Digital Britain universal broadband plan will need subsidies

Communications minister Lord Carter reassured MPs that UK would have universal broadband by 2012 – but it would use public money.

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Communications minister Lord Carter hastold MPs that UK will have universal broadband by 2012 – but that it will require use public money to achieve his goal.

Lord Carter hints BBC would have to pay for next gen broadbandLord Stephen Carter has struck back at critics to his interim Digital Britain report saying the pledge to provide universal broadband speeds of at least 2Mbps (megabits per second) by 2012 as a "base level" was a reasonable target.

"The notion of universal service has been regarded as lacking ambition by some critics," he told the Business and Enterprise Committee, a group of MPs set up to examine the work of the Department for Business, Enterprise and Regulatory Reform.

"They say 'You go to Korea and speed is 50mbps'. That's next generation. But we're talking base level, and as a base level there is no country in the world that is offering to [roll out universal broadband]."

Lord Carter insisted that that incentives would be needed if the private sector was to deliver universal service provision.

"The reason cable companies got into trouble [in the 1990s] was because they raised enormous amounts of money in the capital market to build networks. In some areas where they've built these it's taken 20 years to get anything that resembles economic return. Many of them still have large debts on their balance sheets," he said.

Given that service providers found it difficult to raise capital to build networks before the recession, Lord Carter said most would find it impossible to do so now, he added.

"We should accept that Universal Service Obligations are not funded by the market, they are funded by regulatory intervention, cross subsidy or public intervention," said Lord Carter.

"It requires a change in European legislation, a decision about which technologies will provide it and how it will be funded. It is very possible that these building blocks will be in place by 2012," he said.

On the issue of next generation, Lord Carter hinted that the BBC may be asked to contribute in order to ensure that super-fast broadband reaches the half of the population that are currently not included in either BT or Virgin Media's fibre rollout plans.

"More and more people get their media from the internet and that usage is doubling every two years. Would the nation's state-funded content provider have a role in this? It would seem to me it would," he said.

Lord Carter also said new models of paying for content were inevitable in the digital world.

"Mass access to multiple forms of content demands that it is priced differently. We are talking about an order of change that we have never seen before," he said.

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