U.K.’s Digital Economy Said to Lag in Investment, Consumer Confidence
The U.K. lags in willingness to spend on next-generation network infrastructure, make digital issues a top priority and raise online consumer confidence, said speakers at a London conference Friday. The event centered on the interim “Digital Britain” report by Stephen Carter, the communications, technology and broadcasting minister, for keeping the U.K. at the forefront of the global digital economy.
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The world is on the verge of a “new industrial revolution” as it shifts to low-carbon and digital technologies, said Peter Mandelson, the U.K.’s secretary of state for business, enterprise and regulatory reform. The British economy can grow out of recession and ensure further economic success if it guarantees its digital industries a competitive edge, he said. Broadband won’t just underwrite the communications business but will also redefine competitiveness across all other U.K. industries, he said.
The U.K. is fading relative to other countries in knowledge economy and digital indicators, said panel moderator Nick Higham. He said the term “digital arms race” is used to sound an alarm. Speakers disagreed about whether it applies to Britain’s situation. Britain doesn’t have a deep tradition of public investment in infrastructure, Carter said, but it competes globally with governments that view nation-building and infrastructure as vital. The same conversations about business models and how to build infrastructure are taking place everywhere, said John Higgins, the director general of Intellect, a technology industry association. Referring to a race implies winners and losers, he said. The U.K. has a “long way to go” in fully exploiting its infrastructure, he added.
Japan “would like to win the race,” the director for competition policy in the country’s Ministry of Internal Affairs and Communications, Hirouki Hishinuma, said to laughter. But every major country wants to invest in information and communications technology, he said. Huawei Technologies CEO Samuel Sun said there’s no race. “Everyone can win,” he said.
The U.K. is doing “pretty well,” Carter said. It has advantages including a large population in a small area and the use of English, a content language that sells well around the world, he said. But it needs to worry about huge players that are leaping straight into next-generation networks at a speed that the U.K. and others find difficult keeping up with, he said. The U.K. is steeped in a tradition that “the market will provide,” but the market isn’t making the investments needed, he said.
The interim report was criticized as emphasizing business over consumers. Consumers are important because they “pay the bills” and because they don’t trust the Internet, said Chief Executive John Fingleton of the Office of Fair Trading. Their lack of confidence in the online world is the result of rising incidents of fraud, but the government should avoid knee-jerk legislation, he said.
Consumer demand plays a major role in fueling investment in the digital economy, Fingleton said, but anti-fraud enforcement must be as good online as off. It’s unclear in the U.K. which agency has lead jurisdiction over Web activities, he said. Offline consumer protection principles should apply online but with different rules, Fingleton said.
Digital Britain poses opportunities and threats for content producers, speakers said. The only thing that matters to users is control, said CEO Anthony Lilley of Magic Lantern Productions . The digital-media business is in a “nasty place,” in which the old model is mostly broken but a new one hasn’t emerged, he said.
The report takes up digital copyright, proposing a new Rights Agency to protect it. The music industry is having problems protecting its product, but it’s a “mature business,” said CEO Lucian Grainge of Universal Music Group International. A comparable “storm is on its way” to other sectors, he said. The report is a spark for debate between content owners and distributors, he said.
Several things must happen for illegal file-sharing to stop, Grainge said. Producers and distributors must come together, and the government must work with industry on a “graduated response” to serial piracy, he said. But Six to Start CEO Dan Hon said talk of a rights agency is disconcerting for his business, which creates new kinds of content. Companies seeking to make money on content long- term want people to see it and are willing to take risks, he said. The final Digital Britain report is due this summer. - - Dugie Standeford