Written evidence submitted by

The Broadband Stakeholder Group

[RBB0096]

The Broadband Stakeholder Group is the UK government’s leading advisory group on broadband. It provides a neutral forum for organisations across the converging broadband value-chain to discuss and resolve key policy, regulatory and commercial issues, with the ultimate aim of helping to create a strong and competitive UK knowledge economy.

Executive Summary

1.      The Broadband Stakeholder Group (BSG) welcomes the opportunity to submit evidence to the committee on rural broadband and digital-only services. We recognise the importance of examining access to digital infrastructure and digitisation of government services in one and commend the Committee for doing so.

2.      Presently, the benefits gained for being ‘connected’ for citizens, businesses and consumers are largely additional to what can be accomplished in the paper or non-digital world. However, access to basic digital connectivity will shortly become a necessity. Despite, this recognition we will limit our remarks to the first section on the extent of broadband coverage in rural areas as well as offer suggestions as to how this could be improved.

3.      The broadband access picture is rapidly changing. Private and public investment is now resulting in a rapid expansion in the number of homes now with fixed line access to superfast broadband[1]. 4G services are also being rapidly deployed and alternative providers, of both the fixed line and wireless variety, are beginning to scale their operations in some areas. These investments will likely see fixed line access to superfast reach 95% of premises in 2017 and 98% of households being covered by 4G services by at least one mobile operator by 2018.

4.      Even with this step change in the pace at which these technologies are being deployed, the commercial case for investing in some areas will always be weaker. The BSG believes that the Government can do more to ensure that the cost of deploying infrastructure is lower, but also supports the Department for Culture, Media and Sport’s (DCMS) interventions into the market to date.

The extent of broadband coverage in hardest to reach rural areas

Current broadband access in rural areas and planned investments

5.      Broadband access is provided through fixed line – involving fibre, copper or coaxial cable – and wireless networks – involving fixed wireless access, mobile or satellite technology. These networks have different characteristics and have different coverage areas so it is important to consider them all in assessing ‘broadband coverage’. Competition, both between network types and between providers, have served to drive innovation and resulted in lower prices for UK customers than is found in other markets.

6.      If defined, as ‘always on’ and having a bandwidth in excess of 128 Kbit/s, then the UK has near universal fixed line access to broadband services[2]. This standard broadband is delivered over the local loop using ADSL technology – with copper running from the telephone exchange to premises. Whilst speed is too often, and incorrectly, thought of as the sole measure for quality of service in this instance it is useful to examine the households with access to a connection with a bandwidth in excess of 2Mbit/s. 2Mbit/s is the bandwidth that the BBC recommends for streaming a Standard Definition (SD) programme via the iPlayer and is seen as the benchmark at which the vast majority of internet applications work smoothly. In the UK, 3% of households do not have access to a fixed line connection of this bandwidth[3].

7.      The latest Ofcom figures show that access to superfast broadband is available to around 73% of premises. The majority of this coverage comes from networks using fibre-to-the-cabinet (FTTC) or a cable specific technology called DOCSIS 3.0. These figures are from last year and are expected to have significantly increased in the next Infrastructure Report which is expected in December – for instance 800,000 premises were added to this footprint by the BDUK deployment alone in June 2013-June 2014[4]. This puts BDUK broadly on target to achieve its desired goal of 95% of premises having access to superfast broadband by 2017. This coverage is also complemented by several community driven alternative network providers which generally use fibre-to-the-premise (FTTP) technology.

8.      The UK also benefits from widespread mobile broadband coverage. The UK currently has four mobile network operators (MNOs) who offer both 3G and the more advanced 4G services. 3G services have been available for around 10 years and 80% of premises are now covered by all four MNOs with just 1% not receiving coverage from any operator[5]. Whilst conducted in cities rather than rural areas, recent research from Ofcom indicates that the average speed on 3G networks is 6.1Mbit/s[6].

9.      One year into the widespread deployment of 4G services, rapid progress has been made, largely through the ability to re-use the existing physical infrastructure, with around 75% of households now served by at least one operator. One operator, O2 have a coverage obligation on the spectrum that they use to provide 4G services. This mandates them to provide indoor coverage with a consistent bandwidth of 2Mbit/s to 98% of premises by 2017 at the latest. Other MNOs have indicated that they plan to match this and all are determined to reach this target before then. In the recent Ofcom research, the average 4G speed was 15.1Mbit/s. As well as its higher bandwidth, 4G offers greater stability making it a more realistic alternative option to fixed solutions.

10.  Satellite continues to offer a domestic standard broadband solution to near universal levels of UK premises. Recent developments in technology mean that it is now beginning to be able to offer superfast broadband access although this is not as widespread. Additionally some alternative providers offer both standard and superfast broadband via fixed wireless access networks.

1.2 How to improve broadband access in rural areas

11.  Whilst the ability of the average UK user – be that consumers, citizens, businesses or government itself – to access broadband services has increased dramatically over the last five years, this is not necessarily the case in rural areas. Against a background of a substantial return on investment challenge, the telecoms industry has understandably tended to concentrate on urban areas where demand for their services is higher.

12.  That is not to say that industry does not want to service the demand in rural areas. Indeed it has come up with innovate solutions to try to do so such the development of fibre-to-the-remote-note and the use of telegraph poles in fixed networks or mobile networks development of small and femtocells. What industry needs to be able to do is deploy these, and other, solutions in a cost effective way.

13.  In order to enable further expansion into harder to reach areas, which are overwhelmingly made up of rural areas, it is important that industry can be confident in the wider regulatory framework and ensure that costs are as low as possible. In the BSG’s response to the Government’s Digital Communications Infrastructure Strategy[7], we stressed the need for regulatory and policy certainty and the importance of an independent Ofcom. We also called on Government to make use of the policy levers available to it to lower the cost of infrastructure deployment.

14.  The BSG believes that the Government should press ahead with reform of the Electronic Communications Code, which could significantly lower the cost of land for new sites. The phrase ‘broadband is the fourth utility’ is much used but this growing importance is not reflected in the code and has resulted in operators coming under pressure to provide similar universal coverage levels without the benefits granted to utilities. This can be seen in the difference in land rental of an electricity pylon (£87-147) and a mobile mast (£5-10k), and a fixed line operator (10-29p/metre per annum) and an underground power cable (2p/metre per annum)[8]. The BSG does not expect this gap to be completely closed, but it is clear that regulation should give the industry some of the benefits that utility services receive – whilst retaining the benefits that competition provides.

15.  Whilst important, Code reform only goes so far. There also needs to be further improvements to the planning system to make it a faster and more certain process so that the focus for telecoms infrastructure is on ‘where’ rather than ‘whether’ it should be deployed. In allowing for greater wireless deployment the use of taller masts, which would improve cell coverage areas, should also be considered. All levels of Government should seek to make more use of public sector land in order to lower the cost of infrastructure deployment. Additionally the business rates applied to this infrastructure, a long running issue for industry, must be carefully assessed to ensure that they do not act as a disincentive to investment.

16.  These actions would help ensure that the commercial deployment can go as far as possible. Despite this it is likely there will be areas, predominantly rural, where it will not be commercially viable to deploy infrastructure. That is why, where the market is unable to deploy infrastructure leading to the failure of identified public policy goals, the BSG supports Government intervention.

17.  In attempting to address superfast broadband coverage in the final 5% of premises that would currently miss out under the BDUK framework, the Government has funded eight market test pilots[9] through a £10 million innovation fund. These explore a range of technology and business cases. We strongly support the Government taking forward any successful projects, the success of which will go some way to determining broadband access for those in the hardest to reach areas.

Conclusion

18.  The BSG believes that digital connectivity will soon, if it is not already, become a necessity in our increasingly digital society. Our in a recent report looking at SMEs use of the internet we found that firms who make full use of the digital services available to them have higher growth prospects then those who do not[10].

19.  Ensuring that everyone can make use of the internet is a critically important goal which encompasses a range of issues such as digital skills and ability to pay. These issues are of course closely intertwined with coverage as demand plays an important role in determining where infrastructure is deployed. The BSG believes that reducing the cost of infrastructure deployment would enable industry to expand the current broadband footprint in both fixed line and wireless networks but that there are likely to be areas where direct Government intervention is still required.

1. Digital access and experience of digital─only programmes, such as the new CAP system applications

The BSG has no comment to make on this topic.

2. Support available for those required to use digital─only programmes

The BSG has no comment to make on this topic.

November 2014

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