Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

1. Executive Summary

1.1. This report summarises the economic importance of broadband services in Hampshire. It recommends that further research is undertaken to allow the Hampshire Economic Board to consider and determine whether any future action should be undertaken by Hampshire County Council to address the issue.

2. Contextual Information

2.1. The digital economy underpins the UK's and Hampshire's ability to exploit its skilled workforce and compete with other regions of the world. It is estimated that across the UK £1 in £10 of economic activity can be linked directly to digital technologies. The online retail market alone is worth £50 billion annually.

2.2. Hampshire's population is notably economically active and entrepreneurial compared with many regions, having many independent retailers and small businesses across a diversity of sectors, many of whom exploit ICT and online technologies. The County Council has identified, via projects such as the eLadder (which scores businesses on a matrix of skills and competency) and the Retailer Support Programme, areas in which business and individuals benefit from access to additional ICT training to improve individual employability or increase market reach and business efficiency.

2.3. Hampshire competes for business both nationally and internationally and has identified the importance of broadband services through the work of the eHampshire partnership. Regions of the UK that are taking a proactive approach to delivering faster broadband include in particular Cornwall, North Yorkshire and South Yorkshire, all of whom are launching projects to address market failures in providing adequate broadband to their particular geographical areas.

2.4. Many parts of Hampshire are served by very good broadband infrastructure. The urban centres/conurbations of Hampshire (notably urban south Hampshire) are served by speeds that are at the forefront of national and international provision.

2.5. However, latest research carried out for the County Council (eHampshire) indicates that 51.8% of Hampshire's postcodes cannot achieve the minimum speed laid out in the Digital Britain report of 2 Megabits. The purpose of this paper is to inform the Hampshire Economic Board of the issues and the options for potential intervention it could pursue.

2.6. The UK Market In the UK broadband is delivered by two main methods:

(i) Over existing BT copper telephone network .BT Openreach offer a wholesale product over the copper telephone network

· Speed is reduced the further from the exchange a community is located. More than 12 kilometres from the exchange, broadband becomes unobtainable.

(ii) Virgin (NTL/Telewest) use a private network (located in urban centres)

· Once connected consumers only have access to Virgin services.

· The network design and technology used maintains constant speeds regardless of location.

2.7. Urban south Hampshire is served by considerable Virgin network roll out (because of its population density and demographic profile) and speeds of up to 50Mb/s are being delivered to consumers' front doors whilst business parks are able to access band width speeds of up to 1Gb/s if needed.

2.8. Rural Hampshire is served less well by the market than the majority of urban areas because of a lack of population density and a disconnection between consumer demand and product delivery from ISPs who (understandably) concentrate on large population densities and have `national' product offering and pricing structures.

2.9. Yet broadband is as vital if not more so to rural communities due to their remoteness from other services. This is reflected in the take-up of broadband services in rural locations (60+% in rural compared to 55% in urban centres) and from recent responses from stakeholders to Hampshire County Council's Rural Delivery Strategy.

2.10. Access to broadband services makes location irrelevant to the ability to do business and also connects remote communities, supporting social and economic sustainability:

· 94% of rural residents shop regularly online

· 44% of online retailers are based in rural areas

· 90% of rural economic activity is not based on agriculture.

2.11. Access to media services, TV, radio, films, skills and learning are vital to modern communities. A recent study for OfCom revealed that, given the choice, a majority of people aged under 35 would rather forfeit their TV set than be disconnected from the internet.

2.12. The Commission for Rural Communities has also identified the following:

· demand for adequate broadband exists in rural areas and is rising faster than in urban areas

· businesses will fail to meet their potential if the digital infrastructure is not fit for purpose

· more people in rural communities will be socially excluded from society due to lack of access to digital technology.

3. Digital Britain

3.1. The Digital Britain report was commissioned by the Government and delivered by Lord Carter in July 2009. The report looks in depth at all aspects of the Digital economy, from social inclusion to media to commerce, and highlights why high speed broadband infrastructure is needed.

3.2. Digital Britain's ambition is to secure the UK's position as one of the world's leading Digital Knowledge economies.

3.3. The Digital Britain report highlighted many of the core reasons why infrastructure is so important to the economic and social fabric of the UK and laid out two areas where direct Government intervention will take place to help this provision:

(i) Universal service provision (2Mb/s) The report concluded that the market must deliver a Universal Service Commitment (USC) of 2Mb/s. It has not defined how or by which technologies this will be delivered but it is likely to be delivered by a mix of technologies, including wireless.

(ii) Faster broadband for harder to reach areas. Next generation broadband networks will be delivered by the market in high population density areas and with some assistance into fringe urban locations. It is felt likely that a 'final third' will not have access to this kind of service at all via conventional market solutions.

3.4. However, these areas could benefit the most from some of the applications that high speed broadband can offer: tele-presence, allowing for much more flexible working patterns, e-healthcare in the home and, for small businesses, the increasing benefits of access to cloud computing which substantially cuts costs and allows much more rapid product and service innovation. Next-generation broadband will enable innovation and economic benefits that cannot be predicted today. First generation broadband provided a boost to GDP of some 0.5%-1.0% a year.

3.5. The County Council is not convinced that 2Mb/s is enough for Hampshire's future and needs therefore to consider how it can influence the availability of broadband speeds.

County Council Activity to date:

3.6. The County Council has been involved from the start with provision of broadband services across the county. The final three exchanges in the first round of broadband enablement were enabled with joint funding from the South East England Development Agency, the County Council and the relevant district or borough authority.

3.7. More recently eHampshire led the campaign to improve broadband infrastructure in Basingstoke (which had very poor broadband service) ensuring that Basingstoke became one of the first towns in the south east to get BT's superfast broadband roll out (up to 40Mb/s).

3.8. eHampshire has also been involved in monitoring and understanding the issue of rural broadband access across the county, and has commissioned detailed mapping and analysis of the county. This proactive approach of the partnership has also led to the following communities contacting the partnership to request help with improving their broadband service:

· South Wonston (north Winchester)

· Oliver's Battery (south Winchester)

· Little London (Andover)

· Mapledurwell / Up Nateley (east Basingstoke)

· Froxfield (East Hampshire)

· Hythe (New Forest)

3.9. Given the scale of costs and the likely priorities for Openreach, the County Council has been exploring other solutions to the rural broadband speed issue. The first pilot which has secured Rural Delivery Strategy funding from the Executive Member for Rural Affairs is based in Little London, near Andover.

3.10. Little London is a small rural community which suffers from an absence of broadband from the existing BT/Openreach infrastructure. However, the village school is connected by high speed fibre optic cable to the County Council's Public Service Network (HPSN2) which connects schools, libraries and other public service buildings to the internet and other communications systems. The pilot project is exploring how HPSN2 can be used to provide faster broadband to the community.

3.11. Extensive work by e-Hampshire with Little London residents has identified that either a Wi-max mast broadcasting broadband to the community, or fibre optic to the roadside telecommunications cabinet is the best option for broadband enabling Little London. Private sector providers have tendered to provide the service during November 2009. The broadband service will be live by summer 2010.

Access to Skills

3.12. The recent County Council funded Retail ICT Support package has highlighted access to ICT skills can boost the employment prospects of former retail staff.

3.13. The programme has also shown that educating independent retailers to understand the relevance of eCommerce, the opportunity to market products to a much wider market place, brings viability to traditional shops that would otherwise find trading very difficult.

3.14. The eLadder project, which helps businesses assess their ICT capabilities and identifies gaps and areas for additional training and research, indicates that businesses in other sectors are also experiencing similar skills gaps which the County Council could investigate further.

1. Costs of delivering Broadband

1.1. It has been estimated that delivering fibre to the premises for every home in Hampshire would cost in the region of £100 million. Whilst this would offer unlimited speeds to communities, there is little evidence to show that there is a demand for this type of service at present and therefore the willingness of the consumer to pay for it.

1.2. It is likely that high speed broadband will be delivered using a mixed environment of fibre to the cabinet (as used in BT's current urban centre rollout) and a wireless service, where the geography dictates. This type of technology could deliver speeds of up to 40Mb/s (again dependent on distance from the equipment) and would offer a more cost-effective solution to rural Hampshire at an estimated cost in the region of £10 million.

2. Rural Broadband - Possible Solutions

2.1. There are three options that could be pursued:

A. Wait and see what the market delivers

B. Promote small scale individual community projects

C. Strategic Intervention to provide county-wide coverage.

A. The market will deliver some form of broadband to most of the county of varying quality and availability, under the Universal Service Obligation which forms part of the Digital Britain recommendations, which is a minimum of 2Mb/s by 2012.

B. Case by case, community by community. This will give rural communities the opportunities to build their own solutions. This may prove very effective, however it could lead to the creation of individual `Digital Islands' which are not coherently connected to multiple service providers, leading to poor service and offering questionable commercial viability.

C. Strategic Intervention to address service shortfalls in market delivery of infrastructure across the county. It is key to ensure that multiple commercial service providers are able to deliver end user services. One drawback to this approach is that it could distort the market by discouraging market investment. However, it is considered possible to engage in the process in such a way that it would encourage innovation and market competition. By mapping the areas where the market is unlikely to deliver a service, based on experience from previous commercial network roll outs, interventions can be developed across these areas. This has the benefit of scale and the associated cost savings and can be flexible enough to respond to individual community needs.

3. Conclusions

3.1. The Digital Economy is increasingly important to both the economic viability of the County and to the strategic aims of the County Council in delivering a better trained workforce, more efficient public services, reducing carbon emissions through more effective distribution and by reducing the need to commute to work.

3.2. While Government standards and commercial drivers can be expected to deliver services to many residents, the prospects for rural residents are much less promising and the County Council could consider taking a more proactive role to improve these prospects, as is happening in some other county areas. The options, benefits and costs are not at this stage well understood and a more substantial piece of work will be needed if the Board is keen to pursue this agenda.

4. Recommendation

4.1. That a further paper on this subject be prepared for the next Hampshire Economic Board.

2236Rpt/1107/FS

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

IMPACT ASSESSMENTS:

5. Equalities Impact Assessment:

5.1. No impact.

6. Impact on Crime and Disorder:

6.1. No impact.

7. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

Has potential to save CO₂ by reducing the need to travel and enabling economic activity with minimal CO₂ emissions (see Intellect - High Tech Low Carbon Report).

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

Not applicable.