Digital Connectivity – Men waving red flags

Great piece from Bob Lefsetz today, one of the more important commentators on both the entertainment and digital businesses.

“Algorithms are important. But even more so is the speed within which their results can be executed. Let me make this perfectly clear. If you’re trading from Kansas, you just can’t compete with someone in New York City. It takes too long for your message to get through.

So there’s been an arms race in communication. Fiber optics. Straight pathway. Tower to tower communication as opposed to underground, because data flows faster above ground.

And you know nothing about this. But it’s hiding in plain sight.”

We have our own version of this in the UK, a digital policy which plans to deliver a broadband speed of 2 Mbps to all by 2015. Which doesn’t mention that this might give you an upload speed of 100 kbps. Not a lot faster than the old dialup speeds, for those who remember the stone age of digital.

So private enterprise (BT, Virgin Media et al) will improve provision to the UK’s cities and large towns, but the rest of the country will benefit from having men waving red flags walking along in front of their computers, phones and tablets, never mind obscuring the view of their connected TVs. And for executing such a wonderful policy, the UK’s “digital champion” is due to be elevated to the House of Lords. You couldn’t make it up.

This policy will create a Digital Divide, where some will have reasonably fast connections (24 Mbps is the government aspiration for 90% of us) and some will still have 19th-century connectivity. The economic consequences of this could be catastrophic.

Why? It’s wrong to talk of 2 Mpbs (or even 24 Mbps) as the connection speed. This might be your download speed, but typically with an ADSL service, which most people have, your upload speed will be perhaps 5-10% of your download speed, which is not much use if you’re trying to run a digitally-based business. And with 9% of the UK economy already digitally-based, and 15% of all retail transactions taking place online, being able to transact business digitally is vital to the future of many UK enterprises and service providers.

Now explore B4RN, an enterprise started by a rural community who decided they weren’t going to accept this Digital Divide, and have struck their own blow in the Big Shakeup. Not content with having men with red flags arriving in their area by 2015, they decided to build their own pipe.

This rural community in North Lancashire now offers their service to local residents and businesses for a £150 connection fee and £25 (+VAT) per month subscription. Not cheap you might think, but they guarantee speeds of 1 Gb down and up – that’s 500 times what the government is promising down, and 5-10,000 times the likely upload speed – and of course you don’t need to pay extra for a phone landline. You can also use your fibre line for a VOIP phone service, of course – usually much better voice quality, and cheaper calls, than a traditional copper phone line.

There will be Wall Street and City finances houses unable to get that speed or quality of service. Why? Because the providers still don’t understand their customers (no news there then), and the government don’t understand what the economy needs and think people are happy with having men with red flags in their homes and workplaces.

Britain has one of the world’s biggest digital economies pro rata – it’s now more than 9% of GDP and more than 15% of all retail – but pipe speeds are painfully slow. Depending on what survey you read, we’re ranked about #20 in the world. Akamai’s most recent survey puts us at #17 in the world for average national connection speed, just behind Romania, while the government seem more worried about Romanians wanting to live in the UK than they are about our pitiful digital infrastructure. Sadly, we’re all in this together. Unless of course you live in the rural uplands of Lancashire!

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