Caio review: ISPs should foot bill for next generation broadband

All the costs and work to build high-speed networks should be left up to internet service providers, a key review of the UK’s broadband infrastructure has concluded.


All the costs and work to build high-speed networks should be left up to internet service providers, a key review of the UK’s broadband infrastructure has concluded.

The government need not yet intervene in the provision of high-speed broadband, the Caio review said.

The news is likely to disappoint industry participants who have said the government needs to play its part in speeding up the adoption of ultra fast broadband.

Francesco Caio, vice chairman at investment Bank Lehman Brothers Europe, wrote in government-commissioned report: "Although demand for bandwidth and Internet traffic continues to exhibit strong growth, there is little evidence that in the short term the UK is going to suffer from the lack of an extensive next generation access network.

“I have therefore concluded that the case for a public intervention at this time is weak at best.”

BT and Virgin Media were singled out for their investment in the infrastructure so far.

But Caio said it is important that the “right conditions” are created to allow a competitive next generation broadband infrastructure. He said the government needed to take the right steps to help all potential suppliers of the systems to roll out the the technology cheaply.

It could do this by helping providers develop standards, and allowing overhead lines to be used for fast broadband where it is too expensive to dig up miles of roads. Additionally, builders should be encouraged to construct homes that are next-generation ready, and the government should work with Ofcom to make sure spectrum auctions take place soon, he said.

In the review, called 'The next phase of broadband UK' and commissioned by the government, Caio said Westminster needed to ensure the broadband market remained competitive. Developments in broadband are “essential” for the future of the British economy, he said.

John Hutton, business secretary, responded: "We want to create the right conditions for private sector investment and stand ready to play our part in ensuring the UK has a competitive infrastructure in the years to come."

The UK has the largest online retail market in Europe, with sales last year worth £46.6 billion. The UK also has the highest level of internet advertising per head in the G7 group of wealthy nations.

Industry body the Broadband Stakeholder Group, which contributed evidence to the Caio review, last week revealed that the cost of equipping the UK with next generation broadband could hit as much as £29 billion. It said it was pleased the report told the government to “come off the fence” and recognise the importance of next generation broadband.

Kip Meek, chairman at the group, said that “although there is no government money on the table, there is a key leadership role for both government and Ofcom”.

Some voices in the communications industry were less impressed by the report's findings. Patrick Bossert, telecoms and media lead at customer care supplier Convergys, said operators “will be faced with the challenge of recouping the huge sums invested in next-generation networks”.

“It is entirely possible for operators to enjoy huge returns on their investments, but fundamental choices need to be made,” he said. “Do they offer their infrastructure as a utility to other service providers, or do they provide services themselves direct to customers?”

In July, the Communications Management Association urged the government to take action over slow broadband speeds, which it assessed as threatening the efficiency of British businesses. Over one third of its members had said they wanted speeds of at least 100 megabits per second.

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