A Curious Case of 10Mbps USO Eligibility in Existing FTTH Areas

The Government’s new 10Mbps+ Universal Service Obligation (USO) for broadband is due to start next month, although for some ISPs Ofcom’s approach to eligibility has created a few puzzled faces. As a result some people may live in areas covered by a 1Gbps FTTH ISP, yet still be able to request the USO.

The USO is of course primarily intended to serve digitally disadvantage areas where no such connectivity exists (i.e. speeds of less than 10Mbps), which Ofcom currently considers to reflect the final 0.5% of premises (155,000 properties). This is largely due to the obligation being watered down to include 4G based mobile broadband services, otherwise it would rise back up to 610,000 premises (here). However there’s another caveat in this.

At issue in this article is the fact that the USO imposes a maximum cost cap of £45 per month (inc. VAT), which is calculated to also incorporate connection fees over the course of the contract period. One often overlooked facet of this is that if your area is already served by a Fibre-to-the-Premises (FTTP), or other superfast broadband network, but that service costs more than £45, then technically people in the area could still optionally request the 10Mbps USO from a supporting provider – BT (or KCOM in Hull).

Just to reiterate that point. People who only have access to a service priced over £45 per month will also have the right to request a USO connection, regardless of whether the current fastest local network is already able to deliver significantly faster speeds. So you get the choice between the USO or simply paying more than £45 for the existing service, which could be much faster. We can appreciate why this is done but sadly it gets even weirder.

The real quirk here occurs because Ofcom requires that £45 to also include connection fees over the course of a contract. Put another way, if you did like B4RN use to do and offered customers a 1 minimum month contract term at £30 per month for unlimited 1Gbps with a one-off £150 connection fee, then the regulator would effectively say you’re charging £180 per month, even if that’s only for the first month.

As a result people covered by B4RN’s 1Gbps network could still choose to request the 10Mbps USO from BT. Not that you would, but the choice exists and yes, that does sound a silly (some might call it a waste of money) when an affordable full fibre network is already present. The ISP can of course get around this by adopting a 12 month term and averaging the total costs over that or offering a cheaper but slower tier, yet forcing ISPs to scrap monthly contracts in this way is not a particularly pro-consumer move.

As it happens most such ISPs have already had to adopt 12 month terms, even before the USO arrives, because that is a requirement of the Government’s separate gigabit voucher scheme(s), which many providers are currently harnessing. Likewise altnets often adopt long contracts to help off-set the cost of their network builds. Nevertheless it’s worth highlighting quirks like this as such caveats can easily be overlooked and some rural full fibre providers, even with a 12 month+ term, do cost more than £45.

A spokesperson for Ofcom told ISPreview.co.uk that “the idea is to ensure customers do not face excessive connection fees for a service,” which is fair enough but we think they could probably have found a more flexible way of writing that into the rules. We don’t know of many people who would, for example, consider B4RN’s 1Gbps service to be applying “excessive connection fees.” It is in fact deliciously cheap for what you get in remote rural areas.