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The UK’s internet economy – where are we headed?

Posted by Alex Perryman on 20th March 2012

A very interesting story hit the BBC yesterday indicating that, according to a recent Boston Consulting Report, the internet now contributes to 8.3% of the UK’s GDP. The UK’s internet economy; it seems, is bigger than that of any other G20 country.

This is cause for celebration. At last, we’re good at something again… However I definitely feel this report overlooks one important element; namely that mobile-device infrastructure issues could seriously spoil this party if we’re not careful.

The UK has always been a hotbed of digital innovation; much of which we’re fortunate enough to see first-hand: Our technology community and particularly, (in relation to this story), our development and telco industries, are thriving. And as an ex technical-recruiter I can tell you that, despite UK plc’s terrible track record of developing numerate, engineering types in-house, we’ve always been very good at filling our knowledge gaps with skilled labour from abroad.

Nor is it any surprise to see how well we took to online businesses as a nation. I mean, come on; if you don’t have to leave your chair it can only be a good thing. And those high street things just got in the way anyway, right? We’re probably better off without them…

.. and that Woolworth's was a right pain in the ass...

Boston Consulting Group and the newspapers seem to be modelling their optimistic outlooks, however, on the pattern of the last ten years, where the internet, and therefore the internet economy, has enjoyed unrelenting year-on-year growth. But a number of capacity-related clouds on the horizon suggest that this party may not go on forever.

Is our economic driver falling asleep at the wheel?

I work on a number of tech PR campaigns for companies that provide wireless internet connectivity in one guise or another. I’ve looked at everything from regular cellular comms, to microwave emitters, Wi-Fi offloading, optical communications and white space radios.

Although I try not to confine myself; wireless has always been one of my primary areas of interest. I’ve kept my hand in with the definition of each new internet-enabling wireless technology, and have followed each tech on its way up and down.

Some of them were more 'down' really

And if there’s a key theme across the wireless industry, it’s this: We can’t handle the next generation of internet-enabled mobile devices with the existing traditional mobile infrastructure: As has been pointed out, (to the degree that it has become cliched), it simply doesn’t have the capacity to fulfill the projected growth in use. The big question then becomes how, exactly, we find a way around this.

If the internet represents a bigger part of our economy than any other G20 nation, then, as hinted at in figures published by The Telegraph and others, (here and here, for example), surely we should be ploughing more effort than other G20 countries into using the internet as a quick-fix economic driver?

The government’s drive to connect the last few digital stragglers has been well-advertised, and it seems that everyone’s well-on-board. So why do we continue to suffer from some of the poorest access speeds, and, as of 2009, around 10 million people were still offline?

4G does not present an answer, it simply shifts the goalposts, and alternatives to the mobile web are not given enough governmental fast-tracking or financial assistance.

Where to?

If innovative apps and services drive use, in an increasingly mobile world it’s wireless technologies that will play the biggest role in enabling these economic drivers to take their effect. Bouying up alternative cabinet-to-home wireless technologies, ensuring efficient offloading, presenting alternatives to the already-creaking mobile networks; these are also the things that will enable our internet economy to grow.

The questions the government needs to ask itself in reaction to this report is not just the obvious ones; i.e. ‘how can we encourage more UK based internet startups?’, and ‘how can we allow existing internet businesses to thrive?’, (crucial though these questions are). It needs to prioritise, at this point, efforts to subsidise any technology that will alleviate the Capacity Crunch, thus allowing continued economic expansion into the mobile future. Otherwise the wheels will fall off our much-needed and newest economic engine before it even gets going.

Alex Perryman

Alex joined Wildfire in 2007. He is renowned for his ability to pick up complex technologies and new industries extremely quickly.