Should Broadband Be Regulated?

On April 26, 2013, in Web, by Marty

Restrictions concerning the internet have always been a contentious issue but what about regulating the companies that provide it rather than the individuals? Recently, Dido Harding, the CEO of TalkTalk, called for Ofcom to regulate the UK’s growing superfast broadband network. Currently the network is owned by a single private company that, topically, was privatised by Margaret Thatcher in the 80s and subsequently enjoys a monopoly on supplying the country’s fibre optic cabling. Internet service providers (ISP) then rent usage of the network and sell it on to domestic customers and businesses. As it stands there is no regulation on the price ISPs can be charged for access to the network. In traditional markets competition is the key to controlling prices, however, without alternative suppliers to choose from the setting of prices could be arbitrary.

The government and courts are no strangers to restricting broadband providers. ISPs have been the recipient of court orders requiring them to block access to illegal file sharing sites. Notoriously Pirate Bay was blocked last year and in the last month three more have been added to the list. As of the beginning of April no-one in the UK will be able to access Kickass Torrents, H33T or Fenopy. The government has obviously been involved in negotiating the contracts surrounding the national network but extended their influence by branding Fujitsu, the only viable competitor as too high risk to take on contracts in the public sector.

It’s not just an issue for the UK. In America, the government has consistently intervened to block Chinese telecom company Huawei from making advances on its communications market. Despite being the world’s second largest supplier of network gear, the US claims the company represents a threat to national security. Government officials have been so successful in convincing companies operating in the US to shun the Chinese operation that Huawei have given up all together on pursuing the market.

Britain’s regulatory board for communications, Ofcom, already has a legal obligation to review the final section of broadband that ISPs are responsible for. That only accounts for the distance between the exchange and your house, however, and does nothing to address the network as a whole. Ms Harding voiced concerns about the value of only moderating the ‘final mile’ of the network without reviewing the country’s infrastructure. She claims regulation would bring down the final price for the end user. If broadband providers are charged less for access to the service then they can pass on those savings to the consumer. She goes on to state that out of sixty per cent of the UK population who could have access to superfast broadband, the take up rate is only six or seven per cent. She believes one of the main reasons for this is a lack of competition at the top level which in turn reduces the amount of variation in products available.

The superfast network’s lack of regulation is at odds with other UK services. Historically private companies that provide essential, national infrastructure have been subject to independent review. The rail network is monitored by The Office Of Rail Regulation, Ofwat keeps the country’s water providers in line while Ofgem does the same for gas and electricity. Broadband is a comparative newcomer and, to a certain extent, is only just becoming recognised as being similarly important. With the government investing such large sums in creating a national asset it seems unusual that they wouldn’t set up or repurpose a body to regulate it. If something were to go wrong or the network became mismanaged it’s likely that Ofcom would get involved so, logically, it’s only a matter of time before they do.

Regardless of your opinion on ISP restrictions it would appear that regulating the management and price of fibre optic cabling should lead to a better deal for the end user. Arguably the service will be regulated sooner or later. The preference here should be sooner rather than later to avoid the pitfalls of a nation relying on a service that isn’t accountable to anyone but it’s shareholders.

 

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