Analysys Mason report on “NGA risk in the UK” – missing the moment

Back in March, Analysys Mason (AM) published a report on behalf of HMG entitled “An assessment and practical guidance on next generation access (NGA) in the UK”
(available here http://www.communities.gov.uk/publications/communities/assessmentngafinalreport) . An assessment it may have been, but its approach and consequent guidance has been undermined by the recent election.

The approach AM took was to create two dimensions: (1) three scenarios for the penetration of NGA across the country at 2012, 2015 and 2017; (2) three areas where the impact of not having NGA are highest – areas of highest “deprivation” (or social exclusion), “rurality” and “e-attitudes”. From this they produce areas classified as “priority”, “action probable” and “watching brief. This they do in commendable detail at the level of “lower super output areas” (LSOAs), producing many pretty maps of the country to illustrate their conclusions.

The problem however is that neither dimension is really solid.
The “base case” roll-out assumption has commercial plans (BT and Virgin) supplemented by the Next Generation Fund (Labour’s £6 pa tax) to subsidise up to 90% coverage. The “extended coverage” takes this up to 95%, on the basis of aggressive local initiatives (publicly funded). The third scenario is a “downside” case with no subsidy, reaching 70% population by 2017. In addition, they make some minor adjustments to take into account local initiatives, such as South Yorkshire Digital Region, but these affect only 2.5% of the LSOAs.

Clearly now, with the new Government’s focus on reducing the public sector deficit, and from the coalition partners’ manifestoes, there is little chance of public investment in such adventurous projects. Instead guidance on how that gap could be filled by community initiatives that require little public subsidy would have been helpful. Structured properly, these projects would be driven by local volunteers and use lower-cost local suppliers. This would be a better focus for a new NGA roll-out programme.

Similarly, the impact dimension is pretty soft. There is an unstated assumption that NGA is all about access to some sort of “socially valuable” services – e-government, training, education, even cheaper shopping. Yet the most likely driver of NGA take-up is television/video entertainment – broadcast, on-demand, YouTube, facebook etc, particularly once TV sets come with internet access built in (Sony has already launched one). Most other services are readily accessible at 2Mb/s. If government is concerned about citizens lacking access to important services, it should make sure they are available on the most widely available platform – the TV set.

The AM approach is to mash together Experian and CACI measures for social deprivation, mash them further with e-attitudes (ignoring obvious correlation effects) and overlay a fairly arbitrary “rurality” factor for good measure. It is not at all clear what that final index really represents and whether it forms a firm basis for the investment of several billion pounds of tax-payer money.

AM has as always produced a report which has admirable analytical detail. Sadly on this occasion they have missed the political sea-change and missed the opportunity to find ways of liberating local energies.

How to get your share of £2m from the Technology Strategy Board

Yesterday, the Technology Strategy Board (TSB) explained how the competition for funding of “Network Services Demonstrators” is going to work. £2m is available to fund selected demonstrators which sit at the intersection of thinking about the economics of the network, the economics of content and services and access protection and empowerment. The TSB were deliberately but frustratingly vague about exactly what they wanted to sponsor, looking instead for innovative ideas. But some key points did come through:

• Although not precisely defined, it is clear that they are looking for perhaps 5 to 10 projects in total – so you get an idea of scale
• There must be a network facility ( a “site”) which is open to content owners and service providers, and which allows innovative ideas (including new business models) to be tested; it is NOT just about fibreing up a village
• There must be real users connected to it; real revenues may be generated, if required to test a business model for example, but these will be deducted from the costs being funded
• Out of scope would be anything which was primarily about network provisioning, anything without a network partner, lab/research prototypes and genuinely new technology- it is a “near market” funding.

The independent assessors will be looking for the added value coming from TSB funding (ie what would happen because of the funding that would not have happened otherwise), the impact of service enablers, a proof on principle business model and pretty specific plans for implementation (including, APIs, SLAs and various other abbreviations).

The ten questions on the application form cover:
• The business proposition – is it a viable market, is there a realistic future
• The benefits including wider spin-off benefits
• The technical approach and innovations, both commercial and scientific
• Risks and risk management
• Partners’ track records and experience
• Costs, revenues and added value

The TSB will fund 50% of eligible costs (including in-kind costs), and there are various restrictions on how that is shared and a limit to academic involvement. The deadline for submissions to Stage 1 of the procedure is noon on the 24th June. Further steps lead to a decision by 7th October and project commencement around December/January.

For more information go to the Innovate website: http://digitalbritain.innovateuk.org/

NetStrategics can help with the development of business cases and innovative business models and is keen to hear from anyone planning to submit a project to this competition.

PLUM CONSULTING FIND NO EVIDENCE THAT GOVTS CAN DRIVE BROADBAND TAKE-UP

Plum Consulting presented the results of their research (commissioned by Vodafone), into the role of Governments using demand-side measures to support broadband take-up, to a meeting of the Broadband Stakeholder Group last night. They looked at broadband take-up in several countries - Europe, US and Korea – and age and educational factors, and identified substantial variations between them. However when they looked at specific government interventions – such as Spain spending €6bn in internet education – they found that the increase in take-up was indistinguishable from that which would have happened anyway. Increases in take-up in older groups was simply a “cohort effect”- people getting older.

One of the problems the researchers faced was that few of the interventions were structured to provide post-hoc review of their effect (particularly against the counter-factual of expected growth anyway). So Plum’s main recommendation was that if Government wanted to drive take-up it should conduct small scale trials, structured in a way to provide such sound information into their effectiveness.

In their view, the most significant factor in driving higher take-up was educational levels. Korea provided a good example of this where the older groups, who had been educated when Korea was relatively poor, showed below average take-up whilst the younger generations showed above average take-up.

Plum did explore the main causes and barriers to take-up. Broadband was seen by non-adopters as not relevant, expensive and complex. A positive “social infrastructure” – education, workplace usage, local language content – supported higher take-up.

Addressing these issues, Plum compared PC-based broadband with mobile broadband platforms such as iPad. They concluded that mobile broadband would drive greater take-up as it was application-led (improving relevance), much easier to use (no file structure, faster, easier updates) and could be supported by pre-pay options (getting round credit card issues). The reader might like to recall, however, that the research was commissioned by Vodafone.

In the Q&A session, some people questioned whether mobile was an appropriate platform for services like completing your tax return or accessing medical records. It seems clear that different platforms offer different advantages and that they will be used in different ways.

Whether putting Government services online would drive take-up was raised. The general view was that it would not, as closing down offline options would too badly disadvantage those groups of non-adopters who might specifically need those services.

I think a more significant effect would be internet on the TV set. The TV is almost universally adopted and easy to use; the fastest growth in internet applications requiring broadband is in iPlayer and other on-demand TV services, YouTube and Facebook – ie video-based services. So it seems inevitable that once TV sets with internet access built in become available - with a simplified browser replacing the EPG - that broadband take-up will accelerate dramatically. Current internet applications then in effect replace Teletext. Of course that might show up that the question was not what it appeared – it is not broadband take-up per se that is the concern, but use of online services to help Government reduce costs.

You can read Plum's account of the research from page 31 of the document at
http://www.plumconsulting.co.uk/pdfs/Plum_March09_Demand-side_measures_to_stimulate_Internet_and_broadband_take-up.pdf