Broadband industry debates recession, rollout

Government spending on next-gen broadband could fight the recession — or harm a vulnerable market

Key players in the broadband industry have been debating the possible effects of the imminent recession on the UK broadband industry.

At a Westminster eForum on next-generation broadband, held in London on Thursday, some called on the government to roll out high-speed broadband access across the country as a way to beat the recession. Others said the recession could even boost the broadband market, as consumers spend more time at home instead of going out.

"If the economy is in deep recession, the government ought to be looking at ways of stimulating the economy," said Roger Darlington, the former head of the Internet Watch Foundation and a member of the consumer panel that advises regulator Ofcom. "It makes more sense to invest in infrastructure which would serve this country well for decades and stimulate a new period of economic growth."

Ofcom disagrees. Peter Philips, head of strategy and market development for the regulator, argued that "today's economic uncertainties weaken the case for rapid public intervention" in any nationwide fibre rollout. Philips's remarks were consistent with Ofcom's established view that the market, not the government, should take care of fibre deployment.

Emma Gilthorpe, BT's head of industry policy and regulation, said the credit crunch was already starting to have some impact on the broadband market. "People are not moving house, so they are tending to stay with their providers," she said. "The market is less dynamic."

Others pointed out that no-one had any idea what long-term effect the recession might have on the broadband industry.

"The communications industry as it exists today has never been through a recession," said Antony Walker, the chief executive of the Broadband Stakeholder Group industry body. "We don't know how much consumers value broadband products [in such circumstances]. They could pull back, or there could be a substitution effect as consumers see greater value on premium access from home."

"We're going to find out fairly soon," Walker added.

Forrester analyst Ian Fogg predicted home broadband would be "fairly resistant" to the economic situation. He acknowledged that the recession "might impact consumers' willingness to spend more", but pointed out that — even before the recession — consumers had been unwilling to pay more for premium broadband connectivity, often opting for the cheapest possible deal.

Fogg said that those few operators who currently had the cash reserves to roll out fibre access across the country could find themselves in a good position. "Those who can roll out today may find benefits, such as [equipment] vendors willing to give them a discount," he said, adding that such operators would also find themselves ahead of the pack once the economy starts to look up again.


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