The public needs to see clear benefits of broadband, say MPs

There is no case for big public subsidy of the broadband infrastructure, the Commons trade and industry committee says in its UK Broadband Market report.

The MPs say broadband take-up has risen fast but remains "modest overall".

Despite BT's dominant market position, the MPs argue the firm's retail and wholesale arms should not be broken up.

Broadband is the system which allows "always on" access to the internet at much faster speeds than traditional dial-up connections.

Mass take-up

The government is keen to promote its take-up, saying use of broadband could produce �4.7bn in productivity and cost savings for small and medium-sized businesses.

Broadband subscriptions in Britain currently stand at around 10% of internet households, says the MPs' new report.

It says government can help inform businesses and individuals of broadband's benefits.

"For mass take-up to be achieved, people will have to be given more pressing reasons than extra speed and a permanent connection change to broadband," the report goes on.

"In other words, not only things they can do fast with broadband but things they cannot do without it."

Compromise

The MPs say content which makes use of the faster speeds on offer is needed to encourage wider use of broadband.

The government itself can help by improving its provision of online services and developing genuinely interactive websites instead of just replicating paper publications and forms which can be downloaded, they argue.

Ministers want to make the UK broadband market both extensive and competitive.

But the MPs say in the short term there may have to be a trade-off between the two.

The potential gains of forcing BT to separate its retail and wholesale arms would not justify the upheaval, they suggest.

Subsidy dangers

The Department of Trade and Industry says further roll-out of broadband will depend on the public sector "bringing something to the table".

The report says in the absence of competition to BT, this could cause problems on judging when that point has been reached.

"There will clearly be an incentive for BT to slow the progress of broadband roll-out in future in order to maximise any anticipated public subsidy," it argues.

The MPs hope public bodies and communities will be able to stave off that danger and ensure as many people as possible use broadband before the government has to resort to direct subsidies.

BT responded to the report by saying that the speed of the roll-out of broadband lay in the hands of the public, rather than them.

Committee chairman Martin O'Neill said continued investment was vital to make the most of the opportunities offered by broadband.

"It is imperative that the regulatory regime has the confidence of the industry if this investment is to be sustained," he said.

"However, we are not convinced that the breaking up of BT would contribute to this."