House of Lords Trash Government’s 10Mbps UK Broadband USO Again

The House of Lords was yesterday given the opportunity to debate the Government’s new 10Mbps Universal Service Obligation (USO) for fixed line broadband (implemented from 2020). Perhaps unsurprisingly they trashed it, while also calling for a “more ambitious” minimum speed of 30Mbps.

At present Ofcom are currently still designing how the new “legally-binding” regulatory USO will be funded by the industry and implemented, as well as identifying which suppliers can take responsibility (result expected this summer). Previously only BT (UK) and KCOM (Hull) have shown any solid interest in delivering it but now some alternative network ISPs are also said to be engaging (see the current 10Mbps USO design).

Nevertheless yesterday’s debate in the House of Lords, which comes somewhat after the fact and was thus more of a venting session without a constructive result, revealed that lords from all of the main parties remain disappointed with what the government has passed into law via the Digital Economy Bill 2016-17.

Lord Stevenson of Balmacara (Labour) said:

“It still seems incredible that the Government have come forward ​with the slowest of the available options. The only option that meets all the requirements was Ofcom’s scenario 3, with download speeds of 30 Mbps and upload speeds of 6 Mbps, compared to what is being proposed in the USO: 10 Mbps download speeds and 1 Mbps upload speeds, which is what we proposed.

At this stage, it is worth commenting that, in my view, responses to the government consultation showed support for higher speeds than what made it into the USO.”

Lord Foster of Bath (Liberal Democrat) said:

“By the Government’s own admission, the USO is simply a safety net and frankly, not a very good one at that. I have looked at many Ofcom documents and I cannot find a single one in which they express real enthusiasm for a USO of just 10 Mbps. The lack of ambition shown in the USO is common to much of the Government’s whole approach to broadband rollout.”

Earl Cathcart (Conservative) said:

“We have been promised speeds of 2 Mbps and now the universal service obligation of 10 Mbps. As my noble friend found out for himself when he stayed with me last summer, our speeds are very slow. He measured our speed and found it was a mere 0.03 megabits per second—hardly the promised 2 Mbps, let alone 10 Mbps. He helpfully gave me a number of contacts to improve our speeds and I also contacted Better Broadband for Norfolk, an organisation set up by Norfolk County Council and BT to help all those areas in Norfolk that get bad speeds.

I can now report to my noble friend Lord Ashton of Hyde that our broadband speed is still 0.03 Mbps. Nothing gets done. … why are the Government spending hundreds of millions of pounds on superfast broadband speeds when they have not got the basics right?”

Generally speaking, for context, it should be said that USO’s like this are usually only intended to cater for an absolute minimum starting level of service performance (legal backstop), which must be available upon request from a supporting supplier (i.e. not an automatic upgrade). Most other countries in the EU don’t yet have a USO for broadband and those that do tend to set a lower minimum speed of between around 1Mbps to 4Mbps.

However, in February 2017, the House of Lords threw a political spanner into the works by voting to approve a radically different USO that would have set the minimum at 30Mbps+ and hold an aspiration to deliver 2Gbps for all via FTTP “before 2020” (here). The FTTP part of that aspiration was utterly impossible (even with billions of funding it might still take 15-20 years to hit that). Obviously this wasn’t adopted.

The 30Mbps USO idea also created some other issues. For example, it reflected “Scenario 3” in the regulator’s technical proposals for the USO, which also happened to be the most expensive approach with a hefty price tag of up to around £2 billion. Consumers could have ended up paying even higher bills as a result.

On top of that such a USO might have also damaged the growth of alternative network providers, particularly if BT (Openreach) were chosen as the primary supplier (i.e. risk of rebuilding a monopoly position). Distorting the competitive market would not be desirable at a time when the Government and Ofcom are also trying to foster competition for Openreach (mind you they don’t always get this balance right).

As ever it’s incredibly easy to promise something impressive for a USO but actually delivering on such ideals tends to be the hard part and there could be complicated consequences for the market, which may not always be apparent at the outset. Suffice to say that the Government stuck with a 10Mbps USO instead and their representative defended this position in yesterday’s debate.

Lord Ashton of Hyde (Conservative) said:

“I have to remind noble Lords that the purpose of the universal service obligation, as outlined in the universal service directive, is to ensure the provision of services to all users. Noble Lords have mentioned Europe, which at the moment has coverage of about 76%. The universal service directive applies only to fixed broadband; it does not apply to mobile. Indeed, the European Commission itself has twice reviewed mobile and concluded that social exclusion does not exist.

The universal service obligation does not exist to promote investment; it exists to make sure universal services are indeed universal and a legal right. … Premises in the USO footprint will be the hardest and most costly to reach in the country.

The Government’s position is that the current specification of the USO is sufficient at present and strikes the right balance between meeting consumers’ needs and ensuring that it is proportionate and deliverable. That was not a random decision. The Government carefully considered and consulted on a range of options and three different ​scenarios that Ofcom modelled: a basic 10 Mbps service; the preferred 10 Mbps service with additional specifications, such as upload speeds, latency and data caps; and the 30 Mbps or superfast service.

The 10 Mbps was selected because data usage drops considerably below this, indicating broadband activity is more restricted with speeds under 10 Mbps. Further evidence from Ofcom shows that a speed of 10 Mbps meets the needs of typical households.”

Lord Ashton also noted that the Government have “much greater ambitions” for the future and they expect the current Broadband Delivery UK (BDUK) programme to reach “at least” 98% coverage of the UK with “superfast broadband” speeds (24Mbps+), which we expect to be achieved by around 2020 (i.e. the USO will focus on that final 2% or less).

“However, we are not content with that, and I agree with the noble Lord, Lord Stevenson, and others. In his speech to the CBI last month, the Chancellor set a national target for full fibre—not just to the cabinet, but all the way to the premises. Our aim is for full fibre to 15 million premises by 2025, and all premises by 2033. So the Government are not short on ambition,” said Lord Ashton. Mind you it’s easy to set an ambition and rather more difficult to fund and deliver it, especially with government’s changing so often.

Nevertheless we are still disappointed that the UK Government has not even set a coverage goal for 100% to be put within reach of superfast broadband, even if that’s just a commitment, like the BDUK programme, rather than a legally binding USO. Scotland and Wales are already ahead of England and N.Ireland on this, at least in terms of ambition.

The government has of course promised to review the USO and potentially set a higher speed in the future, although it could be a fair few years before that actually happens.