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Consumers Back Calls for a Universal Service Obligation on Broadband

Monday, March 9th, 2015 (7:12 am) - Score 1,499
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The recent discussion over whether broadband should be added to a legally binding Universal Service Obligation has prompted us to conduct a survey, which found that out of 1,445 respondents some 71.5% supported the idea of imposing a USO on BT (or KC in Hull) to deliver fixed line broadband speeds of at least 2Mbps to all.

The Government and BT are already working towards making superfast broadband (24Mbps+) speeds available to 95% of the United Kingdom by 2017 and a plan is also being worked on to tackle the final 5%. In the meantime there’s a somewhat conflicting Universal Service Commitment, which pledges to ensure that everybody can access a basic broadband speed of at least 2Mbps by early 2016.

Sadly the USC is not legally binding like a USO and at present Ofcom’s related rules only mandate that BT and KC deliver, following the “reasonable request of any End-user“, a telephone service that includes the ability to offer “data rates that are sufficient to permit functional internet access” (here); technically that could include ancient dialup.

However support for the idea of introducing a broadband USO suffers a significant hit once consumers are asked to help pay for its introduction. Imposing a USO could increase the cost of service delivery because operators might need to hire additional engineering staff, improve support and conduct further network development.

Should the UK impose a legally binding Universal Service Obligation (USO) on BT to deliver fixed line broadband speeds of at least 2Mbps to all?
Yes – 71.5%
No – 20.6%
Maybe – 7.8%

Would you accept a small increase (i.e. around £1 per month) in the price of your broadband in return for a USO?
No – 49.8%
Yes – 40.7%
Maybe – 9.4%

Would you accept a larger price rise (i.e. +£2 to £3) if the USO pledged a minimum speed of 10Mbps?
No – 45.9%
Yes – 42%
Maybe – 12%

Clearly there are positives to introducing a USO and other countries have already gone down this road, much to the annoyance of various telecom operators. At the same time there’s always the risk that introducing such a measure could impact competition and help to entrench the already incumbent providers, which might make it harder for rivals to enter the market.

Never the less we do think that now would be a good time for politicians to start seriously looking at the issue, not least with regards to the potential impact upon service costs and competition. One approach could be for this to be done with a view to reflecting a post-BDUK deployment market, so that the existing infrastructure can be made ready before a USO is introduced.

We suspect that many of the issues with introducing a USO could be solved by taking a common sense and logical approach to regulation, but perhaps that would be asking too much of our political leaders.

Meanwhile this month’s new survey asks whether the quality of an ISP’s bundled broadband router is enough to impact your choice of provider? Vote Here.

Leave a Comment
7 Responses
  1. Avatar Steve Jones

    That a significant proportion appear to want to impose public obligations (retrospectively) and aren’t prepared to pay a modest amount towards achieving it tells us rather a lot about those who believe there’s always somebody else that will pick up the bill.

    Personally I think that something like a USO could be delivered, but to do so would require a levy on all ISPs to create a fund.

    A £2 per month figure would be generous as it would raise over £550m per year, which would surely be sufficient to provide a good level of service, certainly over 10mbps to all but a very few locations. It might be expected that, over time, this levy might even be reduced.

  2. The current 2MBs USC which is funded within the £1.7bn public funding available and is defined around a quality home woking experience for 1 individual. It assumes most TV is delivered from broadcast infrastructure but would permit (statistically) a SD video stream.

    Moving to 10Mbps type service does suggest that the 4G coverage obligation (98% of premises -2Mbps) on 02 ought to be examined. This in theory was paid for in the form of lower spectrum fees.

    More than this was where the Fibre on Demand product and the community extension clauses in the BDUK contracts were to come into force. The latter have yet to be exercised in any meaningful way.

    I would also advocate that BT’s spectrun holding in 2.6GHz should have full wholesale obligations and some of the spectrum fees returned or credited if that is what is takes to extend their wholesale data transport fabric.

  3. Avatar DTMark

    The slide down the slippery slope continues.

    Firstly, there’s no need for a USC since BT took on the BDUK contracts, and as we all know, those require BT to supply a minimum of 2Mbps to everyone. Don’t they? We don’t know, because we are not allowed to see them.

    2Mbps is of very limited practical use. 10Mbps would be a more realistic basic level of service. This also ignores upstream, the bare minimum of which can be debated, but perhaps 4Mbps is a useful base target.

    These are extremely slow basic services and none of this looks ahead at any kind of ongoing upgrade path.

    Ordinarily, you can’t simply force companies to supply things. If BT wants to carry on being a dated telephone company that’s fine, it should be allowed to. Why BT, anyway? Why single out BT to supply..

    If BT merges with the State in terms of pension provision and infrastructure spending, a USC is not unreasonable.

    But then back the opening para – we don’t need to impose it, because we have already paid or are in the process of paying BT to deliver that.

    • Correct, but bottom line is engineering verus the economists.

      The engineering is tough in the last 5% and you want to facilitate that with all tools possible – including use of unused licence spectrum in the sub 1GHz and access to MIP monies.

      Unfortunately the economists can show statistically the USC is likely to be met by the exchange of the monies but without any new engineering. Statistically the USC is met, but statistically your unlucky.

      USO nationally, versus by nation, versus county, versus postcode.

      IF the NAO press on and Oxera recommends additional tightening of the state aid measure to protect public monies that 10Mbps edge of network might be more possible than we think. USO for 10 Mbps data transport gets easier with a combined BT/EE.

    • Avatar DTMark

      The statistics can easily be fudged, here would be a case in point. Two cabinets only one of which was planned for BDUK. Village is an upside down T shape. Cabinets top left and bottom left. Users on both with sub 2 Meg. Forget what the Wholesale checker optimistically says.

      VDSL from both *might* just manage the 2 Meg for all with the emphasis on the word might – it’s a hit and miss technology thanks to the ancient line plant. If both are done, re-evaluation is necessary followed by line replacement/ G-Fast/FTTP/whatever to guarantee the 2 Meg. Nobody including BT could be sure how much would need to be done over and above VDSL until then. So lets hope the contracts are based on performance and LA’s were not suckered into paying based on particular tech.

      We should also recall that BDUK effectively ruled out more focused potentially superfast Wi-Fi solutions, so 3G and 4G aren’t going to cut the proverbial mustard being arguably more limited (largely because of servicing transient users e.g. a crash on the nearby A31 sees Three’s throughput fall away) than such deployments. BDUK have said that only fixed line will do.

      Take another village, however, one which is less clustered and with a cabinet a mile away and VDSL might be useless. But then all the detailed planning would have revealed such areas anyway and there will be a plan.. won’t there?

    • @DT Mark – BT planning had to be inhibited by the ‘excess modelled costs’! How can you plan something if you working to costs which have been pumped by 38%. You would draw a line at the SLA of 90-93% and sit and wait.

      To my knowledge the BDUK requirements and the associated state aid do not exclude wireless for NGA. 4G ‘capability’ fits, and permits signal boosters, 20Mhz per antenna segment, if it can be orgamised. Certainly the only engineering evidence of meeting the EU 30Mbps were the working papers of the EU Spectrum Group. The rest is political flag waving. The BDUK plan is likely to be the most tangible and comprehensive one in Europe for rural.

      Fixed only would be great but I do think this demands FOD and some rules on aggregating consumer demand on a DP by DP basis. No reason why it could not practiced and rehearsed now.

      The telephony USO was written after the engineers had worked out how to do it, with lawyers writing around the specs. I think the same is likely to happen with data transport, however the ambition needs to be set without or without how TV is delivered.

  4. Avatar Al

    Ask people who already get fast speeds either by VM, FTTC/P or fast line via ASDL2/2+ if they want to pay more, they are likely to say no. Ask people who suffer slow speeds on ASDL1, or long lines on ASDL2/2+, EO lines or still stuck on dial up if they are willing to pay more for a minimum speed faster than they are already getting they are more likely to say yes.

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