In March's Guest Essay, leading thinker and Demos Associate Charles Leadbeater outlines his critique of Digital Britain , the Government's interim plan which addresses access to broadband, internet regulation and public service broadcasting. Arguing that it falls far short of the radical approach needed, he explains why simply building technological infrastructure won't be enough to drive digital innovation in the UK.

For more information on Demos' work in this area please get in touch.

'Digital Britain' Needs a Revolution
Politicians trade in hope. So it should be no surprise that as the US and the UK lead the world into the deepest recession in 60 years political leaders have alighted on the web as a ray of hope to offer electorates worried about their futures.

Extending broadband to under-served areas forms a key part of President Obama’s stimulus package, with telecommunications groups being offered tax breaks to reach rural and poorer areas, which thus far have proven unprofitable to serve. In the UK, the recently ennobled Lord Carter has produced an interim plan – Digital Britain – which envisages universal access to affordable broadband by 2012. The National Endowment for Science Technology and the Arts estimates super fast broadband could create 600,000 new jobs in the UK based on the experiences of South Korea and California. France, Portugal, Australia and Ireland have drawn up plans to finance broadband roll out, while the Japanese and South Koreans are planning widespread access to the web at speeds many times greater than those planned for the UK. Denmark, Finland, the Netherlands and Norway are already well ahead of the British.

Around the world politicians are making the same claims for the plans. Infrastructure building will create jobs. High speed networks will provide a platform for companies making content, software and services, such as computer games, social networking and online retailing and should allow lots of organisations to be more productive, intensifying collaboration between clients and suppliers, doctors and patients, teachers and pupils. Government subsidy is justified to kick-start investment programmes hit by the credit crunch and to ensure deprived communities are not excluded from the digital future. Access to the net at broadband speed is widely seen as a universal right.

Yet far from being a win-win policy, the push to accelerate the spread of the web puts political leaders in a painful bind they are keen to hide. They want to tell us about the brave new future full of opportunity that broadband will open up. Yet the investment in broadband will only make sense if more consumers use the web to access, create and share media content and services in ways that exploits the web’s capacity for interactivity and collaboration. However, if more people do that more intensively, it will just accelerate the painful disruption of established media and cultural industries – newspapers, film, television, music recording, books – which rely on mass market advertising, physical distribution and copyright protection. The incumbents in these industries were already fearful that the web was eating away at their business models before the recession hit. More media, spread over more channels of communication is leaving advertising spending spread ever more thinly. The steep decline in advertising spending brought on by the recession will make things perilous, especially for the weakest players in the newspaper, magazine and television industries. We will know if politicians are really serious about the coming digital revolution when they start to admit investment to accelerate the roll out of digital technologies will only pay off if they bring further disruption to economies that are already in turmoil.

The credit crunch is remaking the financial system with banks closing, merging, coming into state ownership and under tighter regulation. Down the line, however, the recession could have equally profound consequences for cultural and media industries. Those that survive will do so by innovating to make the most of the web. 

To understand why and how new technologies and industries emerge from the depths of recession it is worth looking at the work of Carlota Perez and her partner Chris Freeman, for many years professors at Sussex University’s highly regarded Science Policy Research Unit. In Technological Revolutions and Financial Capital published in 2002, the culmination of four decades work, Perez argues technologies  transform society only when they become aspirational for a mass of consumers who incorporate the new gadgets into their lives. As Perez puts it: “A technology might lay out what is possible but whether and how it is taken up depends on consumers and that in turn creates opportunities for entrepreneurial businesses to make a profit from the new patterns of consumption. The change has to come from consumer aspiration, a vision of a better life.”
 
When Perez’s theory is boiled down it turns into three questions that can be applied to the plans set out in Digital Britain. Will it work? Will consumers want it? Can business make enough money out of it to be profitable?

Will it work?
Broadband is a tried and tested technology: we know it works. The question is how fast does the broadband have to be to make a big difference to consumer and business behaviour?

The web will become a really powerful medium for collaboration and creativity with easily available, quality video and animation. That in turn requires high speed broadband. The UK does not do too badly on broadband access and take up. Nine out of ten households have access to a broadband network and 60 percent take up that opportunity, ranking the UK 11th in the league of OECD countries. Carter proposes that by 2012 there should be universal access to broadband networks that would carry up to two megabytes per second – enough to download an album of music in less than five minutes. That will seem glacially slow. Average UK broadband speeds are 3.6Mbps. The main network operators, Virgin and BT are planning to upgrade their networks to 40 – 50 mbps by 2015. By 2013 average connection speeds in the EU will be 35mbps, according to the lobby group Fibre to the Home. Korea, Japan, the leading north European nations and some cities in the US are targeting speeds of 100mbps.

So even if the UK achieves the goals set out in Digital Britain – and it is not clear how the universal service obligation would be financed – it cannot claim to be at the leading edge of technology. That means if Britain really is to lead the digital revolution it needs consumers and businesses to innovate in the use of technology. Our edge will have to come from the use of technology rather than the power of the hardware. 

Will people want it?
If Digital Britain’s proposals to extend broadband are unambitious, it’s ideas on stimulating demand for innovative new services are even weaker. That is because the government is yet to understand, let alone embrace the cultural changes being brought by the web.

People are after a mix of three different experiences when they engage with media.  Some of the time people want to enjoy being entertained and served, to listen to a great concert, follow an intriguing lecture, watch a great film, read a good book. For the sake of shorthand call these ‘Enjoy’ experiences.

Then there are experiences in which the content provides a focal point for socialising. The value of the content is amplified by the talking that goes on around them. I watch football perhaps 90 minutes a week but talk to people about it for at least twice that amount of time. Lets call these ‘Talk’ experiences.

People also want experiences that allow them to be creative. They want to get involved, have a go, do their bit. This does not have to be high tech. My nine-year-old son does this with a pen and paper. But he also uses Garage Band to make podcasts on his computer. Call these ‘Do’ experiences.

All media is a mix of Enjoy, Talk or Do.  People talk about films that they enjoy. The best trips to museums for young people involve searching and doing. For adults they often involve a trip to the café for a chat. Online computer games such as World of Warcraft are all about socialising and in social networking sites such as Facebook, socialising is the enjoyment.

The web is shifting the mix of experiences people expect from media. For my parents’ generation most media experiences were in the Enjoy category, with a limited amount of Talk and a tiny bit of Create. For my son’s generation time is much more evenly split: if the television, film or book he is looking at does not engage him, then he is off to do something more interesting which generally involves talking to his friends or doing something.

The web’s real significance is that it encourages people to adopt new habits and roles, as collaborators, distributors, editors and creators of content; they want to connect with other people and do stuff. This culture of mass participation and collaboration is feeding new lifestyles that in turn are fuelling the next wave of innovation. The new media models and businesses will be based on mutual media – allowing people to share content and connect with one another.
 
Digital Britain shows little or no sign of getting this. The report has nothing to say about why or how the BBC might help people create a shared knowledge resource as impressive and useful as Wikipedia. There is no mention of how highly collaborative methods based on open access archives, publishing and software is helping to transform and internationalise science, including scientific publishing. There is no hint of how we might adapt the model of social networks like NetMums, which is attracting 20,000 new members a month to forums that allow mothers to learn from and support one another. Why do we not, for example, have an online social network linking the adult children of older parents to help people coordinate care and support?

The recession will be a boon for the web’s Pro Am, do-it-yourself ethic as people who lose jobs set up micro businesses online and consumers turn to the web in search of better deals. There will be more use of free, open source, software than expensive offerings from Microsoft; more recycling of second hand goods through eBay and freecylcing schemes; more sharing of resources like cars through websites like GoLoco and Liftsharing.

On all these opportunities for the web to promote better outcomes in science, education and health by mobilising the power of mutual media, the Carter report is silent. The main reason for that lies in the answer to Perez’s third question: can businesses make money from the combination of new technologies and consumer lifestyles?

Will business make money from it?
Mutual media models will come into their own in the recession. High fixed cost, industrial-era business models will suffer, nowhere more so than in the media and cultural industries. The OECD estimates these industries account for about 6 percent of GDP, larger than the equivalents in the US, Canada, France and Australia. Audiovisual content production is worth about £6bn a year, with exports worth £2.3bn. Television and publishing is critical to this. Overseas sales of TV programmes and formats were worth £663m in 2007. The UK is the world’s largest cultural goods exporter according to the United Nations. It is these industries that now face a treble whammy: the disruptions brought by the web are being combined with one of the worst recessions in modern history and tighter restraints on public spending which is still vital to parts of the cultural sector.

Britain will lead the digital revolution only if innovation in consumer behaviour is matched by innovation in business: ways to make money from the media.  Given the significance of these cultural and media sectors, in the wake of the decline of financial services this has now become something like a national priority.

Twenty years ago media companies were like boulders on a beach. They came into being because media had high fixed costs – print plants for newspapers and studios for television. They were closely regulated and resources, like broadcast spectrum, were scarce.  All that created high barriers to entry. Anyone trying to set up a significant new media business could be seen coming from a long way off. Rolling a new boulder onto the beach took lots of people, money and heavy machinery.  In the mid-1980s an entrepreneur called Eddie Shah tried to roll a boulder onto the British beach by setting up a national newspaper based in northern England. That provoked a protracted national strike.  Rupert Murdoch caused controversy by moving his boulder – production of his News Corporation newspapers – from one part of London to another. The big advertising agencies – WPP and TBWA – are boulders that service other boulders. Until recently boulders were the only business in town.
 
Now imagine the scene on this beach in five years time.  A few very big boulders will be still showing. But many have been drowned by a rising tide of pebbles. Every minute millions of people come to drop a pebble on the beach: a blog post, a YouTube video, a picture on Flickr, an update on Twitter. A bewildering array of pebbles in different sizes, shapes and colours are being laid down the whole time, in no particular order, as people feel like it. 

There will be three kinds of media and information businesses in future.
 
All the media business created from now on will be pebble businesses. Google offers to find just the pebble we are looking for on the beach. Wikipedia is a vast collection of factual pebbles. YouTube is a collection of video pebbles; Flickr of photographic pebbles. Social networking sites such as Facebook allow us to connect with pebbles who are friends. There is nothing in Digital Britain about how Britain will create the next Google or Youtube, where the money, entrepreneurship and markets will come from.

Another growth area will be in hybrids, boulders that find ways to work with the pebbles. The most successful operator to date in this space is Barack Obama. Obama’s web based campaign rewrote the rules on how to reach voters, raise money, organise supporters, manage the media and wage political attacks. Yet now Obama is now a boulder that speaks pebble. There are huge opportunities to create these hybrids. A prime example is the way that the British Library is finding new ways to engage with its public through the web. The web allows the creation of an entire new generation of public service media organisations simply by encouraging publicly funded museums and galleries to become multi-media, running their own channels over the web.

Digital Britain has little or nothing to say in either of these areas.  It is mainly concerned with reorganizing the boulders.  Many of the boulders will have to merge and cut costs to withstand the onslaught of the pebbles.

Digital Britain claims to be radical to mask its conservativism. It has little to say about how consumer and business innovation will drive the digital revolution. Its hopes for broadband roll out depend on an out dated, old fashioned belief in technology push innovation: except the technology it is pushing is nowhere near the leading edge internationally.

The final version of Digital Britain could easily be saved with: more ambitious goals for broadband speeds and a practical way to finance the investment; a new way to fund the creation of web based content to feed the new generation of mutual media businesses, based on Ofcom’s idea of a public service media fund; ambitious proposals to encourage citizens to use the web to help one another and public services to deliver important public goods like education and health, taking up the ideas in the Power of Information report; funding for practical experiments to adapt copyright and digital rights management systems so new business models for funding content creation will emerge more rapidly in the UK than elsewhere.

Universal broadband will be essential infrastructure for the UK’s future. But even more important will be the creativity and innovation of consumers and entrepreneurs to create the social and business models of the future. If the government is serious about wanting Britain to lead the way into the digital revolution then it has to be honest: investment in broadband will pay dividends only if it further disrupts traditional media industries. It will bring more disruption not less.

An updated version of Charles Leadbeater’s  book We Think has just been published by Profile.

New Comment