Crumbling, outdated infrastructure means many British readers are likely to access this article through a decades-old copper wire. Given how much modern life – or economic activity, if you will – happens through the internet, fixing the problem ought to be a priority.

And yet the government has pledged less than £1.5 billion across various schemes; a small sum compared to the £50 billion allocated to roads, or the £42.6 billion for HS2. Something is wrong here.

The Federation of Small Businesses is the latest organisation to question the UK’s broadband strategy. It rather alarmingly points out that getting an adequate connection remains difficult for many businesses, which in turn is adversely affecting their profitability and potential for growth. This isn’t just a rural problem – the FSB report identifies several case studies where businesses in urban areas also suffer poor levels of service. Amazingly, 45,000 small businesses (1%) still rely on a dial-up internet connection.

The UK comes 15th in the global league table of broadband speed (10th in Europe) with an average connection speed of 9.9 megabits per second (Mbps). This contrasts with the world leader, South Korea at 23.6Mbps and Europe’s leader, Switzerland at 12.7Mbps.

Though the government claims the UK has the best broadband services in Europe, this is because Ofcom chooses to benchmark it against only France, Italy, Germany and Spain. The argument here is that geography plays a key part in broadband deployment and that comparisons need to be made with similarly sized countries. While there is a valid point here, this simply provides the government with a convenient excuse to avoid sorting out our broadband infrastructure.

Low-fibre diet

Broadband speed is primarily determined by the physical connection between your home/business and the local telephone exchange, the so called “access network”. If your internet is slow, don’t blame things clogging up hundreds of miles away; the problem is likely to be closer to home.

While there are more than 50 Internet Service Providers (ISPs) within the UK, there are in effect only two access providers: Virgin Media and BT’s Openreach. The Virgin Media network dates back to the 1990s and comprises fibre optic and “coaxial” copper cables which have fewer interference issues.

The Openreach network on the other hand is built on the UK’s legacy telephone network dating back more than a century, comprising poorer quality “twisted pair” copper cables. Most ISPs use it as it offers near universal coverage. Openreach has upgraded its access network from all copper to one that uses fibre from the local exchange to the green “street cabinets”, but it retains copper in the last stage to the user. This investment has in turn increased broadband speeds from 2Mbps to 24Mbps, and now as a high as 80Mbps.

But there is a catch. Most customers of course never see these speeds because they are highly dependent upon the quality and length of copper cable that runs from their home or office to their nearest green street cabinet. An email, search data or a file download might have travelled thousands of miles at super-fast speeds, only to be held up by a hundred metres of dodgy copper wiring at the end of its journey.

So why not remove all of the copper and make the UK’s broadband solely fibre optic? The reason is cost. A 2012 report from the Policy Exchange estimated that it would cost up to £30 billion to go entirely fibre optic.

The privatisation of BT in 1984 transformed the UK’s telecommunications market from public to private ownership and opened it up to competition. Now, in this privatised world, a telecoms company is clearly going to target its investments based on financial returns. As profit margins decrease, the recent trend has been to provide increased services for reduced returns. Commercial companies are not charities and so we cannot simply expect them to throw money at uneconomic ventures. At the turn of the century the UK cable industry in effect went bust building a new network that didn’t generate sustainable revenues – we can’t ask broadband companies to do the same.

Strategy for stagnation

There are those who say headline broadband speed isn’t the be-all and end-all – that we can just muddle along with what we have. Certainly the Policy Exchange showed that, even with our poorer speeds, the UK topped the world league table when measuring the size of its internet economy against GDP. And speed increases are already planned – the government’s strategy is to provide 95% of the country with access to broadband of at least 24Mbps and the remaining 5% at 2Mbps by 2017.

However, this is a strategy for stagnation, not growth. Take Cornwall, an early adopter of superfast 300Mbps broadband, way above government targets. There, businesses have been pleased with the results, with the majority of firms surveyed saying the technology allowed their sales to grow. This wasn’t seen as a luxury – the majority concluded that access to high-speed internet was simply the price of staying in business.

The government is indeed investing pubic money into the UK’s broadband infrastructure and it is about to publish its new communications infrastructure strategy that will set out a vision for 2017 and beyond. However, the level of public investment is still far too low.

If the UK is to truly maximise the potential of the digital economy then it needs to start viewing broadband as a strategically important utility. The government is seemingly prepared to fork out billions for new roads, train lines and power plants. It’s about time we looked at broadband in the same light. In years to come, £30 billion for the world’s best internet will look like a bargain.