Rural Digital Economy is a Real Digital Economy

I noticed somebody on Twitter earlier this week suggest that if people needed broadband and hadn’t got access to it then they should move. If we take this view we depopulate rural areas so that there is no economic infrastructure at all and we sound the death knell for rural communities. It shows a total lack of understanding of what the digital economy means and a level of ignorance about the impact of digital exclusion that defies belief.

Earlier this week my local council announced that it was seeking European funding for wireless infrastructure in the rural “not spots” in the County. I believe that this is the wrong approach, not that I don’t understand the motivation because rural businesses get to the point where anything will do, but I still believe it’s wrong.

There are, I believe, three elements to the proposal which are fundamentally flawed.

The first is the intention to use European funding – State Aid. State Aid requires four basic conditions to be met. The first is that there must be a clear market failure; the second is that any intervention must not distort the market; the third is that any solution cannot be technology specific and the final one is that the eventual solution must be open to the market. I know that State Aid has been granted for some major infrastructure projects in the past, but this is not a major infrastructure project, this is for the provision of very specific services in a very specific area and the two are not the same.

Let us take these one at a time. Firstly, I believe that there is a market failure. However, this is open to challenge in that the incumbent supplier could claim that it was willing to provide services eventually. Now, I know, just as everybody knows, that this is NOT broadband as we all understand it, but in state aid terms, it is and so, should the incumbent be sufficiently threatened by the market failure proposal they could, in my view, challenge it successfully. This argument also undermines the second condition in which the incumbent could argue that a state aided solution would prevent them from making sufficient return on their investment and make it unlikely that any other provider could enter the market. However unlikely this seems it would weaken the ex-ante case for state aid approval. Thirdly, the application for state aid could only specify the provision for broadband services, it cannot specify a wireless or any other solution so to say that one is applying for European funding for a wireless mesh network is nonsense. Finally, the solution must be available for the wider market, in other words you can only provide the infrastructure you must then get service providers to offer services. The kinds of services that can operate over a basic infrastructure such as might get state aid approval limits the revenue potential for any provider with the result that the sustainability of the network is at risk.

The second is the political impact of doing a project that meets the immediate need. The problem with accepting anything is that it ticks somebody else’s box. It means that rural areas have something and so they can be forgotten for a while longer. I experienced this in the mid 2000’s when there was a state aid application for the provision of broadband services to rural not spots in the West Midlands. The resulting service was satellite based, under capacity, under sold and didn’t deliver a true broadband service. The motivation fitted the criteria we see now; anything will do as long as it’s something. What was worse was that it enabled  regional bodies to say that there was 100% broadband availability in the region, it ticked a box. The agenda moved on and today there are still poorly served villages and not spots in various parts of the county.

The third is to do with sustainability. A basic internet service will deliver just that, basic internet. The potential for value added services such as VOIP, video conferencing, or IPTV are limited. Whilst I believe firmly that business is the key driver for new broadband services it is residences and entertainment that are the sustaining forces.

My final point is that much as I recognise the desperate need for good broadband services in rural areas I fail to see why rural communities should have to accept a second best solution to their urban counterparts. If we accept that it’s okay to provide 20% of the English population with second rate infrastructure because they are unprofitable, irrespective of the potential for social and economic injustice then surely we are all missing the point, just like the individual who suggested that we all move.


13 thoughts on “Rural Digital Economy is a Real Digital Economy

  1. great post as usual, you make your points clearly and well.
    The only way to get a solution to the rurals is to JFDI. There is a business case to supply infrastructure, real fibre stuff, not stopgap satellite or wifi… it just needs some grit. The business plan will be presented at the colloquium, more details on the 5tth blogspot.
    The pathetic gov levy won’t do it. Funding won’t do it. The telcos won’t do it.
    The politicians don’t get IT at all, we will have to do it ourselves, and it is possible for a community network to deliver far more than BT or virgin ever will for the urbans… they would then want some of ours, and we could say ‘sure, just give up holidays, libraries, bin collections, pavements, grit, street lights, police, hospitals, bars and clubs, shops, (etc) and move out to the country, you can have some of our decent broadband with pleasure mate’
    we CanDoIT, and we can do it sustainably, without funding. Granted we won’t make the profits a telco in a city would, but look at it this way, our networks will generate jobs in rural areas, and they will be so good that eventually they will replace the fatcats pathetic networks currently milking the obsolete victorian copper and holding this country to ransom…

  2. I am amazed at the lack of understanding of wimax wireless broadband. It is in fact the future not as you seem to think a stop gap. In Kent we are leading the way with wireless broadband but unfortunately people do not understand what it is or can do. A village near me now has a wireless service of 25mb download and at least 10 mb upload. Now that is state of the art and beats what you can get in most Towns and Cities. Not only that is that they can use it for a phone service and a TV service. They do not need to pay for an old fashioned copper wire to come into thier house that they speak down and have to pay for. The customer can be on line in days of ordering the service not having to wait years for fibre to come into the vilage, if ever. Kent now has major wireless coverage with avaialability I think in most parts. One thing about wireless verses the ADSL is that it gives a fast upload speed as well. Check out what your upload speed is I bet it is less than 1/2 a meg where wireless broadband can be around 10mb. Lets let go of the mindset of cables and realise that the future is in the air with wireless.

  3. I find it amazing that you can class a wireless network as “second best” We have a wireless network using WiMax equipment across Kent delivering better speeds to Rural Area’s than most Urban Broadband networks.

    We have just upgraded one village in Kent and endusers are able to receive in excess of 30Mbit, phase 2 will allow end user upto 100mbit. This speed the the same in both directions and as such benefits customers working from home far more than any traditional broadband connection.

    Many customers are using VOIP and watching IPTV on a regular basis without issue, the future is wireless, fibre is not cost effective , fibre takes too long to install and is not sustainable without funding in rural area’s.

    I think perhaps you are negative towards wireless networks because you have never experienced a carrier class network. We now have many customers in Urban Traditional Broadband areas now opting for wireless connectivity.

    Best Regards
    Darren Brown

  4. oops, never meant to upset those men of grit providing community wireless, we are actually doing the same here, and I am part of such a network. Without it we wouldn’t have had access to the internet, and wifi/wimax has undoubtedly helped areas of market failure, we are living proof of that.
    Currently many wifi networks like the ones who posted above and others around here are TONS better than ADSL or even 21st century BT copper rubbish.
    Also as mentioned above, wifi is cheaper and easier to deploy, but the future is fibre. Wifi, mobile, satellite all have their uses. While an ‘up to 50 meg’ wifi connection is brilliant now, it isn’t futureproof, and kit has to be replaced and updated, with fibre we would be sorted for future generations as it will deliver gigs.
    As a hands on JFDI community networker I have given people connections with wifi, I have also given them connections via fibre. Not a fibre fatpipe, just a fibre link. It is so EASY, and it Just Works.
    With fibre there is no noise. You don’t need to turn it off and on again. You don’t have end user issues.
    Community wifi/wimax networks are far superior to anything the incumbent can deliver. No dispute.
    Community fibre will blow your mind. It is possible. It is affordable.

  5. Is the Swindon model any help. A company set up which is owned by both the supplier and the council which delivers up to 20mbs fast wi-fi across the borough (including in most fields). Anyone can use it for 2hrs for free each day – want to use it more then you subscribe.

    It allows the excluded access, put them on the first rung of the ladder into wider use, makes connectivity universally available for public service delivery etc and has built in an assumption that people will pay for something they value.

  6. The Swindon model is great. Dunno what will happen to it if mad mandy’s bill gets through, but is a quick fire solution to digitalengagement. Kudos to Swindon for providing it.
    We are starting to find in rural areas that people are already prepared to pay, and would value a service, and so it makes more sense to lay fibre, it may take a bit longer to do, but it well worth the effort, because laying it in a rural environment is actually easier than in an urban one. Far fewer utilities to watch out for, easier access, willing wayleaves, help from parish councils and less trouble with highways…
    … cos we ain’t got any.
    It isn’t the laying of fibre that’s the problem, its the obstacles created by bureaucracy that adds to the cost and the time, and that is why wifi/wimax is starting to be used in more areas. We do it that way ourselves, but are migrating to fibre when possible, simply cos it is better and once it is done we don’t have to upgrade in another few years, and we will Never Be Left Behind Again.

  7. Re-reading Podnosh’s comment I think I missed the real point of it. Sorry for being a fibreranter…
    The ownership model for Swindon is fantastic. More councils and local orgs should get involved with Comms access, there is no reason why local communities can’t be responsible and make a profit from new technology. The telcos are hell bent on holding this country to ransom and milking the golden goose that was copper. It will come back to haunt them when the new golden goose of community networks starts to lay golden eggs. The faster councils realise the solution is in their hands the better. Even in urban areas the service received from BT is proving to be unable to cope with the demands being made on it. Working together the councils and suppliers can rectify this, as Swindon is proving.

  8. The striking point you raise of the impact of tactical solutions on removing the drive (commercial and politcal) from strategic solutions stands alongside the funding/ownership question to illustrate why the current state appears very negative.

    WIFI/Wimax zones are quick easy ways of getting around an infrastrcuture that is not fit for purpose but gets the absolute majority of all telecoms funding. By putting them in you take the egde of an issue and server small groups in small localities. BT are happy because none of this can ever compete or threaten their monoploy of services. Even the need for BT share the final mile services to other providers create a wholesale alternative that removes the drive for other fibre providers to put in FTTH. So we have providers either reselling BT connectivity and urban pockets of Virgin/CW fibre services controlling content as well as access.

    Is Swindon an example of alternative – time will tell.

    For rural – or can we say none-metropolitan services – lets have some political will behind removing BTs monoploy and encouirgae local mutuals/co-ops to buy-back the BT infrastrcuture in their area to re-sell and develop. Why give start-ups the biggest capital challenge of making money just out of isolated communities.

    This is the kind of community asset return programme that woudl kick start change. But don’t give it to the beaurocrats in local authorities at present they are part of the monoploy supporting problem – create genuinely customer controlled mutuals and coops that communities can buy into by choice. If East Texas can operate successfully for over 50 years as a mutual servicing 17,000 member customers with 83 staff covering 750 sq miles then scale does not need to be big nor public sector. Having the revenue and assets from a rnage of services is key to raising finance for infrastrcuture investment. Similar models work effectively in Italy and Germany.

    At the moment we have yet another privatised profit, nationalised risk – the telcos can avoid the problem but have the economic means to address it. If they won’t serve the community then pass them back to the community. But don’t let this be another centrally driven excersise (London or Cardiff) let communities reclaim it themselves on scales that make sence for their geography.

    Off the soap box now!

    Compare this

  9. Yes fibre is great if you have FTTH no limit to what you can do. Very few of us and definitely few in rural areas will get that. BT I know are rolling out FTTC which still relies on copper wire to take it from the cabinet to the home. All of this is slow to happen and for BT unviable in lots of cases. Unfortunately some people seem wedded to havering copper cable come into their house as the only way to receive broadband. People seem happy at the idea of receiving digital TV via an Ariel or maybe a small dish. Wireless broadband is no different a principal. Now Kent is a big county and the way that Kent is being covered by wireless is astonishing. And even more so is the step change in speeds with 25mb in both directions becoming the norm with even speeds of 100mb. This is not being done through a community scheme but by a commercial company who see the potential. This is allowing people and businesses across Kent to get fast speeds now not having to wait for some upgrade or other. At the end of the day if you have 25mb in both directions would you notice a faster speed as I am sure that would more than cope with the needs of most households.
    Come on lets give wireless the recognition it deserves and stop banging on about cables.

  10. wifi is fine, but it isn’t the end game, its just another way of getting a connection that is better than BT are currently offering. Yes we could get it done countrywide eventually, but then what? At some point we have to bite the bullet and get fibre to the home, and as a previous poster pointed out, if the telcos won’t do it then the existing infrastructure (pipes, ducts, poles and wayleaves) should be handed over to someone who will do it. It isn’t rocket science. It would provide employment to those currently sat twiddling their thumbs and drawing dole. It would give them their self respect back, and that saving alone would pay for an awful lorra fibre, and build a next gen network that will help rural economies and everyone will benefit.

  11. I think you underestimate the amount fibre around a rural community costs, when residential customers only wish to pay < £20 per month you will not make a profit for many many years. This is exactly why the Telco's have not done it. It does not make commercial sense.

    I dont think councils should be involved in running fibre networks, why should public money be used to compete with private sectors ? Community funded networks however are a good idea but will still cost more to run that the income will cover.

    Best Regards

  12. Darren, there is a working business model for rural fibre, proving that it will generate an income and be sustainable. It will be presented at the colloquium on feb 26th. Granted it won’t make big bucks fast like in an urban setting, but it will create jobs, keep more of the blue pound in the community and provide a far superior service to any that a telco would ever deliver. I don’t know all the details yet, but I do know it is a profitable enterprise and the ROI is for the people, not the telcos.

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