The private sector is trying to bridge the “digital divide”

Struggling to order the internet shopping

GIVEN its reputation for surfing and the slow life, Cornwall has a surprisingly solid technological pedigree. It is where the transatlantic cables that carry much of Britain’s telephone and internet traffic land. Its Goonhilly satellite station is among the world’s biggest. And on September 30th, its council confirmed that, thanks to fibre-optic cables costing £132m (£78.5m from BT, the formerly state-run telephone monopoly, plus £53.5m in aid from the European Union), its residents will soon enjoy some of the fastest internet access in the country. Alas, other country-dwellers are less well-connected.

Despite Britain being the fifth-biggest broadband market in the OECD, a club of rich nations, a rump of about 11% of British homes remain too remote to receive the 2 megabit-per-second internet access the government thinks should be the minimum. The Euro-millions that will wire up Cornwall are available only because Cornwall is, by British standards, very poor.

The previous Labour government hummed and hawed about this rural-urban “digital divide”. Eventually, in 2009, it proposed levying a 50p tax on every fixed telephone line in the country: the proceeds were to be given to BT to allow it to connect even the remotest hamlets by 2012. The new coalition administration abandoned that plan, ditching the tax and pushing the target date back to 2015. Jeremy Hunt, the Conservative culture secretary, insists that the private sector ought to be able to bring broadband to the rustics. Only if it fails will the government consider subsidies.

Mr Hunt may be right. A string of small firms are offering fast broadband to offline areas, via cables, satellites or the airwaves.

Rutland Telecom, for example, has laid fibre-optic cables to several small villages in and near Rutland, a technology that BT is only beginning to deploy in big cities. For around £30 a month, subscribers get super-fast internet access. Rural Internet, another niche provider, is a Cumbria-based firm that grew out of a not-for-profit initiative run by Bill Knowles, a local businessman, to bring broadband to villages too inaccessible for the big commercial internet service providers (ISPs). It now advises customers all over the country. Kijoma, a small company based near Portsmouth, offers long-range, high-speed wireless internet to around 1,000 subscribers in an irregular arc from Basingstoke to Lewes.

Since their overheads are low, such companies can turn a profit from small numbers of customers, and can tailor their offering to local needs. Rutland Telecom’s first project, in the village of Lyddington, became profitable with just 40 subscribers. Because Kijoma uses radio waves to bring the internet to its customers, it has no fixed-line infrastructure to maintain. They can be flexible about funding, too, tapping grants from local councils, charitable trusts or even rich benefactors. And they can compete with the big firms on quality of service. “If we promise you a certain speed, you’ll get that speed,” says Bill Lewis, Kijoma’s boss, contrasting his firm’s offering with big ISPs, whose connection speeds often fall short of their marketing.

Will this nimbleness and enthusiasm suffice to wire up the roughly 3m homes without fast broadband? Many of the new rural broadband specialists have no grand ambitions. “A lot of the work we do is still not for profit,” says Mr Knowles of Rural Internet. Mr Lewis says Kijoma is “more interested in offering a good service to existing customers than in growing fast”.

But even if small firms cannot do it all themselves, their business models may be instructive. In 2009 the Labour government estimated that it would cost around £1,750 per home to connect all of Britain’s country-dwellers to the web. David Lewis, Rutland Telecom’s boss, says that figure is far too high. Costs could fall further, he says, if firms are allowed to run their own cables through BT’s ducts and telegraph poles (something that Ofcom, the industry regulator, is keen on), to as little as £500 per house. Such arguments seem to be convincing at least one bigger player: tiny Rutland Telecom is currently negotiating a partnership with a big, FTSE-listed firm.