ed oughton 2015 digital communications for a digital economy

Digital Communications for a Digital Economy

Edward Oughton ([email protected])

Cambridge Technology & Innovation Meet Up, Cambridge 2015

EPSRC Programme Grant: EP/I01344X/1

Cambridge Meet Up - Clare College - 25rd June 2015

Presentation Outline

• How have digital communications evolved in the UK?

• What has driven investment?

• How has it affected firms:

• Location decisions

• Product, process and organisational innovation

• Productivity and growth


An Interconnected World


Hot Political Topic – European Digital Agenda


Hot Political Topic - 2009

“The availability of broadband has two components: the right network today and the right network tomorrow. To ensure all can access the benefit from the network of

today, we confirm our intention to deliver the Universal Service Broadband Commitment at 2Mbps by 2012.”

(BIS & DCMS, 2009)



“…the Government’s investment in superfast broadband will deliver a major boost to the UK economy,

offering a net return of £20 for every £1 invested”

(SQW, 2013)


Two Opposing View Points

To build or not to build


Jack Dee on the Emergency Services

“I was speaking to a man and he said:

‘I rang for an ambulance and it took half an hour to get to me!’”

…that’s because you live half an hour from the bloody hospital’


Internet Penetration in Major OECD Economies

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

10

20

30

40

50

60

70

80

90

100

China France GermanyJapan United Kingdom United States

Pe

rce

nt

of

Po

pu

lati

on

(%

)

ITU (2012)


Legacy and SFBB Technologies

Superfast Broadband (SFBB)

Legacy Broadband

Premises

Premises

Premises

PremisesCable TV Company Central

Office

Optical Fibre

Coaxial Cable

Street Cabinet


Fixed and Mobile Broadband Technologies

0

10

20

30

40

50

60

70

80

90

Cities and Urban Areas Towns and Suburbs Rural Areas All Households

Pe

rce

nta

ge

of

po

pu

lati

on

(ONS, 2012)


Percentage of the premises covered by digital communications infrastructure by region (Ofcom, 2014d)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

England Scotland Wales

Pro

port

ion

of

pre

mis

es c

overe

d

(%)


Demand for Digital Connectivity Services

GDP per capita (in 1000s US$)

Percentage of students and pupils in the population

Percentage of those aged 30-34 who completed tertiary education

Percentage of households with personal computers

Percentage of individuals with mobile cellular telephone

Percentage of households with Internet access

Percentage of households with fixed-(wired) broadband

Percentage of enterprises with fixed-(wired) broadband

Percentage of population using mobile Internet access regularly

Percentage of population using social networks

Percentage of enterprises' turnover from e-commerce

Population density (100s per km)

0.0

20.0

40.0

60.0

80.0

100.0

UK EU 27


Traffic Growth 2013-18

2013 2014 2015 2016 2017 20180

1000

2000

3000

4000

5000

6000Business - File-sharing

Business - Video

Business - Web & Other Data

Consumer - Online Gam-ing

Consumer - File-sharing

Consumer - Web & Other Data

Consumer - Video

Peta

byte

s


Category Indicator 2012 2017

Percent

Change

IP Traffic

IP network traffic per day 57 Petabytes 125 Petabytes 119.3

IP Traffic per month 1.7 Exabytes 3.8 Exabytes 123.5

Annual IP traffic 20.8 Exabytes 45.5 Exabytes 118.8

Internet

Traffic

Internet traffic per day 50 Petabytes 106 Petabytes 112.0

Internet traffic per month 1.5 Exabytes 3.2 Exabytes 113.3

Internet traffic per capita 22 Gibabytes 48 Gigabytes 118.2

Mobile

Traffic

Mobile data traffic per month 39 Petabytes 333 Petabytes 753.8

Mobile as a percentage of all IP traffic 2% 9% 350.0

Mobile as a percentage of total Internet traffic 3% 10% 233.3

Devices

Total networked devices 279 million 460 million 64.9

Networked devices per capita 4.2 per capita 6.8 per capita 61.9

IP traffic from non-PC devices 18% 43% 138.9

IP traffic from PCs 82% 57% -30.5

IP traffic from TVs 16% 19% 18.8

IP traffic from portable devices 2% 21% 950.0

Wi-Fi

Growth

IP Traffic from Fixed/Wi-Fi 49% 53% 8.2

IP Traffic from Fixed/Wired 49% 38% -22.4

Internet traffic from Fixed/Wi-Fi 56% 60% 7.1

Internet traffic from Fixed/Wired 42% 30% -28.6

Broadband

Speed

Evolution

Average broadband speed growth (Mbps) 16.5 Mbps 50 Mbps 203.0

Connections >5Mbps 67% 99% 47.8

Connections >10Mbps 49% 74% 51.0

Connections >50Mbps 11.10% 18.20% 64.0


Data Downloaded versus Average Fixed Bandwidth

0 10 20 30 40 50 60 70 800

20

40

60

80

100

120

Average fixed broadband speed (Mbit/s)

Ave

rag

e d

ata

dow

nlo

ad

ed

per

mon

th (

GB

)


OECD (2014) Fixed (wired) broadband subscriptions per 100 inhabitants, by technology (June 2014)

0

5

10

15

20

25

30

35

40

45

50

DSL Cable Fibre/LAN (1) Other

OECD average


The Technological LimitationsBT Exchange Locations Virgin Media Cable Areas


Changes in connection speed by technology between 2010 and 2014

All connections ADSL Cable FTTx0

10

20

30

40

50

Nov/Dec-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14

Sp

eed

(M

bit

/s)


OECD (2014) Wireless Broadband Subscriptions per 100 Inhabitants by Technology in June 2014

0

25

50

75

100

125

150

Satellite Terrestrial fixed wireless Standard mobile broadband subscriptions Dedicated mobile data subscriptions


The Relationship Between Average Speed and Density

0.00 50.00 100.00 150.00 200.00 250.000.0

5.0

10.0

15.0

20.0

25.0

Average Speed Polynomial (Average Speed)

Population Density (Per Hectare)

Av

era

ge

Sy

nc

Sp

ee

d (

Mb

ps

)

n = 7124


Mobile Model Parameters and Posterior Distribution

*p<0.05aVariance is the estimated parameter Results rounded to 2 decimal places

Variable Model Parameter Mean

Constant β0 -1.17

Service-sector employment β1 0.52*

Percentage of medium and large businesses β2 0.15*

Population density β3 0.04*

Median age β4 -0.87*

Ethnicity (p.non-white) β5 0.06*

GVA per capita β6 0.15

Level 2 Variancea (n=10) σ2 j 0.00

Level 1 Variancea (n=173) σ2ij 0.02


Mobile Model Parameters and Posterior Distribution

*p<0.05aVariance is the estimated parameter Results rounded to 2 decimal places

Variable Model Parameter Mean

Constant β0 -1.17

Service-sector employment β1 +++

Percentage of medium and large businesses β2 +

Population density β3 +

Median age β4 - - -

Ethnicity (p.non-white) β5 +

GVA per capita β6 +

Level 2 Variancea (n=10) σ2 j 0.00

Level 1 Variancea (n=173) σ2ij 0.02


How important are the following factors for the specific location in which your digital business is based?

Support from local universities/research institutions

Local sector expertise (e.g. gaming, AI)

Access to finance

Strong transport infrastructure

Access to market/customer base

Personal reasons (e.g. family, relationships etc.)

Strong community of digital tech companies

Lifestyle/quality of life

Supply of skilled workers

Strong technical infrastructure (e.g. broadband)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Not at all important Quite important Very importantPercent of respondents


Do you regard any of the following as key barriers to growth for your company?

Poor transport infrastructure

Lack of formal advice and mentoring

Region not attractive to talent

Limited supply of property

Poor technical infrastructure

Overall economic climate

Government policy

Limited access to finance

Lack of supply of talent from universities

0.0% 5.0% 10.0%15.0%20.0%25.0%30.0%35.0%40.0%

Percentage of respondents (n=1183)


Percentage of firms regarding poor technical infrastructure (e.g. broadband) as a barrier to growth:

Bournemouth and Poole

Edinburgh, City of

Oxfordshire

Greater Manchester

Gloucestershire, Wiltshire, and Bristol/Bath area

South Yorkshire

Liverpool

Norfolk

0.00% 10.00% 20.00% 30.00% 40.00%

Percentage of respondents (n=1104)


South Wales

East Anglia

Berkshire, Buckinghamshire, and Oxfordshire

Gloucestershire, Wiltshire and, Bristol/Bath area

Dorset and Somerset

Surrey, East, and West Sussex

Eastern Scotland

East Yorkshire and Northern Lincolnshire

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

How important are the following factors for the specific loc-ation in which your digital business is based? (responses

stating 'very important')

Strong community of digital tech companiesSupply of skilled workersLifestyle/Quality of lifeSupport from local universities/research institutions

Percentage of respondents who stated 'very important' (n=1179)


Conclusions

• Despite the hyperbole, the outlook is positive

• Data usage data – valuable

• Focus on 10 Mbit/s target

• Density is king:

• …but not too much or you’ll end up like London!

• Tackling the SME issue

• Broadband severely impacts on the competitiveness of different places

Digital Communications for a Digital Economy

Questions?

Mr. Edward Oughton – [email protected]

ed oughton 2015 digital communications for a digital economy

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