Interview: FSB on business broadband voucher scheme, infrastructure and digital divide
BT announced this week that its superfast fibre now covers 25 million premises throughout the UK. But while that's great news for home broadband there are still many small business operators who struggle with all facets of digital connectivity, a big problem when internet access is so vital to businesses of all types in our modern world.
One organisation that's done a lot to campaign for better broadband for SMEs is the National Federation of Self Employed and Small Businesses (FSB).
To find out more about the issues facing today's small businesses, and the potential solutions, we spoke to Will Black, senior policy lead on digital infrastructure and telecoms for the FSB.
Broadband Genie: The FSB’s 4th utility report has been quite critical about the quality of broadband available to businesses in the UK. Has anything changed recently, and are we on the right track to providing better broadband to SMEs across the UK?
Will Black: We were quite critical of the availability of infrastructure but I think things have improved quite a lot since then. Firstly, it started with the BDUK rollout, we’ve seen increasing numbers of small businesses getting access to superfast broadband. But I think what’s also positive is the government’s move toward the Universal Service Obligation (USO), which was the key recommendation of the 4th utility report.
What’s important for us is the USO explicitly includes small businesses within that. And the reason we’re very focused on that is Ofcom’s Connected Nations report in December last year found that only 68% of small business properties had access to superfast broadband. And that’s in comparison to 83% of the residential market. But there is still this gap in between the residential market and availability for small businesses so Ofcom has found that gap will continue without further policy intervention.
BBG: The USO recommends a minimum speed of 10Mb - do you think that goes far enough? Does it need to be higher?
WB: 10Mb is a good starting point, I think it's probably in line with where a lot of small businesses requirements are at the moment. I think what is important - and what both Ofcom and government have also alluded to - is that will probably need to raise at some point in the future in line with consumer demand.
BBG: What do you see as the major issues that need to be dealt with in order to improve broadband availability to SMEs in the UK?
WB: I think the key issue for our members remains infrastructure availability. But I think there are a range of other issues affecting the quality of the experience which small businesses have which are equally damaging.
Quality of service is really important - be that fault repair or delayed installation times. But also just contract transparency and the ability to compare and switch products for small businesses. These are all issues which affect our members as well.
And beyond that there's a wider point about small businesses ability to both engage with the telecoms market but also to understand what the benefits of doing more online could be. Whilst we find there is a willingness amongst small businesses to do more online, lots of them don't really know how to get started and that can be an issue as well.
BBG: Many businesses across the country still don’t have access to superfast broadband, and those that want better broadband can face expensive installation costs if new cabling is required. Is cost a big barrier for SMEs getting better broadband? What can be done tackle this?
WB: Cost is absolutely an issue for many small businesses, particularly if superfast broadband isn't available where the only alternative to an ADSL connection could often be a leased line product which, while it will offer very high speeds and very good service levels, will quite often be far too expensive for small businesses. So cost is important.
In terms of what we can do to address that...I think the first thing is obviously just to complete the rollout of superfast broadband so that everyone has access to speeds which are higher than they are currently able to access. And then the Connection Voucher program which is now closed was a really beneficial way of helping some small businesses to access superfast broadband through paying for the installation costs.
BBG: Do we need to be considering a new scheme to help more businesses get connected?
WB: We saw about 55,000 small businesses take advantage of the Connection Voucher Scheme and it was a program which the FSB was involved in promoting to our members. It's unfortunate that it has run out of money now. What we have spoken about in the past is a community voucher scheme which would operate along many of the same lines but might include residential properties as well.
The main issue which we found was most of our members just hadn't heard of the scheme. We did a survey last year and found that 57% of small businesses hadn't even heard of the scheme. And that was in September last year. So if there was to be another scheme a real focus would need to be on raising awareness so that as many businesses as possible can take advantage.
BBG: What would be the most effective way to do that?
WB: Over the course of last year the government realised they needed to invest more money in raising awareness so there were some print adverts. But another thing they could do in future is work with business groups like the FSB. We have around 200,000 members and multiple communication channels to get messages out to those members. And engaging with the business community as early as possible is actually a very easy and cost effective way to get the message out there.
BBG: Did the government never speak to you about the scheme?
WB: They did engage later on in the process. I think a lesson would be to start engaging a bit earlier on.
BBG: The government has suggested that satellite broadband should be used to connect some of the harder to reach areas of the UK despite drawbacks such as upload speed, data caps and cost. Are you happy with their approach, or should we be investigating more robust ways of connecting these areas to fast broadband?
WB: The FSB has always been very clear that we're technology neutral. What our members care about is accessing the internet with good download speeds, good upload speeds and as low running costs as possible. I think we recognise that satellite will have a role to play within that, particularly for hard to reach areas.
I don't think it's necessarily a completely suitable substitute for a fixed line connection for some small businesses, but every small business will have to do an assessment of their needs and identify whether satellite can effectively meet that or not.
BBG: Do you think these business will need additional support with satellite broadband? Making these assessments can be tricky.
WB: With digital connectivity generally these are still relatively new technologies and for many small businesses they can struggle to understand what the differences between different suppliers are and what the different methods of accessing the internet will be. So I think as much support as possible should be given to helping small businesses navigate the market effectively.
BBG: Would you support a program from the government assisting small business with choosing and setting up broadband? Do they get much help presently?
WB: Ofcom has done a really good job. They've created a small business portal which is available on their web site and that offers some advice and support tailored specifically for small businesses to help them start to think about broadband, like what questions they need to ask themselves. So I think Ofcom are really taking a positive lead on this.
The government have done some work on it, so they have the Business Is Great campaign which offered some support to small businesses, again to help them think about what their requirements might be. But it is challenging and every small business is different and will have different requirements. So it's quite difficult to tailor a one-size-fits-all set of resources for small businesses.
BBG: Is there anything you'd like to see done differently?
WB: An increased recognition that this is challenging for small businesses would be helpful. I think the government could be working more with communications providers and with local governments and also with business groups like the FSB to identify what support would be most effective. And once it then carried out that analysis, identify how best to deliver that.
BBG: Is the FSB concerned about the digital divide and the impact it’s having on businesses in neglected areas? Do you see this getting better or worse in the years to come?
WB: Absolutely it is something we are concerned about. Urban businesses still struggle with digital connectivity as well but we are worried about the emergence of a two speed economy where businesses in cities and towns have access to digital connectivity and businesses in rural areas simply aren't able to compete because they don't have the connectivity to get there.
I think the universal service obligation will help this, but as you see ultrafast being rolled out the assumption has to be that will be in urban areas to start with, so again you'll see this perpetuation of the divide in digital connectivity between urban and rural small businesses. It is a concern.
BBG: Ofcom recently announced that leased line broadband installations were taking too long to complete and that they wanted to reduce the average installation time with BT from 48 days to 40 days. How disruptive are slow broadband installations to businesses? In your opinion, is 40 days fast enough?
WB: Only about 3% of our members use leased lines so the targets for leased line installation are less relevant for most small businesses. But I think Ofcom's work to reduce the average installation time is really important.
We haven't asked our members to put a number on how many days they consider acceptable, what is clear though is that any delays to the installation of broadband or leased line can have really detrimental effects on business. These are businesses who absolutely rely on the internet and if they lose connectivity for even a day that can be a significant revenue hit for them.
BBG: Do Ofcom need to do more to protect SMEs taking standard ADSL and fibre broadband and improve provider performance here too?
WB: Ofcom has done some really good work again in this area over the past year or so. They published a big research piece last summer looking at the needs of small businesses and thinking about ways they can improve the quality of service which small businesses receive.
They've created a code of conduct for small businesses which focuses mainly on broadband speeds. That's a voluntary agreement between communication providers and Ofcom, but it should help to give small businesses reassurance about the quality of service they'll receive in terms of speed. But Ofcom recognised that there are further steps they need to take and we're very keen to work with Ofcom to help them achieve that.
BBG: Cybercrime was a major issue in 2015 with the threat and cost to business rising. Is this something your members have expressed concern about? Do we need to provide financial support and advice to SMEs to help them combat this growing threat?
WB: Cyber security is a real concern for small businesses. During the course of the research we carried out we found members who were limiting the amount they did online to reduce their exposure to cybercrime. We carried out research in 2013 which found that the average annual cost for small businesses was about £4,000 per year for those affected by cybercrime.
But I think there are simple steps which small businesses could take to protect themselves. Whether that be updating virus scan software, or updating their firewall. And again the government has a program with Cyber Streetwise which provides some support for this.
Thanks to Will and the team at the FSB! If you're a small business owner looking for a new broadband package you can find guidance and comparisons on our business broadband page. And visit our broadband help pages and features section for more general advice and tips on all aspects of fixed line and mobile broadband.