Consultation Response

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1 Consultation Response HMG Review of Business Broadband: Call for Evidence Department of Business, Innovation and Skills Consultation Date: 3 June 2016 Introduction The Country Land and Business Association (CLA) represents 33,000 members in rural England and Wales. They are either, farmers, landowners or rural businesses but all have a key interest in the availability and use of broadband connectivity. However, the lack of effective and affordable business broadband creates a major disadvantage for rural businesses that are seeking to growth and increase productivity. As a result, the Department for Business, Innovation and Skills (BIS) call for evidence review has to take into account the actual needs of rural businesses and the challenges faced with regard to the provision of business broadband. Section 1: About your business What sector/industry is your business in? The rural economy encompassing businesses with nearly 300 different income streams. What is the type and size of your business in terms of the number of FTEs? CLA member businesses will range in size from micro businesses (under 10 FTEs) to large scale SMEs. We would calculate that CLA members account for more than 250,000 FTEs. Where in the UK is your business located? Please also state if you are in a predominantly urban or rural area, and whether you are based in a business park. CLA member businesses are located in rural areas within England and Wales. Section 2: Current and future business needs What do you consider your business broadband requirements are to be and why? It would be helpful if you could consider upload and download speeds, price, reliability and any other relevant issues in your answers. On the evidence we have received from members over a number of years, quite naturally broadband requirements will vary according to the actual business activity. However, we have been able to classify the following: Page 1 of 5

2 Farmers: above 2Mbps Landowners with diversified activities: 10Mbps and above Generic rural businesses: 5Mbps Specific rural economic activity (such as tourism): 10Mbps and above It should be noted that these bandwidths are higher than the Government s Universal Service Commitment of 2Mbps. It should also be stressed that the minimum 2Mbps has to be the actual speed delivered, not a contended speed. One of the most serious problems experienced by rural businesses is their access to an effective broadband speed. Price does not necessarily act as a major barrier but what is clear is the real need of rural businesses to be able to connect. In addition, reliability is crucial but again, very much depends on the actual use of the broadband package. This tends to be dependent on the technology available. We have evidence that those who have relied on satellite packages do suffer from reliability issues primarily as a result of the lack of available capacity. Do you anticipate your broadband requirements to change in the future? If so, why and in what way? The key point is the availability of bandwidth in rural areas. As rollout takes place across the UK, the availability of a fibre broadband connection will increase. Given the known benefits that broadband gives to a business in terms of increased productivity, it is highly likely that rural businesses will seek significant increases in broadband speed. In addition, the availability and use of different devices, such as smart phones, tablets and laptops, will suggest that rural businesses will require faster speeds for both download and upload applications. Are you confident in determining what your current and future broadband needs are and deciding what products you should choose? If not, please explain why. It would be reasonable to assume that the wide variety of different products on the market should make it easier for rural businesses to access and use broadband efficiently. However, this presupposes a knowledge of both the market (ie what is available) and the ability to utilise broadband effectively within the business. We are aware of too many examples where businesses are unable to fully exploit the opportunities available through broadband because of a lack of education of the technology. Our concern is that this could increase as new products come onto the market. What further information would help you in determining your current and future broadband requirements and which products may be suitable for your business? Rural businesses need to understand how the products currently available and those in the future actually work and how this fits into their own business operation. There needs to be a widespread information/education campaign that targets businesses, whether start ups or Page 2 of 5

3 established, to make the most of what is available. The responsibility here lies with both the Government and the industry as both would significantly gain from such an approach. Section 3: Availability and effectiveness of current provision As a business Do you use a dedicated leased line service? If so, please indicate whether this was a business decision based on your requirements or whether no suitable alternatives were available. There are a number of rural businesses which have dedicated leased lines. However, the vast majority of them (we estimate as high as 95%) had little option but to purchase a leased line simply due to the failure of an adequate broadband provision for their business. Nevertheless, many of these businesses are using the leased line as a broadband hub and spurring off to supply bandwidth for other parts of the business. For example, a rural estate will have purchased a leased line to tenanted buildings as a means of providing a broadband service. Using the leased line as a hub (and the increased bandwidth) they have then either physically connected additional lines to each tenanted property or put in place a wireless mesh network so that those additional businesses can benefit from the increased speeds. What is crucially important in this example is the ability of the main business to be able to do so without hindrance from the infrastructure provider. Are you satisfied with the speeds you receive, the amount you pay and the service you get from the provider? If not, please set out why. There is a growing frustration among many businesses with leased lines that costs are far too high and there may be additional constraints placed on the business by the infrastructure provider. With regard to superfast broadband via fibre, the concern is not necessarily with the speeds although we do have a major issue with the principle of fibre to the cabinet, the main method used by BT to deploy the superfast rollout programme. A number of rural businesses are located too far away from the cabinet to be able to fully benefit from superfast speeds given that the further the distance, the greater the signal degradation, meaning that a rural business located some 4km from the cabinet could be receiving speeds of less than 8Mbps, rather than an advertised 52Mbps (BT infinity). Such a fall away in speed availability will have a significant detrimental impact on the ability of a rural business to fully utilise the available technology to the extent that there is evidence that some rural businesses will not purchase superfast broadband products. This raises another important issue. Irrespective of the clawback arrangement under the BDUK contract arrangements with BT with respect of demand levels, there remain serious question marks as to the level of demand aggregation. It would have been expected that once fibre broadband became available in a particular area, the level of demand for the appropriate product would be high. Unfortunately, evidence suggests that actual take up is less than 50% in a number of rural areas raising two further points. Page 3 of 5

4 Firstly, many businesses are unaware of the need to purchase the superfast product rather than simply waiting for it to be given to them. This means there is a lack of clarity as to how and which products could be bought. Secondly, businesses have never been clear on the advantages afforded by superfast broadband. This should be rectified by government through a clear information programme which sets out the benefit broadband affords. What do you consider to be the main challenges or barriers to accessing the broadband provision for your business needs? Do these challenges include insufficient choice of provider or technology and knowledge of the market? We have set out our views regarding knowledge of the market above. In terms of the challenges and barriers on broadband access these can be listed as firstly, the lack of availability to effective broadband; secondly, the speed of rollout and the lack of knowledge of other forms of technology; thirdly, the inability of many rural businesses to fully utilise the broadband that is available. What impact do these challenges have on your business? It is inevitable that, irrespective of the type rural economic activity, a business will suffer through the lack of an effective broadband connection. Whether that business be agriculture and the ability to use digital by default to complete Basic Payment forms, or a rural tourism business where broadband could transform the marketing potential and increase visitor numbers, the inability of securing a broadband connection can lead to the break up of a rural business. We would like to make it very clear that Government policy in the rollout of broadband has been totally unsatisfactory. There has been a complete lack of understanding as to the needs of the rural economy which has simply exacerbated the rural-urban digital divide. As importantly, the lack of broadband availability makes it very challenging for a rural business to grow and therefore meet the Chancellor of the Exchequer s call for greater productivity. What changes do you consider Government could make that would assist you in overcoming these challenges? Quite simply, the Government s broadband strategy needs to be radically rethought. We believe that given the targets set by government up to the end of 2017, and assuming that these can be met on time, for the period 2018 to 2030 the Government must recognise the different circumstances, challenges and barriers that constitute the rural economy. This must include a clear understanding of what rural businesses need in terms of technological provision in order to thrive. In short, now is the opportunity for the Government to put in place a far reaching and far sighted broadband strategy that places business at its heart and sets out an approach that is integrated. Clearly, we recognise and would support a clearly defined role for government in the future regarding broadband provision and use. However, that role must be proportionate in terms of reflecting developments in the sector to the extent that Government s primary purpose should be the consideration and delivery of an integrated strategic framework, rather than direct intervention in the market. Page 4 of 5

5 For further information please contact: Charles Trotman Senior Economist CLA, 16 Belgrave Square London SW1X 8PQ Tel: Fax: CLA reference (for internal use only): A cnsltrespbusbroadband.doc Page 5 of 5

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