How TalkTalk guesswork became Government broadband statistics

 

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By Barry Collins

Posted on 29 Jul 2010 at 11:50

When Culture Secretary Jeremy Hunt said he’d decided to scrap the broadband tax because Government figures showed 200,000 people would give up their connections, there were only two problems: they weren’t Government figures and it wasn’t 200,000 people.

Speaking at this month’s Broadband Delivery UK summit, Culture Minister Jeremy Hunt was asked by a member of the audience why he had decided to axe Labour’s proposed broadband levy, which would have seen a 50p-per-month charge applied to every landline to help fund next-generation broadband.

Saying it was Government research was quite possibly a slip of the tongue

The Culture Secretary replied: “It was the wrong way of putting public resource into this challenge. And the reason it was the wrong way is because the Government’s own figures showed that up to 200,000 people might stop their broadband connection if the cost of broadband went up. And so we thought that was the wrong approach to dealing with this problem.”

When PC Pro asked the Department for Culture, Media and Sport (DCMS) to source the 200,000 figure, a spokesman told us the figures were actually based on research from the ISP TalkTalk, and not the “Government’s own figures” as Hunt initially claimed.

The research Hunt refers to is in fact a TalkTalk press release issued last November, in which the company claimed the broadband tax “will result in at least 100,000 low income homes being forced to give up their broadband lines” – half the figure quoted by Hunt.

What’s more, TalkTalk’s figure wasn’t based on an independent study or survey, but the company’s own financial estimates. “Assuming a -0.2 elasticity (which is at the low end of estimates) this will result in a 0.6% fall in demand which is 120,000 broadband homes (20 million voice/broadband customers),” TalkTalk’s press release states.

TalkTalk is hardly an impartial observer when it comes to the debate over Government investment in broadband. The company has invested heavily in its own “next-generation” network and any public money ploughed into fibre broadband deployments would undermine the value of TalkTalk's investment – giving the ISP every reason to resist Government intervention.

“It will have an impact on those investments, but that's not the motivation for the criticism,” said TalkTalk’s director of strategy and regulation, Andrew Heaney, speaking last November. “It's a billion pound investment in what is effectively a luxury or premium service and there's been no public consultation.”

”Slip of the tongue”

When asked why Mr Hunt had exaggerated the TalkTalk figures, a DCMS spokesman told PC Pro that the Minister was “speaking off-the-cuff in a Q&A session", and that the TalkTalk figure of 100,000 households “roughly equates to 200,000 people”.

“Saying it was Government research was quite possibly a slip of the tongue,” the spokesman added.

The Government also insists that the TalkTalk research wasn’t the sole factor in its decision to scrap the tax. “Ministers object in principle to the idea of a landline levy and don’t think it is a fair or cost-effective way of achieving the best superfast broadband network in Europe by 2015,” the DCMS spokesman said. “They think it’s much better to adopt the sort of innovative and cost-effective solutions that were set out at the recent broadband industry day.”

TalkTalk has also defended the accuracy of its figures. “The figure was based on TalkTalk's demand elasticity models, which is more reliable than surveys because the models are based on historical data about how people actually respond to changes in price rather than opinion polls about what people say they will do given a hypothetical scenario,” a spokesman said.