes that the lack of competition in the telecommunications market has stalled investment in the required infrastructure. Although there were 1.4 million broadband connections at the end of January, the UK is in only 6th place among the G7 countries in terms of the number of its broadband connections. Only a small percentage of those connections were for SMEs.

A study by the Organisation for Economic Co-operation and Development found a close correlation between the availability of rival providers and the growth of broadband penetration. To date, the UK regulatory environment has offered insufficient incentive for operators to build an alternative infrastructure. We know that much attention has been paid to the unbundling of local exchanges, but local loop unbundling does not appear to have had the desired results. Indeed, of those that have been unbundled, only a small number are being used by alternative operators, which suggests that the concept of local loop unbundling may be inherently flawed. Certainly, it is not a simple procedure.

The CBI concludes that if there is to be an increase in the number of broadband connections in the UK to reach the Government's target of being the most extensive and competitive broadband market in the G7 by 2005, regulation should be introduced to encourage investment and innovation. The existing regime, which was partially created to curb the monopoly of BT, is largely based on penalties rather than incentives. There are few carrots to match the sticks available to the regulator. To attract long-term capital expenditure and create an incentive for the development of broadband markets, a new approach should be taken by the new creature of Ofcom, encouraged by the Government.

What action will the Government take to deal with the problem of broadband provision? It is not a partisan issue—all hon. Members have agreed today that more action must be taken to encourage the development. At a recent meeting, I was told that the Government were good at tea and sympathy. We need more than that today.

Mr. Key

More than RABBITS out of hats.

Mr. Robathan

More than RABBITS out of hats, as my hon. Friend says. We need sensible action, policy and, from the extremely knowledgeable Minister, delivery for the future of the UK and its information economy.

3.18 pm
The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms)

I too congratulate the right hon. Member for North-West Hampshire (Sir George Young) on securing this debate, which has been extremely good. We have had a useful discussion. I pay particular tribute to the right hon. Gentleman for the diligence and authority with which he has pursued this subject. I also wish the hon. Member for Blaby (Mr. Robathan) well in finding the last six people to sign up for the BT threshold in his constituency.

Mr. Robathan

I think that we have got them.

Mr. Timms

I am very glad to hear that.

Mr. Bob Blizzard (Waveney)

My hon. Friend referred to the business of trying to get enough people to reach the threshold, which is what I have been doing in my constituency. The problem is not in achieving the trigger, because my main town has been enabled and we are now trying to enable the second town. However, even when they are enabled, there is the problem of the distance limit of 4.5 miles of copper wire. Large tracts of my main town cannot access broadband and the rural parts of the constituency will never be able to access broadband because of the problem. How will my hon. Friend encourage wireless solutions?

Mr. Timms

My hon. Friend raises an important point: the limitation is an important constraint. BT has announced today that it is introducing a technology to increase the limit. That will not remove the problem entirely but will at least enable some of the problem to be addressed.

In October, I visited the Act Now project in Cornwall, an impressive partnership put together by the county council and enthusiastically supported by the Federation of Small Businesses and others. The generation of demand for broadband has been a key element of that project—to pick up an important point made by my hon. Friend the Member for Stroud (Mr. Drew)—alongside funding for technology.

During my visit to that project, I met the Quintdown Press, which has three print shops in Cornwall, and which as a result of broadband has been able to achieve one-day turnaround for print jobs delivered to its shop in Truro, compared with three days in the past. Its Internet café in Newquay increased its turnover by 50 per cent. within two weeks of the introduction of broadband.

Mr. Swire

The Minister referred to the Act Now project. Will he join me in congratulating Devon county council? It is seeking to emulate that project: it has announced today that it will provide £300,000 to perform a similar function in Devon—and hopefully to obtain some objective 2 funding, as well.

Mr. Timms

I welcome that point.

In Cornwall, I also visited a web marketing company called Neutralise, which moved from London to Cornwall because it knew that broadband would be available there. It is now a six-person business, and its staff made the point that it would never have been able to become that large if it had stayed in London.

Those examples show the economic importance of broadband in rural areas from the point of view both of the rural areas themselves—I refer hon. Members to the remarks about diversification made by my hon. Friend the Member for Tamworth (Mr. Jenkins)and echoed by the hon. Member for Hexham (Mr. Atkinson)—and of our ambition to raise productivity and improve the competitiveness of the UK economy as a whole. It is important that we ground this discussion in the interests of the country as a whole, as well as in the interests of rural areas themselves. My hon. Friend the Member for Tamworth made a telling point about new developments, which I hope that BT heard.

A couple of weeks ago I was in Oakham, the diminutive county town of Rutland, and I visited Rutland Online, which employs 15 people. It began six years ago by hosting websites and providing e-commerce solutions for businesses in the area, but broadband has increasingly become a major part of its interest. Today there is no broadband service in Oakham, but in the coming few months three separate broadband services will be established. Next month, an independent operator will use local loop unbundling to provide the first broadband service in the area; shortly after that, BT expects to upgrade its local exchange for ADSL, and later in the year, Rutland Online will establish a wireless broadband service with which it expects to be able to support 60 small and medium-sized enterprise users. Rutland Online would like to be able to roll out that wireless service to other nearby villages, perhaps by using church spires in the way that the hon. Member for Mid-Norfolk (Mr. Simpson) suggested—I will write to him about the points that he put to me.

There is a great profusion of activities of this kind at the moment. One can get a sense of that from the Government's response last week to the report of the broadband stakeholders group, in which we set out information about activities in each of the regions, in Wales—my hon. Friend the Member for Caerphilly (Mr. David) referred to a number of important initiatives there—and in Scotland. I refer the hon. Member for North Tayside (Pete Wishart) to some of the initiatives that are being taken forward, for example, the objective of increasing access to ADSL-equivalent broadband to 70 per cent. by the end of 2003–04, which is a Scottish Executive initiative. A copy of that response is in the Library and on the Department of Trade and Industry website.

At present, 71 per cent. of households in the UK can access an affordable broadband service. That puts us ahead of several other countries, including France and Italy. We now have over 1.5 million connections, which is more than the figure that some hon. Members mentioned. The UK now has the second largest broadband network in Europe after Germany, and the number of connections is growing by over 30,000 per week, which is much more than in Germany. Recognising the effectiveness of the much greater degree of competition in the UK, my German opposite number asked me last week for UK input to the development of the German broadband strategy, which is due to be launched in May. However, despite the progress that we have made, the hon. Members who underlined that there is still a great deal more to do to make broadband available in all rural areas of the UK are correct.

My hon. Friend the Member for Waveney (Mr. Blizzard) made an important point about the limitation on the distance from a BT exchange from which people with ADSL can receive broadband. Oftel estimates that 5 per cent. of customers connected to BT's DSL-enabled exchanges live too far from the exchange to obtain DSL broadband. However, as I said, BT announced today that it can extend that distance further, and it believes that that will increase the maximum national coverage to 98 per cent.

I do not believe that there should be a general public subsidy for broadband, as has been suggested. The key role for the public sector in broadband will not be through handing out subsidies; it will be as a customer for broadband services, because public services will spend over £1 billion on broadband in the next three years. We need to aggregate that demand to maximise the impact on industry investment and on the availability of broadband. That was why I launched the UK broadband taskforce last November.

At present, the main obstacle to the provision of more affordable broadband in rural areas is concern that the initial investment required will obtain a slower return in those areas, where there are fewer people within a given distance from the service provider than there are in areas of high population. In particular, there is the problem of the so-called backhaul infrastructure—the cost of connecting a local exchange or a new wireless base station to the core network. That is a big barrier to the extension of broadband to rural areas. Rutland Online told me that of the £90,000 cost of providing its wireless broadband service for two years, backhaul will account for £50,000. The key point here is that the investment that delivers, for example, broadband to a school in a rural area in the future can also contribute to the backhaul for a local access system for the community as a whole. That is the key: public sector investment should be used to ensure wide access to other users for broadband services in rural areas. That is at the heart of the work that we are taking forward.

Matthew Green

In Shropshire, every school has been enabled on broadband, but there is no broadband for any of the businesses in my constituency. There is a reason for that: the Government imposed a deadline of this year for the schools and they managed to do that by January, but the only system that was on offer to the county council was of no use to businesses or homes. There was no choice but to accept the only tender on offer: now, every school and library is on broadband but that is of no use to businesses and homes.

Mr. Timms

I welcome the progress that has been made in public sector provision in Shropshire. Advantage West Midlands is now putting together a very impressive arrangement for using the investment that has been made in infrastructure to open that up to other users. The intention is to aggregate the network that the hon. Gentleman refers to—whose contract comes to an end this summer—with the higher education network in the west midlands so that they can be put together and the infrastructure can be opened up to other users. To pick up on some of the concerns that have been expressed in this debate, what is happening in the west midlands is a good illustration of the potential of this approach to provide broadband services, particularly to small enterprises in rural areas.

There is great potential for using public sector procurement to extend the reach of broadband into rural areas. That is not automatic: it requires some very smart management on the part of the Government and the regional development agencies, but I am certain that we can do that. Therefore, we should look at what the public sector will be procuring in broadband services over the next year: for schools, it is planned that broadband will be provided at 8 megabits per second symmetric to every secondary school; all GP practices will get 256 kilobits per second connectivity; and the criminal justice system will use broadband. We need to ensure that that investment is managed to extend access to other users as well: for example, 85 per cent. of public libraries currently have broadband—including, I noticed during my visit there, the public library in Oakham.

I could say a great deal more, and I welcome the comments that have been made in this debate. I hope that I have briefly been able to give the House a sense of the determination of the Government to ensure that rural communities have the benefits of broadband. We have already seen with regard to mobile telephones that the competitive market can best deliver the choice of services and real value that consumers are looking for.