CBI predicts second Internet boom

Study promises Internet revival, but warns that government must speed up delivery of broadband Internet access

A survey of 1,000 leading companies in the UK by the Confederation of British Industry (CBI) and consultancy firm KPMG indicates that Internet business will see renewed growth over the next couple years, bringing fresh optimism amid the ongoing dot-com fallout.

The study showed that, although many traditional UK companies currently generate less than five percent of their business online, 56 percent of these firms expect to see that figure at least double over the next few years.

The survey Quiet Revolution also found that most firms are more concerned by delays to the arrival of affordable broadband Internet access than the string of recent dot-com collapses. The CBI recommends that the government bring forward its target of 2005 for delivering broadband Internet access by up to two years to help calm theses fears.

Broadband Internet access is seen as key to the future development of e-business because software for supply chain planning, customer support or knowledge management works best over high-speed connections.

Head of e-business at the CBI Nigel Hickson says that the UK's Internet industry is likely to lag behind those of more forward-thinking countries in Europe and the rest of the world if the government does not act.

"We know that the government is concerned, and we think they are right to be. We think it should be more concerned," he says. "If business expectations are going to be met, this represents a major requirement in broadband technology. Otherwise it will frustrate business in the UK."

BT has faced criticism for delaying the process of opening up the networks that would carry broadband service to competition.

Arian Afrough, senior research analyst with IDC's European Telecoms Group, says that delays to the delivery of broadband Internet will also prevent companies from delivering content-rich Internet services using the latest media technologies as well as over-the-Web application services.

"In Britain, especially, it has taken too long," she says. "BT has delayed local loop unbundling for some time, obviously to maintain a competitive advantage."

NTL launched a £5m campaign to promote its own broadband cable network, although this will not extend into many rural areas of the UK.

Recent high-profile dot-com failures have prompted some observers to suggest that the Internet boom has officially turned to bust. The CBI says that while pioneering Internet firms recognised the potential of the Web, they typically lacked the skills and experience to make this count. It predicts that the next generation of e-business will make more productive use of the Internet.

"The first wave of e-business is emphatically over, but the rags-to-riches-to-rags stories of the dot.com entrepreneurs that have dominated the headlines have disguised what has really been going on," comments Alan Buckle, chief executive of KPMG Consulting. "A quiet revolution has begun inside British business, imaginative companies in all areas of the economy have been embracing Internet technology".

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