Private firms "should pay for superfast Internet"

LONDON (Reuters) - The private sector should pay for a new super-fast broadband network seen by ministers as crucial to the economy, a review for the government said on Friday.

Oxanna, a chambermaid from eastern Europe, works in a bedroom at The Ritz hotel in London, April 17, 2006. REUTERS/Catherine Benson

Francesco Caio, vice-chairman of Lehman Brothers in Europe, who led the review, said billions of pounds of investment should come from broadband providers rather than public funds.

The government says the new network would deliver Internet speeds up to 25 times faster than current connections, allowing the download of films or music in seconds.

Ministers say faster broadband is essential to help businesses work over the Internet and keep Britain as a leading online economy.

“The case for a public intervention at this time is weak at best,” Caio said. “There is little evidence in the short term the UK is going to suffer from the lack of an extensive next generation access network.”

His report found no immediate need for the government to intervene to help set up a fast network. Companies such as Virgin Media and BT have shown signs of wanting to invest in the new system and businesses and consumers are no worse off without it at the moment, the report said.

However, the report said superfast broadband will become a key “digital utility” in the years ahead and the government should help it to emerge.

The report contains the following recommendations:

- The government should open access to two parts of the radio spectrum for wireless Internet access.

- Regulator Ofcom should force broadband providers to be more transparent about Internet speeds.

- New homes should be equipped with superfast broadband.

- The government should relax planning laws to allow broadband to be delivered via overhead cables carried on poles in the street.

The report said superfast broadband is likely to be transmitted through a mixture of old copper telephone lines, new fibre-optic cables and wireless technology.

Replacing the current copper network with a faster fibre-optic system would cost up to 25 billion pounds, according to a separate report by a government advisory body last week.

Business Secretary John Hutton said in a statement: “This technology will touch almost every part of the economy.

“We will consider his recommendations as we plan to make sure the UK remains one of the world’s leading Internet economies.”

Internet usage in Britain has rocketed from less than 10 percent of the population in 1997 to 70 percent in 2007.

Fifty-six per cent of all households had a broadband connection in 2008, up from 51 per cent in 2007, according to National Statistics.

With the boom in Internet traffic, online videos and other data-hungry services, the government and private firms have been looking at ways of speeding up the network.

The Department for Business Enterprise and Regulatory Reform wants Internet speeds of up to 100 megabits per second (Mbps).

A megabit is a measure of the speed of data transfer. Home broadband links are typically about 4 to 8 Mbps.

The full report is at

Editing by Steve Addison