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Dynamic UK telecoms market a catalyst for inward investment

By Invest UK

The creation of a competitive broadband market will not only strengthen the UK’s dynamic and fast growing telecommunications industry but will also benefit new business entrants from all industry sectors – reinforcing the UK’s position as Europe’s top location for inward investment.

Since opening up to competition, the United Kingdom’s telecommunications market has become one of the most dynamic in the world. At present, telecommunications services alone are estimated to be worth around US$44 billion and new sectors such as wireless, digital TV and the Internet continue to drive market growth.

It is true that the market has not been immune to the effects of the global downturn, with many companies suffering setbacks and redundancies, but the industry remains strong. In fact, the UK still accounts for over 5% of the global telecoms market and most sectors are buoyant enough to support multiple technology platforms.

The UK telecoms market is proving to be one of the fastest growing markets in the world. In 2002, the UK telecoms sector still managed to grow by 1% and is forecast to increase by 4.6% in 2003. In fact, the UK’s business environment gives every incentive for new entrants to grow, innovate and compete in a global marketplace. It has the lowest utilities costs in the European Union, the lowest main corporation tax rate of any major industrialised country – and there are no additional local taxes on profits. This fertile environment is complemented with world-leading telecommunications research and development (R&D) – supported through government initiatives and strong ties between academia and industry.

Technology companies establish their research centres in the UK because of the excellence of scientists and specialists in its universities. In fact, the resulting success has forged a strong partnership between business and academia that can be exploited by inward investors. Overall, there are around 20 universities in the UK carrying out world class research in components, materials, switching and routing systems. A number of global players have established R&D labs including Nortel Networks, Motorola, Cisco Systems, Bookham Technologies and Agilent Technologies.

Building Broadband Britain
The telecommunications industry is being transformed, with high bandwidth communications being brought into homes and businesses, resulting in a rapid transformation in the quantity and attractiveness of digital information. The growth in broadband services is contributing to the UK’s competitive business environment, making it easier for new entrants to set up and thrive. In May 2003, the UK’s telecommunications regulator, Oftel announced that the UK has reached two million broadband connections, with new connections running at 35,000 each week, bringing the government another step closer to its aim to make Britain “the most competitive and extensive broadband market in the G7 by 2005”.

According to research by telecommunications consultancy, Analysys the UK now boasts the third most competitive broadband market of all the G7 industrialised nations. Competitiveness is calculated in terms of market regulation, the number of companies competing to offer broadband services, and price. Oftel’s latest international benchmarking research shows that consumers continue to pay some of the lowest prices in Europe for residential broadband services as a result of the UK’s competitive broadband market. The research shows that broadband services are cheaper than in France, Germany and the US, with only Sweden offering a slightly cheaper service.

Competition between service providers and network providers resulted in cheaper broadband prices for the consumer resulting in a drop of six percent in prices for residential broadband services in the last six months. Not only price cuts, but also the growth in the availability of emerging technologies such as wireless and satellite broadband solutions have contributed to make the UK market more competitive.

When it comes to broadband extensiveness – measured in terms of market context and coverage – the UK takes a fifth place, following closely behind the US. It is therefore a priority area for the government to improve its position to meet its target of making Broadband Britain a world leader.

Driving the government’s commitment
The public sector has an important role to play in the rollout of broadband networks. The UK’s Minister for E-Commerce and Competitiveness, Stephen Timms launched the Broadband Taskforce last year to drive and expand broadband further and more rapidly. The Taskforce is charged with bringing about effective aggregation of demand for broadband in the public sector so that most is made of the £1 billion investment to provide key public services with broadband connectivity. This comes as part of the broader £6 billion investment in ICT over three years – the largest investment in public services in post war history – as announced by the Prime Minister in November last year. The Task Force will aim to ensure that when the public sector is buying broadband – for schools, hospitals, local authorities – it is done smartly and has the maximum effect on extending broadband availability more widely.

To enable broadband to play a larger part in consumer choice a balance has to be achieved across key factors of availability, its diversity, its regional availability, and the range of services it can deliver. Approximately 72% of the population now has access to broadband and 40% of households have a choice of service providers. Yet, there are still too many people in rural areas who cannot access affordable broadband. The Broadband Taskforce and its network of advisors will use the public sector spending power to boost availability in these unconnected areas.

A new rural broadband team in the Department for Trade and Industry will also add to the work being done in bringing broadband to these areas.

Satellite broadband is one alternative for homes and businesses that cannot get broadband via either cable or DSL. Britain has a cheaper broadband satellite market than fellow European nations, according to Oftel. In its latest Internet and broadband benchmarking study, the regulator has found that both one-way and two-way satellite services can be bought for less in the UK than in France, Germany or Sweden.

“The UK is making good progress on its journey towards Broadband Britain. Initiatives such as these mean that together, Government and industry can increase the momentum,” comments Stephen Timms. “We are in a good position to meet our target. Price, competition, coverage and take-up are all showing positive signs, but there is still a lot to be done. We are working to stimulate competition at all levels and encourage infrastructure roll-out throughout the country.”

New leading edge technologies from Britain that will have a fundamental impact on our every day life, changing the way we work and communicate will be showcased at ITU Telecom World 2003 in Geneva.

As part of the UK government’s commitment to create the right climate for technology driven businesses to set up and thrive, it will bring together the national and regional development agencies, universities and research centres, trade associations, and companies in order to showcase its telecommunications excellence to the world’s leading businesses.

Branded as UK@ITU Telecom World and jointly organised by Invest.UK, Trade Partners.UK and Intellect (UK ICT trade association), the UK pavilion will provide the opportunity to demonstrate the unique combination of skills, expertise and market knowledge held regionally, by indigenous businesses and within university research facilities and the range of technology-based products and services produced by UK companies. Overseas companies will have the opportunity to exploit the huge trade, investment and partnership opportunities the UK offers in the way that best suits their business strategy – as commercial partnerships or joint ventures, research contracts, distributorships, product sourcing, inward investments or technology transfers.

This joint approach recognises the increasing role of partnerships in business and reflects the need to be flexible and responsive in the way the UK is marketed to global companies in a fast-changing economic climate.

A programme of presentations will run on stand throughout the show, with the academics from the UK universities talking about some of their leading edge technologies. Visitors will be able to learn about the technologies and talk to those developing them.

It is part of the ongoing work undertaken by British Trade International to build on the UK’s status as a top location and source for leading-edge technologies, products and services.

Invest UK is the UK Government's national inward investment agency, helping companies to set up or expand business in the UK. For more information go to http://www.invest.uk.com or visit us at the UK Pavilion in Hall 2, ITU Telecoms World 2003 Geneva, 12-18 October.

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