Digital infrastructure matters to modern manufacturing
That announcement followed EEF’s publication of our results on manufacturers’ experiences and expectations from digital infrastructure in the UK (you can read all about that here).
Given the transformation of industry to the 4th industrial revolution, manufacturers understandably attach a high degree of importance to their internet connectivity, both now and in the future.
Our submission to the review highlights that speed is not the only concern – the debate on the future of broadband for business need to also focus on reliability, resilience and a future-proofed network.
For us that means a more pervasive rollout of fibre to the premise.
Excellent work has been done to increase bandwidth capacity in the UK, but while this need for speed was an important early priority, manufacturers believe there should be a stocktake on broadband policy objectives to ensure the UK doesn’t fall behind competitors in the equally important area of reliability.
The broadband market is failing to deliver ‘reliability’ for business
Manufacturers are paying significantly more to access digital infrastructure that can meet their needs, due to market failure in providing what is necessary – namely reliable connections. So they’ve intervened themselves to get leased lines, at a significant cost.
A third of manufacturers have invested in a dedicated leased line connection.
In the key areas of speed, network availability, quality and reliability – leased lines are seen as the best choice in meeting manufacturers’ requirements - highlighting that the need is not just about speed but wider factors to do with reliability and resilience.
"We have to have a very expensive leased line because broadband is so poor and unreliable in both the areas where we have factories (The Black Country). I believe there is a calculated policy by BT Openreach to retard rollout of fast broadband to industrial areas in order to maximise their income. If I had fast reliable broadband I would need less BT lines." – EEF survey respondent
"Broadband is too far away from exchange to be of use, and Openreach shows no interest in upgrading the cabinets near our sites to FttC while they can fleece us for £6900 a year for leased lines (3 of them), as is the same across the majority of business parks. If Openreach could also stop faffing around in the countryside connecting villages to finish off upgrading the cities they abandoned half way through, perhaps we could get some of our staff working from home as well." – EEF survey respondent
Looking to the future just over 50% of manufacturers say their current internet connection is not adequate for their expected needs over the next five years (only 35% said it was).
The inability to deliver what manufacturers want is tied up in the infrastructure
In EEF’s view, this inability to deliver on reliability is fundamentally tied up in the underlying BT Openreach infrastructure – namely copper.
Crucially, as the same infrastructure is used, the issues businesses may have with reliability and resilience will remain the same regardless of which broadband provider you take.
"For us it is pretty much BT, we can subscribe through others but the physical infrastructure is still BT." – EEF survey respondent
While Fibre to the Cabinet rollout may improve speeds, reliability will still remain an issue.
A full Fibre to the Premise (FTTP) rollout will not only deliver on speeds, but answer the question of reliability, latency and resilience, while also future proofing the network in a way that no current technology solution can.
While the Government is currently hesitant to mandate a technology solution, there may come a point where the opportunity cost to the UK economy of waiting for the market to deliver reaches a point where such a clearly stated solution will be necessary.
Recent figures show that BT’s FTTP rollout has reached just 1% of total UK households and businesses. Additionally, the UK remains off the league table for FTTP subscribers according to the FTTH Council Europe (their analysis is here).
A stocktake and way forward
We need a stocktake of what we’re trying to achieve with a much greater focus on reliability, resilience and future requirements. Recently announced Ofcom remedies may address current limitations – but industry feels there are no more free passes.
Government also needs to be a more active player and be prepared to intervene.
In addressing the requirements of industry there are three crucial aspects that are needed – a clear framework for improving reliability with milestones, plans for remedial action if those milestones are not met and all players, including government, standing behind that strategy in a joined up way.
Given the fundamental changes in demand expected over the next decade as a result of the 4th industrial revolution, industry can’t wait another 10 years for an Ofcom review process to come to conclusions that should have been identified and addressed far sooner.
Ofcom’s remedies need a much clearer framework from government on objectives and milestones and just as they have done with setting out a new Universal Service Obligation, government must be prepared to take leadership in mandating a full Fibre to the Premise rollout if progress is not made.
This in our view would also include asking the question, do we need a ‘Network Rail’ for digital infrastructure to deliver the requirements of a modern economy?
"We only have the option of leased line for data on our industrial estate and all installation subsidies have currently been cancelled - there is no incentive for telecoms companies to provide cost effective fibre connections like they do to home users." – EEF survey respondent
"We occupy 2 sites principally: Our Manchester site is in a residential area and the broadband is fibre optic and 60mbps download 12 upload. Our Birmingham site is in the Jewellery Quarter business district and the broadband is 15mbps download 0.72 upload and is 25% more expensive than Manchester. BT told us in 2010 that BT infinity (fast broadband) will be available on the 1st March 2012. In 2014 we were told that there were no plans to upgrade our exchange. It seems that BT Openreach are prioritising where they can make the most money. If Openreach is being subsidised by the public purse then this is priority is wrong." – EEF survey respondent