How the UK could get the world's fastest broadband

Could someone else jump in and do what BT won't? Fujitsu would like to, but there are two problems.

The wayleaves - rents paid to locate ducts and poles on private land - negotiated by BT are often so low that rivals can't possibly hope to pay similar prices, and Fujitsu and several other network providers claim that BT's charges for access to its own network are ridiculous.

Fujitsu wants Ofcom to force BT Openreach - BT's network arm - to provide access to telegraph poles and cable ducts on "fair, reasonable and non-discriminatory terms".

The government could also help by changing the way it taxes network operators. The coalition government abandoned its promise to review the rates levied on fibre optic networks, so - excepting BT and Virgin - firms are taxed according to the length of their networks.

That taxation, which makes things particularly difficult in rural areas, is "an active disincentive to competitive, next-generation access roll-out". Who said that? Ed Vaizey, our communications minister. Of course, he wasn't in power then.

"It cannot be right that a network operator might have to pay rates on a specific length of cable whilst BT does not," Davies says, noting that whenever the rates have been challenged in court, the courts have found in favour of the status quo.

"Operators should be getting together en masse to oppose the rating system - but they are not." In the current climate, local authorities won't be keen on giving up this particular cash cow.

Broadband subsidies

What about South Korea-style subsidy? Oliver Johnson isn't convinced that it would work.

"It would be very difficult to transfer the model to Europe without affecting or compensating the market... we're already too far down the commercial deployment road to make significant intervention meaningful for most of the population. Where government can make a difference is in the commercially marginal - or flat-out impossible - areas and population."

That's an issue that applies to BT and to Virgin: large parts of the UK are sparsely populated, which makes rolling out any kind of broadband prohibitively expensive. The operators are private businesses, not charities.

As Trefor Davies explains:, "the investment case really doesn't exist for BT to roll out services [in rural areas]," he says. "Even where there is substantial EC aid as was the case in Cornwall, this only just brought the business case return on investment to an acceptable time frame - 13 years or so, I am given to understand."

SURFING THE NET: Thanks to BT, these ordinary businessmen can now SURF THE NET! [Image credit: BT Plc]

There's more to broadband than the operators' return on their investment, though. South Korea's investment in broadband and related technologies saved its economy.

Reeling from the collapse of the Asian financial markets in the 1990s, its government saw technology as a lifeline and spent billions on infrastructure, subsidies and investment in IT firms. In the 1990s, South Korea was an economic basket case. Now, it's one of the world's more successful economies.

Given that our economy is apparently a basket case too, could broadband help us out of the hole?

There are certainly economic benefits, Oliver Johnson says. "Broadband increases the tax base, increases GDP - by up to 2% from the first period of broadband... and even more today, reduces government expenditure in the medium to long term and improves the quality of life and access to services for the population."

It turns out that the biggest obstacle to super-fast broadband may be that the benefits take too long to arrive - for MPs, that is. As Johnson points out, "you don't get much benefit in the five-year lifespan of a Parliament." Why invest in something if you might not be around to get the credit?

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