Businesses and home workers rely on better connection more than ever since Covid

Chief executive of Broadway Partners Michael Armitage on why a level playing-field for small broadband providers in Wales is needed

IF there is one positive we can draw from the coronavirus crisis, it’s how abundantly clear the economic and personal case is for a better-connected Wales.

Businesses and home-workers in rural communities across Wales have really felt the pain of patchy connectivity during the lockdown, as indeed have broad swathes of individuals not in employment, from schoolchildren to the elderly.

According to data from Ofcom, the industry regulator, 79,000 households in Wales (6% of all) do not have access to ‘super-fast’ broadband (30 Mbps and above).

And it is highly likely this figure understates the real extent of Wales’ digital deficit: in some rural areas, we estimate that as much as 30% of the population has barely functional broadband.

Whichever figure you take, across the whole country the connectivity gap represents a massive opportunity cost for the Welsh economy, and often a very real personal cost for individuals.

Wales’ dependence on the rural economy is high, accounting for around 20% of the country’s economic activity (compared with around 16% for England).

However, it is likely that economic recovery post-Covid will be driven as much by knowledge-intensive and creative industries as by so-called traditional industries.

Many of those creative industries will have teams working from home and, whether in rural areas or in the major cities, all will be equally dependent on having access to fast internet connectivity.

It is therefore more vital than ever that good broadband is available consistently across the country – a critical ‘silver bullet’ to get the economy firing again post-crisis.

The fact of the existence of a rural digital deficit is of course easy enough to explain, as traditional operators were bound to focus where the economics were most favourable and where the competitive threat was most immediate – in the more dense urban and suburban areas – leaving rural areas for another day.

But Wales cannot wait for that ‘other day’ to roll around, and for the big players to upgrade their rural digital infrastructure.

Incumbent broadband operators are typically burdened by legacy technology and business models, rendering them unable to respond to the digital needs of rural communities in the absence of large government subsidies – and, even then, only over many years.

Fortunately, the UK Government and Ofcom have increasingly been adopting pro-competitive policy positions, recognising that the rural broadband challenge is too great to be solved by one provider, and actively encouraging greater diversity in the supplier base.

Now that the competitive battleground has shifted to rural areas with the UK Prime Minister’s ‘outside in’ broadband strategy, new and smaller players can exploit their natural advantages of new technology, both fibre and wireless, their more flexible business models, their greater agility, and their inherently lower costs.

We therefore welcome the Welsh Government’s move to raise the value of the Gigabit Voucher scheme, further empowering individual households and businesses to encourage new suppliers into the market.

We also applaud the launch of the Welsh Government’s Local Broadband Fund, encouraging local authorities to develop their own solutions, often with new providers that can bring fresh thinking to the task.

But the decision to channel additional Welsh Government funding directly to the incumbent operator is mystifying to us, particularly given the risk of highly targeted, ‘divideand-conquer’ strategies that selectively pick off individual premises and communities for new broadband connections, thereby effectively neutralising competitor activity in that area.

We would therefore encourage the Welsh Government to reconsider its approach to funding allocation, levelling the playing-field for small broadband providers and ensuring they have equal opportunities to connect communities in Wales.