Broadband

– in the House of Commons at 2:34 pm on 1st May 2003.

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Question again proposed, That this House do now adjourn.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes 3:11 pm, 1st May 2003

I welcome the debate, which is important, as Mr. Robathan said. I am the chairman of an organisation that brings together parliamentarians, civil servants, Ministers, the industry and the European informatics group, of which some hon. Members are members. The debate is timely. As an officer of the all-party internet group, I have had discussions with some internet companies, which should be useful for the debate. In common with other hon. Members, I shall also raise some constituency issues.

Milton Keynes is unusual because most of the rural areas are better off than the urban area. A few weeks ago, I attended the launch of the Olney exchange to enable broadband. In the city of Milton Keynes, 80,000 houses have cable and every exchange is enabled, but many people are unable to receive broadband because of technical difficulties surrounding the installation of cable. To be fair to British Telecom, it is aware of the technical problem and is trying to tackle it. The 80,000 households cannot receive broadband on the cable network because the cable is analogue. NTL is trying to deal with the problem, but views it in financial terms. The city is quite industrialised and many people want broadband, but they are frustrated because they cannot gain access. The problem still exists even where exchanges are enabled.

I know that the Minister is aware of the problem—I have browbeaten him on several occasions about it—but I want to be fair to NTL and BT, which are trying to deal with it. NTL is carrying out a pilot with the local authority to introduce wireless technology; and this summer it will launch another pilot to get 3,000 households online. The company will use its 10 GHz licence and, with the auction for 3.5 GHz licences coming up this month, it will improve the position further. The regional development agency, local authorities and Government agencies are aware of the problem, but we must ensure that they all work together to tackle problems that go beyond merely getting enough people to register for the exchange.

Photo of Mr Lawrie Quinn Mr Lawrie Quinn Labour, Scarborough and Whitby

Does not the commercial impediment—the fact that the market could slow down and capital investment be unavailable to the providers—require the sort of stimulus that RDAs have been able to provide through the £30 million grant? Does my hon. Friend agree that that needs to be sustained in the long term to ensure that the roll-out is more effective and consistent?

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

I am going to return to the issue of the investment climate for broadband, but my hon. Friend is right about the role that the public sector has to play. The Minister has already spoken about the role of public service aggregation and other such contracts to stimulate the growth of broadband. He also spoke about his experiences in Canada and the MUSH economy, which stands for municipalities, universities, schools and hospitals. He spoke about how Canada used investment in those public services to drive the broadband agenda forward. I commend that as an example of good practice.

When we speak about broadband, we often assume that it is a good thing. However, in the rush to talk about access, we can forget that the case for broadband has to be made. A debate like today's should not pass without stressing that the UK should make the case for broadband to its citizens. As the hon. Member for Blaby pointed out, we are one of the highest narrow band users in the world because of the perceived need to provide the services for it, but we must learn the lessons from it. When narrow band grew, it did so when ISPs provided unmetered online access. We must ensure that broadband learns the same lesson in order to advance.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

As the hon. Gentleman knows, I was somewhat cut short in my speech. I agree with him about the need for education—it is not entirely a Government responsibility—so that people understand the benefits of broadband. People need to know more about broadband, and this debate may help them.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

I agree. UK Online provides a key example of how to educate people about access to Government services and to e-commerce. I give credit to the Department of Trade and Industry for promoting e-commerce, which is critical to progress. Recent research by the British Educational Communications and Technology Agency, for example, showed a positive link between information and communications technology use and attainment in education.

I hope that the Minister will reflect on one issue of concern—only about half of computer science graduates are moving into ICT companies, with the rest moving on to companies that use it. The Minister might like to pass the point on to his colleagues in the Department for Education and Skills. We need to encourage graduates to work in ICT because it is an area where we have skills shortages.

My hon. Friends spoke about initiatives for schools—for example, providing money to fund a certain number of megabytes for them. Such facilities are important. As I said in an intervention, we must ensure that we avoid the silo mentality. Several barriers—such as perceived regulatory problems with data protection—have to be addressed. When the Minister chairs the Cabinet Sub-Committee, I hope that he will deal with that and ensure that the issue of the perception of barriers is addressed, as well as the removal of the barriers themselves.

Earlier this year I had the pleasure of sitting on the Committee considering the Communications Bill. It has been suggested that the Committee did not consider all its clauses, but most of those that were not debated did not have any amendments tabled to them. The Bill was subject to pre-legislative scrutiny, so I reject any suggestion that it was not properly scrutinised. The key point of the Bill is to set up a converged regulator, but there is little point in that unless we have a converged industry to regulate.

The Minister knows of my concern that convergence largely depends on broadband and that although we currently have technological convergence, we have not yet achieved social usage convergence. One of the best ways of achieving that is through greater take-up of broadband. I urge the Minister to consider not only infrastructural issues, but content and how people use the internet. Everyone talks about exclusion as though it were a geographical issue alone, but it is also about how and where people use services and how they use them to buy goods and services.

When I started out as a programmer in the 1970s, there were many blind programmers because the technology allowed them to use it. The introduction of Windows and the like practically wiped out blind programmers from the industry. It has taken a long time to get disabled people working again in the industry because the things that allowed them to work in the industry were not addressed when the new technologies were brought in. A key skills issue is making sure that new technologies are not just introduced for the few, and that issues surrounding disability and exclusion are tackled.

The Minister covered the point about why we should not simply rely on BT. The hon. Member for Blaby said that Germany was ahead of us. I hope he realises how Deutsche Telekom has got there. The East of England Development Agency has given £3.4 million to Norfolk for a high-capacity broadband network. It is supposed to be along the lines of those of European cities such as Antwerp and Stockholm. Some people have expressed concern that making such a sum available to create those networks is breaking EU state aid rules. Whether that is the case or not, there is a perception that some initiatives are not going forward for that reason. The Government need to clarify what the rules are to ensure that, where people are taking innovations forward, best practice is spread round the country. In particular, regional development agencies need transparency about what kind of investments they can and cannot make.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Trade and Industry)

Obviously, my constituency is affected by the EEDA grant. Is the hon. Gentleman saying that the grant should have been awarded only if it had been available to other counties and on a completely even basis? I did not quite get the drift of his remarks.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

My point was that some people say that the grant should not have been awarded because it broke the state aid rules. I do not accept that. I am saying to the Minister that we need clarity about what constitutes state aid for innovations and pilot projects. We need to ensure that good practice is spread across the country.

Photo of Mr Lawrie Quinn Mr Lawrie Quinn Labour, Scarborough and Whitby

In Finland, the whole community grasped the need to invest in the nation's infrastructure and included broadband and the internet in that infrastructure. Does my hon. Friend agree that we in this country need to take that cultural step to adjust to these new opportunities and perhaps to get over the hurdle of the state aid argument?

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

I have a Finnish wife and I would entirely agree with that. Stockholm city council created a company that it wholly owned. The company raised capital on the stock exchange, cabled the whole of Stockholm, opened it up to competition with different companies and within 18 months repaid the loan capital. It now gives the citizens of Stockholm a rebate. Such an initiative is not allowed in the United Kingdom because Treasury rules prohibit local authorities from following such a route. We need to address that sort of barrier if we are to move forward with broadband.

Many people compare us with South Korea and ask why, since South Korea puts billions of dollars into broadband, we cannot do the same. There are a lot of tower blocks and flats in South Korea and broadband is used as a way of social inclusivity and of dealing with the security of housing. In this country we have much more individual housing, but there are lessons to be learned from South Korea for our tower blocks and housing estates.

It is important that we do not focus on ADSL alone but recognise that broadband is far more than the provision of ADSL and the other technologies. The hon. Member for Blaby asked what wi-fi was. Broadband wireless has the opportunity to plug some of the gaps that are causing some problems, certainly in my city. That is an exciting opportunity. If the forthcoming auction goes well, it will deliver some of the investment that is needed. Most people who saw television over Easter cannot fail to have noticed the adverts for 3G. It is an important service that is coming online and will tackle many of the mobile broadband issues. It is important to recognise that.

With the introduction of wireless broadband there are real issues concerning access points and gateways—a matter on which the Minister has already touched. The United States Senate and the Welsh Assembly have already looked at some of these issues. It is important for the Minister to consider providing gateways into rural areas. The issue is not so much about the provision of wireless broadband, as about the gateways that are causing barriers. That applies to satellite broadcasting too. We must not get hooked on whatever the panacea of the moment is. We did that with local loop unbundling and we have done it with a number of things in the past. It is important to be technology neutral. If we are to achieve the Government's targets it is important that we do not put all our eggs in one basket, but promote the principles of broadband rather than any particular technology.

The Government are to be commended on their targets. The Public Administration Committee has just taken evidence on targets, and I recommend its forthcoming report to the House. Two points emerge from the evidence. First, if the private sector achieves 80 per cent. of its targets, it is considered to have done well. If the public sector fails to achieve 20 per cent. of its targets, it is considered to have failed. We must recognise that if we set challenging targets, there will be failures and that that is not a bad thing but a way of moving forward. Secondly, a good target transforms the way in which people operate. The Government's target has transformed the way in which Departments operate. Simply to keep to the target that all online services should be online by 2005 is not necessarily the best way forward. We need to look at the transformation of services and to ensure that the vast majority of people can access services differently. A recent report by Cisco stated that where investment is linked to changes in business methods, there is a much bigger productivity improvement than if only one of those two things happens.

It is important that we recognise the work of the e-envoy, and I pay tribute to Andrew Pinder and the Office of Government Commerce for their efforts to implement the work of the broadband stakeholder group. I look to the Minister to reinforce that work, spreading best practice in both Whitehall and industry. We should shift the policy focus from the promotion of e-commerce—although that is important—to a more holistic consideration of e-business as a whole, which includes high internet use.

In the European Union, internet use has increased from about 67 per cent. to 79 per cent., but the sales of actual services fell during 2001–02. We need to realise that quality matters, too. About a quarter of small businesses are still on dial-up analogue services, while the majority of large companies use systems of 2 megabytes or more, or four times the speed of ADSL. Simply relating broadband to ADSL will not raise us to where we need to be. That imbalance exists throughout the EU, so we need to adopt an EU focus.

We need to ensure that we promote regional clusters. My city, Milton Keynes, is in the middle of the Oxford-Cambridge technology arc, but such clusters need support from the whole Government, not merely from the Department for Education and Skills and the Department of Trade and Industry. Where the clusters cross RDA boundaries, cross-regional working should be enhanced.

We need to tackle the skills shortage. The Government have set up several initiatives but they have tended to remain as pilots. We have not been especially good at transforming pilots into mainstream funding. The Minister is aware of some of the problems, but I emphasise that we need to learn lessons from the pilots and find ways of transforming them into mainstream funding, especially as regards skills.

Photo of Mr Lawrie Quinn Mr Lawrie Quinn Labour, Scarborough and Whitby

Does my hon. Friend agree that the work being carried out by the British Computer Society, especially on a project called the European computer driving licence, and by the Communication Workers Union, the telecommunications trade union, has been instrumental outside Government Those groups played a key part in the stakeholder group in developing the training options to which my hon. Friend alludes?

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

My hon. Friend underpins my point: many good things are happening, but we need to ensure that they are joined up. That is one of the points identified by the stakeholder group, and we need to work on that.

The skills shortage affects not only people providing broadband services but also the people who access such services. Broadband is about much more than merely getting people online more quickly: it is about giving them the confidence and ability to make innovations and to open up new possibilities.

There are several problems that need to be addressed. The Minister will be aware that spam can deter people from using the internet. We need to make progress on work to provide solutions to that problem. He will also be aware of the work of the Internet Watch Foundation, highlighted in its recent report, to tackle pornography, especially child pornography. That is a good example of self-regulation, but in order for self-regulation to work it needs to be properly funded. The IWF pointed out that, in the past, a reliance on too few funders caused real problems. I urge the whole ICT industry, especially the new third-generation mobile companies, to fund the IWF and to recognise that self-regulation is not cost-free.

At present, there is a problem with the rolling out of broadband across the UK owing to BT's dominant position in the wholesale market. There are two BT products on the market: BT IPStream and BT DataStream. Tiscali, a company in my constituency, and other companies, such as Energis, have drawn attention to the wholesale price impact of BT's broadband pricing. BT is reducing the price of IPStream so that it can promote BT Openworld and others—internet service providers—to those who actually use the BT internet, but it is not reducing the price of DataStream, which network suppliers use. Telecoms companies that use their own network and therefore use the DataStream product, however, pay a higher price. To me, that is unfair competition. The matter has been raised with Oftel, but the procedures by which it is being resolved are far too slow. Again, one of the issues that was raised when we discussed Ofcom was the speed with which such regulatory issues are resolved. Those kinds of barriers cause real problems. When Ofcom comes into existence, we need to ensure that its speed of reaction is far faster than Oftel's. The broadband stakeholder group has told the Government that it wants the UK to be the world leader in this field by 2005, but it is also necessary to get the investment climate right. That means removing some of the regulatory barriers to access.

It has been suggested that the dotcom boom has meant the end of investment in ICT. That is not the case, however. If we look at the history, we have been in this position before. In the 1880s, there was a railway boom, followed by a crash, followed by stronger railway companies coming out of it. In the 1920s, there were thousands of car manufacturers, there was a boom and a crash, and very strong car manufacturers came out of it. The same thing is happening to dotcoms: there was a boom, then a crash, and the companies that survived that crash are coming out of it far stronger and far more effective than when they started. In relation to the City and getting the investment climate right, there was an over-expectation during the dotcom boom about profits. The Government have a role to play in ensuring that analysts have the right kind of information on which to base their investment decisions. Instead of going from glut to famine, we should have been having sustained investment.

Lastly, EU legislation has a key role to play. At the last count, there were about 50 EU initiatives that affected broadband issues. If we are to exploit broadband properly in this country, we need to make sure that those initiatives are subject to proper debate so that we can influence them at an early stage, rather than it being too late to do so, as has tended to happen in the past. A number of content issues are also emerging, such as intellectual property rights—relating to both software and content—and I do not think that today is the right day to have that debate. There are open source and e-crime issues, however, and an EU consultation is currently taking place on intellectual property rights. At the moment, the Minister is rightly concentrating on infrastructure and regulatory issues. We need to ensure, however, that the policy debate moves forward on to content. One of the dangers is that this place moves at such a slow pace that we will find ourselves behind the times again.

There will be calls for regulation of the internet as broadband develops, and I hope that the Minister will resist them. We need to ensure however, that the kind of initiatives suggested by the broadband stakeholder group—I welcome the Government's positive response to its recommendations last November—are taken on board and dealt with quickly. Its work highlights the need for still more work to be done by the Government, while recognising what has already been done. Some barriers still exist—I have touched on the regulatory and financial ones.

We also need to learn lessons from other countries, and I am pleased that the Minister has taken on board the lessons from Canada and Finland. There are still vested interests that hold things back, however, whether in the public services or in industry. We must also tackle those. I am optimistic about this debate, and I know that the Minister is held in quite high regard in the industry. Addressing some of the issues that I have raised, however, will be key to taking forward broadband. Broadband has the potential to transform our lives, and while no one will go out and sell it on the doorstep, it will have a far more profound effect on our quality of life in the future than some of the other issues that we spend our time talking about in this place.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 3:39 pm, 1st May 2003

I am deputising for my hon. Friend Mr. Allan, who is infinitely better informed about these issues than I am. However, I recognise that he has some competition, not least from Brian White. I also know that the Minister is highly authoritative, and even the Conservative spokesman showed an impressive grasp of the jargon. I cannot hope to compete with that.

I face an additional disadvantage in that I represent an urban constituency in south-west London where broadband is not an issue and never has been. The pavements were dug up 10 years ago for the cable companies, and people have access to the system. My constituency is relatively high income, with a relatively highly educated population. Broadband is widely used and, indeed, taken for granted.

If we have a digital divide, it is not a geographical one; it is more based on age. A serious problem is emerging in terms of an elderly population who have no access to information technology and who are increasingly bypassed by many information flows. One of my minor accomplishments as an MP was to persuade the local adult education college to lift the age bar that it used to impose on people doing IT courses to prevent people of over 65 from learning about the subject. However, the age barrier remains a problem.

I was not even aware of geographical barriers to broadband until I acquired a new partner, who is a farmer in the New Forest. She is a logical and competent person but, when I asked her to download some photographs on her farm, she was unable to do so because she is outside the 3 km limit on the pipes. Access is an issue even in the relatively affluent areas where people cannot get access to fast internet connections.

As I am not an expert on the subject, I shall ask three elementary questions. The first is about what broadband means in terms of the economic implications for business competitiveness. The second is about the spread of geographical access. What is the best model to follow when encouraging that? The third is about the Government's £1 billion pound initiative, and whether that is the appropriate way forward.

On the first point, I had what I feared might be a slightly dim question. Why should we take it for granted that broadband is a good thing? However, the hon. Member for Milton Keynes, North-East has already posed that question. It seems self-evident that a new technology that enables information to flow more quickly and easily will stimulate the economy. However, I was struck by a recent comment from the director general of the Federation of the Electronics Industry, who made the challenging assertion that he had yet to see a single major viable business use for broadband. He was implying that broadband has many interesting applications domestically and in big companies, but he challenged us to come up with concrete examples of how it would materially affect economic performance. I do not know what the answer to his question is; I assume that he is wrong, but that is not self-evident.

Photo of James Paice James Paice Shadow Spokesperson (Home Affairs)

May I suggest that the answer lies in the long-established statement that time is money?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

That is a good common-sense answer. However, that probably manifests itself not so much in the overall performance of the economy, but in where and how we work. A good example was described to me. For example, architects increasingly work from home or in small communities. They do not need to drive into an urban practice, because they can download complicated charts and maps. Designers can do the same. Time is money, and many professions and many creative businesses can operate from home. That is changing the geographical pattern in which economic activity takes place. One of the consequences is that communities—particularly rural communities—that do not have access to broadband miss out on that kind of self-employment and small business.

It is almost self-evidently true that broadband is economically beneficial, but we need a sensible benchmark as to how the United Kingdom is performing. The Minister said that he would come forward with figures in a few weeks, but those that I have seen are bewilderingly contradictory and lacking in meaning. Perhaps he can help us to interpret them. When I researched the debate, I discovered that Reed Electronics Research argues that the continental European model is much better than ours because 10 per cent. of households access broadband compared with 6 per cent. here. However, IDC Consulting argues that penetration in continental Europe is only 4 per cent., which shows that there are vast disparities in the information.

I appreciate that the concept is difficult to measure because broadband is a process rather than an end point and employs many different technologies. However, surely it is possible to decide on a common denominator against which national performance could be measured so that we would know whether we were ahead of the game or behind it. The Minister started his speech by saying that we got into broadband rather late, but it would be useful to know our exact performance. I understood that the United States, which we usually expect to be at the head of information technology matters, has a broadband domestic penetration of about 4 per cent., which is a lower proportion than that of the UK. I would be interested to know whether that is the case.

My second set of questions is about how we may widen access and deal with the problem of areas, and especially rural areas, that are excluded. I would like to establish that we are talking about the same set of data. Figures from British Telecom show that 1.8 million households use broadband. The cable provider NTL quotes a figure of 6 per cent. of households—I assume that the figures are the same. About 11.4 million households have internet access.

Two distinct problems tend to be rolled into one, although they might be related in many ways. First, significant numbers of households do not yet have internet access and, secondly, a number of internet-owning households do not have broadband. I was struck by an Office for National Statistics survey that showed that more than half non-owning households had no intention of acquiring internet access under any circumstances. We are heading toward an environment in which the number of people who own personal computers and access the internet with even relatively simple technology will plateau and a significant proportion of the population will be excluded from internet access due to reasons of choice and age.

I want to deal with those who have access to the internet, but want faster broadband connections. Roughly 70 per cent. of those people may access faster broadband connections, mainly because they live in urban communities that have cable. However, problems exist even in those areas. My colleagues met a delegation from the cable company just a few weeks ago and it pointed out that many elements of the Government's regulations on street works, such as the charging system and the procedure for restoration work, are causing many problems for cable companies, albeit unintentionally. Have the Government given any thought to that problem given that we have taken it for granted that there is not a serious problem of urban cable access?

Five per cent. of households that access the internet are in remote areas and will always find it difficult to access broadband; my hon. Friend Mr. Carmichael speaks eloquently on that subject. A further 5 per cent. are in the same position as my partner because they live in areas such as the New Forest which are such a distance from the exchange that they cannot access broadband. The remaining 20 per cent. are in the trigger point because new technological applications and a stimulation of demand might bring them within the system. What is the best mechanism to assist the diffusion of broadband to those households, which are mainly in rural areas?

The Minister described the British model, and Mr. Robathan endorsed it. It is essentially based on competition, and that is right because there are many competing companies and there has been minimum use of Government subsidy, whereas in France and Japan a massive amount of Government money has been thrown at the problem. If private sector providers will implement broadband, there is no reason why the Government should subsidise it.

Although the £30 million that the Government allocated is relatively small and not enormously controversial, it raises legitimate questions. There are both good and bad models for the use of funding by regional development agencies. An oft-cited good model is the Cornish case. The RDA for Cornwall, working in conjunction with local communities, let BT provide and pay for the normal connection charges. The RDA then provided an additional subsidy for those connections that were above the normal cost—so the access has been enlarged and BT is making a contribution.

The contrasting example, put to me by a cable company that may have its own interest in being critical, is the Scottish case. It has been argued that such a use of public money is inappropriate and simply reinforces the use of the ADSL system when alternative technologies could have been used. In addition, it was argued that the process was opaque. I do not know whether the Minister will volunteer comments about the different experiences of the RDAs, but they seem to vary.

The Government's billion-pound plan could be ambitious. Listening to the Minister, it seems that they have two, potentially conflicting, objectives. The first is to improve public services. We can hardly quarrel with that. The second is to stimulate demand for the industry. People in the industry have explained to me that in the attempt to aggregate demand, decisions are being delayed. Public sector providers might make decisions now if left to their own devices, but are being held back by the need to aggregate and plan those decisions. I do not know whether that criticism is valid.

Although the Government described their programme in broad terms, they are trying to achieve two different things, which need to be analysed in a slightly different way. They are trying to improve public services, and I can think of obvious practical examples of how that could be achieved. If a doctor's surgery can switch an x-ray to hospital through a broadband-connected machine and receive it back again, that is infinitely better than shipping it around by hand. One can appreciate how the health service could work much better with the direct application of such skills.

I have a reservation. The public sector in general has been extraordinarily bad at integrating IT systems. We have heard about scandalous cases of misuse of funds and bad management, and there was simply a primitive use of technology. The Crown Prosecution Service and the police are the most notorious examples of that. What assurances do we have that the public services have learned from those experiences so that they will be better equipped to handle the new generation of what I assume will be more sophisticated technology?

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

Is the hon. Gentleman aware that private sector companies have experienced similar problems, but they do not get the same publicity? The problem is not necessarily with the public sector, but with the way in which IT companies relate to their customers.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I am sure that the problem is often one of large organisations rather than necessarily one of government. I worked in one of the largest international oil companies and remember the grief caused by attempts to generate new IT systems there. It is not an ideological point; there have been major problems. I wonder how the NHS, which is the biggest public sector unit in, I think, the world, will manage to aggregate its needs efficiently.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

I apologise for missing the beginning of the hon. Gentleman's speech when I was having lunch. He is making an extremely good point. In response to Brian White, may I add that the difference between a large oil company, such as Shell, losing a lot of money on IT and a public sector organisation is that the taxpayer does not have to pay for that company's losses?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

The public sector does not have to pay either if it structures its deals properly. That is probably one of the lessons that we have to learn.

The other aspect of the billion-pound programme is not so much making public services work better as providing better information flows to the public and helping people to communicate, for example, by paying their taxes and getting passports on the internet. That is already happening, often in surprising ways. I have discovered in the past few months that because my local council is putting its unitary development plan and all its planning applications on the internet so that local people can access them—if they have broadband, they can get all the maps—between 500 and 1,000 people have been turning up to public meetings that I have organised to discuss fairly modest issues such as the use of a public open space. They have downloaded the maps and they can see how a proposal will affect their homes and their areas, so they are massively engaged.

There is a problem with that, however. Planning is a relatively wired-up area, so the council has got used to notifying the public of planning decisions through the local online service. Most people are aware of that and make their objections, but the information flows are completely bypassing elderly people and others who do not have access. Although a great deal is happening, and most of it is beneficial and efficient, what will happen to ensure that we provide public sector information to that residual part of the population—the elderly, those on relatively low incomes and the isolated—who do not have broadband or, indeed, any internet provision?

There was a proposal, which the Minister will know about—indeed, he may be a little embarrassed about it—to make sub-post offices the locus for bringing together all those information flows. I believe that the Government have retained the idea that post offices will, like a GP service, provide generic advice, but the technology aspect has been lost. If post offices are not to be the focal point, where is that point to be? If I am a newcomer to an area, whether it is the New Forest, Shetland or Twickenham, and I do not have broadband, cannot afford it and do not know how to operate it, I will want to go somewhere to get information about working with the Inland Revenue or understanding my local development plan and planning applications. Where would I go? Where is the public resource—the central point at which a local authority would bring all that information together?

Photo of John Maples John Maples Conservative, Stratford-on-Avon 3:57 pm, 1st May 2003

We have listened to a series of speeches by people who obviously know what they are talking about, and I hope that the last two speakers will forgive me if I do not follow them down the routes that they took, interesting though those were. This is not my specialist subject, as will rapidly become apparent, but I have a problem, and I hope that the Minister will be able to give me some answers when he winds up the debate.

I want to concentrate on the problem in rural areas, which have 25 per cent. of the population and produce 30 per cent. of GDP. Only about a quarter of BT's exchanges have been upgraded to operate ADSL, and depending on what figures one uses, between 10 and 20 per cent. of the rural population have access to broadband. I want to confine the problem further—to business in rural areas. I am not desperately concerned about whether individuals have access to broadband in their homes, although I suppose that it would enable my children to stream even more unsuitable videos to themselves when I do not know that they are doing it. We manage to live in my village without Channel 5 and I do not hear a huge number of complaints about that. However, I am concerned about business and the rural economy.

Rightly, part of the Government's strategy for rural areas, and that of the previous Conservative Government, was to encourage diversification and to encourage businesses to locate themselves, or to stay, in rural areas. Businesses have been encouraged to convert old farm buildings, for example, and there are many of those in my constituency. If all those people have to relocate to a large town to get a service that they need, we will have more problems in the towns with transport, traffic congestion and pollution, costs that the Government will have to pay, one way or another, because those costs tend to get externalised.

If we are serious about business staying in rural areas it has to be able to be competitive. For many businesses, access to broadband is part of that competitiveness and the foundation of productivity. If an architect's practice, to use the example given by another hon. Member, or another business that does a great deal of work on the internet, could not get broadband, while its competitors in the nearest big town could, that would be a serious problem, and it would lead to migration to the towns.

Despite being called Stratford-on-Avon, my constituency is about 500 square miles of rural Warwickshire. Stratford is the only exchange that is broadband-enabled. Two others, in Southam and Alcester, will be enabled this month, and trigger levels have been set for two more, at Studley and Wellesbourne. I like to think that we had some role in persuading BT to publish those targets and in getting people to sign up, resulting in two of the exchanges I mentioned being enabled. I hope that the other two will be as well. No trigger levels have been set for three other major exchanges in my area, and many small exchanges are not even on the list for getting a trigger level in the next few weeks or months.

I urge the Minister to persuade BT to publish trigger levels, or even to insist that it do so, so that we know what is needed in an area to make the exercise economic for BT; then, we will know in which areas broadband will never be economic. I realise that BT faces problems—if the company is to act voluntarily provision has to be economically sensible. However even if all the exchanges for which trigger levels have been published are enabled, many rural areas will still not have access to broadband, either because they are too remote, or because enabling their exchanges will never be viable—I understand that for technical reasons some exchanges cannot be enabled. I am concerned about that, but I want to explore a few ideas about how the problems might be addressed and ask the Minister to comment on them.

First, might we consider introducing a universal service obligation? Large areas of the countryside would not have telephones, electricity or even water if there were no universal service obligation. Do the Government think that that might be one way to proceed? I understand that there are problems with EU legislation and that the issue cannot be re-examined for a couple of years, but that is not an enormously long time in the context. What do the Government think would be the consequences for BT? Would it be reasonable to impose a universal service obligation on the company, or would it be hugely uneconomic, in which case we would pay for it in terms of inefficiencies in other parts of the telephone network? If so, perhaps the Government should consider helping. I am not usually at the forefront of asking the Government to spend money helping private business, or asking private business to do something that it does not want to do, but the Government will pick up the costs of failure in terms of the relocation of businesses to urban areas, creating traffic congestion and pollution problems. Therefore, the issue is not cost versus no cost, but one cost versus another.

Secondly, BT is doing a great deal of work in this area and I have had helpful replies to correspondence with the company, which seems to be trying different technologies in different areas. However, reading what it has to say, it seems to me inevitable that not all rural areas will be reached—not all will have access to broadband. BT and my local regional development agency, Advantage West Midlands, are looking into wireless and satellite technologies. Does the Minister think that those are viable alternatives for rural businesses?

I understand that satellite is far more expensive, at about £1,000 to initiate compared with about £30 for a regular ADSL connection, but that is not a huge sum in a business context, although an individual might see it differently. Any business that needs broadband to remain competitive will probably be able to afford the £1,000 initial charge. My concern is whether the system is viable for the type of rural business I have in mind. I understand that there is a technical problem in that either the upstream or the downstream traffic runs at half the speed of the other; is that likely to be overcome? Is wireless technology, which BT and Advantage West Midlands are exploring, likely to provide a solution?

Thirdly, will the Minister tell me about the Government's programme to link up schools and GPs? I listened carefully to the Minister's speech and heard him say that all GPs—I was going to ask him whether all GPs or most GPs would be part of the programme—will be broadband enabled by March 2004. There are GPs in many of the villages that I represent—and, I am sure, in areas represented by many other right hon. and hon. Members. If broadband cabling, or some other system to give them broadband access, is to be installed, could it be made available to rural businesses? Giving business access might help to defray the costs—Brian White talked about something similar happening in Stockholm, although that might not be an exact parallel. Perhaps the Government could charge people: if the alternative was satellite costing £1,000, it might be possible to get £750 from a rural business that wanted to hook up and thus defray part of the cost.

Does the Minister think that that is a viable solution, or does it run into serious problems with European law on state aids? It would be a pity if it did. There are all sorts of special schemes for rural areas, such as the new rural regulation that allows common agricultural policy money to be spent on non-agricultural matters in rural areas. It seems a pity if, on one hand, we and the European Union were trying to promote business and non-farm activities in rural areas, and, on the other, we stopped for a competition reason problem one of the things that was an essential ingredient of such businesses being able to remain competitive.

The regional development agency in my area is playing a part, with its share of the Government's £30 million, in trying out some things. I understand that it is heavily involved in the backbone network that the Government are putting in place and is undertaking some rural pilots. It says that it believes—it is a bit of a throwaway line in its memorandum—that satellite services are a practical alternative for most small and medium-sized enterprises. I am not convinced that that is so.

I have rather more questions than solutions, but the problems to which I have referred are important to several businesses in my constituency. I think that that situation will be replicated throughout much of the country, and in geographical terms, most of it. There are many rural constituencies like mine in which there are villages and businesses that will never, realistically, have access to BT's cable broadband service, without either some Government intervention, some ability to hook up to the Government's own network, or some alternative technology.

I read carefully the report of the Minister's speech in a Westminster Hall debate a couple of months ago, or whenever. I did not feel from that that this issue was really addressed. I realise that there are many other issues that must be higher up the Government's list of priorities with which they must deal. However, the issue before us is important to many of us. I think that any Member representing a rural constituency would say to the Minister that it is coming pretty high up in the issues that are raised in their postbag. We are receiving many letters and other forms of communication about it. People feel upset and angry. They feel that their problem is not understood. I am sure that the Government understand the issues, but I look forward to the Minister telling me how he thinks that the Government can help to solve the problem, or whether he thinks that market forces can solve it.

Photo of Robert Key Robert Key Conservative, Salisbury 4:06 pm, 1st May 2003

I come to this debate as a strong believer in science and the development of science through technology to improve the quality and standard of life of the people of our country and of the world. I have always been a strong supporter of communications technology. I am certainly the only person taking part in the debate who is a veteran of the Cable and Broadcasting Bill. Therefore, I have a sense of déjà vu. It was back in that era, when the House was legislating for the arrival of cable television, that we were faced with a new technology that was, on the one hand, grasped with great expectation by existing companies but, on the other, was resisted until those organisations had their share of the market sewn up.

There is a certain amount for which BT can be forgiven. It is acting in the good commercial interests of its owners and customers. However, we should not forget that it is the monopoly supplier of broadband in this country. More than 90 per cent. is in its hands. Therefore, I suspect that we need to take what it has to tell us—it has had much to tell us in its briefings during the past week—with a large pinch of rock salt. One of my purposes will be to encourage the Minister to develop his own thinking and to explain to the House the alternative methods of delivery of broadband.

As my hon. Friend Mr. Maples has said, broadband is a real issue in our constituencies. Only 10 days ago, when I was canvassing in the local elections, I stopped to read the village notice board in Pitton, which is opposite the excellent village shop of Mr. Morrison, where I had popped in to buy a bottle of gin. Not many people realise that a bottle of gin in a village shop is often cheaper than the same brand in Tesco. However, I digress. I read on the notice board an advertisement from a frustrated local resident. He was saying, "Please sign up and register with BT because we want broadband in Pitton."

That was not the first village. In Shrewton, Fonthill Bishop, Tisbury, Downton, Trafalgar, Whiteparish and Amesbury, people are similarly concerned about the issue. In Amesbury, a trigger threshold has been announced by BT.

Mention has been made of the role of the development agencies. I am sorry that my hon. Friend Mr. Robathan is disappointed with the agency in his area. The south west RDA has been playing an important role in assisting the development of broadband communication.

Whether we like it or not, RDAs are now important players and big distributors of taxpayers' money, so I want to make sure that my RDA operates effectively for my constituents. I think that it does—it has an excellent website, ConnectingSW.net, where people can find a great deal of information and discover how it is doing. They can also find out about satellite broadband delivery by connecting up to the remote area broadband inclusion trial or RABBIT system.

I have been briefed by NTL, which is an interesting company. After the passage of the Cable and Broadcasting Act 1984, I became the director of a cable television company, which was taken over by interests now represented by NTL, so I saw the development of the technology at first hand. NTL has pointed out that it would be a mistake to believe that only DSL technology can be used in broadband technology. If we only go down the ADSL route, we will give BT a monopoly. NTL's answer is to trial wireless broadband services in the 10 GHz band, and it is talking to development agencies about the use of that technology in rural areas. It looks forward to the forthcoming auction of band with which it hopes will be cheaper than the last round. We should not be lulled into the belief that only BT can provide the technology.

I mentioned the exchange at Amesbury, which BT says requires a trigger level of 350 customer registrations to be viable for broadband upgrade. I was therefore interested in the comments of my right hon. Friend David Maclean, who has conducted a campaign for broadband in his constituency, where the trigger is different. Each and every one of us should be interested in the breakeven level set by BT Wholesale, which is three years in Penrith. My right hon. Friend has asked why that extraordinary and arbitrary figure has been set as the payback period for investment. After all, Sky television took 10 years to break even. Why the magic figure of three years? Is it just good commercial sense by BT, which is telling us how long it thinks it will take to break even? It has said that it is prepared to take 50 per cent. of the risk, for which I salute it. However, that is a commercial choice—there is nothing technical or political about it. None the less, I wish my right hon. Friend success in his campaign for his constituents.

The Minister said some important things in our excellent debate on 25 March. I pay tribute to him, as those of us who have been in the House more than five minutes recognise a Minister who knows what he is talking about. That can be a severe disadvantage, however, as it means that the Minister shares our frustration at not being able to move further and faster, given all the frustrations of government and different departmental interests, including the insurmountable obstacle at the Treasury, which has to be overcome. However, at column 55WH on 25 March, he said:

"I do not believe that there should be a general public subsidy for broadband, which 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."

The Minister went on to mention the problem of backhaul infrastructure, which involves the cost of connecting a local exchange or a new wireless base station to the core network. He said:

"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".—[Hansard, Westminster Hall, 25 March 2003; Vol. 402, c. 55WH.]

The Minister was absolutely right.

I believe that there is an important role for wireless technology, and we have not heard nearly enough from companies interested in making an investment about its use as an appropriate technology. The Financial Services Agency was slow in sorting out its housekeeping, taking a year to get up and running. I suspect that Ofcom will spend a year sorting itself out and doing the housekeeping. It is a slow process. I hope very much that Lord Currie, who I think is an excellent choice of person to do the job, will sort out the FSA—I mean Ofcom, although I wish he would do the same for the FSA—as quickly as possible. If he can do so in less than a year, we will make some real progress.

In rural areas, there will probably always be hybrid solutions. Dr. Cable spoke of his constituency, where the issue does not arise. It will always arise in mine. Sixty per cent. of my electors live outside Salisbury, in more than 100 villages. That is the problem. More than 3 km out from the hub, or perhaps 6 km, the trouble begins. We must have a hybrid solution.

There is another problem that the South West of England Regional Development Agency has put to me. Whether it is deliberate or not, I do not know, but BT Wholesale and BT Retail are not talking to one another very well at present. Sometimes there is a regional management issue, and the RDA finds that if it talks to BT Wholesale, it is told to refer the problem to BT Retail. Even though there is a common manager somewhere up there in the heavens, a little game goes on, which causes delay. That is not good enough, and I hope BT will deal with the matter.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

Is the hon. Gentleman aware that a number of network companies are experiencing equal frustration in their discussions with BT Wholesale, and that the problem will be resolved by the opening up of competition? That is a key job for Oftel initially, and Ofcom later.

Photo of Robert Key Robert Key Conservative, Salisbury

I am grateful to the hon. Gentleman for his support for my thesis. He is another expert in the House, so I hope the Minister will realise that what I am saying must be true, and will address the issue.

Other possible solutions have been suggested. For example, there is a group in the south-west that wants a wireless solution, but that would involve borrowing £80 million from the European Investment Bank, and it would be a monopoly, which would crush all the competition and would therefore not be allowed. Even if one wants to attract big money, one cannot do it because that would crush the opposition and be against the rules.

A further approach is the Atlas project in Scotland, which involved the laying of the cable between Scotland and London. Scottish Enterprise did a remarkable job there. It provided access both ways, giving Scotland a great advantage.

Satellite is expensive. My hon. Friend the Member for Stratford-on-Avon is once again right. For a business of a substantial size that will generate substantial income, the £1,000 charge may not seem too much, but for many small companies it is too much. For example, a small company that I know in Fonthill Bishop has been told that £900 is the charge. There is no way that a one-man business can sustain that level of investment. Other approaches have been tried, such as the regional development agencies that got together in the RABBIT project and produced a system of vouchers for first-year costs. That may be one way forward, but it is only an interim solution.

My best information is that satellite access to broadband will only ever be about 2 per cent. of the services provided. Some people might say that that is a little low. We must address the problem of small and medium-sized enterprises, as well as one-man businesses. Ironically, many creative people, such as writers and designers, who could bring life and wealth to the rural communities are being prevented from doing so because of the bottlenecks. Sometimes they are commercial bottlenecks, and sometimes they are caused by restrictions.

I should like the Minister to expand on a topic that he touched on in the Westminster Hall debate. I know what was running through his mind on that occasion: he had 10 minutes to wind up the debate. He could have spoken for 100 minutes and he would probably have said what he was longing to say, but he had only 10. Well, he will have more than 10 minutes this evening, so I should like him to address this issue, please.

First, will it be possible for commercial traffic to run on public networks? That is the real issue for rural areas. There are restrictions at present, such as the BT sales contracts. If one is under contract to BT, the line cannot be sub-let, so no one can share. Therefore, having one major enterprise is no good. It is not even good for a public enterprise to have a BT contract, because it cannot sub-let to the private sector, to small firms or individuals.

The second issue concerns Ofcom itself. It is argued that the public sector supply is achieved at a discounted price. If, having obtained the connection at a discounted price, one sub-lets to a private sector company or individual, that is once again counted as a subsidy, which is against the rules. Is that really a good enough argument for preventing the spread of access to broadband on the back of public sector investment?

The next issue concerns the regulations and licences themselves. There is one set of regulations and licences for the public sector and another for the private sector. That, too, is a barrier to broadband access.

Lord Currie's view will be critical in determining such issues, and I hope that the Minister will discuss them with him. My plea to him and to the Minister is to relax the regulations and allow for fertile development of the provision of broadband, particularly in rural areas where there are so many potential customers.

It is wonderful that schools, doctors and local libraries will all be on line, but we must find a way of piggybacking on public investment. No one disputes that the public highway should be resurfaced, because it is used by the public sector, by ambulances, police cars and private vehicles. It is a common infrastructure and broadband should be similarly accessible. It should not necessarily all be provided by the public sector, but where the private sector is willing to invest, it should not be restricted in obtaining the service.

I pay tribute to my county council of Wiltshire. It has taken a tremendous initiative in trying to access broadband for the taxpayers of Wiltshire and the Wiltshire smart place scheme has been successful.

Despite people thinking that there cannot possibly be any technology in Cornwall, I know differently. It is not even true that just because the satellite dishes are on Goonhilly Down there is no access to the world of cable. In Cornwall, small and medium-sized enterprises take up broadband at four times the national average rate, which goes to show that with dedication and vision, the removal of regulations and will in the public and private sectors, there is no reason why there should not be a much higher penetration of broadband as an everyday way of improving the quality of life and the advantages that Britain should enjoy in the 21st century.

Photo of James Paice James Paice Shadow Spokesperson (Home Affairs) 4:23 pm, 1st May 2003

The 100 minutes to which my hon. Friend Mr. Key referred has already passed for the Minister, but I shall try to leave him a few because he clearly has many questions to answer.

I want to follow much the same vein as my hon. Friend Mr. Maples, looking at the subject as a self-confessed ignoramus, but very much aware that my constituency has major problems. My constituency surrounds Cambridge and we can literally see, on the other side of the road, the Cambridge science park enabled and active, while elsewhere knowledge-based businesses are disadvantaged. I do not like to refer to them as small businesses: they are often small because they have only a handful of people, but are major businesses in turnover and their impact on the economy.

The case for broadband has been made well by so many hon. Members, including the Minister, that it does not need repeating. As has been said, it is simply a matter of competition. Whether or not one argues that broadband is necessary, the fact is that, if some have got it, everybody must have it to compete. That applies to businesses competing not only within the UK, but internationally.

I want to concentrate on connectivity, as it is called in much of the documentation that I have read, and on the use of Government money—a point that I mentioned in an intervention on the Minister. I challenge him to answer this question: does he believe that the totality of public money spent on broadband is being used to the best advantage? I refer not only to the £30 million that has been mentioned several times, but to the £1 billion-plus that is being spent in the public sector on connection, of which the Prime Minister made so much in his statement in November.

On the education sector, which has occupied much of the debate, the regional broadband consortiums with pooled local education authority funds are an important issue. In giving evidence to the Select Committee on Environment, Food and Rural Affairs on 8 April, the Under-Secretary of State for Education and Skills, Mr. Twigg, said that it was intended that all schools would be connected terrestrially in the long term. While some of them may be using satellite services, he made it clear—admittedly, only the uncorrected evidence is available—that he expected all their provision to be terrestrial.

I confess that I am not sure whether radio counts as terrestrial—I assume that it does not—but it is clear that terrestrial provision involves copper or cable, including fibre. Very large parts of the country do not have a cable connection, and neither will they get it in the foreseeable future, if we continue to proceed in the same way. My hon. Friend the Member for Stratford-on-Avon referred to BT thresholds. Fortunately, we are all connected by copper through the universal service obligation, but the trigger levels in my constituency are set at varying levels, including 300 people, 350 people and others. BT has tried to explain why different trigger levels apply to different exchanges, but I confess that I have no idea about the justification for setting different levels. It seems to me that provision will either be viable in relation to a set number of connections or not. I do not fully understand that issue.

As the Minister well knows, pioneering work is taking place in Bottisham in my constituency using the radio antenna-based system. However, even those involved in that pioneering work, which was established a year ago, have faced major problems. They received no grant from the regional development agency, as it was not yet at a stage at which it could give any money for the project. The only grant came from the Countryside Agency, which is not a body that one readily expects to invest in such work. However, another problem arose thereby—the radio-based system was such a success in the villages for which it was originally founded that the neighbouring villages all wanted to join in and link up through more radio antenna, although the Countryside Agency has now put its hands up and said, "Sorry, there is no more money; this is not really our field, although we were happy to put a little money in to try out the project and set it up." Once the system got going and those involved received the initial grant, which allowed them to reduce the connection fee from about £150 to £49, the rate of subscription from businesses and private individuals quadrupled. That is a clear link, but my constituents are paying the price of innovation. Although those involved have overtaken the field, a lot of villages are now unable to set up the system.

There is another problem that affects rural constituencies throughout the country—the existence of cabling only in some locations. Cables were often installed in village centres, but did not cover much of the outlying ground. My village is a case in point. Of course, not every village that is cabled is connected to broadband. NTL, the operator in my area, has yet to do that work in many cases. The additional problem is that, if part of the village is connected up via cable, it dramatically reduces the potential for the rest of the community to be cabled or to meet a trigger level for BT or any other system. In some cases, partial cabling is more disadvantageous than no cabling at all. The only dedicated, discrete exchange in my constituency to have met the threshold is that of the city of Ely. Hon. Members will probably be surprised that that was not done ages ago.

Photo of James Paice James Paice Shadow Spokesperson (Home Affairs)

I have to say to my hon. Friend that it is a long while since Ely had a Liberal MP. I cannot even claim the victory of having ousted him. The Boundary Commission ousted him from Ely, but it was my hon. Friend Mr. Moss who finally removed him from this place. I am pleased to say that, ever since, the whole of eastern Cambridgeshire, as well as most of the rest of the county, has been represented by Conservative Members.

My hon. Friend forces me to digress. The point is that in my very large constituency—it is roughly similar in size to that of my hon. Friend the Member for Stratford-on-Avon—only one exchange is enabled. Some parts of the constituency are enabled because they use exchanges from over the border, but large chunks are not, and many exchanges have neither thresholds nor any real likelihood of their being set.

I turn to the situation in schools in Cambridgeshire. The regional consortiums expect all but three of the schools in the county to be connected by August 2004. I am not sure which those three are, but I suspect that they are not in my constituency. The Minister said that Government expenditure in the order of £1 billion will open up opportunities for communities, but the advice that I am receiving suggests that there are serious implications. My hon. Friend the Member for Salisbury mentioned the whole issue of the network and regulations. Another issue is cost. Will the Minister clarify how he expects all the schools in rural and more remote areas to be linked up? Clearly, it will not be done by cable. The only options are radio, satellite or the leasing of copper from BT. I suspect that leasing copper will be the commonest approach, because it is already there. The problem is that it is not a capital but an ongoing cost. Without wishing to get into the problems of educational funding and school budgets—

Photo of James Paice James Paice Shadow Spokesperson (Home Affairs)

I shall resist the blandishments of my hon. Friend.

If the connection is made by leasing copper, it becomes an annual charge on the education budget for the local education authority or, indeed, the individual school. Is long-term provision being made for that, or will the cost have to be absorbed within the schools budget, as in so many other circumstances? I hope that the Minister can shed some light on that.

It seems to me, having not only listened to hon. Members who have spoken with immense knowledge, but gained information from elsewhere, that one problem is that we are concentrating on today's technology. Brian White said that we must not concentrate on ADSL. He is right about that, but perhaps we should not concentrate on radio or satellite either. At serious risk of showing my lack of knowledge, my information suggests that fibre will have to be used to accommodate the much faster speeds of connectivity that we will face in the not-too-distant future. The Minister was a little dismissive about future developments in technology and tended to concentrate on today.

Choosing fibre means ducting. I revert to the Government's expenditure of more than £1 billion to develop their services when only £30 million is available for developing broadband in a huge swathe of the United Kingdom that represents approximately a quarter of the population. That raises the question of value for money. I agree with the Minister that the Government should not subsidise such work, but they should consider using public money to facilitate development throughout the country. I am not convinced that that is happening.

I am not a fan of development agencies, but nevertheless, the East of England Development Agency has a programme. It received the grand sum of £3.2 million for East Anglia out of the £30 million to which I referred. It contributed another £2.6 million from its resources. It received more than 100 applications from the eastern region for the original consultancy grant of up to £10,000. Yesterday was the closing date for applications for projects, and I am told that there were more than 30. The development agency anticipates that only a handful will get the go-ahead because of the availability of resources.

There is no long-term prospect of more money. Earlier, Lawrie Quinn chided my hon. Friend Mr. Robathan about the Conservative party's budgetary proposals, yet we are considering, to all intents and purposes, a one-off sum of £30 million from the Government. That is not a lot of money compared with £1 billion for connecting public services. Rather than arguing for more money, there is a case for the Government's spending the £1 billion more productively.

I strongly endorse the competitive approach and stimulating demand to encourage innovation. I have no doubt that once we have the facility, demand will expand dramatically. It is easy to declare in the House that we should encourage businesses to sign up, register and so on, but it is difficult to effect that. Something that is not there will not necessarily grab interest. Once broadband is available and the business down the road starts using it, or children return from school and ask why they cannot do their school work at home on broadband when they can do that at school, it will drive up registration and connections locally.

I strongly welcome the Minister's personal commitment, obvious knowledge and the announcements that he made today, but much of the £1 billion has already been spent or at least allocated. Although the Minister did not use the hackneyed phrase, "joined-up government" when he spoke of the committee that he will establish and chair, it is a little late for such an approach. Much of the public money has been spent.

There is no obligation on those who are spending the public money on connecting public services to have any regard for what can be done for the rest of the community. It is fine for the Minister to say that there is no reason why the infrastructure provision for public service could not be available to others, but in many cases it is not. There is no obligation on providers to make it so. The quicker the Minister deals with that in his new committee, the quicker connection will happen.

I suspect that the pass has been sold. As the Minister said, he was appointed only a few months ago and is trying hard to catch up and regain the ground that the Government lost. For many areas, of which my constituency is typical, there is no genuine prospect of new infrastructure, be it fibre-based cabling or large-scale radio systems. The figures that I cited from the East of England Development Agency show that the majority of projects will not receive the funding that they need to get off the ground. I suspect that the areas where village schools are connected use leased copper. My information is that most of them will use the full 2 megabytes committed by the Government. While I do not pretend to understand it fully, I am told that there is a big question mark over whether the infrastructure for backhaul is as substantial as the Minister would have us believe.

I do not doubt the Minister's commitment but I fear that, for my constituents and for many others in rural areas, there is no real likelihood of getting access to broadband in the very near future, unless he picks things up and shakes them vigorously to make things happen. My hon. Friend the Member for Salisbury made a number of proposals. I would like to think that the Minister will give us a commitment that, in every village that has a school—that is by no means every village—the connection to the school will also be available for the rest of the community and that public money will be spent constructively. That will be a considerable step forward, although it will still leave many villages unconnected. On that basis, I hope that the Minister will give us some commitment.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry) 4:41 pm, 1st May 2003

With the leave of the House, I wish briefly to touch on a few points and reiterate some of the points made by my hon. Friends and others. Everyone has been very nice about the Minister today. That is understandable because he is a decent cove but I hope that he will give good responses to some of these important questions.

I was somewhat curtailed, not least by the arrival of people such as Mr. Pound, before the statement at 2.30 pm and I would like to touch on a few points that were left out. Some good points have been made. I will not bring them all up. My hon. Friend Mr. Paice said that he did not know much about the subject but he showed a tremendous grasp of the issues. He brought out many of those that need to be dealt with.

None of us has a crystal ball and knows in what form broadband will develop. The broadband delivery systems that we are talking about today may be archaic in 20 years. Wireless or cable may have taken over completely from it—who knows?

Good points were made by hon. Members on both sides of the House about EU state aid, whether permission was required and whether the East of England Development Agency was behaving lawfully. The money given to RDAs was mentioned by Dr. Cable. There were concerns about the £30 million being given to RDAs and the £1 billion being spent on public service networks. My hon. Friends, including my hon. Friend Mr. Maples, raised the issue of securing access in rural areas for small and medium enterprises so that they can be competitive. My right hon. Friend David Maclean wanted it to be noted that he is very concerned about what happens in Cumbria. The point about the universal service obligation was made well, too.

As various of my hon. Friends said, Conservative Members particularly believe in competition but the Government do as well. We have an excellent opportunity. Lord Currie and his board at the new Ofcom are in a position to stimulate the competitive environment, protect consumers and liberalise the marketplace. Although we all know that he is somewhat linked to the Labour party, it appears to me—and I have not met him—that he has a pretty agile mind. Perhaps he will be in a particularly good position to deal with the issue. My hosts at the CBI annual dinner will be slightly distressed because he is on record as saying that BT should be broken up but we need a flexible approach from the regulator and from the Government. We need an enabling approach, not a dirigiste or controlling approach.

As the Minister prepares to respond to the many points that have been made, I say that, in general, we think that regulation cannot replicate the good operation of the competitive market, and we look forward to hearing what he has to say about how that competitive market will develop.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 4:44 pm, 1st May 2003

We have had an interesting and helpful debate with many contributions, most of which started with Members confessing that they knew virtually nothing about the subject, but then demonstrating to the House that they knew a great deal and understood the issues well. I shall respond to some of the detailed and important points that were raised and add a few more of my own.

Mr. Robathan talked in his opening speech—as he said, it was a little curtailed, but he managed to cover a good deal of ground—about primary schools. He was concerned that many schools were limited to midband. As I said in my intervention, the current standard for primary schools is 2 megabytes per second two-way, and the target set by the Department for Education and Skills is 100 per cent. coverage at that standard by 2006. By last December, 16 per cent. of primary schools had reached that stage—a much higher proportion of secondary schools had reached it—which illustrates that we have a long way to go before we have provided primary schools with the functionality to which we are committed. I hope that that deals with the point raised by Mr. Paice about rolling out the infrastructure to public services. As I say, there is a long way to go: the window is fairly narrow and we must ensure that we get the process right over the next few months in order to maximise the benefits for schools, and for other users.

The hon. Member for Blaby spoke about the need to promote usage. I was grateful to my hon. Friend Brian White for what he said about the Department of Trade and Industry's UK online for business programme, which is about helping businesses to understand how best to exploit technology—not only broadband, but other technological opportunities—to improve their performance. I was pleased to note that the Economist Intelligence Unit recently described the UK online for business programme as

"one of the world's strongest and most innovative government projects supporting e-business".

It has a network of more than 300 advisers delivering advice to businesses across the country through business links and other channels. It has helped some 100,000 businesses over the past 12 months and 175,000 have accessed support through its excellent website.

Hon. Members may have noticed the current advertising campaign, featured prominently on London taxis, promoting the business benefits of broadband. It is part of the work that UK online for business has in hand this summer. The programme will introduce a mobile broadband demonstrator to support events run by it, providing another means of getting the broadband message out more widely. The broadband show is a project run in the south-west to promote the tourism and aerospace industries. It is putting on roadshows to demonstrate the business benefits of broadband to small firms in those two sectors.

There is a lot of activity going on. My hon. Friend Mr. Mole referred to the campaign of the Communications Workers Union—Broadband Britain—which is supported across the House. The British Computer Society, with its European computer driving licence initiative, is another example.

The hon. Member for Blaby was, I thought, unduly dismissive of the work of the East Midlands Development Agency. He will find that EMDA will play a leading role in the months ahead in organising public sector demand for broadband in a way that also extends the benefits of broadband services to other users. I shall explain a little more later about how I view that working.

My hon. Friend the Member for Milton Keynes, North-East referred to the need to deal with the challenges of broadband content. We need compelling content that will encourage people to access broadband, and much is happening in that respect, too. Last week, EMI reached agreement with more than 20 online retailers to offer digital downloads of their music—an important step forward.

We in the Department are looking to see whether there is a role that we might play to support projects to stimulate the development of a compelling broadband content.

My hon. Friend referred to the importance of the development of skills. Earlier I spoke about the launch of the e-skills agency, which will have an important role, and about the Government's skills strategy, which will be published later this year. He asked about Norwich. It is indeed the case that there is a project in Norwich with a grant from the EEDA which will establish a network of ducts in the city for service providers to use in establishing their services. The way in which that has been structured means that it will not fall foul of state aid rules, but the hon. Gentleman is absolutely right to say that there needs to be clarity about that. More work may well need to be done to establish that clarity. From his important contribution to the Communications Bill Committee, the hon. Gentleman will know that the Bill includes a clause to facilitate exactly that approach: to give access to the communications code to organisations other than telecommunications operators, so that local authorities and others can make contributions of that kind to facilitate the investments that we need.

I am glad that my hon. Friend referred to 3G mobiles. As a proud and enthusiastic customer for third generation mobile services as of the past week—we have had a 3G service for less than a month, but there will be another two by the end of the year—I agree with him that 3G may well prove in due course to be an important mechanism for extending broadband availability to rural areas as well as to the city areas in which it has been introduced so far.

My hon. Friend asked about the support from mobile companies for the Internet Watch Foundation. I agree with him about the valuable work that it does. As he said, it is a successful example of self-regulation. I am pleased to tell him that the proprietor of the first 3G service is contributing to the Internet Watch Foundation, as are Key Mobile, mm02, and Vodafone. Increasingly, as image and video content become available via mobile, it will be important that those companies support the work of the foundation.

Dr. Cable drew attention to the fact that there may be an age divide rather than a geographical divide in this area. There is a serious geographical divide as regards rural areas, but he is right to draw attention to the need to encourage what is called silver surfing among retired people. The UK online centres—the network that the Government have established—are targeting older people and others who may not have had the opportunities that others have had, and are doing so with some success.

I take the hon. Gentleman's point about the confusion about the data on broadband. Oftel, which produces authoritative data for the UK, told me that we have 1.9 million broadband connections as of the end of April. Sometimes it is difficult to get a handle on what is happening elsewhere, and that is made more difficult by the speed at which things are moving. When I was appointed to this post, an item in one of the computing papers announced that the UK was neck and neck with Croatia on broadband. That picture has change beyond recognition in the intervening 12 months. We periodically commission research ourselves about the position in other countries so that we have data, but things move so quickly that it is difficult to keep track.

The hon. Gentleman made the point about the different experiences of the work of RDAs and the devolved Administrations in this area. It is important that we maintain transparency and a strongly competitive market for broadband provision. That characterises many of the RDA initiatives about which we have heard. It is important not to introduce delays in the achievement of improvements in public services as a result of aggregating public sector demand. I do not think that we need do that, however. The hon. Gentleman is right to sound a warning, but it is essential to take the initiative forward without delaying those vital improvements.

The hon. Member for Twickenham also asked where people without broadband at home could go to take advantage of the service. In fact, 93 per cent. of public libraries offer broadband internet connection—100 per cent. in Northern Ireland. The People's Network has been most effective in putting almost every public library online and the great majority offer broadband access. In addition, much of the network of 6,000 UK online centres, which includes libraries, has adopted broadband. As the hon. Gentleman knows, there are also commercial initiatives to establish kiosks in post offices.

Photo of Robert Key Robert Key Conservative, Salisbury

Villages throughout the country, including Great Wishford and South Newton in my constituency, are addressing the homework problem, to which my hon. Friend Mr. Paice referred, by using the village hall, holding clubs at weekends and two or three times a week for that purpose.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

That is an important point and I welcome such initiatives, which have social advantages as well as extending the benefits of technology.

Mr. Maples made a powerful case for the importance of broadband in rural areas. I entirely agree with the points that he made. The competitiveness benefits are crucial for businesses in rural areas. The hon. Gentleman pointed out that, even after all the published trigger levels have been reached, there will still be areas without broadband. I understand that BT expects to have published trigger levels for exchanges by the summer. Once they have all been met, the availability of ADSL will reach about 90 per cent., but, even then, as the hon. Gentleman rightly said, 10 per cent. of households will not have access.

The hon. Gentleman asked what we were doing about rural broadband. I am establishing a rural broadband team in the DTI, to work with DEFRA and the RDAs to address the issue. Much activity on broadband is already under way. Reference has already been made to the £30 million fund established by the DTI, and I can give the House a couple of examples of its use.

The hon. Member for South-East Cambridgeshire referred to broadband brokerage in the east of England. The project was set up in June 2002 to allow people and companies to register their interest in broadband on a website. I gather that Diss and Felaw Maltings will be the first communities to obtain broadband through that scheme. The idea is that once demand in an area has reached a particular threshold a partnership is established with a local authority to form a community network. Service providers are then approached to identify the most cost-effective solution for the community.

Buckfastleigh in Devon is demonstrating how broadband can be brought into key facilities in a rural town. Broadband demonstration centres are being set up in Scotland. The point is not that we believe that we can solve all the problems with that £30 million but that, through those pilots, we can develop and demonstrate solutions that can be much more widely applied once they have been properly assessed and understood.

There is certainly much more to do. The hon. Member for Stratford-on-Avon asked about the attractiveness of a universal service obligation for broadband. We have considered that, although it is not yet justified. For example, in places where broadband is available—even in London, where take-up is highest—the figure is still only about 10 per cent. If we were to impose a universal service obligation for broadband, it would impose significant costs on all customers and we have not yet reached the point where the scale of take-up, where the service is available, is sufficiently high to warrant the imposition of such costs on everybody. With things moving so quickly, however, that position may change. Certainly, we need to keep the question under review in the months ahead.

Satellite is a viable alternative for businesses in rural areas, and there are a number of examples of satellite-based broadband solutions being used successfully by businesses, including in business centres, in rural areas. My hon. Friend Lawrie Quinn presided recently at a public meeting on broadband options, which I notice included a welcoming contribution from Sir Alan Ayckbourn—the meeting took place at the Stephen Joseph theatre in Scarborough. A presentation was made by Aramiska, a satellite broadband service provider, which meets the needs of businesses in Yorkshire. For many businesses, satellite will be the best and easiest way to access services. There have been many examples of regional development agencies helping to defray the costs of satellite broadband access, which, as was pointed out, is quite expensive. The South East England Development Agency has enabled a number of businesses in Hastings to gain access to satellite broadband services, and the scheme is being extended across the region. Other RDAs are doing similar things.

Will wireless technology be a solution? Yes, again, I think it will be. I hope that, for example, when a school is broadband-enabled, it may be possible for a wireless antenna to be erected, perhaps even at the school, for the broadband provision supporting the school to be used also to provide backhaul for a wireless broadband service, using the antenna based at the school. A variety of approaches of that kind will be needed, but that might be one way in which a community around a school could be broadband-enabled through wireless, taking advantage of the investment that we are making.

Photo of James Paice James Paice Shadow Spokesperson (Home Affairs)

I am grateful to the Minister for the comments that he has just made. Will he go further, however, and consider the absence of any obligation on the public services to have regard for community provision? Will he—I was going to say, "issue an edict"—put an obligation on the public services that when they install broadband in schools, libraries or anywhere else, they should have regard to making it available for the rest of the community? That would be a huge step forward.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

That will be precisely the aim of the ministerial broadband steering group to which I referred in my opening remarks. It will bring together the Ministers responsible from all the Departments, and its aim will be to ensure that the investment that is being made on behalf of public services is managed in a way that opens up access to other users too. The way in which that can happen is well illustrated by the project being taken forward by Advantage West Midlands, which I described. It has set up a special purpose vehicle, separate from the RDA, that is commissioning a broadband network for all the schools and universities in the region, enabling the network provided to be opened up to other users too. The hon. Gentleman asked me whether I could give a commitment that, in every village that has a school, the broadband connection will be available to the wider community. I think that it will be clear from what I have said that that is exactly our aim. I cannot give a date by which that will happen, but I will certainly welcome opportunities to update the House on progress as we take the work forward.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

People often say that data protection issues create a barrier to community use of facilities. Will my hon. Friend ensure that the Information Commissioner is involved in those discussions and ensures that there is best practice guidance so that data protection does not become such an issue?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

My hon. Friend makes an important point. With networks used, for example, to send electronic patient records around the health service, he is absolutely right to suggest that such issues need to be addressed carefully. They certainly will be.

Mr. Key also made a thoughtful contribution, but there was one point on which I did not agree with him. I think he said that 90 per cent. of broadband is from BT. However, on the latest figures, there are 1.9 million broadband connections in the UK, 1 million of which are cable modem connections and just over 900,000 of which are ADSL. The hon. Member for Blaby pointed out that only half the ADSL are bought from BT Retail. The rest are bought from companies such as AOL, Freeserve and Pipex. I understand that, according to some estimates, about 300 retailers of ADSL products use the BT Wholesale ADSL product. It is then retailed by someone else.

I was pleased that the hon. Member for Blaby was able to compliment the South West of England Regional Development Agency on the work that it is taking forward. I agree with him. I have been impressed by what I have seen of its work. I am glad that he was able to refer to NTL's enthusiasm for wireless broadband, and I am aware that NTL has been keen on using the 10 GHz part of the spectrum. As I have said, I think that wireless will prove to be important.

The hon. Gentleman asked me a question that has come up several times. Will it be possible to have commercial traffic running over public sector networks? We will ensure that in delivering connections to, for example, a village primary school we make affordable backhaul available for broadband services that can be used by other businesses and households. That is the central task on which the ministerial group will be working on. The hon. Gentleman used the term piggybacking. It is right that, if a substantial investment is made, we need to ensure that other users benefit without compromising the needs of public service users. They need to be met properly.

The hon. Member for South-East Cambridgeshire asked why different trigger levels are set for different exchanges. That is a commercial matter for BT, but one of the reasons for that is that the costs of backhaul differ markedly depending on where the exchange is. In some exchanges in remote areas, a substantial investment is needed to provide the backhaul into the main network. In other exchanges, the cost of that part of the upgrading is much less. That is the big differentiator in the costs of upgrading.

Photo of Robert Key Robert Key Conservative, Salisbury

I have been in the House for some time. May I remind the Minister that one of the principal problems encountered when the Central Electricity Generating Board controlled access to three phase electricity throughout rural areas was that it said that a factory in a remote village would have to pay all the upstream charges for upgrading the lines all the way back to the board's generating station? That could cost a small company £25,000. Anyone else that came in then received the provision free. That was unfair and outrageous; thank goodness, it does not happen any more. There is a parallel and we need to be careful.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

It sounds a very interesting parallel, and I am grateful to the hon. Gentleman for making that point.

I was pleased that the hon. Member for South-East Cambridgeshire did not chide me for not having yet made my visit to Bottisham; I am looking forward to doing so in the near future. He referred to the East of England Development Agency grant funding, but I do not think that we should look to such initiatives to deal with problems in the long term and as pilots to work out how to do things. We need to move towards normal commercial arrangements in rural areas, just as in urban areas, so that we provide the services that businesses and others need so much.

The hon. Member for Blaby and my hon. Friend the Member for Milton Keynes, North-East made interesting comparisons with the way in which things operate in other countries. Germany certainly has many more broadband connections than in the United Kingdom. However, as they pointed out, Deutsche Telekom has 90 per cent. of the market in Germany and prices there are drifting up and the growth of the German broadband installed base is very slow at present. Prices in the United Kingdom are coming down—they are already lower than those in Germany—and growth is very fast. My opposite number in Germany was keen to find out more about how we are managing matters in the UK because he wants more competition in the German market. There is no doubt that that is the way forward.

My hon. Friend the Member for Milton Keynes, North-East mentioned the Communications Bill a couple of times. It will give Ofcom the new role of supporting innovation and investment in communications networks and services, and I agree with those who spoke about the critical role that Ofcom will play in the months ahead. I have very high expectations of Ofcom under the leadership of Lord Currie and its chief executive Stephen Carter, who was formerly with NTL.

I am grateful to all hon. Members who participated in this important debate. There is a significant economic challenge for the UK. We have identified ways to address the challenges, especially by ensuring that rural areas throughout the UK, as well as urban areas, will have the benefit of broadband services. I hope that I made clear the Government's determination to address those challenges and that hon. Members will follow progress in the critical few months ahead with great interest.

Photo of Keith Hill Keith Hill Deputy Chief Whip

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.