London’s much heralded Old Street technology startups are struggling to grow their businesses because of poor internet connection services, the Guardian has been told.

Lengthy installation delays and high fees have caused some companies to leave the area, while others complain of months of costly hold ups moving to new offices.

Startups and smaller ISPs, as well as technology collective Perseverance Works, are all due to meet Labour MP Meg Hillier on Thursday to discuss the crisis in the capital’s broadband provision. Hiller represents Hackney South and Shoreditch where many tech companies are based, and described the situation “a national embarrassment” that requires urgent action.

Hillier claims that some companies have left the area because of problems accessing high-speed broadband - and despite government access grants of £3,000. She called for a “comprehensive review of broadband, plans for infrastructure and roll out and a competitive framework for delivery”.

The Old Street area was labelled ‘Tech City’ as part of a government promotional campaign for the area in 2010 and is touted as the centre of Europe’s technology scene, yet startups say the difficulties accessing adequate broadband have been an issue from the outset.

Five months for new broadband connection

Affiliate marketing service Skimlinks moved offices in 2013, but it took five months for the fibre broadband to be reconnected in the new office near Old Street.

“After mixups with council addresses, wiring and hardware deliveries the SDSL (slow backup) lines were finally active one week after our move,” said chief technology officer Richard Johnson. “During this time we attempted to make-do with bonded 4G dongles, so most people worked from home. Our fibre was active on 4 March 2014, having given the go-ahead to move on 11 October 2013.

“Five months without fibre for an internet-based organisation is difficult to swallow. Our old office was vacated and demolished in the time it took to get fibre connected,” said Johnson. “There is nothing more frustrating than rapidly needing to provision new servers and seeing your terminal take seconds to acknowledge each keystroke.”

‘We paid rent for months on an office we couldn’t use’

Another business, the money transfer service TransferWise, endured a four-month delay while the internet service provider (ISP) paid to secure a wayleave from the new landlord, which gives the ISP permission to enter the property to install the fibre cable.

This process, TransferWise co-founder Taavet Hinrikus explains, can take weeks because the landlord is under no pressure to comply, and can also choose their fee.

“It’s ridiculous that it takes so long for a company building an online business to get internet - not to mention that we had to pay rent on an office we couldn’t use for months,” said Hinrikus. “If the UK is serious about making Silicon Roundabout into a global tech hub, we need to do something to speed this up. Now it’s all installed, we are happy with the speed and reliability of the connection but it took far too long to get to this point.”

New, faster BT service

BT announced a new trial of faster fibre-to-the-remote-node broadband for the area on Thursday which will offer speeds of up to 80 Gbps, in addition to existing Openreach business service offering speeds up to 10Gbps.

“However, we see a lot of smaller businesses going for consumer lines, because they are cheaper, lacking service up-time agreements and extra security services,” said spokesman Richard Knowles, explaining that three-quarters of business premises in the Tech City area will have fibre connections by the end of 2014.

Entrepreneurs have been quick to blame internet service providers (ISPs), including BT, Virgin Media and TalkTalk, yet those ISPs have also failed to communicate to customers the significant costs and logistical challenges of installing broadband in a heavily built-up area. Many of the problems can’t be solved with faster speeds alone.

When a business orders broadband, it sets in motion a multi-stage process involving bartering deals, on-site visits, permits, digging up roads and eventually the installation.

“Planning regulation accounts for approximately 85% of the costs Virgin Media faces in building network,” explained Dan Butler, Virgin Media’s head of public affairs. “This has a direct effect on the number properties we’re able to serve. Currently, planning regulation prevents us from deploying network in more cost effective and less disruptive ways, such as narrow trenching.”

‘The government needs to get involved’

Tech City also includes several red routes, some of London’s busiest and most strictly controlled roads, including limitations on road works. Utilities have to apply for a permit and pay a fee, which can take 10 days.

“Getting a broadband connection capable of supporting our businesses has been a nightmare,” explained Paul King, chairman of Perseverance Works - a co-operative of technology businesses in Tech City. “It’s the kind of thing government will have to get involved with to solve.”

The government’s broadband connection voucher scheme – a grant for up to £3,000 aimed at covering the installation costs of broadband for small businesses – alleviates some of the financial burden placed on startups trying to fund a solid internet connection, but does nothing to speed up the process.

King and the Perseverance group went beyond BT and other big ISPs to fit their own broadband infrastructure, clubbing connection vouchers together to cover the cost. It took the group two years to be ready to start installation.

Broadband: one of top three issues for small businesses

Some critics have suggested that the problem will remain until internet connections are treated like water or electricity, already connected to the building or property as part of the landlord’s responsibilities.

“This area of London produces more job opportunities than anywhere else in the country, primarily in the digital economy,” said King. “It is absolutely vital that we have an infrastructure set up that enables us to compete with the rest of the world.”

Hackney Council has made moves to try and address the complaints of local businesses, launching public Wi-Fi in central areas across the borough, while EE launched a high-speed 4G network in the area for anyone with a 4G handset, capable of reaching speeds around 300Mbps.

“Broadband speed is one of the top three issues brought to me on a regular basis by business leaders in Hackney,” said Andrew Sissons, head of regeneration delivery at Hackney Council, told the Guardian.

“Companies moving into the area need to better prepared, giving people more notice especially when moving into properties like old warehouses where there was no previous provision for high-speed internet. But internet connectivity is a thing of national importance, and critical to our economy.”

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