Worries over super-fast broadband may be ‘misplaced’

UK businesses should not panic over efforts to catch up with other economies that have super-fast fibre broadband.

The reassurance came from Francesco Caio who has been appointed to review government policy on Britain’s internet infrastructure.

Mr Caio said that concerns over the lack of a fibre-optic broadband network in the UK may be unfounded.

His appointment was prompted by the gap between the UK’s own broadband structure and that of competitor countries in Europe and the Far East. Fibre-optic networks can deliver broadband speeds up to 50 times faster than those of which the UK’s infrastructure is currently capable.

Although Mr Caio’s review will not be published until the autumn, his initial conclusions suggest that broadband speeds do not necessarily correlate to increased business competitiveness.

He pointed out that despite the fact that 40 per cent of connections in Japan are fibre-optic, there still fewer users as a percentage of the population than in the UK. While in Korea a 34 per cent rate of fibre-optic connections has so far failed to produce the same number of high-tech patents as are registered in this country.

Mr Caio also argued that, of itself, fibre may not result in extra business activity. Although 2.1 million homes in Italy have access to fibre-optic cables, the percentage of retail revenue produced by the internet is just 1 per cent, whereas that figure is 7 per cent in the UK.

He said: “So can we infer that the sheer number of fibre connections in the ground is, alone, an indicator of a country’s competitiveness? Nobody doubts the centrality of a digital infrastructure for the future of both quality of life and the competitiveness of business. The issue is at what point in time that becomes absolutely critical, who should be paying and what the competitive forces we have to encourage are.”

BT estimates that the cost of upgrading the UK network from copper wires to super-fast fibre-optic broadband may cost in the region of £20 billion.

There are plans for a £10 billion upgrade to be completed by 2011, but the issue of a complete overhaul and who will carry the bill remains.