The global economy is undergoing rapid and massive changes, with one of the greatest challenges facing UK business today being how to adapt to the rise of competitiveness from overseas rivals with much lower labour and environmental costs.  I admire the way that Government, business and many people in the work place in Britain have responded to this global transformation by viewing it not as a threat but as an opportunity to be seized.  The high proportion of UK GDP coming from trade means that our businesses have both more to gain and more to lose from these low cost suppliers than some others in Europe and the Organisation for Economic Co-operation & Development (OECD).  We do not hide behind protectionist measures as the Americans and French do but embrace open markets as an opportunity to make both productivity and welfare gains.

One of the key means by which businesses can create opportunity out of increased competition is by driving up value for themselves, their suppliers, employees and most crucially ~ their customers. Broadband wireline, cable and wireless communications provide platforms where deeper and richer online content and services can be provided to consumers and business partner, and the restrictions on higher value transactions and wider supply chains faced by SMEs in more limited systems, they allow companies to electronically integrate their operations better with their suppliers, employees and customers and to respond faster, smarter and more efficiently to what their customers want, as and when they want it.  As a result, UK businesses can get closer to these parties and build valued relations of trust that overseas competitors will find hard to achieve.

We recently surveyed several hundred CBI members to produce a report with the DTI of where our businesses have got to in what we call this e business journey.  The survey results were illuminating in many respects identifying areas of best practice where some companies are excelling but also providing evidence that there is still a lot of work to do.  Overall, the critical issue was that it seems we are at a crucial take off point where leading companies are moving from automating business to processes to transforming how they do business.

The survey showed that many companies are developing innovative ways of engaging customers and employees to their online supply chains, and not only developing new revenue streams but also improving service delivery through more fulfilling working practices and better customer information management.  With their employees, they are implementing remote working and e-learning, thereby adding value to their human capital by developing IT skills, improving internal communications and customer responsiveness.  With their wider business partners, some companies are engaging third-parties online in broadband marketplaces to create richer and wider supply chains that reduce barriers to entry for SMEs.

Taken as a whole, businesses are using e-business to deliver more value, to raise the level of service, to extend global sourcing and to run a more effective and responsive ship.  They are doing this through demanding clear returns from investments in IT software and services, and moving beyond simple automation of traditional business processes to more fundamental achievements based on gaining meaningful and fat-reaching business goals.

You might think from this that a broadband revolution has been achieved.  And according to Ofcom, over 99% of the country will have access to broadband by the end of this year.  But whilst the various parties involved in achieving this goal should be applauded, there is still much work left to do for the great majority of British businesses.  We might have extensive broadband networks available, but we need to ensure that businesses have available to them services that match the significant investments they have to make on top of these connections in order to take the pearl out of the broadband oyster.

A lot still needs to be done to develop practical broadband services that meet the real needs of businesses in all the diverse economic circumstances that exist on the UK.  It is only relatively recently that providers have been paying attention to business rather than consumer entertainment markets, and the scepticism that many SMEs still exhibit towards the benefits of broadband are a reflection of this relative neglect.

In order to optimise fully the possibilities of broadband for the UK economy, regulatory authorities and policy-makers also need to be attuned to the issues that businesses face in developing and marketing services online and to be responsive to their concerns.  They need to understand the impact that regulatory decisions have up and down the digital value chain.

One of the advantages we have over many - though not all - low cost countries is the flexibility, efficiency, sophistication and responsiveness of our governmental and regulatory authorities.  In the U, Ofcom has so far provided an excellent example of this.  But it is not God-given and must be developed and maintained over the long-term.  We cannot take for granted either that our institutional approaches will remain adequate (let alone above par), nor that those of our competitors will remain sub-optimal.  No one stands still in global competitiveness. 

This is particularly pertinent in relation to the EU and in the area of broadband regulation and ICT development in particular.  In the last few days we have seen clear protectionist reflexes at work in Germany - and we support the Commission in ensuring that such measures do not contradict EU competition rules.

But the CBI is also concerned by the way in which some of the EU Commission's own measures - such as the review of the TV Without Frontiers Directive - though couched in better regulation rhetoric, actually seem in many respects to be about protecting public broadcasting incumbents from innovation and competition, marching valiantly towards 1970.  Instead, we would encourage the Commission to stay true to its pro-competition remit and the fundamental benefits it brings over time as the most appropriate way of responding to the forces that drive the world today.
 
In this regard, it is vital that the Commission's proposed i2010 programme for the implementation of the telecoms package and introduction of spectrum liberalisation and coordination be fully supported by the Telecoms Council next month.  A monitoring group of Member States needs to be established to drive the programme forward, and it is important that the Parliament be included in the process through annual progress reports on i2010.

Looking further down the line, the reviews of the e-commerce and other related Directives need to be carried out in line with the better regulation principles of minimal, risk-based intervention, if service development is not to be stunted Industry-led initiatives based upon optimising the conditions for self-regulation will almost invariably be best suited to responding to the challenges of the global economy.  If such initiatives are developed in partnership with government they will help the EU as a whole adapt to the modern world in a fair and open manner.

In the UK, the principles of better regulation need to be embedded permanently in Ofcom and its partner institutions, with regulations monitored on an ongoing basis to ensure that they have not become outmoded and a drag on the UK economic competitiveness.  An eye will also need to be kept open to technological innovations creating possibilities for new bottlenecks to form in the value chain - but this will be easy to achieve through maintaining better regulation and a competitive environment.

In summary, innovative services based on broadband communications are bringing about a radical transformation in the competitive potential of UK (and European) business.  It is vital that we all work to ensure that we don't throw away this potential to match and even out do our international competitors.  We have advantages and so do they - let's optimise ours to gain value and create a richer, better international economy.

When people feel insecure and scared in the face of the threats of Globalisation they need to be equipped to deal with an uncertain future.  Broadband is an enabler in equipping them.  It is one of the tools we can use to build a better and safer world - and what is wrong with that?

Thank You.

Sir Digby Jones
Director-General
CBI