Tim Creswick and Paddy Paddison.

Q210 The Chair: Good afternoon, everybody, and welcome to the House of Lords Home-based Working Committee. We are here today to hear from Tim Creswick and Paddy Paddison in a session predominantly about digital infrastructure; thank you very much for coming to talk to us. This session is being broadcast live. You will be sent a transcript of the evidence within a few days to check for accuracy. If you want to provide any supplementary evidence after the meeting, you are more than welcome to do that.

I want to kick off with a general question about the extent to which remote and hybrid working are reliant on digital connectivity. Is it about the same as the reliance on it in an in-office situation, or are there particular issues if you are working remotely or hybrid?

Paddy Paddison: I am the CEO of INCA, the Independent Networks Cooperative Association. We represent the altnet providers in the UK.

You have to be more self-reliant rather than more reliant on digital. In an office, you usually have management supporting you and IT people who can come up and support you, whereas when you are at home you will need to support your own connection from the router—wherever it is—to your desk and to make sure that that is sufficient for your service. A lot of service providers will provide to that gateway and no further; others will help you all the way to the desk. So it is not about whether it is more important to be digitally connected remotely or in an office, because it is kind of the same in both; it is about being self-reliant and, perhaps, more reliant on your digital provider as well.

Tim Creswick: I am the founder and CEO of Vorboss; hopefully you will have heard of us. We are probably one of the largest fibre operators in central London. We operate about 700 kilometres of business-only fibre. Our specialism is in connecting all the great and wonderful businesses that support the London economy.

From my point of view, we have definitely seen a change post Covid in terms of some of the utilisation around fibre and connectivity for businesses. One of the key things—this might be a nice point to frame much of this discussion—is the change in what we call real-time applications over fibre and over people’s internet connections. This is a pain point that hopefully everyone can understand—that point when we start putting in audio and video, which are what we call real-time applications. Suddenly, an interruption to the service or a lack of bandwidth causes a very visceral interruption to the proceedings. Whereas previously, if you ran out of capacity on your service momentarily, it might just have been that a web page took five or 10 seconds to load when it should have been quick, so it was a much less disruptive issue.

This has meant that a lot of businesses might not historically have thought about how they provide capacity into an office building, for example, because if they had a period where they hit peak capacity and everyone was contended, then all it meant was that a few people’s web pages loaded more slowly for a minute or two or that a couple of files took longer to open. Now, you might have a multi-million-pound sales call that is interrupted due to this real-time traffic flowing over the top. So the nature of the risk is changing, and the amount of business risk is going up.

Obviously, that applies domestically as well. With a lot of these domestic connections, even when you are doing things such as streaming—whether it is through a streaming service or you are watching a film or TV over your internet connection at home—there is a lot of buffering involved. This means that brief interruptions do not really cause you a problem because you are already storing about 30 seconds of footage at any given time, which can get depleted. That can smooth out any local connectivity issues. However, you will have noticed that in things such as phone calls and video calls you suddenly get that disruption to quality.

One of the big changes that we are seeing, both in-office and at home, is that we are having to think all of a sudden about provisioning networks for peak capacity. It is no longer okay to look at your utilisation over a whole month and say, “Well, 90% of the time we use only 100 meg”. Now you have to look at the peaks in use and actually provide for them. We already do that for most other infrastructure—we always dimension things such as railways, parking and toilets for peak usage—but, historically, that is not how we have dimensioned our networks.

The Chair: That is really interesting. So, in terms of demand, are you seeing that it is all quiet on Mondays and Fridays but there is more of a peak in the week, or is it more complex than that?

Tim Creswick: That is a difficult one to answer. Anecdotally, we certainly see that Tuesday-through-Thursday utilisation peak.

There are some interesting changes in behaviour. What everyone forgets about is that, although people are often at home on video calls, the big change post-Covid is that at least a few people are in the office at any given time. Any Zoom call, Teams call or other video call always now has, at the other end of it, people sitting there in the office; sometimes, it is multiple people who have not gone into a room but are sat at their desks. The office is now aggregating lots of video streams from all over the place. If you have 20 people remote and five people in the office, you have 20 times five versions of different streams going to different places and suddenly the bandwidth consumption in the office has shot up.

That is an interesting dimension: as long as there are people in the office, there will probably be a net increase in connectivity demands, especially given that everyone now has these real-time uses over the top. It is really important to have that surplus capacity, which was not really the way people were thinking before, so we are definitely seeing an increase.

Q211 Baroness Manzoor: Thank you very much for appearing before the committee today and for the written evidence that you have submitted. My question links with the question that the Chair just asked. First, how far does variable connectivity affect access to remote and hybrid working in different parts of the UK, including in rural areas and, in particular, the regions? Secondly—you have touched on this a little—what structural factors other than connectivity may be at play in preventing people working from home? I am thinking about rural and urban areas.

Paddy Paddison: Variable connectivity is always the hard one. Anecdotally, the question has been asked, “Would you like a consistent slow connection or a really fast one that is intermittent?”, and people will tend to say the slower one because they will create workarounds. Reliability is where it is at. The fibre that companies such as Tim’s are rolling out is the technology of the future, which will take that variability away. But, as Tim said, that peak usage has to be accounted for.

Rural areas tend to have slower speeds, by about 26%, than urban areas, so there is a variability in what is available to people in rural areas. That is very clear from Ofcom’s statistics. However, that still exists in urban areas. There are 600,000 premises within the M25 that do not have fibre. This may be for a variety of reasons, from landlords getting wayleaves to various other things. At the moment, we are having some struggles with the building safety regulator: an exemption that we thought we had under the 2010 regulations seems to have been taken away, which will slow down the installation in those areas by up to seven months from planning.

Tim Creswick: I should explain that we are a business-only and predominantly London-based network. This means that, while we serve a disproportionately large amount of the UK economy from a coverage standpoint, we do not do any residential connectivity and we do not operate outside London. You asked about rural areas and the regions; that is definitely not my area of expertise, although I would echo some of what Paddy said about the challenges that we sometimes see with obtaining wayleaves.

Installing fibre into commercial premises is difficult, time-consuming and quite costly to do, albeit the connections that we are providing are highly available, reliable, high-bandwidth services, so we are targeting a different part of the market. We are definitely seeing a few challenges there but, again, that point is probably not one for the regions, if that is the specific direction you are going in. We are seeing a change in the use of office space, which is driving a change in the way that connectivity is procured as well; I would be happy to elaborate on that if it is relevant.

Baroness Manzoor: I think that question is coming up next. It was interesting to read some of the evidence that you gave regarding digital inequality in London. That surprised me; I must admit that I had not thought about it. Can you expand on that a bit? I think you said there was greater inequality in London and the south-east than in rural areas.

Tim Creswick: To be completely blunt, we see that mostly where we are recruiting for our workforce. Before this meeting, Paddy and I were discussing the things we have done to compensate for that in terms of digital inclusion; we were both on a panel talking about it not that long ago. We have gone to quite some lengths to make it easier to apply for jobs at our company because we recruit locally, but you have to accept that one of the downsides of now being “smartphone-first” is that a shocking number of young people do not have access to a computer.

All of us here have probably at some point in the past couple of decades written or submitted a CV; that is probably how we got our last job. That is not the norm any more, but there is still an expectation that you should have a CV, and it is very difficult to write a CV on a smartphone. You can do so much on a smartphone and owning or having access to a laptop or computer is difficult, and it might be difficult to go to a library to access one. You very quickly get into a wealth inequality problem, where people cannot afford to take time off work to go to a library to use a computer or to borrow one, and it may be that nobody in the household knows how to write a CV.

Those are the sorts of challenges that we see, so we have put a lot of work into making that element of our recruitment process better and more accessible. In my experience, the digital inclusion problem in London is quite shocking. We have had to do a lot of work to ensure that we have a representative workforce. I speak with some authority on that as our company is—I think—the leader in diversity in our industry.

Q212 Lord Farmer: How can we ensure that there is government investment in broadband in areas that the big companies will not go to, perhaps because they are too remote or there are not enough prospective customers? How can we ensure that that is a good use of taxpayers’ money? Who will run the service once it has been set up and get the revenue from line rental, for example, when the initial investment has been made by the state?

Paddy Paddison: Project Gigabit provides that funding at the moment. In the last spending review, its full delivery was delayed by two years, which reflects where the industry is as well. It will get done and we are grateful that the aim of getting to 99% of people is still there. Availability is difficult in rural areas, where getting that last mile is usually the hard bit. Getting into the city is fine but, when you get to the farms, Project Gigabit pays to get to the curtilage—the edge of the property. The difficulty with that can be that it is still 800 metres to the house, so the job is not quite done. There is still that inequity in rural areas.

Also, where it is financially or commercially viable to have only one operator in an area—what Ofcom terms “area 3”—at the moment, Ofcom’s preference is Openreach and to promote investment in that. We do not think it is for Ofcom to make that determination. We think that whoever is there first should be the primary provider, especially if they are using government funds. We do not want to see Project Gigabit cover an area, an independent provider build in that area and then the incumbent is able to afford to overbuild because they have superior market power. That reduces the market for everybody. We ask that Ofcom look again at area 3, but also ask the Government to please keep going with Project Gigabit. I am a non-exec director of one of the altnets that I founded down in the south-west. Having won three of those contracts, I know that they are delivering change in those areas to the very edges of where people can connect to with fibre.

Q213 Baroness Freeman of Steventon: To follow up on the previous question, if in our report we wanted to show the variability in connection, where is the best data held on connection speeds, at as local a level as possible?

Paddy Paddison: Ofcom’s Connected Nations report is pretty good. Ofcom requires communications providers to put in a Section 135 notice, under which they have to declare their connections with quite a high level of detail. Having done them, I know that they are quite hard and take quite a lot of time. I would suggest that that is the best place to look.

Tim Creswick: We always end up having to campaign on being very clear about the distinction between business and consumer connectivity, because they very often get horribly conflated and, typically, the networks are fundamentally very differently designed in terms of topology and type of fibre. The reason why is probably not a topic for today, but physically different cables are used for those two modes of connectivity. Sometimes we find people saying, “That map’s weird because there’s a huge not-spot here where there is no connectivity”, and it is because it is a business area that is served with a different kind of fibre. It is worth at least bearing that mind when you source that information. We quite frequently get Section 135 notices from Ofcom, which are very detailed in their information gathering, so Ofcom should have absolutely everything you need on that.

Baroness Freeman of Steventon: That is very good to know. What effects have you seen—both positive and negative—as a result of the increased move to more hybrid and remote working, and, concomitantly, reduced office space and working, in things such as collaboration, connectivity in meetings, tech problems, troubleshooting and, importantly, as Tim said, conferencing space and the changes in requirements for office-based technology and connectivity?

Tim Creswick: I can answer that generally as a vendor in this space, and give you some of the trends we see with customers anecdotally, and as an employer. At a very high level—I emphasise that this is in central London but also applies in other big metropolitan areas in the UK—the trend is moving towards flex space, which is either serviced offices, smaller offices or more flexible office space. If you are an avid Financial Times reader, you will see the big swing that is taking place at the moment with massive corporates closing their huge headquarters and then all of a sudden saying: “Actually, everyone’s coming back and now we need them again”. No one quite knows yet what the answer is on that one.

At one end of the spectrum are the organisations that used to have between 2,000 and 5,000 people in a building, which are really stuck between two stools. However, that perhaps distracts from the majority of businesses that are much smaller, with 50 to 100 people, where the problem is a bit easier. They do not need 20,000 square feet of central London real estate and they might need only a quarter of the number of desks, depending on how they do their hybrid working. The other thing that plenty of property people will tell you is that this is also changing the way they use the space—the balance between meeting rooms, desk space, breakout areas and so on has completely changed. People are coming in to collaborate more, which is changing behaviours. The flexibility of having those kinds of spaces, which are often either on a licence or very short-term lease or can be flexed up and down, allows people to hedge against what the behaviours and changes might be.

From our side, traditionally, getting fibre into a central London office is typically a two-month to three-month project, believe it or not. That is largely due to the wayleave delays introduced by landlords and the fact that it is a complex multi-party process with tenants, landlords, agents, wayleaves and the lawyers involved in handling the wayleaves. It tends to move quite slowly. Obviously, that does not really work in a world where there is much more flexible access to space. Some of that means that, as a connectivity trend, we are providing connectivity in bulk to a flexible managed office provider, and then it is carving things up for its tenants; sometimes it means we are doing deals with landlords and structuring it so that we can very quickly act within their buildings. However, a lot of buildings in the UK are not owned by active landlords, so then you are dealing with an absentee or passive landlord. Those are some of the challenges we are generally seeing.

Q214 Baroness Freeman of Steventon: Related to what you were saying about the different types of fibre that you lay for domestic and work use, without going into the technicalities of it, does the fact that a person might now be working fully remotely from home mean that they need the kind of fibre you would have laid in an office for a domestic house?

Tim Creswick: In most cases, no. There are a couple of factors that distinguish them. We generally provide 10 or 100 times more bandwidth or capacity to commercial office space than you would have domestically. Crucially, we are doing it in a way that comes with a very stringent Service Level Agreement. Our business is campaigning quite hard on this as we are the only operator in the business sector that provides automatic compensation to business customers—which residential customers benefit from—and we start providing compensation to our customers after four minutes of down time.

I am sure everyone here, at some point, has been on the phone to a broadband provider domestically where they are not super interested in getting you fixed within hours or minutes. It is just not possible at the kind of rates you expect to pay residentially. On the commercial circuit, however, the business risk and loss of revenue that can happen mean that an entirely different risk-based approach is taken. That is what we engineer for. The reality is that you could never consume our service for £50 a month because we have had to engineer a huge amount more reliability and capacity into the network, so we are meeting much more demanding break/fix times and uptime commitments for our customers.

Baroness Freeman of Steventon: We are going to talk to you about your role as an employer later. Paddy, what changes have you seen?

Paddy Paddison: INCA is an organisation in which there are four of us who all work remotely all the time. Primarily, we do not have to rent an office, which is great for members as they do not need to pay for an unnecessary thing. On the negative side, sometimes engagement can be difficult; anecdotally, over the longer term, there will not be the learning that comes with working in person. The most engagement you would have with somebody is at interview and then a year later, and the rest of the time you are seeing them on a screen. That can probably be detrimental, especially to a young person who does not have the experience to fall back on. On the positive side, it means that you are not limited to jobs by where you live; if you are in deepest Cornwall, it does not mean that you cannot have a job that is based in London. It is a nice positive that it opens up the world to you, in some respects.

Overall, remote working has a positive effect. Over the last 10 years, I have spent about half my time working in an office and half working remotely. It is very nice not to have to spend an hour driving somewhere every morning and then having to drive home again. There is a positive there—we say, living in the middle of London.

Q215 The Chair: Tim, do you want to comment on your policies as an employer?

Tim Creswick: There is quite a lot to say here. For background, we employ just under 400 people; 20 to 30 are fully remote while probably another 25% exercise some degree of hybrid working and are in our offices a minimum of three days a week—although that is not a mandated minimum, per se.

We are unusual in that we do not use any contractors, so we built and maintain our network with direct labour—which comes back to some of the points on reliability I made earlier. Around 150 of our staff are field based or working in a physical kinetic role, in logistics, transport or in the field performing installations, maintaining the network and so on. For us, that produces some really interesting challenges, because almost half of our workforce have roles that simply cannot be performed remotely.

Thinking about how that works is interesting because they do not perform their roles in isolation; they often perform them in lockstep with someone sitting at a desk who is helping to plan, co-ordinate and do other things. Our network is physically located where it is and we have to maintain it, so there is a kind of spillover between these adjacent roles which has a bias towards being there in person, as it makes contact easier. Having the person who is working in the field able to come in, look at a map or plan with someone and discuss it in person is very valuable.

There is an interesting tension that I spend quite a lot of time talking to people in my business about: how privileged they are if they have a role that can be performed remotely, because there are plenty of people who do not, and that they should exercise it with a degree of respect as it often makes the lives of your colleagues harder if you have decided to be remote when you do not necessarily have to be.

We are very light on policy as an organisation. Our approach has always been more of a 10 commandments concept where we try to be really clear about the principles rather than write a rule for every possible edge case that could come up. Otherwise, the rule book just keeps getting bigger and bigger and it becomes impossible to follow, and everyone loses track of why you are trying to do things. So far, we have dodged any hard rules on remote working, although we probably lean on what the contract of employment says, what we agreed to and whether we agree that the role can be performed partly or fully remotely. If we hired a person on that basis, that is fine.

The areas of tension appear where expectation does not meet reality—where we have a contract with an employee or an expectation that the role is fully in person and they start trying to perform some of it remotely, or vice versa. This starts to produce difficulties. As an employer, it is difficult to resource for that. I have a lot of sympathy for these large organisations where suddenly 200 people turn up to the office and they do not have the desks for them. As you will know, central London office space is extremely expensive, so it is a huge financial burden for us to be able to provide desk space.

Overall, it is all well and good for people who say, “I am more productive when I am at home”, but, as an employer, I am not measuring your contribution by the number of words you type; I am measuring it by how much you might reach over and help a colleague, contribute to the company culture and help with training, or in your availability to pick up a phone when someone is really busy. For me, the corrective input is to say to people, “Hang on, it is not just about whether you achieved all the output. What else did you add to the business?” If no one did any of that, we would have no culture.

Q216 Baroness Nye: Robust investment in infrastructure is critical, but digital skills are just as vital. How do you think access to those digital skills affects the prevalence and success of remote and hybrid working? Is there a variation across different demographics where you are seeing more difficulties?

Paddy Paddison: This is a hot topic for both of us. In terms of access to skills, there is a triangle: access to the internet, the equipment to use it and the skills. My learning since taking on the role of CEO of INCA is that digital skills are different for different things. I have been doing some work on the future of television; just because you can operate IP television, that does not mean you can operate your mobile phone or get in touch with your bank. Once we start thinking like that, digital skills get much more complex. That is the same when you are at work as well; there is the basic suite of Word, Excel and things like that, but your company will also have applications that are unique to it, like CRM or, in Tim’s case, GIS.

When working remotely, you have to learn those things on your own, and that can be very difficult. Even though you can be quite highly skilled and just trying to learn another application, doing that in a remote location can be very difficult. I do not know about how you teach that side of it, but that is where coming into the office can be better, certainly at the start.

On the variation between demographics, when we started Wildanet back in 2016, we thought it was old people who did not know how to use the internet. I was wrong: people who have not used the internet do not know how to use the internet. That could be everybody. There are 78,000 people in Devon who have never connected to the internet. That is a mad number, and I did not believe it when I was told it, but it comes from research by Lloyds. Those numbers make you think: “That is a whole segment of society that is not engaged in the same way that we are”. That is not about home working; that is about basic internet skills.

There needs to be a lot of work. I am pleased that DSIT is doing the digital inclusion plan, and the five-step plan it has going at the moment is a step in the right direction. We need to recognise where we are, the different skills that are needed—it is a wide spread of skills—and that the Government are needed to help support that. It is not just because you are old, working remotely or living in a rural area. It is everybody.

Tim Creswick: It is hard for me to answer that just as a digital skills question rather than as a general skills question. Maybe, as a technologist, I do not like it being branded as “digital skills”. For example, if I am showing my mum how to use a smartphone, I am not necessarily thinking that I am teaching her digital skills.

One of the interesting things is that there is a huge time lag between changes we make in our education system and what emerges in the workforce. As an employer, it is fascinating; I have been in this job for 20 years with this company that I started, and now we have employees who are younger than the business, so I really have seen this lag. It is amazing to see the kinds of skills that people arrive at the business with: we have some very young people who you would refer to as “digitally native” and who you probably would not think of as the problem, but they have not necessarily been shown how to write a professional email. We spend a lot of time on things such as that. I do not know whether that is digital skills, just skills or professionalism; it is not for me to say.

You can look at someone’s university transcript or their high school transcripts and say, “They have passed exams at certain levels”, but, as Paddy says, you might have young people who are extremely adept in some of the tooling and things that they need to do when they arrive in our workplace, and then there will be a whole load of other things that people in my generation can immediately pick up—a spreadsheet, and building a model from it—that they have never done before, because the kind of tooling they are used to using is very different.

A slightly older demographic in our business are very adept in those tools but, generally, the thing that you most often see cropping up is the breadth of different communication tools we use for different things—instant messaging, WhatsApp and email. They ask: “When do I use each tool for what thing? I have spent 30 years in a workplace where, if I need something, I send an email”. This idea that there are now three or four different ways to do it is quite a difficult thing. Again, it is not so much a digital skills question; it is digitally enabled, but it is more about changes in the workplace that are a consequence of this new tooling.

Q217 Baroness Nye: There will be another question on what the Government should do but, on this narrow point, do you think there is a difference between what the Government should do and what businesses individually should do?

Tim Creswick: Yes and no. I have come to many things like this and joked that I am a happy capitalist. I am always up for training my staff. We have a training facility in east London. Everybody who physically works on our network was trained by us. We hired 200 people during Covid who had never touched a telecommunications network in their lives. A lot of them were young people who had been made unemployed from hospitality and retail jobs. We saw that as a fantastic opportunity, but obviously they were going to need training. The first thing we did was build a school, get it certified and then teach these people skills that have given them a career in laying cable, which is why we have the youngest and most diverse physical installation workforce in the UK for telecoms.

The Government can make it easier for employers who are keen to train, like we are. When navigating a lot of the schemes and things you have to do, you suddenly find that something you are doing needs to be signed off by Ofsted. There are these barriers that can make training quite difficult.

I am ever hopeful that a lot of employers would be willing to do what we have done and deliver the training. We always see it as our problem. I have no time for the employers that turn up and blame the Government and the education system for the workers they get, because you have the freedom to train people yourselves. I think it is lazy of companies that are not prepared to do that. That being said, obviously, we should make sure that the education we give our young people is relevant and useful in a business context and will help them build careers, pay off their student debt and those sorts of things. The number of people we see who arrive with degrees and yet need exactly the same level of training as someone who has left high school is shocking. That is quite strange in some ways. They have certainly got a mountain of debt.

Q218 Lord Stevenson of Balmacara: This has been a very interesting conversation. We have touched on both the technical side—how much broadband, how quickly and how fast—and the skills side. Would you be prepared to mark the Government’s scorecard in terms of where they have got to so far? Their estimate is that they will have nationwide coverage by 2030 through Project Gigabit, but that does not really cover the skills, which I do not think there is a date for. How do you think they are doing? Have you got any pointers on how you think it could be improved?

Paddy Paddison: In terms of infrastructure deployment, Project Gigabit has been delayed by two years, so now the target for 99% is not for 2030 but 2032. We are at 76% now, so it is going well, if you consider that five years ago we were at about 30%. It is moving at pace, and the build is still going on really fast.

In terms of skills, I would say there are two sides to that. There should be an awareness of the advantages of fibre and the reliability that we were talking about earlier to prevent variability. It would be good if the Government helped with that take-up in terms of educating people about the benefits of fibre and, along with that, the benefits of the digital skills you can deploy with the fibre.

On infrastructure deployment, they get 10 out of 10 from me; it has gone well. Obviously, there have been a few hiccups: the gigabit voucher scheme first time round was awkward and difficult. Project Gigabit has been quite a good success from what I have seen of it. I am sure other companies would say otherwise, but it is overall pretty good.

On the future and what they need to do next, they need to say how they will get to the 99%, so that it is very clear what the next tranche is that they will do, which still, in the scheme of things, falls under hard to reach but not very hard to reach. What is the plan for reaching the 2032 targets? In what order are they going to do these things? From a business perspective, the earlier we know what we are aiming at, what will be available in terms of government support—do not forget, government support is there because of market failure—and what, where and when the Government are going to support, then business can line itself up: it can get investments ready, its teams ready and the skills ready to do that and deploy. Up to now, they have done great. What is next? Please tell us.

On the digital skills side, tell people what is available in terms of the changeover from copper to fibre. Tell people what digital skills they can use with that. That would be great. Hopefully, the DSIT digital action plan will do that.

Tim Creswick: Paddy and I sit here probably fronting billions of pounds of private capital that has gone into building this kind of infrastructure. If you read the press, it is no secret that particularly the investment in fibre to the home and altnet—which also affects us in some ways—has been pretty volatile, and I think there is a lot of investor uncertainty. This is an area where clear government policy and leadership will give investors certainty. To an extent, this requires some government investment, but it also requires a huge amount of private investment, as well as big movements in capital, resource and people. That sort of clarity is really helpful.

On my part, it would be remiss of me not to mention something here. Paddy talked of the market failing. No one likes to talk about it but there is also a substantial failing from BT here. We have a situation where the former national monopoly is now regulated. I am always prepared to stick my neck out a bit on this one. About five years ago, the UK was absolutely at the bottom of the European league tables in terms of this kind of connectivity. We are very much playing catch-up; that is probably the extent to which I will comment on fibre to the home, but it would certainly be worth this committee giving due consideration to how we ended up there. The failing of that former monopoly is a key part of it, I think.

We now have this opportunity to bring in a lot of private investment to start to make up for it. We are catching up, which is really good to see from my point of view as a technologist and a pro-UK plc operator; even though I do not build fibre into the home, I am really glad to see that working. However, the focus has been on catching up so much that I worry about what is next, particularly in terms of business connectivity. Residentially, once we get fibre installed into most people’s homes, those changing bandwidth demands happen a bit more slowly.

For businesses, if we want the UK to stay relevant, we will need investment in the sorts of networks that we provide in central London, which make the UK one of the top three places in the world to start a business. However, that is definitely in doubt. The rate at which we are selling now is a clear sign that there was a lack of infrastructure. We look forward to the next 10 years and the connectivity demands that we will be able to supply, which the incumbent supply is not able to meet. We are the only operator that sells 25-gigabit and 100-gigabit services; that is 100 times more than what most fibre-to-the-home networks are providing.

It is also worth asking this question: we are still classified as a large business, I think, but how did a plucky company that was a 25-person company six years ago get to a position where it is providing market-leading services that are better priced and have higher bandwidth, better availability, automatic compensation and faster fix times than what the national former monopoly has in the same market? That is a really big question here. In our sector, we have to think about getting new products out and innovating every year. It is not about how we can catch up; we have built our infrastructure to last 20 years. It will do that, but we have to keep pushing and pushing. It just moves so much faster. I really worry about having policy that supports that continuum rather than this sort of quick fix.

Q219 Lord Stevenson of Balmacara: I take your point, but can I probe you on one thing? Clearly, there is a large company with a lot of the resources that you think could be deployed better. It is regulated by a regulator that has recently taken on a lot of extra, additional work. Do you see any issue there that might unpick some of the problems you have?

Tim Creswick: Again, I have to be a little cautious on this one. I have sat on panels with some of our colleagues at BT Openreach, where I have expressed that they have a difficult job and that I have some sympathy with them. I do not know how you operate a business unit where the clear regulatory sign is that you need to cede market share, so your business has to get smaller, but you personally have the objective of making revenue in order to be successful. That is a difficult challenge; I am very glad that it is not a challenge I have to resolve.

What I would say is it should not be a surprise to anyone if they go down fighting. We recently made our submissions to the Telecoms Access Review, in which we gave both Openreach and Ofcom a bit of a hard time about the way in which this is being regulated in London—the reality being that, in most of central London, Openreach is totally unregulated, so we see what we would classify as unfair competition. Now, the competition is such that the bar to us bringing a complaint is now much higher than it would have been had Ofcom not intervened at all. That is quite a strange position in itself.

We are in a delicate phase. I talk about giving investors confidence. I do not think that our investors would say that it is a dead cert that Openreach will lose or cede that market share, because I do not think that we have seen an intention from the Government or Ofcom to say, “Actually, we do want to see 50% or 60% of the market supplied by non-BT operators”. That has not been a clear signal.

Lord Stevenson of Balmacara: Thank you very much for that. It is obviously a very difficult issue. I wonder whether, if you felt like it, you might drop us a note, which we could look at in more detail at some later date.

The Chair: That would be great. Before we move off this issue, can I ask you, Paddy, something? Where are we compared to Germany, France, the United States and so on in terms of the—76%, was it? How do we compare?

Paddy Paddison: Interestingly, I was in Madrid speaking about this on Friday. Compared to Spain, we are a long way behind; it is fully fibred up. Ireland went a different route: it created what is called National Broadband Ireland and put the infrastructure in in one sitting, as it were. It used its €5 billion and, in essence, rolled it out like that.

When you get into telecoms, you realise that Germany is not one state but a federated state. There are lots of very small providers and copper still reigns. It is a little way behind. France is ahead of us in terms of provision. The old eastern bloc countries that are in the EU came out of the USSR at just the right moment for fibre and deployed that, so while they tend to have ageing networks, they are good fibre networks that they are upgrading.

So, on a European scale, we are better than some and worse than others. The model to follow would certainly be Sweden or Spain, I would suggest. The USA is, again, a very fragmented market—and it is so huge as well. It tends towards a more wireless frame than we do, which I presume is because of the geography: the distances are much larger.

The Chair: That is really helpful.

Q220 Lord Parker of Minsmere: I want to ask a quick follow-up about the technology in this space. This area of inclusion, particularly regionally, is important to us as a topic within home-based working in terms of making this more available to more people, including some minorities. Is there any substantial remaining prospect of technology being explored for smarter compression—using the same bandwidth and getting more signal that way? I have heard about research that is going on and using AI tools to get more down the pipe. Is there gain to be had there, which is material to this, without changing the physical infrastructure?

Tim Creswick: It is a fascinating area. We could address it in a number of ways.

It is safe to assume that most of the material gains there are already being taken by virtue of the fact that the internet is not free. At some point, someone is paying for every packet to be transferred; that creates incentives at probably the right places. For a long time, bandwidth has not been abundant, so in the same way that fuel prices meant that Europe generated far more fuel-efficient vehicles than North America did, as you can imagine, it is the same thing when it comes to how a lot of technology has evolved.

The starting point is usually, “We know that the application we have envisaged—for example, video calling—works. The problem is that we can’t launch it to the mass market because most people don’t have the bandwidth for it”. Therefore, the engineering effort quickly goes towards, how do you lower the bar? How do you make sure you can do it with the minimum bandwidth possible in order to open it up to the widest audience? I would say that it is safe to assume that the incentives are in place and that technology providers, operators and software vendors are always pushing as hard as they can on them.

In fact, my big gripe is this. I do not know whether any of you have had the benefit of conducting a video call in 4K or high definition. The experience is so much better. I know that it sounds really silly to say that but it is about your ability to pick up on small nuances in someone’s expression, which you can do when it is not a very-low resolution video feed that is compromised. We can compress it, for sure, but the question should then be, at what cost?

Q221 Lord Fuller: I am really keen on competition. Clearly London is a very competitive market but for my part, and professionally, I run networks across the country, from Scotland and what have you, and we have got a really complicated landscape—Starlink, fibre, mobile, altnets, even Virgin Media—and none of them have a fixed IP address. The interoperability and address translation is really difficult at a network level. I know you are talking about your own businesses, but are we getting to an almost geometrically complicated landscape—in contrast to Ireland and Spain, which you have mentioned—where interoperability is now significantly harder? Not if you are working from home, but to manage the networks securely? Has choice become a paradox where it is actually harder to have a secure landscape in which companies can exploit these technologies?

Paddy Paddison: In terms of security, the Telecommunications (Security) Act is going to come into play. It came into law on 31 March, and it is starting to secure networks at the highest level. Interoperability will be resolved as soon as we get to IPv6, will it not? Anytime now: 20 years ago, they were saying it will be 20 years, and they are still saying 20 years now. Address translation at the higher levels is mostly resolved by the larger networks using v6 as transit, but also by going to layer 1 services if you have dark fibre between locations.

In the home, security is going to be provided mostly by the hardware provider themselves. In-home devices like eero or other extending services are most likely going to provide your security rather than your IT provider in the office; your actual device would do that, usually via an app on your phone. Therefore, interoperability is not that much of an issue. I suppose when you get to the transit layer that you are talking about, yes, it can be difficult, but at the home level, I think it is taken down to a level where it is capable by competent people.

Lord Fuller: Just to follow up on that—

The Chair: No, I am sorry but we need to move on.

Q222 Lord Farmer: This has been a very interesting evidence session. If you could make one recommendation to the Government about remote and hybrid working, what would it be?

Paddy Paddison: Promote the changeover from copper to fibre. That will get people on to reliable, high speed and low latency networks and will enable all the things we have been talking about.

Tim Creswick: I would tackle this from an employment law angle. In the 20 years I have been running my business, it has become increasingly burdensome to hire and employ people. I appreciate that we do an awful lot to protect our workers and be incredibly fair and go to greater lengths than most businesses, but it is very difficult for companies to navigate how to create policies. Something I often say light-heartedly that may be useful to bear in mind is that companies should be a bit like restaurants. You do not want to go to the multi-cuisine, all-you-can-eat buffet if every company and every restaurant was the same: there would be no difference. People should be able to go and work for a business that reflects the values that are important to them. In our business, we attract a lot of people who have a bias towards working in person—not exclusively, but we are more in-person than most, and that attracts certain people.

A business should have the freedom to express its culture this way. We very often look at everything like it should be like a public sector employer: all businesses should have the same policies and should be required to do the same things. It is incredibly hard now for a business to put its cultural brand on the style of working, and I think that is incredibly important. A lot of employers are very afraid to even go out and state what their policy is, because of the potential backlash or the legal ramifications. Employment law is incredibly hard to navigate around, with fair treatment and so on.

As an employer, it makes me a bit sad, because there was such an opportunity to allow businesses to really set out their stall and say, “If this is what you want to do, come work here”. Now, more often you get the application coming in and a prospective employee is demanding exactly what you have to do for them. I say that super cautiously, because it is really important that we do not marginalise any groups or opportunities, but I feel I can say it, having been recognised as a particularly diverse employer. We have done a huge amount to make it easy for a very wide range of people to apply for a job and succeed in our business, but that has certainly been a real challenge.

The Chair: Thank you both very much indeed for giving us your time this afternoon and, more importantly, your perspective on what is a really interesting and important issue. Thank you, and I will bring this session to a close.