One of new Labour’s biggest mistakes was to ignore industrial policy. In thrall to neoliberalism, the Blair government failed to support the U.K.’s successful industries, and Peter Mandelson’s change of heart, when he came back from Brussels, came too late.
That’s the consensus today, echoed by everyone from Vince Cable to ... Peter Mandelson. But it’s not entirely true. Flash back to 1995, and you find Tony Blair doing a deal with British Telecom to build the “information superhighway.” Zip along it to 1998 and, far from being shy about picking winning sectors, we find Lord Mandelson launching a white paper on the knowledge economy—inspired by a trip to Silicon Valley.
True, after the dot-com crash, ministers swapped trips to California for pictures in hardhats. But Labour did, half-intentionally, have an Internet strategy. The U.K.’s libraries and schools were connected. Ofcom, widely seen as the world’s leading media regulator, was created. Broadband wholesale prices were slashed and government services put online—quickly, if not always very elegantly or effectively.
We were not alone. Sweden was the first country to have a broadband policy, spending half a billion euros to connect 90 percent of the country. South Korea, too, saw the potential of information and communication technologies and set about exploiting them.
It worked. South Korea is at the top of The Boston Consulting Group’s 2012 e-Intensity Index, followed by Denmark, Sweden, Iceland, and the U.K. All five had governments that pursued proactive Internet strategies. Countries that haven’t acted have fallen behind; the global digital divide is getting worse.
The U.K. is running hard to stay in the same position, like Alice in the Red Queen’s Race. Over the past year, Internet speeds in the U.K. have increased faster than in other countries, but our Internet infrastructure rates only thirteenth. We are first in the world in some aspects of how government uses the Internet, but we’ve fallen behind in business use of the Internet and in mobile broadband.
Nor can we rest on our keyboards: nearly 30 percent of Slovakian and Estonian households have fiber connections, compared with 2 percent here. The cost of accessing a megabit is $1 in Romania—but $5 in the U.S.
Politicians are cagey about Internet policy. Sometimes they worry about being technologically illiterate—although that didn’t stop Tony Blair from asking Bill Gates how the mainframe part of his business was going. (Mr. Gates went quiet before explaining that his business was putting mainframe businesses out of business.) More often, politicians just worry that decisions will be overtaken by technology.
To build the Internet’s future, policymakers must appreciate that, rather than going for detailed, definitive strategies, they have to be nimble. Typically, politicians and civil servants tie themselves in knots on Internet policy. They write white papers that take years to prepare and brigade hundreds of initiatives that end up being less than the sum of their parts and are often out of date by the time they are published. That may work for defense or welfare, but it’s too slow for the Internet.
Instead, governments must cultivate a much more adaptive style of policymaking. Rather than aiming for definitive answers, they should make quicker, rougher decisions—but be prepared to change course quickly.
This requires a different type of organization. We need to create a MiniCom in Whitehall, bringing together all policy teams with a key responsibility for the Internet. The government has made a start by putting telecommunications and media policy in one department, the DCMS, but it needs to go further. This team could move out of Whitehall to an area with an Internet cluster—perhaps joining the former Facebook executive Joanna Shields in Tech City, East London.
It should have as many outsiders as civil servants, with a fast stream for digital natives, its own budget, and the authority to spend without normal Whitehall processes. It shouldn’t fear imitating other countries. The world is an Internet policy lab: Finland has given a basic right to broadband access to every citizen. Estonia will give every household and business fast fiber- network access by 2015. Denmark will stop accepting paper forms and letters by then, while South Korea has saved 10 percent of its $60 billion-a-year procurement costs by going online.
We could copy all those policies, but we also need to make big bets of our own. The U.K. appears to have built a virtuous circle of engaged consumers prepared to try new products in large numbers, which supports thriving content industries. Our big industrial bet could be to support that, perhaps by giving the same priority to the creative industries in the next spending round as to science—whether through the license fee, the Arts Council, or universities.
And if those bets go wrong, I have my get-out clause. It was all part of being adaptive in the first place.