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Piers Daniell: London's biggest business blocker? Lack of high-speed broadband

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Why is London lagging behind on broadband bandwidth? Asks Fluidata CEO Piers Daniell in his inaugural column

Back in 2011, the Government allocated £100m for an Urban Broadband fund. This fund was to create around 10 ‘Super Connected’ cities in the UK, including London. It later added £50m to the programme to increase the number of Super Connected cities. But what do we mean by Super Connected cities, and what benefits does the scheme bring to small businesses in the capital and beyond?

There are apparently currently 22 large and medium-sized cities in the scheme. The first 10 (Belfast, Salford, Portsmouth, Cardiff, Derby, Bristol, Edinburgh, Newport, London and Manchester) joined the programme in late 2013, and the next 12 are due to enter the scheme in 2014. Apparently local small businesses can apply for vouchers worth up to £3,000. These vouchers will help them pay for the fixed cost of connecting to a broadband network capable of anything above 30 Mb/s – better than a kick in the teeth.

Eligibility is only for businesses of up to 249 employees and with a turnover of less than €50m pa and/or a balance sheet of no more than €43m. Successful applicants can then choose their broadband supplier from a list of suppliers signed up to the scheme. They still have to pay, unfortunately, for VAT, line rental and other service charges.

The original intention of the Urban Broadband Fund was to provide funding to local governments to invest broadband infrastructure for cities. When Birmingham, for example, secured £10m to create its own Super Connected City, back in 2012, it looked at teaming up with a delivery partner. However, this meant that government was getting involved in the broadband market, and ISPs were far from happy with the situation. 

Worried that they would lose out, BT and Virgin Media launched legal challenges against Birmingham’s Smart City plans, citing fears of network overbuilding and state aid representing a blow to market competition. The Government decided to change the scheme from one that provided direct funding to the city and allowed the city to select its own partner, to the voucher scheme, which included a list of suppliers and featured direct applications to the scheme. A system London can now benefit from.

I for one like the Connected Cities Voucher Scheme, as more than 98% of businesses in London are SMEs. It’s incredible that we don’t automatically have high-speed broadband in our capital city, but the fact is not all businesses (or homes – as my own experience bears out) can access the speeds we need if we want to compete nationally.

Secondly forecasts say that by the end of 2013 more than 75% of UK businesses would be using at least one type of cloud service. To stay competitive, most SMEs will use some form of cloud computing: to access documents on the move, to be flexible, and to save money. You need good internet connections to do that.

Also as we all know customer service is a differentiator for business. It’s moving away from a one-platform call centre, and diversifying to provide service across social media, through virtual assistants and through video. This all needs decent bandwidth, and a stable, secure and fast internet connection.

There are plenty of tools on the market which aid collaboration, and allow teams to work together no matter where they are located, or when they are working. (Just try getting to work during a Tube strike in London, and you’ll know how important it is to be able to work from home). Yet these tools are useless if you have a poor internet connection. Office space is at a premium in London, and high-speed broadband means teams can communicate and collaborate over distance without the business needing to invest in expensive office space for everyone.

Finally research by recruiting firm, Hays, shows that 31% of Generation Y workers consider working from home a key benefit, while nearly three in four millennials expect their jobs to provide opportunities for travel. They expect to be allowed to work from home, and to have a task orientated working week, rather than a focus on ‘presenteeism’.  Businesses that invest in the latest IT and high-speed broadband are going to have the advantage over any of their competitors who are less willing to change. They will attract the best (and most demanding) employees, and have the talent to drive the business forward.

Piers Daniell is the founder and managing director of Fluidata, one of the UK’s fastest-growing tech companies. He was named “Young Entrepreneur of the Year” in the LondonlovesExcellence Awards 2013

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