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Tuesday, 2 March 2010

The Business of Broadband

Everyone knows how important a digitally connected Britain is to every citizen. We know what is required to achieve the ultimate solution – Fibre To The Home. Yet, we get lost over and over again in the politics of the cost/benefit analysis, and profitability for the telcos. So we play a half-hearted game and don't reach the Endgame. However, here in the UK, we have a history of supporting other sectors without a business case at all, including one which has been around since 1170!

There is one sector in the UK where no-one argues about its sustainability; into which money is thrown hand over fist by business, government and private individuals, knowing that the business case is almost, if not entirely impossible to prove. And knowing that the benefits of this 'industry' are felt by only a few....I personally am not one of them, but I don't begrudge the game they are playing.

There are 102 football clubs in this country. Some are in administration, many are close to it, very few are profitable. So, what fuels football's funding and hence its continued existence?

Passion and the belief that football is an important part of our culture and heritage.

Even the Government funds the Football Association.

There is no business case for football. As Accrington Stanley's Chairman stated today on Working Lunch, (8m) “on a commercial basis, it doesn't stack up....". He goes on to say that "my measure of success isn't a return on the money I put in." The success will be to get 2,3 or even 4000 fans coming to watch the game.

So, it's not about balancing the books. It would be impossible to do so and also get the calibre of players which keep England's football alive with the spending spree madness which is now player purchase, globally. Football simply isn't profitable and won't be. Football just is.

When a merchant banker, Ilyas Khan, throws £150M of his personal wealth into the club in the hope it will get it to that point where there are fans in the stands, you know it's about passion and the belief that this part of our culture is part of the stitching which makes Britain the country that it is. He has not done this as an investor, but as a fan who believes football matters and who measures success not in ££s from ticket sales, or the bottom line, but in how many people it can touch and engage.

And that measure of success is important – it is what we should be applying to Digital Britain. It is not about whether or not the initial investment will be returned in 5, 10 or 15 years, it's about getting fans in the stands, and so far, the UK has less FTTH fans than Accrington Stanley has footy fans.

That passion to make it happen, against short-term financial gains, has to reach deeper into the population of Britain. Those with money to invest should realise that whilst it is often made out that investment in FTTH is equally as un-businesslike as funding football's continuing existence, FTTH is quadruply, infinitely, more important than a sport.

And, with FTTH, there is a strong business case, despite the misinformed hype that Ofcom, the media and telcos keep spouting. Evidence abounds as to the positive economic impact of FTTH, particularly in rural areas. It will bring social benefits too, that are immeasurable, to every citizen and business in this country, and financial returns to those who are brave enough to think longer-term than the next couple of years. A government is only in place for five years, yet FTTH will be in place for 50+ years and run by the next generations, not ours.

But we keep losing the match and our position in the global league tables by focusing on making money out of the original investment. It is far more about reaching a point where the game can happen. Football would not be football if half the country didn't have a club because they were closed purely on the fact they cannot in themselves make enough money to survive.

And the reality is that just by deploying FTTH to every corner of this green and pleasant land, the number of jobs and business created (often cited at 200,000 jobs and 40,000 new businesses) will repay into the national coffers, in taxes alone, the initial investment many, many times over in your and my lifetimes.

The measure of success of Digital Britain will be every property connected to fibres delivering unlimited (not infinite – dig, dig!) capacity to permit residents and business people to do what they wish to be able to do over that network. Half measures will not work any more than endeavouring to win the World Cup with half a squad would. Currently Britain has well over 99% of its team on the bench, sitting out the game while the rest of the world increasingly extends its choice of players by connecting vast swathes of the population to FTTH.

Football or Fibre? I know which one makes more sense to me!


Cyberdoyle said...

great analogy! phew, if only the policy makers would read this blog instead of listening to the dinosaurs.

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