Is it time Government takes the lead on broadband investment?
The UK Government may want to reconsider its position in developing high speed broadband networks, as a report published at the end of last week found the UK's 'Internet economy' is worth some £100 billion a year.
Last week the Coalition Government published its National Infrastructure plan which, among other things, dealt with that broadband network. The plan allotted £530 million over the next four years to 'support the UK's broadband network', and effectively turned things over to the private sector to sort out.
This seems a risky strategy, considering the cost to the economy if it goes wrong. As it stands, according to the report commissioned by Google UK, from research firm Boston Consulting Group, the Internet economy now represents 7.2% of UK GDP, which is more than construction, transport, or utilities; and this is expected to rise to 10% by 2015. Internet companies also employ some 250,000 people, according to the report.
The UK, in fact, is now the world's leading country for e-commerce, said the report, and UK businesses are regularly using the Internet to expand sales overseas. While the 'offline economy' exports 90p for every £1 imported, e-commerce goods and services are exporting £2.80 for every £1 imported.
And in terms of how use of the Internet is actually affecting businesses, and the potential cost of falling behind in developing the network, the report surveyed over 900 SMEs, and found that companies actively using the Internet reported overall sales growth more than four times greater than those companies which were not engaged.
Paul Zwillenberg, partner with Boston Consulting Group in London, said, "The Internet is pervasive in the UK economy today, more so than in most advanced countries. Whether they are driving international expansion, improving their interactions with customers or the efficiency of their supply chains, UK companies are increasingly embracing the Internet's potential. Several industries - Including media, travel, insurance, and fashion - are being transformed by it."
The £100 billion figure represents investment in the UK's Internet infrastructure, government IT spending and those net exports, though the majority, or 60%, is driven by UK consumption; this is the spend on online shopping, as well as the cost of connections and devices to access the Internet.
Indeed, the report found that more than 19 million households have an Internet connection, with broadband penetration more than doubling since 2005. There were 31 million adults buying goods or services online in the past year, or 62% of the adult population, spending about £50 billion last year on goods and travel.
Also nearly a third of Internet users have accessed the Internet on their mobile handset, up from 23% in 2009, which rises to 44% among 16 to 24 year olds.
And online payment service PayPal has reported that a million Britons have now used PayPal to make a payment or send money through their mobile phones. The company has produced apps for iOS, Android and BlackBerry devices, and says that it has seen a 'dramatic acceleration' in the amount of money sent via mobile phones. The company said it expected to close 2010 with 30 times the mobile payments volume globally of 2008, reaching over $700 million, while in the UK, PayPal saw month on month mobile transactions grow by 20 per cent in July and August this year.
This highlights the need for investment in both the mobile Internet and the fixed line network, and Government simply turning everything over to private industry to sort out seems illogical. As the Boston report has highlighted, the network is vital to the economy, and failure to ensure it keeps up with demand would be highly detrimental to economic recovery and future growth.
As Matt Brittin, Managing Director for Google in the UK and Ireland, put it, "We all know how the Internet has changed the way people access information and communicate. Now for the first time we can see how its adoption by British business has become a major contributor to the UK's GDP, and that the Internet is a central pillar of the UK's economy. The sector has come of age, and with great prospects for further growth, the UK internet economy will be vital to the UK's future prosperity."
The UK Government may want to reconsider its position in developing high speed broadband networks, as a report published at the end of last week found the UK's 'Internet economy' is worth some £100 billion a year.
Last week the Coalition Government published its National Infrastructure plan which, among other things, dealt with that broadband network. The plan allotted £530 million over the next four years to 'support the UK's broadband network', and effectively turned things over to the private sector to sort out.
This seems a risky strategy, considering the cost to the economy if it goes wrong. As it stands, according to the report commissioned by Google UK, from research firm Boston Consulting Group, the Internet economy now represents 7.2% of UK GDP, which is more than construction, transport, or utilities; and this is expected to rise to 10% by 2015. Internet companies also employ some 250,000 people, according to the report.
The UK, in fact, is now the world's leading country for e-commerce, said the report, and UK businesses are regularly using the Internet to expand sales overseas. While the 'offline economy' exports 90p for every £1 imported, e-commerce goods and services are exporting £2.80 for every £1 imported.
And in terms of how use of the Internet is actually affecting businesses, and the potential cost of falling behind in developing the network, the report surveyed over 900 SMEs, and found that companies actively using the Internet reported overall sales growth more than four times greater than those companies which were not engaged.
Paul Zwillenberg, partner with Boston Consulting Group in London, said, "The Internet is pervasive in the UK economy today, more so than in most advanced countries. Whether they are driving international expansion, improving their interactions with customers or the efficiency of their supply chains, UK companies are increasingly embracing the Internet's potential. Several industries - Including media, travel, insurance, and fashion - are being transformed by it."
The £100 billion figure represents investment in the UK's Internet infrastructure, government IT spending and those net exports, though the majority, or 60%, is driven by UK consumption; this is the spend on online shopping, as well as the cost of connections and devices to access the Internet.
Indeed, the report found that more than 19 million households have an Internet connection, with broadband penetration more than doubling since 2005. There were 31 million adults buying goods or services online in the past year, or 62% of the adult population, spending about £50 billion last year on goods and travel.
Also nearly a third of Internet users have accessed the Internet on their mobile handset, up from 23% in 2009, which rises to 44% among 16 to 24 year olds.
And online payment service PayPal has reported that a million Britons have now used PayPal to make a payment or send money through their mobile phones. The company has produced apps for iOS, Android and BlackBerry devices, and says that it has seen a 'dramatic acceleration' in the amount of money sent via mobile phones. The company said it expected to close 2010 with 30 times the mobile payments volume globally of 2008, reaching over $700 million, while in the UK, PayPal saw month on month mobile transactions grow by 20 per cent in July and August this year.
This highlights the need for investment in both the mobile Internet and the fixed line network, and Government simply turning everything over to private industry to sort out seems illogical. As the Boston report has highlighted, the network is vital to the economy, and failure to ensure it keeps up with demand would be highly detrimental to economic recovery and future growth.
As Matt Brittin, Managing Director for Google in the UK and Ireland, put it, "We all know how the Internet has changed the way people access information and communicate. Now for the first time we can see how its adoption by British business has become a major contributor to the UK's GDP, and that the Internet is a central pillar of the UK's economy. The sector has come of age, and with great prospects for further growth, the UK internet economy will be vital to the UK's future prosperity."