For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment
The
high-speed train (HS2) might eventually leave Euston station in 2026 but high-speed
broadband has arrived and it has delivered quantifiable benefits to the UK
economy for a while.
The UK
communications sector must blaze a trail in the global economy but it will need
infrastructure and not speed for this to become a reality.
“Internet
Matters”, a report published last May by McKinsey and Company, puts the UK in
second place in the list of countries with the largest contribution from the
internet to gross domestic product (GDP).
This
month sees the publication of two significant reports on 21st century
infrastructure. In the UK, the business lobbyist CBI released “Blazing a trail:
The UK communications sector in a global economy”. This 12-page document sets
out the conditions that Britain will need in order to maximise the growth
potential of the sector, which the CBI defines as both the telecommunications
and content creation industries.
Report
author Samantha Abrahams writes, “Individual industries are world leaders: we
are the largest producer of television and radio content in Europe, UK internet
advertising has demonstrated the largest and steadiest growth of all European
countries since 2004 and the UK is the largest games market in Europe, the
Middle East and Africa. With such global potential, it is not surprising that
recent studies have shown the direct link between a dynamic communications
sector and a strong economy.”
The CBI
calls for the government to ensure that the sector remains in a strong
competitive position in the face of increasing global competition, through a
revised Communications Act, a policy framework that encourages investment in
content and infrastructure and “a regulatory environment that promotes
innovation and competition.”
On the
other side of the Atlantic, the US Department of Commerce published a weightier
tome, “The Competitiveness and Innovative Capacity of the United States”
(pictured), which provides an American perspective on many of the issues
considered by the CBI.
The
report said, “In the past, the United States led the way in several key areas
of infrastructure development, starting with the railroad system of the 1800s,
an innovation that greatly reduced travel times and allowed more robust
commerce between the states and the rest of the world. In today’s economy – with global supply chains, exports to
foreign markets, telework, and just‐in‐time inventories – the nature of infrastructure needed to
compete is changing. The United States needs a 21st century infrastructure to
ensure that it remains competitive.”
On the
subject of broadband, the target set by the Federal Communications Commission
(FCC) is for 100 million US households to have a download speed of 50 Mbps or
better by 2015, rising to 100 Mbps by 2020. What is significant is the parallel
commitment that every community across the United States should have affordable
access to services of at least 1 Gbps in schools, hospitals and government
buildings.
The
US report cites the earlier work of McKinsey when it says: “Internet‐related consumption and expenditure is now
bigger than agriculture or energy, accounting for as much as 6% of GDP in
advanced countries such as Sweden and the United Kingdom.” This information is instructive for
inhabitants of the British Isles, particularly those obsessed with speed as the
only measure of broadband performance.
McKinsey
reported that, at 5.4% of GDP, the benefit of the internet to the UK economy
was greater than that in South Korea (4.6%), Japan (4.0%) or the USA (3.8%) – all countries that appear frequently in
lists of exemplary broadband nations. The average figure across the major
countries surveyed was 3.4% and only Sweden, with 6.3% of GDP from the
internet, kept the UK from the top spot.
What
pushes the UK down the list of nations in many surveys is the figure for the
average speed of broadband connection. While Britain struggles to meet a
universal service obligation of 2Mbps in rural areas, superfast broadband and
fibre to the home (FTTH) bring connection speeds of 100 Mbps and more to
subscribers in countries around the world.
European
Commission Vice President Neelie Kroes said recently, “To match world leaders
like South Korea and Japan, Europe needs download rates of 30 Mbps for all of
its citizens.” The CBI argues that figures such as this do not provide an ideal
basis for comparison with other parts of the world.
Its
report says, “Accessible, high-quality broadband has a vital role in ensuring
the UK remains competitive as a place to invest, The benefits are felt most
keenly by SMEs as research shows that better access to broadband services can
enable small businesses to access previously impenetrable markets and reduce
costs and improve efficiency.”
The
organisation calls for a new benchmark to assess the comparative performance of
broadband in the UK that would provide a more effective basis for comparison
with countries such as Singapore, which will always have a geographical
advantage in terms of speed alone.
It
suggests that a basket of indicators, in which speed is just one element, will
help calculate the UK’s standing in the digital world. It would include
indicators such as access and take-up of broadband services, private sector
investment, digital exports and literacy, the volume of e-commerce and the
number of sector start-ups. Together, this data would provide what the CBI
identifies as a “truer picture of the vitality of the digital economy”.
Yet speed
for its own sake continues to dominate the agenda in the popular culture.
Headlines earlier this month shouted: “Virgin Media boosts broadband speeds.
Next-generation speeds to catapult UK up international rankings.” Reports
quoted Virgin Media CEO Neil Berkett who said, “We want to make sure that
consumers have access to the best-value broadband service and that means a
superfast connection.”
Double
the speed is good news if your current connection is 10 Mbps, it is far from a
given that a jump from 50 Mbps to 100 Mbps will make any perceptible difference
to the average user, as the CBI points out. To double the speed sounds good on
paper but the connection between value for money and superfast broadband is
tenuous at best. Unless a household is blessed with three teenaged gamers and
parents who like to watch HD movies online in different rooms, the maximum
speed will seldom be approached.
The bandwidth will be throttled long before it
reaches the consumer.
By
mid-2013, Virgin customers will be able to stand at the water-cooler and tell
envious colleagues that they “got 120 Mbps last night”. They would have to run
the speed-tester at 4 a.m. and since that bit-rate is the equivalent of three
Blu-ray discs and some “World Of Warcraft” played simultaneously is unlikely
that anything other than the occasional data spike will reach the headline
figure.
However
fast a broadband connection might be, there always will be calls for more speed
and the consumer electronics industry is adept at designing products that take
advantage of every increase in bandwidth. At this year’s CES show in Las Vegas,
Samsung announced the Dual-View HD TV, which allows viewers to watch two
entirely different HD channels on the same screen and at the same time. Using
active shutter glasses with built-in headphones, the demonstration featured a
feature film and a music concert running simultaneously. Clearly, the family
that watches TV together stays together even if the entertainment is not the
same.
There
always is the suspicion that to downplay the need for broadband speed is akin
to the early 19th century Liverpool landowners, who doubted that human beings
could survive the terrifying speeds reached by Stephenson’s “Rocket”. A BBC
Radio 4 listener said of the announcement of the HS2 rail link, “The two-hour
journey time from Warrington to London Euston is fast enough for anybody.”
Speed for its own sake does not bring prosperity.
The
report should be required reading for our lawmakers, identifying as it does the
barriers to innovation that can result from cumbersome legislation. It quotes
from research by Ernst & Young that shows that the UK’s telecommunications
and technology infrastructure is the single most important attraction for
foreign companies considering investment here. “It is greater than the stable
social environment, education in trade and academia, and even the strength of
the financial services sector,” the research shows.
The CBI
points out that consumer appetite for access to information and content through
digital platforms continues to increase, with e-sales in September 2011 up 15%
on the previous year, in an otherwise stagnant retail market. It says,
“Companies must react quickly to meet the needs of consumers or risk losing
them as customers.”
Regulators
must respond with the same alacrity or else the digital economy will run out of
steam before it has really started.
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