Speech to Reform
A few weeks ago I was in Silicon Valley meeting with the CEOs of some of the world’s most innovative, high-tech companies.
I remember talking to a partner in a venture capitalist firm that has successfully backed companies like Apple and Google, Pay Pal and YouTube.
He was in his late 40s, but he told me that the difference between Silicon Valley and Boston was that: “There they think only people over 25 are smart. Here we think it’s only people under 25”.
We may have a young Prime Minister but the truth is that London and the UK weren’t even on his radar.
It made me ask myself: what part does Britain want to play in the digital revolution? Do we want to be the perennial “first follower” to America? Or can we do better?
I hope that, after six months, the government’s direction of travel on this is clear.
Within a month of my appointment I set out our ambition to have the Europe’s best superfast broadband by 2015.
Then we announced four rural superfast broadband pilots in the Highlands and Cumbria, Herefordshire and North Yorkshire.
We settled the television licence fee in record time, increasing public investment in high speed broadband from £200 million to £830 million.
And last month the Prime Minister unveiled our plans for a new Tech City in East London and the Olympic Park - with support from companies such as Google and Facebook, Intel and McKinsey.
Today I want to put flesh on the bones of our ambitions. But first I want to explain why we believe that this agenda is so central to our strategy for economic growth.
Economic growth: laying the foundations for risk-taking
Back in October, David Cameron set out his plans to restore our economic dynamism.
Anyone who has seen the film Social Network will not need reminding that we live in an age when companies with the smallest of investments can become global giants overnight.
This world is not foreign territory for the UK. Our digital industries already generate 10% of our Gross Value Added - around £130 billion.
They already employ around six per cent of the UK’s workforce - more than 1.7 million people.
And they have already demonstrated their incredible potential by growing through the downturn - growth that is set to continue in the years ahead by an estimated four per cent each year.
We are the acknowledged global leader in e-commerce - spending more online per capita than any other country in the world.
Our businesses are successfully exploiting the internet to expand their sales overseas - exporting £2.80 for every £1 imported, compared to 90 pence for every £1 in the offline economy.
And our consumers are highly active online. We now have 40 million users of the internet, broadband penetration has doubled in the past five years, and 70 per cent of households are broadband subscribers.
But, at the same time, we face significant barriers to growth.
The country the world envies for its skills in creating digital content lags alarmingly behind when it comes to monetising it.
Our broadband infrastructure is towards the middle rather than at the head of the pack.
Only 15 per cent of UK subscribers currently have speeds above five mbps, compared with 65 per cent in South Korea. And only 0.2 per cent of UK households had a superfast broadband connection at the end of last year - compared to 12 per cent in Sweden and 34 per cent in Japan.
And when it comes to Bill Clinton’s “Digital Divide” we are the country with 30 million people who go online every day and nine million people who haven’t been online once - that’s more than the population of our five largest cities.
These are all big challenges.
Today I want to focus on an area where I believe the government has a pivotal role to play - namely in ensuring that we have world-class digital infrastructure in place.
The LSE believe a superfast network will create 280,000 new jobs, while NESTA believe it will be more like 600,000. The Federation of Small Businesses believes it could add £18 billion to GDP.
The potential is huge. But when I spoke to Jonathan Ive, the British Head Designer at Apple based in California, he told me that, unless you take extraordinary risks, you won’t survive in the digital world.
I want our broadband infrastructure to make it possible for our entrepreneurs and investors to take those risks.
To draw on what Shakespeare once called “The natural bravery of our Isle”, and use it to develop the commercial applications, products, services and content that will dominate in the high-speed world.
The best superfast broadband network in Europe? Yes, but not as an end in itself. As the foundation for a new economic dynamism that will be at the heart of our future economic success.
Public services reform
But this is not just about economic growth.
I am particularly pleased to be launching our strategy for superfast broadband at Reform today because it is also central to our agenda for public services reform.
Already we can see how other countries are using next generation access to transform the delivery of public services.
Australia, for example, where higher speed broadband has led to the School of the Air - a distance learning initiative which brings together students from remote areas in online classrooms.
Or South Korea, where the Education Broadcast Service means that children who can’t afford to go to “cram schools” to prepare them for the crucial, national aptitude test can still access high quality educational tutorials online.
Or America, where Snap! VRS uses teleconferencing to connect deaf citizens with sign language interpreters who can help them during medical consultations or with other services.
“Ons Net” in The Netherlands is another good example. By taking fibre to the home for all residents of the small town of Nuenen, it has allowed a whole host of new services to develop and help raise their quality of life.
From telecare systems for the elderly to live streaming of church services; from web applications for Alzheimer’s sufferers to virtual fitness coaching and local TV - there are countless examples of how superfast broadband is helping them to build a fairer, as well as a more prosperous, society.
And we are already getting glimpses of that future here in the UK.
At Alston Healthcare in Cumbria, for example, where medical staff are using next generation broadband to diagnose, treat and monitor remotely, while their patients are using it to book GP appointments and arrange repeat prescriptions via their TVs.
Last month we announced that digital will increasingly be the default channel for delivering public services - just as it is for many service in the private sector.
And as part of that, we announced a first wave of services that will have digital as their primary delivery channel - including student loans and jobseeker’s allowance applications for individuals, as well as VAT registration and Companies House services for businesses.
For providers, digital is cheaper and more efficient.
With Jobseeker’s allowance alone, the Department for Work and Pensions is expecting to save up to £100 million of taxpayers’ money by 2014-2015.
For users, digital is simpler, more convenient and more personalised.
That’s why Martha Lane Fox, as the UK’s Digital Champion, has the goal of closing the digital divide and making this country the first in which everyone has the opportunity to access the internet.
Her campaign - Race Online 2012 - is making a real impact, working with more than 900 partners from all sectors.
Just last week, Microsoft launched their “Give someone their first time on the web” initiative - opening up new opportunities to get people online, provide them with training, and even offer them your old PC.
Closing that digital divide, and making that shift to online delivery, has the potential to transform the relationship between individuals and government;
Putting more power into the hands of citizens, and giving communities the tools they need to build a bigger and stronger society.
A strategy for Britain’s superfast broadband future
So much for the “why?”. What about the “how”?
Of course, it’s not the Government’s role to tell businesses what to do.
Already, the market in the UK is making great strides in delivering superfast broadband. With Virgin Media and BT rapidly deploying networks, nearly 50 per cent of households can now access speeds of 50Mbps.
At the same time, smaller providers such as Rutland Telecom, Vtesse and Geo are finding innovative ways of delivering superfast broadband in areas where the economic climate is more of a challenge.
But the Government does have a key role to play in stimulating competition and catalysing investment in the new infrastructure we need.
That’s why, in the recent spending review, we announced £530 million of funding to support broadband rollout - with the potential for making an extra £300 million available for the period 2015-2017.
The strategy we are publishing today represents our plan for how to spend it in a way that will stimulate the greatest possible investment in our superfast broadband network.
That means opening up access to existing infrastructure, including BT’s network of ducts and poles.
It means working with local authorities to reduce the cost of broadband roll-out by clarifying existing guidance on streetworks and micro-trenching.
It means issuing new guidance for builders and contractors on how to make sure new buildings are broadband ready - and I’m pleased to say that the British Standards Institution and the Building Research Establishment, who have led this work for us, have brought out that guidance today.
And, at a time when half of all new web connections are mobile connections, it means awarding the 800MHz and 2.6GHz spectrum to allow the development of the next generation of mobile service.
A fibre point in every community
Technology neutrality is a central part of this strategy.
No single technology will be suitable for all circumstances, and a mix of technologies - fixed, wireless and satellite - will be needed if we are to deliver on our ambition throughout the UK.
But at the same time we recognise that taking high-capacity fibre deeper into the network is likely to be key - which is why our goal today is very simple: to deliver a fibre point in every community in the UK by the end of this parliament.
In order to help achieve this, I can announce that we will be making up to £50 million of funding available for a second wave of superfast broadband market testing projects - to add to those that we have already established in North Yorkshire and Herefordshire, Cumbria and the Highlands and Islands.
We will be inviting local bodies and devolved administrations right across the UK to propose new testing projects in April of next year, with a view to making a final selection in May.
I am giving everyone advanced notice of this to allow local communities time to develop broadband strategies and work out which projects they need the most.
I am also very pleased to be able to say that we have been having constructive discussions with BT and the BBC about the role they can play in fulfilling these ambitions.
The BBC recognise that, as one of the biggest drivers of demand for broadband through the iPlayer, the licence fee has a big role to play. But they are doing much more and have indicated they are considering funding outreach and education programmes in the areas where we have pilots.
As a result, they have announced a series of new initiatives.
A one Gigabit per second trial in Kesgrave, near Ipswich, early in the New Year - a speed that can download a two hour film in just 12 seconds.
An extension of their highly successful “Race to Infinity” campaign.
A decision to include up to 40 market towns in rural areas in their next phase of superfast broadband deployment in late 2011and early 2012.
And last, but by no means least, a signal that they intend to bid for our £830 million investment by matching it with a similar investment.
According to their analysis, this matched fund will ensure that superfast broadband will reach 85-90 per cent of the country.
It’s a great example of how public investment and government action can stimulate further investment from the private sector.
And it’s an achievement that will take us well on the way to creating Europe’s best superfast broadband network.
Let me finish by saying a few words about what we mean by the word “best”.
The broadband scorecard developed by the Berkman Centre at Harvard focuses on three areas - speed, coverage, and price.
To that, we are adding an additional factor: choice.
If, by the end of this parliament, we are performing across these four areas then we will have met our ambition.
But in reality “best” means more than just a measurement against a set of indicators.
It means more than a broadband network that will help us to secure and underpin our economic future. One that can put the UK right up there with the rest of the world when it comes to internet innovation.
It means one that will make sure that everyone can benefit from being online, and that no one is excluded.
Like the young man from Leeds who told Martha Lane Fox that the opportunity to learn how to make and sell music online had turned his life around after drug addiction. Without the internet, he said, he “would be dead”.
Or the woman in her 80s I met in Downing Street in the summer who told me that getting online had, quite simply, stopped her from feeling lonely.
New technology is not perfect. It is a force that needs to be carefully harnessed.
But in the end we should remember that its benefits are not just about efficiency, or growth, or jobs but about a lasting, positive impact on each of our daily lives.
A positive impact that the Government is determined to make possible.