Digital Economy Bill

Lord Mitchell Excerpts

2nd reading (Hansard): House of Lords
Tuesday 13th December 2016 Lords Chamber

[Lord Mitchell (Non-Afl)]

My Lords, the Digital Economy Bill does very little for the digital economy. Of course, it addresses subsidiary issues that certainly need to be changed, but in its key objective to launch the UK into the next phase of the tech and digital economic revolution, it fails. We are entering a new, post-Brexit era in which we are told we will be taking on the world in the exciting challenges that face us. Digital has to be part of that, but what are we offered? A Bill so limp and so pedestrian, so uncoordinated and so patchy and, as many noble Lords have said, so lacking in ambition that it proves the old adage that it you set the bar low enough, you might even achieve it.

The digital world is growing fast, very fast; certainly faster than most politicians understand. If we are going to lead in a world of driverless cars, the internet of things, digital health and a host of other data-dependent technologies that require massive connectivity speeds, we need a digital infrastructure that matches our ambitions. I hear Ministers making proud statements that we will achieve 100% coverage in 10 megabit per second speeds by 2020. Do they realise just how embarrassing this is? I hear them talking about a megabit economy, but in the world around us megabits are becoming obsolete. In tomorrow’s brave new digital world, gigabits will be king. That is one thousand times faster. Without a Government commitment to a gigabit infrastructure, we have not got a prayer of meeting our digital objectives. So, my first question to the Minister is: will the Government make such a commitment to encourage the building of a gigabit infrastructure? After all, that is what South Korea, Japan and Finland are doing. We have to think big.

Nearly 50 years ago, I joined what was then called the data processing industry. I have seen an industry grow to become the world leader. If nothing else, it has given me a perspective on this industry and what it is set to offer in the future. Five of the biggest companies by value in the world today barely existed 20 years ago. Indeed, three of them—Google, Amazon and Facebook—did not exist at all. Microsoft has been around a little longer, and Apple, in 1996, was close to bankruptcy—now look at it. This is an industry which continues to experience phenomenal growth, and to many people’s surprise we in the UK have done really well. There are some powerful statistics provided by Tech City. The UK digital tech industry is worth £161 billion, of which London contributes £62 billion. Over a four-year period from 2011 to 2015, the digital industry grew 32% faster than the rest of the economy. UK Digital tech employs 1.56 million people, of which London employs 328,000. Jobs are created nearly three times faster here than in the rest of the economy. In London, one in four new jobs are in tech. There are 58,000 digital tech businesses in the UK. Finally, it is worth remembering that 41% of all digital tech jobs are in non-digital industries; it is not all apps and data management.

In usage, we are the world’s leader in online shopping, with a spend of £1 billion a week, and 35 million of us log on every day. Dare I say that 5 million of us use online dating agencies, although I point out that that does not include me? Who books travel except online? We are a tech savvy country and this is a huge success story. London has become a digital exemplar to the world. Today, it sits there right at the top, behind Silicon Valley, it is true, but certainly on a par with New York. Nowhere in Europe comes close. Why has it occurred? I would say it is because of convergence. Two of the world’s top 10 universities—Imperial and UCL—are based here. Only one other city, Boston, can match that. Then, throw in the close proximity of Oxford, Cambridge and King’s College, and it can be seen that London is a scientific and intellectual powerhouse.

Then, look at where London is also a world leader—music, fashion, media, sport, theatre and, of course, banking, insurance and financial services. These are the ingredients in the cocktail that makes London such a digital leader. This bringing together of science and the financial and creative industries is critical to London’s growth, particularly in the world of smartphone apps. Medicine is a good example. We have the universities, but we also have the Wellcome Foundation and the newly opened Crick Institute. MedCity has been created to commercially exploit the exploding world of digital health. It is a rosy position and, as I say, no country in Europe comes close, but we have to stay ahead of a very fast-moving game. That is my plea for today. The usage of internet connectivity is not a gradual process; it is exponential. Billions are being invested in new technologies, which are going to require huge data capabilities. Driverless cars will happen. When Google, Amazon, Apple, BMW and the Japanese car companies are investing tens of billions of pounds in this area, it cannot fail. A grid of driverless cars and lorries will require undreamt of levels of mobile data connectivity. So too will the internet of things, which is just in its infancy but about to become ubiquitous. Without ultrafast connectivity it does not work.

However, there is one company which on its own is restricting our digital growth and holding us back, and that is BT. The way things are going, BT will soon control a very high percentage of the access to things digital in our country, both broadband and mobile. Broadband provided on its ancient, dilapidated copper cables seems to be its solution to our short-term problems. “Sweat the assets” is its mantra, then delay and obfuscate. In the mobile sector, it has purchased EE. In the 5G spectrum, it will end up with over 40% of this key mobile technology. When you group broadband and mobile together, you see the giant that BT is becoming. To give it a historical slant, it owns the roads and it owns the railway lines. It is demolishing the competition. Its level of investment is low and that is why our connectivity is equally low. It could have diverted much more funding into digital, but it chose instead to set up BT Sport.

Speak to friends about BT’s services. Speak to MPs and hear what they say their constituents and small businesses say. It is awful. BT is holding us by the throat. Its performance is dismal. That has profound consequences for us all. It displays all the attributes of a predatory monopoly. My question to the Minister is: will the Government encourage the Competition and Markets Authority to pursue BT for anti-trust and monopolistic behaviour? Secondly, will the Government and Ofcom force BT to sell Openreach so that it can make its own way without BT holding it back? I am sure the Minister will divert my questions, but will he at least concede that BT in its digital activities is displaying monopolistic behaviour—a monopoly acting against the public interest? We are poised for spectacular growth. We are not starting from the beginning. We have done very well in digital. However, our success could slip in the proverbial nanosecond if the gigabit infrastructure is not in place. We cannot allow that to happen.