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Written evidence submitted by techUK

techUK response to DCMS Select Committee Inquiry on Broadband and the road to 5G

20 April 2020

About techUK

The telecoms[1] and wider tech sector are playing a key facilitative role in assisting the NHS, keeping businesses going and vulnerable people connected during the COVID-19 crisis. Our response addresses the questions as they were asked so we have not factored in the inevitable and ongoing impact of either the health or economic crisis. We would be happy to return to these issues with the Committee once their impact is clearer and the immediate priority of assisting frontline healthcare has passed.  

techUK welcomes the recognition by Government that digital connectivity underpins the future of society and the economy.

If the UK is to retain and continue to attract investment it will be essential to invest in upgrading digital connectivity, including broadening its availability by population, landmass and transport corridors, and ensuring quality appropriate to needs.

There remains a digital divide across the UK. Citizens’ ability to enjoy world-class digital connectivity should not be determined by where they live or work. Whilst the Shared Rural Network announcement is whole heartedly welcomed, Government needs to continue to ensure that all of the places where people live, and work can receive high quality broadband at accessible prices.

The ambition to achieve universal gigabit-capable broadband by 2025 is achievable, but challenging, and must be aligned to market needs.

Why fibre matters:
 

a)    Higher physical resilience than copper

b)    Lower operational costs

c)     Supports much higher data rates

d)    Data rates distance independent

e)    Future proof investment cases

Why 5G matters:
 

1)    Higher data rates than 4G and legacy WiFi

2)    Supports low latency, where needed

3)    Aligns with cost-efficient cloud-based architectures

4)    Support for novel public and private services

Response

1)   How realistic is the Government’s ambition of nationwide gigabit-capable broadband by 2025, and what measures (regulatory, financial, technical, other) will be needed to achieve it?

techUK supports the Government’s ambition of nationwide gigabit-capable broadband by 2025, and a range of recent Government initiatives contribute towards achieving this objective. But there are some additional measures that need to be put in place to ensure this target is achieved given the challenging timescale.

Government should work with industry (to assess best economic value for investment), all relevant public stakeholders and Ofcom to create a clear roadmap on how they envisage this target being met and addressing barriers to that target. In particular, a cross-Whitehall approach would be helpful as barriers are spread across departments e.g. DCMS, HMT, VOA, DFT, BEIS etc. As this is a build-once infrastructure it needs to be prioritised over other public policy targets during this build phase. Other measures would also need to include a mechanism for identifying specific areas of coverage which are unlikely to be cost-effective under usual market-led deployment planning. These will need to be treated differently in terms of economic, planning and technology choices.

Additionally, Government should work with local authority planning teams, highways authorities and industry to help streamline the application and deployment process operators must follow across the nation. Wayleaves still present a barrier to installing new network and connecting customers, both residential and business. While techUK welcomes the ongoing initiatives around unresponsive landlords and new build connectivity, more could and should be done.

The proposals that Ofcom proposed in their January 2020 ‘Supercharging Investment in Fibre Broadband’ from 2021 are welcomed, particularly further support for rural areas, although industry await detail. It will be essential that any changes to Openreach’s wholesale prices, and withdrawal of regulation from Openreach’s broadband products in areas deemed competitive, do not discourage investment in competing networks.

But there is even more that could be done to help achieve the 2025 nationwide rollout of gigabit-capable broadband target. The business rates holiday in England for new fibre broadband (which currently expires in 2022) needs to be made permanent or, at the very least, to match Scotland’s 10-year rates holiday (which the Scottish Government is now considering extending). techUK also support a wider reform of business rates to ensure they are fair, transparent and do not discourage competition and investment.

If we want fibre to be rolled out faster and cheaper, operators must be able to share existing infrastructure far more than is currently possible. To that end, techUK believes that the current Government-backed Underground Asset Register pilot, involving companies owning ducting in London, shows the way forward and could significantly help towards achieving the 2025 target.

Additionally, if we are to ensure mobile broadband is available on major rail routes, as the National Infrastructure Commission has again argued for, then industry must have a right of access to the trackside infrastructure of Network Rail Telecom. To achieve rural coverage, extensive sharing, collaboration and neutral hosting will be required, due to the poor ROI from investment by each individual operator. This should include sharing of assets to provide both fixed and wireless services using a range of appropriate technology options.

2)   What are the challenges to the roll-out of 5G and gigabit-capable networks? To what extent do existing legislative, regulatory and spending plans address them?

Unlike previous generations of mobile technology, for 5G network planning is fibre-led, not radio-led. For optimal performance, 5G needs fibre, suitable power and sufficient spectrum. So, when fibre is deployed consideration should be given to subsequent 5G deployment and “break out” points planned. This means that rural planning (in non-competitive areas) must include fibre planning for both fixed and 5G services, with an approach that maximizes the utilisation of deployed fibre assets.

Civil works represent roughly three quarters of the cost of deploying fibre, a position made worse by long line lengths, there are likely to be some consumers for whom full fibre could never be cost-effectively provided, even with sharing passive infrastructure. techUK therefore believes that 5G Fixed Wireless Access (FWA), which is gigabit capable, should be clearly within scope. For those customers for whom even FWA may not be available, they may have to rely on connections which will never be gigabit capable. Therefore when “outside in” deployment commences, techUK suggest that a policy should be adopted of ensuring the availability to customers of the optimal technology which could cost-effectively be made available.

Furthermore, in relation to “outside-in”, we would stress that not all areas with poor connectivity can be found in rural areas. Many town centres, high streets and business parks also suffer from poor connectivity and we must ensure that they are picked up in the next rounds of deployment as well. For business customers, lack of good quality fibre broadband denies them of the benefits of digitisation and ultimately impacts on productivity and the wider economy. We recommend that Government collects connectivity data on all properties and encourage Government to ensure its outside-in approach targets all areas of poor connectivity for both consumers and businesses. 

techUK’s concern to national roaming and not-spots is that it would discourage investment from Mobile Network Operators and, in practice it may prove difficult to identify enduring partial not-spots. Additionally, there is no consistent definition of ‘rural’ across the whole of the United Kingdom. A definition of “uneconomic” areas might be more useful to enable these to be approached differently. techUK would also point out that the proposals contained within the current Ofcom consultation ‘Enabling Opportunities for Innovation’ would enable local community groups to access unused mobile spectrum to provide localised coverage. 

We must ensure that 5G helps create market expansion within the UK and to help Government and Ofcom promote new 5G services from existing and new players through the release of additional spectrum. We support the growth of infrastructure models (including neutral hosts), and urge that greater focus be put into making available public infrastructure (e.g. Network Rail, Highways England) to support neutral host 5G deployment.

Having people with the right civil engineering, digital and other skills to deploy networks is also clearly critical. Government must ensure to continue to diversify the education routes we have in the UK ensuring that businesses are closely involved in designing and delivering vocational education and that digital is embedded as a skill across all learning.

In relation to regulatory matters, long-term certainty is needed so that deployers of physical infrastructure can be confident on a return on their investments. techUK look forward to seeing how Ofcom’s recent Wholesale Fixed Telecoms Market Review 2021-26 and the implementation of the EU’s European Electronic Communications Code plays out and how that promotes investment and competition in fibre networks.

A further area of regulatory certainty is the framework for resilience of our gigabit networks. techUK believes that the Government’s current approach, as set out in the Telecoms Supply Chain Review and guidance on High-Risk Vendors, is based on a strong evidence foundation and strikes the correct balance between ensuring the security of our telecommunication networks and providing certainty to our mobile network operators (MNOs) who are investing and building out these networks.

techUK would like Government to act quickly as many of these barriers have been being discussed for years without resolution. Without action, the 2025 target could be under threat.

3)   What needs to happen to ensure the Government’s ‘outside in’ approach successfully addresses the digital divide while also delivering value for money?

As mentioned in the previous question we suggest that a policy should be adopted within the “outside in” approach of ensuring the availability to customers of the optimal technology which could cost-effectively be made available within the timescale. Early identification of areas where normal deployment will be uneconomic will enable focus to be put on these areas early in the rollout, rather than leaving them as the “difficult long tail” as typically happens in deployment planning. This should also look at all properties (commercial and residential) which have poor connectivity and are less commercially viable to deploy too).

Transparency of the “outside-in” approach should be essential.

We believe it is right that the Committee highlights the importance of value for money. The recent Shared Rural Network initiative is a good example of where government and industry has come together to discuss and agree on a plan to leverage both public and private funding to tackle poor 4G coverage in rural areas across the UK.

techUK welcomes the Government’s commitment to spending £5bn in this Parliament on rural digital connectivity and look forward to seeing how this will be spent in a way that maximises private sector investment and competition as part of a wider and detailed programme of work that shows how the UK will meet the 2025 gigabit connectivity ambition.

4)               What does take-up of broadband and mobile services indicate about consumer and business attitudes to digital connectivity? What needs to be learnt from this for the roll-out of, and switchover to, gigabit-capable networks?

The importance of connectivity recognised by all, something currently being reinforced by increased working from home, but also the increased digitisation of the world for business, society and entertainment.

A highly competitive broadband market in the UK keeps consumer prices lower than in many other developed countries, although that relative low return on investment then feeds into investment in technology upgrades and in coverage improvements.

However, many consumers could upgrade to faster fixed line packages (which could include full fibre) but choose not to, presumably because they haven’t yet identified any uses requiring (or optimised by) the additional speed. It is important to note therefore, that industry is often rolling out ahead of the demand.

Fibre is far more reliable than copper broadband, with about half the fault rate, but operators don’t currently market reliability as a value add for fibre. Given that operators have to invest in deploying fibre considerably in advance of demand for it emerging, and business rates are levied on fibre whether or not they have paying subscribers at the end of the glass, early adoption by consumers of gigabit-capable technology requires them to become aware of desirable use cases requiring an upgrade. This is true for 5G also, although we can expect that consumers will increasingly adopt 5G-capable handsets as part of their replacement cycle. In many cases, end users want services that are good enough, and of course this should be supported by an assessment of future proving investment, so forecasted investment return models are essential.

5)               What will be the impact on individuals and communities whose broadband and mobile connectivity fails to keep pace with the rest of the country over the next 10 years? What is the link with other DCMS policy concerns, such as changing patterns in the consumption of digital media?

The COVID-19 pandemic has shown the value of technical connectedness in times of national crisis. While this pandemic will pass, it is likely to leave a legacy of new social norms which will include expectations of high-quality online video interaction, particularly to vulnerable members of society.

More needs to be done to enable easy access for vulnerable communities such as older people who have limited mobility, as online connectedness becomes a much more important feature of their lives.

A lack of good quality connectivity for businesses can also deprive them of the benefits of digitisation and ultimately impacts on the UK’s productivity. We also believe there should be a focus on economic benefits for the country, for example in public services such as mobile, NHS and police where they are a high priority at this moment in time.

6)   How effectively do the different stakeholders (UK and devolved governments, local authorities, Ofcom, industry) work together in both the mobile and broadband sectors? How might these relationships be improved to support gigabit-capable roll-out?

The stakeholders outlined above are generally aligned by a desire to rollout gigabit connectivity, albeit they have different objectives. 

Ofcom by law is required to execute tasks in the Communications Act. 

UK Government and devolved administrations are not always aligned, for example Scotland’s R100 programme vs. the UK Governments initial USO proposals. Industry and in particular Operators’ rollout is dictated by business logic, such as population density and margin, whereas Government and Ofcom focus more on social inclusivity.

More work needs to be done to seek a set of common incentives set at the centre of the above stakeholder ecosystem. One approach could be to empower an agency to oversee national digital infrastructure matters.

There is also a need for greater cross-Whitehall working and a more collaborative approach to working with industry. Landlords is also another key stakeholder which should be engaged by Government to get their buy-in to help facilitate rollout.

This is also an extremely busy period for telecoms and the wider tech industry with several new policy issues to manage including changes to the Ofcom regulation; new entrant rollout; security and supply chain restrictions and regulations; WLR withdrawal; European Code implementation; and post-Brexit UK negotiations. While industry is up for the challenge, some understanding, and proportionality needs to be accepted across Government and regulators.

Joint work between Government, industry and other stakeholders will be critical if the UK is to meet its ambition of gigabit connectivity across the UK by 2025. Organisations such as the Broadband Stakeholder Group, techUK and the CBI help with this engagement and we would encourage the Government to ensure it works with a wide variety of stakeholders when considering how to achieve its connectivity ambitions.

techUK Recommendations:

1)     Reduce deployment cost & time:

• Ensure specific requirements of 5G are reflected by the Barrier Busting Task Force, including Restructuring Wayleaves (e.g. strengthening rooftop sites), planning for fibre breakout points, use of public assets (rooftops, street furniture etc).
• MHCLG consulted last year on proposed changes to permitted development rights – where is their statement?
• HMRC needs to match Scotland’s Business Rates relief on fibre.
• Cabinet Office needs to take learnings from London Underground Assets Register nationwide.

2)   Improve rail connectivity - Recent NIC “Connected Future” report

• Department for Transport needs to align rail sector incentives & offer neutral host access to NRT infra tied to deploying 5G.
• Consider establishing a “C-CAV for rail connectivity”.

3)     Skilled Labour

• Immigration policy needs to reflect the skills needed to achieve the 2025 objective.
• Explore whether BDUK competitions (particularly “Outside in”) could be managed to reflect where skilled labour is located.

4)     Resilience Uncertainty

• Uncertainty around how the High-Risk Vendor cap operates, what the draft TSRs will propose, and how Ofcom’s new power will work in practice, increases risk of investment in 5G. So earliest certainty needed, following wide (not just MNOs) industry engagement.
• Resilience isn’t a concern for 5G only. There is also limited vendor diversity (including only 2 strategic vendors for Openreach fibre).
• 5G interdependencies: Wi-Fi, Backhaul, MEC & IOT. If 5G is to connect millions of things, would that risk importing long-standing IOT security cause concerns into 5G networks? Specific mitigation actions should be defined for those new risks.