The Digital Millennium

The screech claws at my eardrums every time my dialup modem connects. With less than half an hour to go for the new millennium, I am sending last minute emails to family and friends down south and abroad. Contemplating the early fireworks across the football pitch, today’s snapshots take ages to upload though; seconds seem an eternity with few minutes now to go for the end of this millennium. Still waiting for the photo attachment, I ponder what everyday life would look like in 2050 - how would information and communication technologies have evolved and shaped our future?

... Back from my daydream, a decade later in the new millennium, I am again sitting in front of my mobile-enabled netbook ordering Christmas presents for my wife and son. Many people, like me, would now find it difficult to conceive their busy daily routines without access to a laptop and a speedy connection to the internet. Over sixty six percent of consumers shopped online over the last Christmas period; one pound in every seven was spent online in the UK. (Source: ONS)

Since the early 1990s, when the first web browsers were made freely available, accompanied by mass-produced PCs, and followed by affordable dialup internet connections (at the turtle speed of 56kps), many aspects of work life and society in general have been touched by new information and communication technologies. With growing multimedia capabilities and increasingly hyper-fast wireless connections, we are certainly witnessing a cultural and economic revolution, geared by the creation, processing and sharing of vast amounts of ubiquitous information. New business models have also emerged that capitalise on the disruptive time and space-shrinking nature of new information and communication technologies.

Building and using new software applications and information services effectively not only increases productivity but also contributes to raising national competitiveness. It is not surprising that national governments now regard industries based on new information and communication technologies as a key axis for sustainable economic growth, in a similar way to more traditional sectors such as manufacturing and transportation.

But, how has the UK performed relative to other countries? Has our country led the technology race - or have we just struggled to keep the pace?

Let’s revisit the historical evolution and current status of new information and communication technologies. More specifically, let’s look into the trajectory and rate of change of internet technology, such as dialup and broadband internet in the UK and other leading nations.

At a very low pace, the UK reached 1 million broadband subscribers by 2002. Broadband connections then multiplied much more rapidly from around 3 million lines and £1 billion in revenue in 2003, to 17 million lines and £3 billion in revenue by 2008 in the UK.

What has been the role of the UK government in promoting the uptake of broadband services in the UK?

Let’s not forget that the UK government provided more than £1 billion via the Broadband Aggregation Project to develop broadband connections to primary and secondary schools between 2003 and 2006 and NHS clinics. In addition, the UK government awarded grants of over £70 million via the Broadband Fund to more than a dozen of similar projects between 2001 and 2005.

In addition, the UK government, through new regulations promoted competition amongst the incumbent British Telecomm and new providers such as Virgin Media since 2000. This has taken the form of ‘unbundling local loops‘- facilitating access to raw copper pairs (or fibre) networks to competitors, at reasonable prices, so that new providers can themselves procure broadband connections to end users. The basic idea is to increase choice for the end user, and competition based on cost and quality of services. Thanks to this regulation-induced competition, the number of unbundled lines increased from 365,000 at the end of 2005 to 1.7 million by early 2007 (Source: IT&IF).

How has the UK performed relatively to other industrialised and emerging nations?

The US grew from 26 million to 78 million broadband connections and from £6 to £17 billion in revenue between 2003 and 2008. Japan grew from 14 million to 30 million connections and £2 to £6 billion in revenue in the same period.

A more useful measure is the number of broadband lines per 100 people. This figure grew from five to 28 in the UK, nine to 25 in the US, and eleven to 24 in Japan from 2003 and 2008. The two countries with the highest number of broadband lines per 100 people were the Netherlands with 36 and Canada with 30 in 2008.

Interestingly, social networking, online games and video-on-demand applications have a huge potential to play an important role in economic growth. For instance, as much as 30.9 per cent of mobile web users participate in social networking sites in the UK, compared to 30.1 percent in the US and just over 12 percent in Germany and France (Source: Ofcom).

The above suggests that the UK is amongst the top ten countries in the world in broadband development.

However, the proportion of broadband lines with a speed above 8 Mbits per second – the current benchmark for connection quality and sophistication - was just 10 percent in the UK, compared to 37 percent in the Netherlands and 33 percent in Sweden in 2008. The leaders of the pack, Japan and South Korea are currently providing speeds up of to 100 Mbits per second to above sixty five percent of their populations (Sources: OFCOM, IT&IF).

What is the UK government and community of private investors going to do - or should do – to keep our nation backing the winning horse?

History shows that close public-private partnerships have worked in the past, evidenced by ring-fenced funds at the early stages of the innovation cycle to kick-start new infrastructure, promoting a critical mass of users that will boost further demand of new services, and entice private investors to jump into the competition band wagon. New regulations should be aimed at fixing market failures and provide economic incentives to increase competition - as shown by the experience of unbundling for instance.

The Digital Britain Bill promises to leverage this type of public and private partnership and help the UK to continue to be a proactive player in the global knowledge economy.

The shape and scope of renewed public-private partnerships might differ slightly from the above, but the core principles of boosting demand, enticing supply, and shaping a healthy competitive environment - paramount for long term success – should remain the same.

... thanks to the wider adoption of WiFi, I am able to quickly complete this entry from my lodge at Center Parcs Whinfell Forest. Surrounded by beautiful ancient conifers and freshly sprinkled snow, I am looking forward to a relaxing retreat with my family away from the mayhem of festive shopping. Having missed the only copy of the weekend edition of the Financial Times in the parc market, I think it is time to relax.