Connecting Crossed Wires

SBT looks at the issue of slow and unreliable internet in rural areas. How much of a problem is it and is enough being done to improve it?

The internet has become integral to the operation of the vast majority of – if not all – businesses. Indeed, you’d be very hard pressed to find a company that doesn’t use the web for some aspect of its business. Ofcom have reported that 83% of small businesses consider communication services to be fundamental to their business, and 78% use a fixed broadband connection. They also estimate that UK turnover would increase by £18.8bn if all SMEs traded online. When one considers that the UK has 5.4 million SMEs, constituting 99.9% of UK businesses, the sheer extent of the numbers involved here is brought in to sharp focus.

Speaking during SBT’s Growth and Innovation in Professional Services roundtable discussion in March, Matt Turner of Young Start-Up illustrated just how dependent some businesses have become upon the internet: “I think for the SME sector in particular, when your internet service provider has a problem, the business literally stops” He explained: “One afternoon, our internet at Basepoint went down, and every business’ account systems, CRM, marketing platforms, emails and HR platforms are all in the cloud, so the businesses just ground to a halt.”

A report published by the Federation of Small Businesses (FSB) recently suggested that a lack of fast and reliable internet access reduces productivity, stifles innovation and restricts the ability of British firms to grow and compete in global markets. Furthermore, surveys undertaken in 2013 and 2014 found that 94% of small business owners considered a reliable internet connection critical to the success of their business, and that as many as 14% of small businesses considered the lack of good broadband to be their main barrier to growth. Overall, only 15% of small firms said they were very satisfied with their broadband provision, while a quarter said they were fairly or very dissatisfied.

In an attempt to rectify such issues and overhaul the dated internet infrastructure, in February 2013 the government published details of a plan to achieve a transformation in broadband service by 2017. The headline aims were to provide superfast broadband (speeds of 24Mbps or more) for at least 95% of UK premises by 2017, and universal access to basic broadband (speeds of at least 2Mbps) for all from December 2015.

However, in spite of the considerable time and money that has been put into improving the broadband infrastructure thus far, there are many businesses for whom the service still isn’t cutting the mustard. And things are even worse for those residing in the UK’s rural regions, where in some cases improvements are yet to be seen. This is highlighted by research by the FSB which found 49% of rural small businesses were dissatisfied with the quality of their broadband provision: nearly double the level of dissatisfaction compared to urban small businesses. Speed and reliability were key issues, with the statistics representing an almost 50% gap in reported satisfaction levels with comparable urban businesses. That the £400bn rural economy is being stifled by such a simple thing is beyond appalling.

Commenting on the research, Mike Cherry, National Policy Chairman for the FSB, said: “This research paints a worrying picture of a divided business broadband landscape in the UK. We risk seeing the emergence of a two-speed online economy resulting from poor rural broadband infrastructure. Continued poor connectivity in rural areas represents a huge missed opportunity for economic growth in many parts of
the country.”

Another survey conducted by the Manufacturer’s Organisation, EEF identified a particular problem in business parks, where almost half of the 128 businesses surveyed were unable to access speeds above 10 Mbps (excluding those using leased lines). Taken with the EEF finding that over a quarter of small firms and half of medium-sized firms are paying more than £5,000 a year for broadband connectivity, this is a pretty shocking statistic.

So what’s being done about it? In response to business’ mounting concerns, in February 2016 the Secretary of State for Business, Innovation and Skills announced a joint review into business broadband by the Departments for Culture, Media and Sport and Business, Innovation and Skills, to explore the barriers facing businesses in accessing affordable superfast broadband. The findings are yet to be published.

Businesses are also having to take matters into their own hands. At the Manor Royal business park in West Sussex, the Manor Royal Business Improvement District joined forces with West Sussex’s Better Connected partnership to deliver 100% fibre broadband coverage across the 540 acre site, which is home to more than 500 companies.

Upon the completion of the project in late 2014, Trevor Williams, Chairman of Manor Royal Business District Ltd said: “Prior to the Manor Royal BID, poor broadband speeds were a problem that a number businesses wanted us to get on top of and we made this a priority. Faster broadband is a must-have for companies to help them compete and we are very pleased that 100% superfast coverage has now been achieved throughout the Business District.”

In other cases, rural communities have clubbed together to literally build their own networks. In some cases, fibre cables have been laid right up to the premises, giving blistering ‘hyperfast’ download speeds of up to 1,000Mbps. This, however, is a costly and drastic step that shouldn’t be necessary.

Superfast coverage for SMEs may have increased to around 68% of premises, and Ofcom anticipates that by the end of 2017, 82% of SMEs will have access to superfast broadband. However, as this number still isn’t up to the mark, questions remain as to just how successful the government’s upgrade programme will really be and whether rural business will see the benefits that they so sorely need.