When IT Meets Politics

July 20, 2015  6:00 PM

Minister urges business parks to bypass BT and organise their own broadband

Philip Virgo Profile: Philip Virgo
3, Broadband, BT, EE, Hansard, O2, Ofcom, Openreach, Thinkbroadband, waveney, Wifi

On July 13th the House of Commons had another Broadband Debate, this time introduced by Dan Poulter, on how BT was meeting the numbers in the BDUK targets for Suffolk, but leaving a wave of complaints, particularly across his constituency, because of how it was doing so. I recommend you read the full account in Hansard. It again illustrates the shortcomings of using government money to simply fund the extension of BT’s 21CN network (designed over 20 years ago when X25, not IP, was expected to be the “future”) to meet the needs of those being excluded from the Internet Age. The way in which engineers were moved to other counties as  soon as the targets were being met was probably because BT was resource limited. If so, that opens up the question of whether others could have filled the gap then, or now. If BT is still resource strapped (finance as well as people), that adds another dimension to the Ofcom review and also the CMA review into the BT-EE and O2-3 mergers (submissions due by 25th July).

The report in Thinkbroadband on the Suffolk debate illustrates how Waveney benefited from the initiative led by Peter Aldous but his intervention in Hansard on July 13th showed how annoyed he is that some of those who attended the meeting in Beccles at which he launched his broadband campaign, back in April 2011, have still not benefited – even though the nominal targets have been met.     

One of the issues has been the treatment of business customers. The response of the Minister, which I have paraphrased in the heading to this blog was:
“Business parks and industrial estates are also an issue that we negotiate regularly with BT. Again, the issue is somewhat balanced. It surprises me sometimes that business parks do not take it into their own hands to provide superfast broadband for tenants. The market is replete with numerous business suppliers of broadband. As we found from our business voucher scheme, which has connected 25,000 businesses, we have more than 600 registered suppliers all over the country that are more than willing to provide superfast broadband. Business broadband is a different beast from residential broadband.”

Those who disagree with his analysis should contact the many would-be suppliers to help them with evidence to the Ofcom review.

P.S. I have been told that the Corporation of London has just issued an invitation to tender for a wifi concession two months ahead of schedule but now expects to take nine months over the process. Meanwhile other London councils, whose processes took less than three, will have their services operational.  I am awaiting details, including why the City is so different.

P.P.S. The majority of stockbrokers still show BT as a “buy” and I am not selling mine yet. I estimate the break up value to be well above the current share price – even though I am not sure it would be in the national interest!  

July 20, 2015  2:15 PM

A Dirty Digest of the Executive Summary of Ofcom Strategic Review document

Philip Virgo Profile: Philip Virgo
bskyb, competition, Duopoly, Ofcom, Oftel, Openreach

The Executive Summary of the Discussion Document for the Ofcom Strategic Review is 20 pages long and omits a key phrase from the main paper regarding the impact of regulation on investment “Whatever approach is adopted, its success or failure depends significantly on the trust investors place in the regulator. Investors value predictable and stable policy interventions:significant and poorly signaled changes of policy can damage investor confidence, and may increase the risk associated with new investments“. It then goes on to ask: “What might be the most appropriate regulatory approach to the pricing of wholesale access to new and risky investments in enduring bottlenecks in the future?”

Five years ago the lack of trust in the UK telecoms market was indeed such that fund managers were not interested in anything other than bottleneck removal with a payback in months rather than years. Over the past couple of years that appears to have changed. I therefore begin this digest with a consideration of how that lack of trust came about – before I digest the executive summary with that specific question in mind.

The Ofcom executive summary begins with a contrast between the scene today and that when Ofcom did its previous market review, a decade ago. This prepares the ground for a possible reversion for a return to the regulatory priorities set by Bryan Carsberg and dropped by Ed Richards (my convention in this article is to use the names used the decisions were taken, not those they subsequently received). We have moved from monopoly regulation in 1984, through encouraging duopoly (leading to infrastructure competition) in 1991 under Oftel , back via “access regulation” (alias local loop unbundling) to infrastructure monopoly under Ofcom and now to the beginnings (over the past year) of genuine infrastructure competition (as new players began to exploit the opportunities opened up by the run-down of BT’s investment and maintenance programmes). 

Directors and investors would benefit from a quick and dirty digest of the effect of those transitions on BT’s capital spend and share price. It is unclear whether any lessons have really been learned”when a cryptic comment in the Ofcom executive summary says that when the effectiveness of the attempt to encourage “end to end competition …  was shown to be limited, the emphasis shifted again to access based competition”.
The attempt failed because the Cable Companies ran out of cash while trying to fight planning permissions through local authority planning processes. Meanwhile BT was galloping ahead with an ambitious capital investment programme to provide “full motion video” (the original definition of broadband) to every home by 2002. Then came the switch to local loop unbundling  to protect the US bond-holders of the now bankrupt cable companies (NTL filed under US law) and the “redefinition” of broadband to include “125k always on internet”, (all the cable companies could guarantee nationally).
The consequence was a collapse in BT’s share price from a peak of £15 at the start of 2000 to a plateau of about £1.50 – 2.00 (from 2002 – 2012) with a trough of under £1.00 when Ben Vervaayen left and Ian Livingston announced plans to cut capital and operational spend by nearly 25% in the period  2008/9 to 2012/13. Michael Rake then oversaw the decision to invest management time and shareholders’ funds into content (Quad Play) rather than infrastructure (alias utility) services because he could not see how BT could make money out of the latter without political and regulatory changes that were then unlikely.  The price has since recovered to over £4.50 but Openeach is a said to be still heavily cross-subsidising the entry into content markets..

We can see the effect in the steady run down of BT’s annual capital spend (net of overseas spend and/or government subsidy): from £3 million in 1998 (when the BT share price rose from just under £5.00 to over £9.00), rising to over £4 million in 2001, falling back to £2.5 million in 2002 (after the share price tanked), rising again to £3.25 million in 2007-8 before being cut to £2.5 and then £2.25 from 2010 onwards. 

Meanwhile fund managers around the world (but not in the UK) increasingly saw the value of investment in broadband as a utility. The world’s most active on-line retail market (using the cheap consumer broadband enabled by BT’s past investment) is now dominated by US players using off-shore data centres and paying little, if any UK tax. Meanwhile many of their erstwhile UK competitors have been crippled by expensive and slow business connectivity (the leased line legacy).
BT now accounts for less than half the annual investment in communications infrastructure, fixed and mobile are converging and both are suffering from congestion and overload (back haul as well as local access) at peak times in hot spots and not spots. Meanwhile the problems with local planning have still not been properly sorted – although active local opposition is now considerably more muted than a few years ago, when I blogged on the Midsomer Broadband Murders.

The good news is that, at long last, we have a credible government strategy to encourage and support the investment that is so badly needed and action is under way to address the planning problems that caused the failure of the duopoly policy over 20 years ago.  

Now to the challenges and options on which Ofcom wishes to receive inputs.

It sees four strategic objectives, each of which pose challenges:

1)    Incentives for investment and innovation, delivering widespread availability of services with a need  to look at the evolving technology investment scene in the context of the “challenges” of:

Universal broadband: where the current perceived need is for about a reasonably reliable 10mbps, including at peak times,  “to benefit from the most popular on-line services” – not “up to 10 mbps, let alone up to 2mbps

Superfast broadband:  with claims of “availability”, whatever that means,  by 2017 still leaving many gaps, especially for SMEs.

Ultrafast Broadband: where debate is muddled by BT’s “announcement that it would deliver speeds of up to 500 mbps to most of the UK within a decade” – this is presumable a reference to a technology that is likely to deliver such speeds only to those linked to their local cabinet via less than 150 metres of high grade copper. Given that fibre is now cheaper than copper (and less attractive to thieves)  this is not a very credible way forward.

Mobile cover and quality of service: in practice the need for “fibre to the femto” to handle the volumes, plus the problems with inner city, let alone rural, not spots (particularly within office buildings using modern claddings that are “resistant” to radio waves), plus the massive rise in traffic volumes (e.g. over 5 million Sky Go customers already accessing TV on their smart phones) means that a transformation in back haul investment will also be needed.    

There follows interesting sections on:

  • Competition as a key enabler of investment and innovation with some contentious statements on the value of “access based competition” (e.g local loop unbundling and shared access dark fibre)  and “end to end competition  between telecom and cable operators operators in driving innovation and investment.

and on

  • ensuring availability beyond commercial provision where it is unclear what role a regulator should play.

2)    Sustainable competition, delivering choice, quality and affordable prices

This is looked at under five headings

2.1) Promoting competition in fixed telecoms. Here the choices are perceived to be:

  • Continue with the current approach – i.e. evolving fudge as pressures change
  • Strengthen the current model of  functional separation – i.e. to better ensure that Openreach does not favour BT’s content operations
  • Substantial deregulation and greater reliance on end-to-end competition  – hoping that head to head competition between quadplay operators and the grosing number of alternative network operators and shrinking number of resellers will not lead to a new set of customer lock-in and cartels

2.2) Sustaining effective competition in mobile

Ofcom, probably correctly, declines to comment on the impact of Gordon Browns’s “removal” of £20 billion of potential investment funding from the industry (spectrum auctions) and the recent decisions of  Deutsche Telekom and France Telecom (EE) and Telefonica (O2) to withdraw from the UK market  when faced by the infrastructure investment needed to address urban and rural notspots  

2.3) Regulating to protect incentives for efficient investment

This section includes words on “risk adjusted rates of return” which are anathema to those of us who studied (albeit I did only subsidiary course at London Business School) regulatory economics under the late great Michael Beesley. Attempts to second guess incumbent players, let alone innovators, on “rates of return”, acceptable or otherwise, are always doomed.  Meanwhile the rise and fall of BT’s share price (and its current market valuation compared to those of, for example, Sky or ITV) indicates the views of the market.

2.4) Taking account of convergence

This section distinguishes  between:

  • different means of providing the same services
  • different types of network adopting a common architecture
  • different services collected together in the same retail bundle (e.g. TV content and fixed/mobile access) 

The regulation of abuse, to prevent players dominant in one sector (infrastructure, technology or content) from using that to leverage dominance in others as opposed to offering genuine choice, is probably Ofcom’s greatest challenge over the next few years. That is particularly so given the fluidity and uncertainty of change across all three dimensions. 

2.5) Securing a sufficiency of service for consumers and business

Ofcom refers obliquely to the fall (after separation from the rest of BT) and subsequent rise (after the Olympics and associated restart of recruitment and training) of the quality of service provided by Openreach and asks some excellent questions.  Improving the measures of delivered quality, as perceived by users, is essential for a society that is increasingly dependent on its on-line connectivity. But the problems now appear more acute with regard to mobile. 

Is it really sufficient to say that “quality of service concerns in competitive markets … may simply be because consumers and businesses are not willing to pay for higher quality of services”?

I am one of those who has long paid extra for BT (as opposed to unbundled) landlines and have mobiles on two different services (Vodafone and O2) while using Sky for TV. That is because of past personal experience (non- response as opposed to poor response) with other suppliers. I do not believe I am alone in wanting better access to reliable information on current service levels (including geographic cover) but have grave difficulty in finding out the truth, e.g. when seeking to help MPs faced by complaints from their voters. So do all those I know who are seeking to advise SMEs on the choices available to them.

I also hope that some readers may choose to comment on the role of Ofcom (as opposed to, for example CPNI) when it comes to reliability and resilience.  It was only recently that I learned the scale of unreliability (e.g. exchange, not just line, outages) across our creaking shared infrastructures.

3)    Empowered consumers and businesses, able to take advantage of competitive markets

The confusion of misleading information currently used in the marketing campaigns to persuade customers to switch supplier clearly needs to be addressed. That only 8% switch more than one service at a time is not in the least surprising given widespread hearsay of what happens when you try. “Better the devil you know”.

This is clearly an area where Ofcom should be far more active, perhaps in co-operation with the Advertising Standards Authority. But I also look forward to seeing what groups like the FSB, Countryside Alliance and LEPs and Chambers of Commerce have to say about the information provided to SMEs. 

4)    Targeted regulation where necessary; deregulation elsewhere

The current regulatory regime has grown in response to consumer complaints and industry responses, without pruning as technology changes and legacy systems and services are run down or withdrawn.  Ofcom is therefore seeking inputs on issues associated with the transition to an all-IP phone (as well as data) network and the termination of copper and leased line services.

It is also looking for inputs with regard to opportunities for deregulation where end-to-end completion can be promoted or promoted, services can be delivered by different mechanisms or regulation can be focused on specific bottlenecks or geographic areas. Its example of the effect of deregulating leased lines in parts of London is not, however, necessarily a happy one.

The argument that “reducing intervention to promote competition … could also risk resulting in higher prices for consumers” is also odd. That of greater inequality of service is rather less contentious.

The executive summary ends with “We welcome stakeholders’ views on areas where there might be further scope for either deregulation or simplification”. 

I now plan to make time to read the full paper  but my own immediate reactions are:

1)    Stop trying to measure return on investment. It is even less useful when technologies and markets are converging, diverging (in some cases) and evolving at unknown speed in uncertain directions.

2)    Focus on price, quality of service, clarity and accuracy of advertising claims and, above all, controlling predatory behaviour – particularly customer and technology/service lock-ins

3)    Pay equal attention to business and consumer needs because without the former the consumers will not have the jobs of the future to earn the money to spend on the services of the future    

July 20, 2015  1:02 PM

BT declares war on Ofcom – your opportunity to help reset the UK regulatory landscape

Philip Virgo Profile: Philip Virgo
21CN, Broadband, competition, DCMS, EE, Gigaclear, Inca, ITS, lDCIS, Ofcom, Openreach, Virgin Media

I  was intrigued by Gavin Patterson’s reported attack on Ofcom for even raising the question of separating out Openreach. But for the “problems “of the BT pension fund and the block on foreign ownership of its surveillance operations, BT would probably have been broken up by its shareholders long ago. Today its share price is £4.50 (from a nadir of under £1.00 after a peak of £15.00) but a break up could be under way, before Ofcom completes its consultation, if it were to lose badly in the current battle to sign up those who want to watch TV over their smart phones (and Treasury and GCHQ were to remove their objections). Conversely, if BT wins well, it will need a massive rights issue to fund the extra investment in network capacity (EE as well as Openreach) to carry the explosion in mobile (even more than fixed) traffic under way.

The supposed threat to stand still on infrastructure investment because of uncertainty may prove to be a “Ratner gaffe” – especially if HMG reminds others of the availability of guarantees as used to underpin Virgin’s £3 billion spend on upgrades and extensions. A whole new generation of competitors (City Fibre, Gigaclear, ITS etc.) have investor backing to build lower cost, higher speed all-fibre networks to fill the other gaps left by the run down of BT’s 21CN investment programme (after local loop unbundling changed its core business model).  They would like BT to provide regional and national backhaul. But others are already stepping into this market too as sector regulators (e.g. for financial services) open up the market by demanding that payment systems (for example) have fall-back facilities over networks that are not critically dependent on each other.

The lack of investment in Openreach over the past decade (compared to period before local loop unbundling or the recent acceleration in infrastructure spend by its competitors) means that BT may lose its monopoly position across much of the UK before it is broken up – unless, of course, it responds positively to those shareholders who want it to lead that process. That leaves open, however, the question as to whether a break up would be good for stimulating competition, let alone investment. I suspect not.

You have until 8th October to help ensure that Ofcom becomes an effective competition regulator, helping re-create a globally competitive UK communications market in which customers (both residential and business)  have genuine choice and investors have confidence that the risks they take will not be compounded by political and regulatory uncertainty.

Do not waste that opportunity.

The discussion document for the Ofcom Strategic Review of Digital Communications  illustrates just how far thinking about the UK Broadband market has moved on since the consultation over the Digital Communications Infrastructure Strategy was launched during the silly season last year, with almost no publicity. Readers may remember my exercise to overcome that lack of publicity, drum up responses from other than the usual suspects by pointing out what was at stake, organizing a round table of those considering responses and getting these into the public domain because DCMS had no plans to put the responses into the public domain until after it had responded. The full set of responses is now available and I very much hope that Ofcom will be using them as part of its input. It is not, however, obvious from its discussion document.
The document is hard going. Even the executive summary is nearly 20 pages and needs a “Director’s Digest” to bring out the key points. But it has been released before the start of the silly season and the deadline for responses is not until after the end of the last party conference. 

I therefore strongly recommend reading it all, pondering the implications and responding accordingly.

I will post separately a copy of my own “dirty digest” to help readers understand the implications of some of the more measured language in the executive summary. I also strongly  recommending  reading Malcolm Corbett’s excellent paper on why we should “Support the Digital Innovators”    and, if you can, attend the INCA meeting  on Financing Independent Networks on Wednesday  to get a better understanding of what has changed over the past year.

July 16, 2015  4:02 PM

Why is Computer Science degree worth 20% of History Degree to a man but twice as much to a woman?

Philip Virgo Profile: Philip Virgo
Apprenticeship, Digital skills, FE, IT skills, Shortages

As part of the follow up to my first blog on the effects on Digital Skills of the Spring Budget I have been looking at some of the back up material. I began with “Fixing the Foundations” which contains excellent measures. The main ones include: 

  • “employer-routed funding reforms, such as the digital apprenticeships voucher, are putting control of funding directly into hands of employers
  • apprenticeships will be given equal legal treatment to degrees, to ensure that apprentices and employers can be given confidence in the brand
  •  the government will abolish employer NICs for almost all apprentices under the age of 25 from April 2016
  •  the government will set apprenticeship targets for public sector bodies”

It also says, albeit thinking mainly about the FE sector:

“The government wants strong local areas and employers to take a leading role in establishing a post 16 skills system that is responsive to local economic priorities …the government will enable local involvement in the ongoing commissioning of provision, putting power in the hands of people who are best placed to tailor provision to local economic needs”

Then l took look at the “Fixing a broken system: the case for an apprenticeship levy“. This  contains some excellent material but can also be seen as defence of formal apprenticeships (using off-the-job, FE-based modules, defined by Industry Training Boards), against the new world of flexible, workplace, on-line distance learning, using skills frameworks agreed by employer-led Sector Skills Councils (now “Partnerships”). It also implies that the use of apprenticeships to train older staff (as opposed to new teenage recruits) in the retail, hospitality and care industries is an “abuse” and not to be copied by others.

I think we need a more profound look at the role of FE in a digital world and look forward to helping publicise some of the initiatives to which I referred in my recent blog on how the “Creative Industries” are working with bottom up college-based consortia

Finally I took a look at the catchy titled: “The impact of University Degrees on the lifecycle of earnings: some further analysis“. This is used to justify the claim that the Net Present Value of a degree is 170,000 for a man and 264,000 for a woman. I remember the controversy when it was first published. Table 16, Page 54 showed that social studies and arts/design had a negative value while Engineering/Tech had barely any value. Part of the reason was said to do with the methodology. This did not take into account the need for further qualifications (as with Medicine, Law and Accounting) or the way that earnings in design and engineering are affected by apprenticeships (which may be pre- or post- graduate and may, or may not, include a modular degree).

The weakness of the “premium” (alias NPV for the individual) for maths and computing degrees, (100,000 for a man and 243,000 for a woman)  is harder to explain, until one looks at the high average unemployment rates among computer science graduates. If fact this masks a range from under 2%, for the ITMB (I need to check whether this is included with Computer Science or Business and Management) to over 50% for some universities and course). 

Meanwhile the NPV for a History/Philosophy degree is 557,000 for a man but only 113 for a woman – hence the headline for this blog.

The message for me is the importance of one of the actions in “Fixing the Foundations” :

“The government will improve destination data to enable informed choices.  The government is supporting the development of online portals to present all post 16 learning options to young  people in a user-friendly way, and is strengthening the provision of destination and earnings data. The new careers and enterprise company will encourage greater collaboration between schools, colleges and employers, helping young people to access the best advice.”

It will be hard enough for the Careers and Enterprise company to achieve its current objectives (which appear focused on FE choices)  but we also need to ensure much better advice for those deciding whether to incur 50,000 of debt for an uncertain return or to enter into an apprenticeship contract, perhaps one which includes a modular degree, with a local employer, or one who will provide (or offer help with)  accommodation that is a least as good as that they might expect at “Uni”.    

July 13, 2015  12:35 PM

How do we ensure apprentice levies do not extend legacy of Industry Training Boards to digital?

Philip Virgo Profile: Philip Virgo
Digital skills, MOOC

The recent tax changes to reduce the cost of employing apprentices deserved an unequivocal welcome . The reintroduction of training levies and grants, albeit confined to apprenticeships, does not. But the devil will be in the detail.

After the repeating the commitment “to significantly increase the quantity and quality of apprenticeships in England to 3 million starts this Parliament, putting control in the hands of employers” (Para 1.269)  the Budget Report says “This goal will require funding from employers. In recognition of this, the government will introduce a levy on large UK employers to fund the new apprenticeships. This approach will reverse the long term trend of employer underinvestment in training, which has seen the number of employees who attend a training course away from the workplace fall from 141,000 in 1995 to 18,000 in 2014.” Para 1.270)

The UK has a serious problem with under-investment in training but the figures quoted are for “No. of people in employment whose actual hours worked was less than usual hours because of training course (sic) away from the workplace”. Does this mean that the aim of the apprentice levies are to bring about a return to off-site “chalk and talk” and to reverse the rise in supervised and monitored on-line learning at the place of work that has transformed skills acquisition over the past 20 years. Is the aim really to encourage UK employers and training providers to shun the rise of globally recognized technical and professional qualifications and modular degrees, with on-line materials interspersed with webinars, MOOCs and awaydays which do not eat into “usual hours worked”.
One can understand why the Government is seeking means of funding the recommendations of the recent review of the remaining Industry Training Boards but the volume of “off-site” training (or even the time spent using on-line learning material and simulations at the place of work) is not a good proxy for  investment in the changing demand for digital skills. The case for the levy was made in a paper by Professor Alison Wolf which makes some excellent points, including about use of the current government supported apprentice programmes by the retail, hospitality and care industries to cut the cost of retraining older workers. But the main cost of a digital apprenticeship is the time of those providing supervised work experience and mentoring. This is rarely measured, let alone reimbursed in Government supported programmes. Cutting the cost of off-site course modules and accreditation will have little effect. If these are to included then the levy required will not be “modest” and could serve to further encourage the outsourcing and off-shoring of jobs.  Also is the retraining of older workers to be condemned as an abuse or welcomed? 

We need to encourage large private sector employers to train (and not just first entry apprentices) rather than poach from those who do. Nowhere is the problem more serious than with regard to the information security skills crisis, on which I have blogged regularly over the past few years  I summarised the wider issues in my evidence to the recent House of Lords Digital skills report – page 1057 (go to the back a scroll forward!), The problems are not new  but universal broadband that is fit purpose makes it easier to break out of Groundhog Day and use on-line delivery to help slash the cost and time of workplace trainin. Meanwhile while training contacts (where the law was well summarized thirty years ago in Strathclyde Regional Council v. Neal) remain a more effective means of deterring poaching than levies and grants (“job creation programmes for personnel officers”). Those who use contracts to reinforce loyalty tend not, however, to publicise the fact. Also they do not deter the import of supposedly skilled immigrants  or the off-shoring of tasks,  including to meet public sector needs, any more than would a levy and grant regime.

If the aim is to encourage those bidding for public sector business to train UK youngsters
, rather than import supposedly skilled graduates from overseas  then the Chancellor should improve “guidance” on the use of the Social Values Act to cover the public and systematic  weighting of public sector outsourcing procurements in favour of those who take on UK apprentices. There is also a good case for supplementary “apprenticeship levies” on those who recruit off-shore or otherwise export jobs..

On a wider front the Chancellor needs to also address the behavior of Central Government itself – where in-house training appears to have collapsed since the introduction of Civil Service Learning and the termination of all courses that the main contractor cannot provide from its own product line or profitably subcontract. I have blogged on the consequences of this before.  It would be wrong to condemn the analysis that led to the recommendation in para 1.271 as one such consequence, but confining apprentice levies to private sector employers would be a mistake. It is therefore hoped that the Government will not only set apprenticeship targets for public sector bodies (para 3.5 of “Fixing the Foundations: Creating a more prosperous nation” published in parallel with the Summer Budget) but will include then in levy and grant systems, including any levies on those who outsource jobs in order to avoid the need to train their own staff.  

July 2, 2015  6:10 PM

Broadband Competition spreads from Shropshire to Shoreditch

Philip Virgo Profile: Philip Virgo
B4RN, BDUK, Broadband, competition, Cornwall, fHyperOptic, GigaplusArgyll, glasgow, Gloucester, ITS, Manchester, Ofcom, Shropshire, Virgin

We can now see the result of last year’s change of policy and leadership at BDUK accompanied by rediscovery by Ofcom to its duties as a competition regulator. Those Counties which held out from pledging everything in support of extending BT’s twenty year-old 21CN infrastructure appear now to be getting rather better offers. Sometimes BT wins the Phase 2 BDUK contracts, as in West Yorkshire or Shropshire. Sometimes Gigaclear wins, as with Gloucestershire . Sometimes the business is split (as in Essex or Berkshire). It will be interesting to see what happens next in Shropshire where the Council is co-operating with INCA on an event to help local businesses look at using the voucher programme to meet their needs. Shropshire is, arguably, one of the most difficult counties to serve using anything other than a mix of satellite and terrestrial radio. I do not therefore envy the council the task it faces in getting value for money – other than from mixing an extension of the current BT network with radical alternatives – perhaps it needs the local equivalent of B4RN (*).

Meanwhile Devon and Somerset has decided on a rematch, having failed to get a sufficiently attractive bid from BT.  As with most (but not all) other rural areas, it may not be practical to have a commercially viable service without council money to help prevent social and geographic exclusions – but competition between suppliers for the public funds available, perhaps leading to a mix and match of suppliers and technologies, is more likely to be able to serve ALL residents and businesses, at affordable cost, than the simple extension of a legacy network (likely to be obsolete within the decade as the end-game for IPV4 spreads from the Pacific to the USA and the main Internet players accelerate their transitions to IPV6 accordingly).

At this point the BT response varies. At its best, (when faced by well-advised Councils who are serious about value for money) it produces imaginative new solutions involving a mix of technologies and business models, as in Glasgow (using the infrastructure investment for the wifi for the Commonwealth Games to provide supported access via community centres) or in Cornwall (using wireless and satellite to achieve its targets for cover).  

At its worst … you can read Hansard for the complaints about attempts to stop councils from comparing notes (I still do not understand how “commercial in confidence” can be applied to services in receipt of “state aid”) or doing joint deals to get better value for money than any silo-based Whitehall procurement.

Meanwhile when it comes to urban broadband we can see City Fibre, HyperOptic and ITS expanding the number of locations to which they offer true fibre while Manchester is about to benefit from head-to-head competition between Virgin and BT. We should also not that   Wimax has shown its potential when everything goes pear-shaped   At a recent event on cyber-insurance I asked whether dropping bombs down a manhole cover to set off all the alarms in the area so that you could rob a safety deposit company counted as a cyber-crime. On that note (and the implications for those who are more concerned with reliability and resilience than raw speed) I will stop.

(*) I remind readers that I am not only a shareholder in B4RN but am looking forward to receiving a dividend cheque – much earlier than I expected – although I confess I will probably frame it rather than drink it. I do, however, also declare an interest in the choices available  to GigaplusArgyll . I used to be able to download e-mails, albeit very slowly, using the 2G signal from a mast the other side of Loch Scridain. Now thanks to modern bloatware I can barely get the headings before losing the signal. The absence of reliable communications also adds an extra frisson to the organisation of the Isle of Mull Rally


July 1, 2015  9:27 AM

Transforming participation in Digital Skills programmes by involving MPs

Philip Virgo Profile: Philip Virgo
Apprenticeship, Digital skills, European Union, London

Redeploying welfare funding to support 3 million new apprenticeships was one of David Cameron’s most highly publicized election pledges. We can expect to hear more in the budget this week. Meanwhile every survey of employers’ current and expected problems, for well over a decade, has flagged shortages of digital skills.

It is often said that “there is no shortage of digital skills (e.g. cyber, design, etc., pick your definition), only of employers who recruit trainees and retrain their existing staff“.

That is, however, not strictly true. 

There is also a shortage of employers willing and able to work with local schools and colleges to help educate and motivate the next generation (digital natives/millennials), re-motivate the “lost generation” (digital neets) and offer “back into employment opportunities” for the “other half” (including returners with family responsibilities). Every skill in short supply now has a digital component and employers want evolving mixes of skills that do not fit traditional qualifications.

Meeting the objectives set by the Prime Minister, let alone the evolving skills needs of industry, will not be easy but the glass is also half full. We need to publicise, build on and replicate success. Failure to do so risks iniativitis, fragmentation of effort and the replication of that which does not work.

One past success was “Make IT Happy“, the brainchild of Andrew Miller MP when, as  Chairman of PITCOM (subsequently transmogrified into PICTFOR) he secured agreement to use its reserves to underpin the launch of a series of competitions to improve links between MPs and the schools in their constituencies. A result was that e-Skills, now the Tech Partnership acquired 25 Parliamentary “Digital Skills Ambassadors”, willing to help support and publicise local schools activities.

The Digital Policy Alliance (which has an MoU with PICTFOR but is not bound by the rules of the All-Party groups) has organized an event on the afternoon of 9th July to help the Tech Partnership recruit new “Skills Ambassadors” to help publicise the full range of activities now available (or planned) to help their voters and their voters’ children and grandchildren to acquire the skills of the future and to help employers (large and small) create the jobs of future in their constituencies

The second objective is to identify those MPs who wish to help ensure that the promises of today are turned into action plans that will produce results by the time they stand for re-election in 2020. My own (third) objective is to encourage MPs to ask employers who complain about skills shortages, what they are doing to help. I would also like to see more MPs publicly praise those who are already helping – particularly those in their own constituencies.

The result should be a set of symbiotic relationships that make the target of 3 million additional apprenticeships by 2020 look not only achievable, but modest.  . 

The good news is that the time is finally ripe for breaking out of Groundhog Day. The bandwagon has started to roll.

Over 500 employers, large and small, are now supporting existing programmes via the new Tech Partnership (successor to e-Skills) and there is an impressive portfolio of new programmes for launch over the next few months and during the run-up to the party conferences in the Autumn.

In parallel, City and Guilds, the only globally recognised skills brand the UK still possesses, is looking at how to enable employers to embed digital into traditional skills, including to meet the skills needs of the City of London as the world’s main Fintech centre.
Across the UK a growing number of FE Colleges, individually or in bottom-up consortia are working together to re-create community skills hubs, supporting employers who are too small to organise in-house apprentice programmes . Click here for more detail, including links to case studies of success. .

We have a growing number of services to publicise apprenticeship opportunities and/or help employees find suitable (motivation as much as innate aptitude) recruits. Some are focused on organising events to promote what is happening regionally or nationally, such as Apprenticeships4England . Some are embedded in national careers advice services for young people unable or unwilling to incur student debt, such as notgoingtouni. Some are specific to digital, such as wearedotdotdot. Some are geographically specific, such as the Good Careers Guide “brokerage” pilot. Others are embedded in mainstream job search serves such as Total Jobs . We should also include programmes such as “Young Enterprise” and some of the more successful “welfare to work” contractors whose “graduates” are now recruiting apprentices of their own or helping others to do so in areas of extreme shortage, such as information security  

There is a wealth of relevant careers and learning material on-line and the regional “grids for learning” (linked nationally via JANET) could enable most schools and libraries to operate as on-line local skills, careers and learning hubs, networked to colleges, schools, universities and education and training providers around the world, not just in the UK.

Most of the main professional bodies and trade associations are looking to provide support for skills programmes and apprenticeships via their local branches and activists. Those serving the digital world range from the umbrella bodies like the British Computer Society to specialist international bodies like ISACA (which bridges the world of audit and information security and has a strong UK chapter).

On the 9th July the aim is to provide succinct introductions for MPs and their research assistants to what is already happening or planned at the national or international level and to the opportunities to support local action to help meet the needs of their voters (and their voters children and grandchildren) and get the jobs and skills the future to their co nstituencies.

We also aim to provide platforms for:

  • MPs to publicly support (quotes for press releases etc.) what is already happening or planned in their own constituencies and
  • Employers to state what they are doing with their local MPs.

Please  email me , copy to the DPA Office, if you would like to participate in the follow up.

[This blog will be updated at periodic intervals between now and the 9th July]

June 26, 2015  3:39 PM

Over 30 MPs contribute to debate on Broadband: the pressure for change is clear.

Philip Virgo Profile: Philip Virgo
Broadband, Defra, Internet access

I strongly recommend reading the contributions made during the debate on Superfast Broadband on Wednesday 24th June. 26 MP were named as down to speak. I have counted contributions from over 30, including all of those to whom I sent links to my previous posting.

I will not try to summarise all the points made but three main themes seem to emerge:

1) Overall BT is delivering more and faster than contracted but local performance varies and appears proportional to the determination of the local Council to get value from its contribution. Those which not only publicise who is to be served and publicly monitor and report performance, but help promote take-up as soon as areas go live, get much better service. Actively promoting take-up delivers a win:win.BT commonly increases its investment as revenues begin to come in – and is also liable to give a pay back that the Council can use for those hardest to reach.

2) The approach of encouraging BT to extend its legacy 21CN network, beginning with those who are easiest to serve, has deepened geographic and social divides, making it harder to serve “not spots”, including those area which are “descoped” when they prove harder to serve than expected. The next phase of funding should copy the Gloucester approach where the council has listed the properties to be served and Gigaclear consequently won the contract in a head to head competition with BT.    

3) It is impractical and immoral for Government to penalise taxpayers and benefits claimants for not submitting returns and claims on-line when they do not have reliable access, either at home or via a local community centre or library, particularly during the evenings or at week-ends when most small firms and self-employed do their paperwork.

I spent yesterday at the Digital Leaders conference, addressed by Ed Vaizey and Matt Hancock. I spent part of the time with some of those organising services for residents of social housing. The problems faced by those they are seeking to help, because of the lack of affordable and reliable access to services that are fit to use, was a major issue. The personal benefits to be gained and public sector savings to be made from providing fibre to the home (or the “7 – 11 library or community centre supported drop in centre”) are obvious.

There was a common call, among the “Digital leaders” for a responsible Minister in the Cabinet. I thought back to when Kenneth Baker became Minister for IT (I was the dissenting voice in the policy troika referred to by Adrian Norman in the blog to which this links). Government policy for its own use of IT became fragmented as the departmental silos fought back. CCTA (which had co-ordinated policy) was emasculated – with teh results we have seen since. I was not around myself when Alexander Pope wrote “For forms of government let fools contest …”. (or for John Adams counter-attack) but subsequent history shows that John Adams was an optimist.

I think we are more likely to get progress if the 30 of so MPs who spoke in the debate on Wednesday form into hunting packs and demand quarterly progress reviews, via joined up Select Committee Enquiries and coerce the Silos of State into taking seriously the need for  co-operation across departmental boundaries – perhaps even organising shared training programmes to provide Civil Servants with the skills to plan, organise and monitor the delivery of joined-up policies and services that are fit for purpose.  

June 22, 2015  10:26 AM

Points to bear in mind when MPs debate broadband, including the digital divide

Philip Virgo Profile: Philip Virgo
2MBs, Broadband, Crapband, Defra, EE, Gigaclear, Leased line, O2, Ofcom, Reghed, Telecommunication, Virgin

The summary produced to help MPs contributing to the Westminster Hall debate on Superfast Broadband roll-out helps explain why debate is so confused and bitter. The  Librarians of the House of Commons preface a summary of the official sources (particularly the Ofcom “European Scorecard”) with links to recent articles which call in question the methodologies used in those sources.    

Those who say that the UK is lagging behind commonly quote the services available across Scandinavia, the Netherlands, parts of Eastern Europe and the tiger economies of the Far East. The Ofcom Scorecard compares our performance with France, Germany, Italy and Spain – where the incumbent operators are doing no better than their UK equivalent – BT. Those in the lead have competitive markets with varying mixes of private sector and community (including municipal)  enterprise.providing more modern local services.

Then there is the measurement of speed – beginning with the meaning of 2Mbs. Is this a guarantee of 2 Mbs minimum speed or a circuit rated at “up to 2Mbs”: i.e. a supposed average of  2Mbs over the course of 24hours: faster when no-one else in the neighbourhood is on-line but slower, sometimes below 50kbs, during peak periods. Given that “up to 8Mbs” may well deliver well below 2Mbs during peak periods we can see why DEFRA would probably have had to abandon the on-line Farm Payments system, even if the system had been otherwise fit for purpose.

Page 16 onwards of the summary produced by the House of Commons library quotes Ofcom data indicating a 21% increase in average speed over the past year but this is for urban areas served by fibre services but suburban and rural areas have seen little or no change. The Ofcom release only quotes variations around the average for a few high speed services(e.g 96% of those receiving the Sky “up to 38 Mbps” service receive at least 90% of their maximum speed at peak times while only 7% of EE customers do so). I have been told (by sources other than Ofcom) that the omission is because the service used does not work reliably at lower speeds, such as the “up to 8 Mbps” common in rural areas.

I hope that the debate will focus on the present and the future, not who is to blame for the past, because the world has moved on since Rory Stewart fired the starting gun for the Great Rural Broadband race, in Reghed in 2010. At one end of the spectrum, the local community champion B4RN now provides fibre to over 1,000 premises, is in the process of launching subsidiaries to serve additional communities, and is about to pay its first dividend (albeit I will probably frame my cheque rather than cash it). At the other end HM Treasury has agreed to underwrite 3 bIllion of investment to enable Virgin to restart its roll-out to cover those areas abandoned when Telewest and NTL went all but broke. We can argue whether national progress would have been faster had DCMS officials not insisted  on providing “guidance” to local authorities and hired consultants who understood neither telecoms nor state aid rules, while BT focused on delivering the infrastructure for the Olympics instead of the rest of the UK. [P.S. Wapping still appears stuck with 8 Mbs]

The roll out is now accelerating as BT discovers that it cannot sell its sports content to those served only by long lines of crapband (Copper, Rust, Aluminium and other Pollutants from the cabinet to the home). Meanwhile previously docile local authorities are considering whether to produce guidance on how to copy those who have done deals with its competitors (from Cities like York and Peterborough.to counties like Oxfordshire and Gloucestershire ) in order to prevent the jobs of the future migrating elsewhere.

Meanwhile the new team at Ofcom looks set to restore its role, as a competition regulator, using realistic measures of price, performance and behaviour instead of playing regulatory games over cost of capital and return on investments, with all-too-predictable results.

I therefore hope that the debate will focus on what is happening now needs to happen now and that the Minister’s response will cover not just how to get better value from the state aid to BT, but what is being done to encourage fund managers to invest in British Broadband infrastructures (to collectively form an ubiquitous, reliable, resilient, inter-operable fixed and mobile mesh) that is fit for the future – and not follow the shareholders of O2 and EE in selling out to put their funds elsewhere.

It may be that he cannot comment (in advance of the budget) on how the next phase of state aid will used, but I hope that he will be able to reassure those who voted for his new Secretary of State (MP for Malden) and his ministerial colleagues with even less well served seats (from West Dorset to Westminster),  as well as new Chairmen of the Public Accounts Committee (MP for Shoreditch), of the DCMS Select Committee (MP for Herefordshire) and of the DEFRA Select Committee that genuine progress is being made, not just in the Northern Power House (with bandwidth hungry players moving from Soho and Shoreditch to Manchester), even if the Chancellor intends to take most of the credit.    


June 15, 2015  10:09 AM

Enforcing Magna Carta in the age of Cyberwarfare, Surveillance and Electronic Impersonation

Philip Virgo Profile: Philip Virgo
DNV, John, Notaries, Odiham, queen, Runnymede, Scrivenors

All roads round Runnymede will be closed on 15th June as the Queen, the Prime Minister, the Archbishop of Canterbury and the Master of the Rolls commemorate the 800th anniversary of Magna Carta at Runnymede. Sunday Worship on BBC4 on 14th came from Odiham, whence King John had set out to meet his Barons. It featured a splendid address from The Master of the Temple where the Barons, including 7 Bishops, had plotted their tactics). He reminded us of the background, particularly the role of Stephen Langton, (the Archbishop King John never wanted). Langton believed that laws came from God, not the King. He not only helped with the drafting, he arranged for Magna Carta and the more significant revised versions under Henry III, to be copied and “published” across the Kingdom via the Church – to prevent the Monarch/State from backtracking. Today some would argue that the occupants of Buckingham and St James‘s palaces have joined those of Lambeth Palace among the defenders of civil liberties against threats from those who now occupy the site of the Palace of Whitehall and their allies and accomplices in the Palace of Westminster.

I have blogged in the past on the tension between those who believe that the laws come from God and those who believe in the divine right of the State including with regard to identity policy  Those who rabbit on about trust and identity in on the on-line world might do well to remember that the main Western world’s main service for checking identities, the Notaries, until recently reported to God, via the Archbishop of Canterbury (in Common Law Countries) and the Pope (in Roman law Countries). For high level global trade the Scriveners provide the underpinning, (e.g which version of which e-mail, between whom and in which language was the contract) for the services provided via operations like Lloyds Register and DNV, Meanwhile surveys as to who is trusted with our identities and personal information in on-line world show that on-line retailers and internet service providers have “earned” approximately the same level of trust as journalists and politicians. They come below government (central or local) and well below the banks.

When Sir Tim Berners Lee, the Stephen Langton of the Internet, received the freedom of the City of London his address to the Common Council on the role of the City in creating and preserving the rule of law instead of the state led through to the potential role of London in the on-line world. His calls for a global on-line On-line Bills of Rights have been well covered by others. I would, however, argue that it is not only impossible to achieve in practice, but a red herring. We need “merely” to apply the same law on-line as off-line.

That does, however, require abiding by the spirit, not just the letter, of Magna Carta. That means looking at the theological basis of what Stephen Langton was trying to achieve. We also need to remember that the current threats to civil liberties are very similar to those that led up to the Glorious Revolution of 1688. James II had lost the popularity he had won by taking charge of the efforts to put out the Great Fire (blamed at the time of the terrorists of the day) and had put down the original London-wide Penny Post (supposedly used for scandalous letters between lovers as well as for business), because his men could not steam open the letters.

In a modern secular society I doubt that most of the population would be happy with the Archbishop of Canterbury as the prime guardian of Civil Liberties against the state, but the fourth key player in the celebrations at Runnymede is the Master of the Rolls, the third most senior Judge in Britain. Past readers will have noted that I have called in the past for the oversight of privacy and surveillance in the UK to be properly resourced and report via the Master of the Rolls, That leaves open the question as to whom the Master should be responsible (other than God). At the end of the final discussion paper of the 2003 -5 EURIM – IPPR study into Partnership Policing for the Information Society , I tentatively suggested that the ultimate oversight for the policing should be a committee of both House of Parliament.  

The Home Secretary’s statement to parliament on David Anderson’s report into the practical working of the UK’s surveillance law, published a week before the Magna Carta celebrations, should be the starting gun for an open and constructive debate. The overall objective should be to better reconcile the protection of the public from fear and abuse (whether from on-line stalkers or those planning terrorism) with the protection of “peaceful dissidents” and whistle-blowers from action supposedly designed to address organised crime or threats to society as a whole. We should also remember that most of the public wants more, not less surveillance (including for the reasons well-illustrated in the current Channel 5, Caught on Camera, series).

The arguments should not, therefore be less about the degree of surveillance that is reasonable or acceptable. They should be more about the accountability of those organising it or demanding access to the results.

We should also remember Archbishop Langton’s mistrust of the draftsmen in the royal chancery, without which Magna Carta would probably not have been drafted, let alone distributed (by the Church not the Sheriffs) and thus remembered.

Those who understand how modern legislation is negotiated, drafted and implemented might reflect how little has changed in 800 years.

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