The digital revolution will form a major pillar in the creation of a ‘new’ economy for Britain. In recent weeks, both the major parties have staked out their positions but it is the plans unveiled by the Conservatives that cause concern.

To match the government’s target of universal next generation broadband services (100mbps) by 2017, they have proposed breaking up BT’s local monopoly on telecommunications cabling, arguing the lack of competition is the main factor behind Britain slow development of super-fast internet services.

They have studied and based their digital policy on South Korea. However, a variety of factors are attributable to South Korea’s success, not just competition. Major public investment laid the structural foundations for the network. The Korean government spent $24 billion in constructing a nationwide high-speed fibre optical network that allowed for different broadband service providers to compete. This was supplemented with further government funding and low-cost loans partnered with private investment to develop the ‘last mile’ broadband deployment – the key aspect of next generation broadband, as ‘fibre to the home’ (FTTH) would need to replace the current copper based cables supplying most businesses and homes. This is something the Government has set about doing, recently launching the Digital Regions project, which has so far raised £90 million to deliver next generation broadband services across South Yorkshire by 2012.

A key driver of super fast internet access in South Korea has been the government’s initiatives to stimulate demand for information technology. Small and medium-sized enterprises were given a tax exemption equivalent to 5 per cent for investment in broadband communications systems. In 2002, they also provided 50,000 free computers to low-income students. The Labour government recently announced similar measures, ensuring that 270,000 of the poorest families in Britain will receive a free computer and have broadband access. There was no mention of similar ideas by the Conservatives.

The high-density of South Korea’s population – 50 per cent of the country reside in tower blocks and apartments – make it structurally easier to deliver super-fast information services. To overcome the rural access problem in Britain, the Conservatives proposed using 3.5 per cent of the license fee from the digital switchover (Labour want this to fund regional news broadcast services), to invest in creating fibre-optic lines in these hard to reach areas. This will provide £750 million to £1 billion, far short of the Government’s proposed telephone levy and industry estimates of what it would take to achieve a Universal Services Commitment.