Fears urban SMEs are to miss out in broadband revolution

MANY city-based small businesses in Yorkshire will struggle to compete with their rural rivals because they lack high speed internet access, it was claimed yesterday.

Earlier, this month, the Government announced that nearly £363m will be spent on upgrading broadband services in rural areas.

Although this initiative has been welcomed by rural firms, there are concerns that the needs of urban small businesses have been overlooked.

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Robin Bosworth, a senior consultant at Mott MacDonald, the management, engineering and development consultancy, said the Government’s Digital Britain Report proposed that market forces would address the broadband requirements of two-thirds of the UK. For the remaining areas, there is a need for public intervention, because market forces are unlikely to be able to justify investment on a commercial basis, Mr Bosworth added.

Broadband Delivery UK (BDUK), a team within the Department for Culture, Media and Sport (DCMS), was set up to deliver the Government’s broadband strategy.

Mr Bosworth said: “However, BDUK has really been primarily focused on rural initiatives as the Government believes market forces will take care of urban areas. This is not proving to be the case, and a more detailed analysis of the market shows that there are more businesses in urban areas whose broadband needs are not being addressed.

“Typically these are SMEs (small and medium-sized enterprises) and the economic impact of not providing adequate digital connectivity to them is great. However the existing round of BDUK funding misses this point.

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“The investment required to provide next generation broadband services across the country is many billions of pounds.

“Investment has tended to go to those areas where there is intense competition and a concentration of large businesses. However, most employment in this country sits within SMEs which remain ill-served.

“Urban areas in need of regeneration are not receiving investment in telecoms infrastructure, hence we have a cycle that needs to be broken.

“As a result, businesses could suffer from the lack of investment in areas which are not deemed a priority. This is harming competitiveness and employment.”

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Richard Tuplin, the chairman of the East Yorkshire branch of the Institute of Directors, said yesterday: “There is a danger that all the focus on super fast broadband provision is on rural areas, with urban areas missing out on this investment, and missing out on the huge benefits.”

Charlotte Britton, the chairman of the West Yorkshire branch of the IoD, said there needed to be a balanced approach focusing on rural and urban areas.

Lyndsey Whitaker, the development manager for the West Yorkshire Federation of Small Businesses, added: “The indicative allocation for Yorkshire and Humber from the £363m fund is £32.7m.

“Yorkshire and the Humber is the largest region in the country, so a 10 per cent allocation from the national pot is disproportionate.

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“It’s true that we have seen some great examples in recent years of how businesses and communities have worked with local Government, Yorkshire Forward (the regional development agency) and telecoms providers to provide improved access to broadband services in our rural areas, but we know that FSB members in our cities are struggling with current connectivity speeds.

“The Government is trying to encourage businesses to do more of their business activities online, including the completion and filing of tax returns, but the current broadband infrastructure across Yorkshire means this just isn’t a possibility for one in five small businesses. The £32.7m will just scratch the surface of the problem. The local authorities are also expected to match-fund the BDUK allocation, but with reductions to local authority budgets, a key question is where will the local match-funding come from?”

A Department for Culture Media and Sport spokesman said: “The market will take superfast broadband to around two thirds of the UK. The Government is supporting the roll-out of superfast broadband to those areas that would otherwise be left behind.”

THE HAVES AND HAVE-NOTS

According to research from the consultancy Mott MacDonald, South Yorkshire-based initiatives to help businesses obtain super-fast broadband are well funded because of the Digital Region project covering Barnsley, Rotherham, Sheffield and Doncaster, which has already received more than £90m.

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The East Riding, including Hull, is projected to get less than £8m from the Government, while Leeds, Bradford and Wakefield is expected to receive £6m. North Yorkshire is in line for £17.8m. Andrew Seaton, the managing director of Sheffield-based Resolve IT solutions, said: “Broadband is an essential service for all business. There has been an increasing requirement for more bandwith.”