The Big Question: Is Britain finally on the verge of a digital revolution?

(RUI VIEIRA/PA)

Why are we asking this now?

Lord Carter will stand up this afternoon at the RSA in London to present his vision for Britain's digital future. The minister will then make a statement outlining his much anticipated Digital Britain white paper to the House of Lords and recently appointed culture secretary Ben Bradshaw will take it to the Commons. Digital Britain is the result of eight months of research, consultation and lobbying. It promises to provide a long-term blueprint to overhaul Britain's digital infrastructure and is regarded as critical to the country's future development.

What is the background to the report?

Last October, the Government commissioned former Ofcom boss Lord Carter to draw up an action plan "to secure the UK's place at the forefront of innovation, investment and quality in the digital and communications industries". The report covers hugely broad topics from across the sectors, from broadband to digital radio, public service broadcasting to video piracy. Digital Britain is a joint initiative from the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport.

Why did they introduce it?

The digital and communications industry in the UK is worth about £52bn a year, and employs 500,000 people. Lord Carter said that alongside energy and financial services it is the third sector "upon which the whole of the economy rests." He estimates that 22 million Britons rely on the industry for their daily work.

How does Britain rate worldwide?

Britain hasn't lagged behind but it is certainly not a first mover on digital investment. The development of the digital economy in the US is a core part of President Obama's administration, while the French government has launched an overhaul of the country's communications sector. Australia announced a A$43bn super-fast broadband programme this year and countries in the Far East, including Hong Kong, have also poured cash into next generation broadband. The European Commission's global league table of digital adoption, skills and use has seen the country peak at seventh place in the past decade but is now languishing in 12th. "Britain needs to be a leader and use it to drive long term productivity and education," Chris Williams, partner of economic consulting at Deloitte said.

How important is the report?

Lord Carter thinks Digital Britain will be "the leading major economy for innovation, investment and quality in the digital and communications industries". Peter Mandelson added that the digital economy would be central to getting through the worst of the crisis and preparing for the upturn. Mr Williams said: "This report is critical. How critical will remain to be seen."

What are the key points to watch out for?

Lord Carter outlined many of the focal points of the study in an 86-page interim report in January. The recommendations in the final report have been closely guarded and could spring some surprises, but the principal issues have been outlined. Mr Williams said: "The interim report was wide-ranging but short on detail, the industry is waiting for this report to add the specifics." There are five objectives of the report and experts are expecting over 40 "action points". These include modernising the country's digital infrastructure, promoting investment, pledging "UK content for UK" users, as well as universal availability of broadband.

What is the cornerstone of the report?

Lord Carter wants to provide broadband to every home in the UK, running at speeds of at least 2mbps: fast enough to watch a programme on the BBC's iPlayer. Some have criticised this as too slow while others have questioned whether everyone wants broadband. Britain's take-up of the service has been faster than most other major economies, and has the highest proportion of internet advertising of any developed economy. By 2012, £1 in every £5 of all new commerce in Britain will be online, the government said. However about four million homes currently can't receive 2mbps broadband. Lord Carter hopes to tackle this with an overhaul of the existing network infrastructure, as well as moves to increase wireless, mobile broadband, and satellite broadband services.

What about the question of creating a rival to the BBC?

Lord Carter was also handed the task of helping secure the future of Channel 4, which announced its future was under threat as it faces the prospect of running a funding gap of £150m by 2012. The government wants to provide a powerful public-service broadcasting body that rivals the BBC, and it is likely to be based on C4. The preferred tie-up for the government and C4 is through a joint venture with BBC Worldwide. Talks have been ongoing and the companies were hoping to secure an agreement by tomorrow. Should the negotiations collapse, C4 could be lined up for a merger with Five. Elsewhere in the media, Digital Britain will look at the future of regional newspapers and regional television news production.

What about piracy?

Online video and music piracy formed another crucial part of Lord Carter's report. Digital Britain is looking to stem the flow of illegal file sharing with an estimated seven million people having downloaded copied content. The government has looked at ideas including a "rights agency", or introducing a "three strikes" rule – similar to that originally envisaged in France – by sending letters to offenders before limiting their services. The creative industries coalition said illegal file sharing smashed revenues in the industry which led to fewer films, songs and TV programmes being produced, causing widespread job losses.

So who is going to pay?

Given the worldwide slump and Britain's fall into recession, the government hasn't a whole load of cash to throw around and Lord Carter believes delivering a digital Britain must be driven by the market. The government is more likely to participate in the form of tax incentive schemes and loosening regulation. Much of the £120m freed up from the digital switchover funds could be handed to BT, although the telecoms giant is already investing £1.5bn in a drive to bring faster broadband to 10 million households. Some of that dividend could go to plug C4's. Or the BBC licence fee could be topsliced to invest in that or regional news provisions. The industries involved are waiting to see how the measures will be implemented, but "there is unlikely to be much direct funding from the government," Mr Williams said.

Will it work?

The political shake-up in the run-up to the announcement hasn't helped. Lord Carter revealed he was to step down after the report's publication, while Andy Burnham has left the DCMS.It is a wide-ranging report with many interests, which Lord Carter has had to negotiate carefully. Mr Williams said: "This is the ultimate political hot potato. The arbiter is drawn between the hard line businessmen worried about profits and very vocal arts-orientated community. The report will be very high profile."

Does a digital future truly beckon?

Yes...

*Industry experts believe the Carter report is crucial in bringing the UK out of the slump

*Government moved quickly to tackle the issues and appointed a capable leader in Lord Carter

*His report deals with critical issues – including video piracy and Channel 4 – that needed resolving urgently

No...

*The Government is unlikely to offer any direct funding, preferring to looking for a market-led solution to the digital question

*The issue is too politically vexed for a neat solution to be possible

*Many claim 2mbps broadband isn't quick enough. Others aren't sure everyone wants it

n.clark@independent.co.uk