E-commerce minister: No rural broadband subsidies

In an exclusive interview, Stephen Timms MP says market forces - with some government help - are the best way of rolling out broadband across Britain

The UK government is still not prepared to subsidise the rollout of broadband to rural areas, as is happening in some other countries, despite increasing concern that a digital divide is emerging between broadband haves and have-nots.

In an exclusive interview with ZDNet UK, the e-commerce minister Stephen Timms said he supported the decision of his predecessor, Douglas Alexander, not to provide tax breaks to support infrastructure rollout -- as was recommended by the Broadband Stakeholder Group (BSG).

Timms is encouraged by BT's change of heart towards broadband, which has seen substantial price cuts this year, and believes this shows that market forces will be enough to drive broadband rollout.

"Since that (BSG) report was published, we've seen some big changes. I met with the chairman and chief executive of BT last week, and they both emphasised that broadband is at the heart of BT's commercial strategy," Timms told ZDNet UK.

"I think it's important that people don't look to government money as the way forward. We can look to the normal commercial process to deliver broadband to people. It is government's responsibility to help the market, and to keep an eye on what's going on, but it's not going to be government money that pays for the infrastructure," Timms insisted.

This position, which has been attacked in the past by some tech-savvy MPs, is at odds with the policies of many other developed nations. France last year committed 1.5bn francs (£150m), plus another 15bn francs worth of loans, to finance broadband networks in areas where it isn't economically viable, while Sweden is spending 10bn Swedish krona (£700m) on achieving 98 percent broadband coverage. The US government has earmarked $750m to help underwrite the cost of deploying rural broadband to about six million homes.

Currently, around 70 percent of the UK population can get affordable consumer broadband, either from a cable company or from an ISP reselling a BT ADSL product.

The UK government has committed £30m to a variety of local broadband initiatives, but these are intended to spark private-sector solutions to the rural broadband problem. Timms believes more money could be committed to such schemes in the future, but that the government's main role is likely to be aggregating the public sector demand for broadband in rural areas.

"If we can identify the public sector customers for broadband and bring them together then there is the possibility, I think, of making it viable for service providers to roll broadband out to them, and then everyone else in surrounding areas can benefit," said Timms.

Douglas Alexander mentioned such a scheme last year, and Timms told ZDNet UK that further details would be announced soon.

Some in the telecoms industry believe that the rural broadband problem could be resolved, before it becomes a crisis, if broadband was designated as a universal service. This would mean that BT would have to offer it to everyone in the UK, as is already the case with basic telephony services.

Timms, who has a 15-year track record in the telecommunications and technology sector, does not support such a move.

"I think the definition of a universal service is something that needs to be kept under review, but I don't think there's a case at the moment for adding broadband to the list," he said. "The danger with going down that road is that you create a kind of dead end that would actually hold up progress rather than enhancing it."

Click here to read the full interview with Stephen Timms MP, minister for e-commerce and competitiveness.

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