Brown Says U.K. Will Invest in Broadband to Curtail Recession

By Gonzalo Vina

Jan. 29 (Bloomberg) -- Prime Minister Gordon Brown will pledge government support for British companies providing digital communications and broadband networks, part of a plan to curb the impact of the recession.

“Our digital networks will be the backbone of our economy in the decades ahead,” Brown will say in a speech in London today, according to his office. “Even at this difficult time for the economy, we will not turn our backs on the future.”

The government says the industry, with revenue of 50 billion pounds ($72 billion) a year, can help revive economic growth by laying down the infrastructure needed to support the next generation of companies that depend on computer technology.

Communications Minister Stephen Carter will give details of the plan in a statement to Parliament later today. The measures may affect broadband providers including BT Group Plc, Cable & Wireless Plc and British Sky Broadcasting Group Plc.

They are the latest in a series of steps aimed at showing voters the government is supporting the economy as it enters its worst slump since World War II. Brown, who must call an election by June 2010, has seen his popularity slump as the economy worsened.

Britain’s economy will shrink 2.8 percent next year, the most since 1946 and the biggest contraction among the world’s leading industrial economies, the International Monetary Fund forecast yesterday.

Bailout Measures

Brown has pledged 50 billion pounds to recapitalize banks including Royal Bank of Scotland Group Plc and hundreds of billions of pounds of further loan guarantees. Earlier this week, he also offered carmakers 2.3 billion pounds of support.

A draft version of Carter’s report suggests the government will introduce a “universal service commitment” to provide a minimum broadband download speed of 2 megabits a second to every household that wants it.

Last year, Brown said the U.K. would invest 300 million pounds over three years to give 1.4 million children access to the internet with free broadband and computers. The U.S. and Britain lead the world in internet use, according to an International Communications Market report published Nov. 20 by the U.K. communications sector watchdog Ofcom.

Americans spend an average of just over 15 hours a week online, compared with just under 14 hours a week in the U.K.

Earlier this month, the Financial Times reported that the task of providing nationwide broadband would fall on a mix of fixed-line and mobile telephone operators because of the costs of rolling out wire-based broadband networks. Carter’s report does not rule out “fiscal relief” or public funding for broadband networks, the paper said.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net;