Select Committee on Culture, Media and Sport Minutes of Evidence

Supplementary Memorandum submitted by the Department for Culture, Media & Sport and the Department for Trade and Industry


  1.  It is important to stress that the roll-out of broadband services is a challenge not only for Government but also for the private sector. Government action however at national and regional level has a key role to play.


  2.  The Government has set out a number of measures to intensify competition, support demand and aid provision of broadband content. These measures will benefit those areas where broadband is available at mass-market rates (covering around two-thirds of the population). But they may not make a strong enough business case for broadband investment in the remaining rural and remote areas. The primary barrier to broadband roll-out in rural areas is the high cost of capital. The investments needed are large and attract a high-risk premium. Roll-out to rural areas is therefore likely to be very slow and patchy, even under benign conditions.

  3.  Our strategy is to;

    —  encourage infrastructure-sharing by telecommunications companies to reduce the cost of roll-out, encouraging the telecommunications industry to come forward with specific proposals (within the bounds of competition law);

    —  Cut red tape which may be holding back deployment of satellite broadband services (potentially a major contributor to rural broadband access); and

    —  Aggregate broadband procurement by the public sector in order to provide guaranteed levels of demand in rural areas. The public sector spends around £1.7 billion on communications. Research undertaken for the Office of the e-Envoy suggests that significant benefits could be achieved by moving towards a nationally-co-ordinated set of regional procurements, each guaranteeing a given number of public sector sites and given levels of demand for broadband at each site. The Office of Government Commerce is currently examining how we might use public sector procurement more effectively.


  4.  Valuable work on the promotion and development of the broadband market in the English regions is carried out by the Regional Development Agencies (RDAs).

  5.  The UK Broadband Fund was established to support the RDAs (along with the devolved administrations) in taking forward innovative schemes to meet local requirements for extending broadband networks. DTI provided high-level guidance for the RDAs, who developed action plans in consultation with Government and local partners.

  6.  From April 2002, under the new `Single Pot' arrangements, RDAs will work to meet targets agreed with Government, funded from a single budget which they are responsible for managing. Many RDAs consider broadband an important aspect of their development agendas and are likely to be carrying out considerable work on supporting the market.

  7.  DTI Ministers and RDA Chairs have agreed that the RDAs have several roles to play;

    —  They can develop better-focused information for the region, such as the availability of broadband;

    —  They can co-ordinate the work of other public sector bodies so that maximum benefit can be derived from their purchasing of broadband services;

    —  They can catalyse action on behalf of the industry through identifying with them the potential markets in the region.

  Much of their work will be focused on rural areas where there is a lack of provision at present.


  8.  The Department for the Environment, Food and Rural Affairs (DEFRA) has an overall role in helping other government departments and the RDAs take account of the needs of rural areas in developing their policies. The Countryside Agency, which acts as an independent adviser to DEFRA on rural issues, is monitoring the roll-out of broadband in rural areas.

February 2002

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