Rural Business Services – Caught in the Crossfire

Will remote SMEs cope with the privatisation of Royal Mail and can superfast broadband be good enough for them?

Rural postboxThis morning I was listening to Evan Davis’ guests on the Today Programme on BBC Radio 4. Speaking about the imminent privatisation of Royal Mail this coming Autumn, one of the guests from a workers’ union pointed out that the Royal Mail is a universal service and that deliveries in high-density urban areas effectively subsidised those in rural areas.

Dave Ward, the Deputy General Secretary of the Communication Workers’ Union (CWU) said that in the future addresses in cities would probably get two deliveries a day and yet in the countryside there might be none…

Arguing the other side, Steve Davies, of the Institue for Economic Affairs (IEA) said that the universal service was a hangup of history where people in remote areas might have once have been cut off from society could they not catch up with the mail and news of the outside world. But now, in the age of mobile phones and email, rural customers would have to pay a premium and that was the price people should pay for living in “beautiful rural surroundings”.

Then at work a CBI report fell on my desktop – Let’s Get Digital about the drive to roll out Britain’s digital infrastructure, including to rural SMEs. Already the National Audit Office have said that the government’s target to roll out “Europe’s fastest broadband service” by 2015 is already two years behind schedule.

And this tied the two stories together.

If the Royal Mail is privatised it could possibly engage in a number of cost-cutting and price-raising exercises, so setting a premium for rural mail deliveries could become a reality.

But what if rural customers refuse to pay that premium? Do they get no mail or just a once-a-week service? Will rural Post Offices be put at risk too?

And what about Steve Davies’ argument that the universal service offered by Royal Mail is just a quirk of history and that, in an age of mobile phones and email, it was probably now irrelevant?

What if the Royal Mail does reduce rural services and what if the rural superfast broadband rollout is further delayed?

So there is a very real threat of rural businesses being caught in a crossfire between reduced-frequency or increased-cost delivery services on one hand and the failure of providers to deliver a possible alternative service via digital means on the other. That said, having fast broadband will not be of any benefit to firms in the countryside who rely on  sending and receiving physical goods – not even a 50Mb internet service can get actual spare parts or raw materials delivered to a rural manufacturer.

And that raises yet another concern – We need to remember that the “superfast” that the government wants to offer to rural areas is just 2Mb whilst the rest of the country must have access to at least 24Mb speeds. As a suburban 30Mb customer I sometimes find that my own high speed connection is not enough and I can’t fathom how countryside SMEs would find 2Mb is anyway near enough to be “up to speed” with current demands. Of course, it is far better than the 56k speeds we used to get in the dialup days and certainly better than nothing, but that’s not the point.

South Korea is often used as an example of a positive broadband policy and its speeds, in built-up areas, is often cited as being around 100Mb. Britain’s average broadband speed is about 6Mb. There have been stories of Virgin Media trialing the “world’s fastest broadband” back in July 2011. That was a 1.5Gb service but, two years later, it does not appear to be available on general public release.

More recently BT has trialed its own “world’s fastest” 10Gb service but again, seven months later, where is this offering?

I’d like to see more competition in the broadband provision sector and there should be a much bigger commitment to get genuinely faster broadband to rural businesses and communities. That, and I’d like to know what Royal Mail’s plans are for the future of rural services, but then wouldn’t we all.


By is4profit’s business editor Paul Mackenzie Ross

Do you own a rural small business? How do you think the privatisation of Royal Mail will affect your business? What do you think about rural broadband speeds? Let us know in the comments section below.

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