The Chancellor’s Productivity Plan was released just over a week ago. It presents a road map to support digital infrastructure, developing a series of measures to decrease red tape and cut costs for infrastructure providers.

We welcome these developments, as will many small, innovative infrastructure providers, but we go further to suggest that the UK needs a flexible and responsive system to enhance infrastructure investment decisions. We should be ready to support ultrafast roll out that reaches speeds beyond hundreds of megabits, and into the tens of gigabits, that are already being tentatively rolled out across the UK by innovative commercial providers.

The announcements in the Productivity Plan strongly echo messages in the coalition government’s Digital Communications Infrastructure Strategy and its announcement that “ultrafast broadband of at least 100Mbps should become available to nearly all UK premises”. This is the latest in a series of government statements of ambition. With rapid technological progress, however, the speeds just get higher and higher. Should policy be more future-proof?

The UK government is caught between a rock and a hard place. It needs to show long–term commitment to upgrading the UK’s digital infrastructure to ensure its industries can always innovate and compete with the likes of those in Korea, Japan and Singapore; but it cannot justify spending billions of pounds of taxpayers’ money when the full future benefits of ultra-fast speeds are impossible to foresee. At our roundtable in March we asked what the future new government should do in these circumstances.

Nesta believes that policymakers need not be paralysed when faced with this quandary. Government can greatly reduce the risks for private investors by setting up an Ultrafast Digital Infrastructure Demonstrator Fund for fast-growing creative and tech clusters to test the efficacy of new technologies and applications and to measure customer demand. The Demonstrator, which we believe could in the first instance be funded to the tune of £100m, would back the following types of activity:

• Testing methods for reducing the cost of ‘civils’ when installing fibre in the ground and into people’s homes which can represent 80 per cent of total costs of Fibre to the Premises (FTTP) solutions. This is as much about social innovations to reduce labour costs and minimise disruption to households as it is technology–related.
• Tracking the development of new business applications of and services delivered through ultra–fast provision.
• Monitoring the development of new civic applications which may not be sustainable on purely commercial grounds (including those aimed at innovative delivery of public services).
• Analysis of the behaviour of households moving to higher speed connections, to understand if this results in changed behaviour and in particular increased usage of applications with positive externalities.
• Collection and publication of anonymised longitudinal data sets adhering to the Open Data Institute’s (ODI) Open Data Certificate standards.

The Demonstrator Fund would demand a strong partnership between the state and commercial providers. An important lesson from the roundtable is that the latter should not be restricted to large incumbents and to big, city–level capital projects. The government should also work with smaller service providers and Alt Nets like Bristol is Open, Hyperoptic and Broadband for the Rural North (B4RN) who are adopting innovative models of ultrafast provision throughout the UK. These projects may not only have great impacts on the local places they serve, but – supported appropriately – act as testbeds for the development of lower cost, locally–responsive provision in other parts of the country too.

But are we just chasing our tail?

The Coalition’s Digital Communications Infrastructure Strategy sets out a new ambition that broadband of at least 100 Mbps should become available to nearly all UK homes and businesses. The Productivity Plan does not elaborate on this,  It lists a range of policy measures that should help make this a reality, from testing innovative new digital technologies in cities and public services, and supporting digital entrepreneurship. These include:

• Removing barriers to investment in ultrafast broadband and reducing red tape, including reviewing planning rules and encouraging innovative approaches in street works
• Further supporting broadband delivery in rural areas, including looking to raise the Universal Service Obligation to 5 Mbps
• Providing free Wi-Fi in public libraries and make the broadband connection voucher scheme available in 28 additional cities across the UK by 1 April (bringing the total to 50)
• Providing up to £600m to clear spectrum bands for use by 4G mobile networks
• Centralising the operational management of public sector spectrum, and resetting the release target

The Budget contained other measures to support digital enterprise and technology, investing in Tech Hubs, Digital and Future Cities Catapults, the Internet of Things and the Sharing Economy.

These are all welcome examples of how the coalition government wants to support the digital economy, but they do not add up to an infrastructure strategy. Government needs to formulate a vision and make genuinely long-term public investment in the UK’s digital infrastructure, pledged over decades (rather than years), and of the type we take for granted when it comes to infrastructure projects like railways and airports. In this context, it is worth remembering that the £1.2bn that the government has spent in different ways on broadband infrastructure since 2010 compares with the £43bn that the state is planning to spend on HS2 alone. To put this another way, no one would question that the state has a major role in investing in the public good that is physical infrastructure. Why should it be any different for digital?

Promotion of innovative ultrafast providers

A central plank in this commitment from government must be to support experimentation with innovative models of ultra-fast connectivity. At our roundtable, it was clear that innovation is burgeoning across the UK and, as is so often the case in the digital economy, led by novel partnerships and new entrants to the sector. But at the round table, a number of complaints were made on the government’s current policy stance which critiqued the lack of ambition with regard to ultrafast.

Government should focus on the capacity of connectivity over arbitrary targets for broadband speed. The challenge for government moving forward will be to nurture a fleet of foot relationship with industry that will facilitate development of dynamic new tech solutions, moving beyond exclusively exploiting the existing copper infrastructure. Some have even suggested copper switch off in the UK, to facilitate investment in alt-tech infrastructure. We see initiatives like Bristol is Open, an experimental research-led collaboration between Bristol City Council, the University of Bristol, and private sector partners providing bewildering speeds to the city (of as much as 30Gbps) using different technologies, and B4RN, a community-driven model for building high-quality, reliable rural fibre infrastructure.

Ofcom, in it forthcoming Strategic Review of Digital Communications is charged with  reviewing the regulatory framework to ensure that competition-related market failures in private investment are removed. As such, it will do what the UK’s independent regulators do best, namely review market structures to ensure competition is working in the interests of customers (including potentially revisiting the current model of functional separation for Openreach).  Ofcom’s role is not however to invest in public goods and to support innovation and experimental development.  Public investment in innovative pilots, through our proposed new Demonstrator Fund, are a cost-effective way of ensuring that the benefits and costs of ultraspeed connectivity are tested and the insights shared widely, to the advantage of the whole of the UK.