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Mixed Results as Ofcom Compares UK Broadband to 18 Major Countries

Thursday, December 10th, 2015 (9:10 am) - Score 1,206

The telecoms regulator has today published their annual International Communications Market Report 2015 (ICMR), which among other things compares the performance of broadband and telecoms networks in the United Kingdom with 18 other key countries around the world.

As usual it’s important to point out that country-to-country comparisons are complex and time consuming to produce, which is sadly also the reason why Ofcom’s data sources for this report are based on information collected to the end of 2014 (not as recent as last week’s Connected Nations 2015 report).

Otherwise the ICMR compares the UK with 18 other countries, including many of the big players like Germany, France, Italy, Spain, USA, Japan, South Korea, Australia, Sweden, Russia and China etc. The results are somewhat of a mixed bag, with the UK performing well against the biggest four EU states, but poorly when put up next to some of the more advanced countries.

At this point it’s worth reminding readers that the 2010 coalition Government originally said that they wanted the UK to have “the best superfast broadband network in Europe by 2015“, but in 2012 that was watered down (here) by the former Culture Secretary who called for the country to have the “fastest broadband of any major European country by 2015” (i.e. comparing us against France, Germany, Italy and Spain [EU5] – an easily achieved target).

Next Generation Broadband Availability (NGA)

Unsurprisingly hybrid-fibre VDSL (FTTC) broadband technology, which is usually delivered via BTOpenreach’s network, offered the highest population coverage of 79% in the UK. Elsewhere the other hybrid-fibre solutions (FTTLA), such as those delivered via Virgin Media’s cable network, covered a total of 47%. Meanwhile true ultrafast fibre optic (FTTH/P) networks struggled to reach 1%.

Interestingly this means that the UK had the second highest VDSL coverage after South Korea (95%), while Singapore delivered the highest FTTLA coverage at 99% (followed by the Netherlands at 97%) and the top countries for pure FTTH/P were the densely populated Singapore and Japan (95% each).

icmr_nga_broadband_coverage_2015

The VDSL solution is popular in the UK because it’s seen as a cheap and quick to deploy service, although it also suffers from more variable speeds and is struggling to keep pace with Virgin Media and other rivals. Future upgrades, such as G.fast technology, may improve matters but will take some years to fully deploy and won’t reach everybody (here).

Take note that NGA network coverage is not the same thing as “superfast broadband” (30Mbps+) availability because some areas that are covered by an NGA service can still receive sub-30Mbps speeds, thus Ofcom reflects this separately.

In the UK, 35% of connections had a “headline speed” of over 30Mbps+ at the end of 2014, the 8th highest proportion among all comparator countries and the highest out of the EU5 countries. Mind you it’s worth noting that “headline” speeds can be based off unreliable estimates, which often don’t reflect real-world experiences where actual performance can be slower.

icmr_broadband_headline_speeds_2015

NGA Broadband Take-up

The UK had 13 NGA connections per 100 people at the end of 2014, which ranked us 7th among the other countries (mid-table), which is largely because such services can take several years to fully deploy and some countries are at a much more advanced stage than others. Once again we beat all of the four major EU states, but trail the USA, Russia and Netherlands etc.

icmr_nga_broadband_takeup_2015

The Money Trail

Total retail telecoms revenues across the comparator countries increased by £4bn (0.7%) to £589bn in 2014, albeit mostly thanks to mobile services. As part of this it’s noted that total fixed line voice revenue fell by £9bn (9.5%) to £87bn in 2014, as a result of falling call volumes. Meanwhile total fixed broadband revenue increased by £14bn (12.3%) to £124bn.

Increased data usage also meant that mobile internet revenue (including messaging) increased by £11bn (6.6%) to £173bn, which is almost double the total from 2009 (£87bn).

The US continued to have the highest retail telecoms revenue of all the countries (£172bn), followed by China (£110bn) and Japan (£79bn). By comparison the UK had a slight increase over the same period, up by around £1bn to £29bn. This puts us ahead of France (£19bn), Germany (£25bn), Italy (£16bn) and Spain (£14bn).

It’s worth noting that most of the major EU5 states actually saw a big decline in retail telecoms revenue since 2009, only the UK and Germany have held fairly steady. Most other countries echoed the UK by showing a small to modest improvement.

The UK was also one of four countries (along with Singapore, South Korea and Brazil) where the number of fixed exchange lines actually increased in the five years to 2014, up by 2 million to 39 million (an average increase of 1.4% annually). The UK’s boost was mostly “due to strong demand for xDSL access” (ADSL, VDSL broadband etc.). Every other country reported a decline of around 2% overall.

Unsurprisingly then the UK also had the seventh-highest fixed broadband revenue of all the comparator countries in 2014, at £5bn (in line with Australia and South Korea), and the highest among the EU5 countries. Fixed broadband revenues were highest in the US at £34bn, followed by Japan and China (at £25bn and £24bn respectively). Overall every country, except Nigera and Italy, saw their fixed broadband revenues grow and the UK went up at a fairly average rate of 7.7% per year in the five years to 2014.

Similarly the average monthly telecoms spend per person ranged from £1 in India to £53 per person in Australia. Interestingly the average spend per head fell in the UK (by 0.3%) to £37 per person, which means we were the fifth highest (expensive) of all the countries.

Broadband is actually fairly well priced in the UK, thus the cost impact mostly stems from our expensive voice calls, mobile services and phone line rental. In the UK, average fixed broadband revenue averaged £6 per person, equal with France and the Netherlands (one of the lowest).

Meanwhile the per-capita spend on mobile services ranged from less than £1 per month in India to £33.22 per month in Singapore in 2014. The UK’s spend was £19.75, the eighth highest spend out of the comparator countries.

Other Stuff

Ofcom’s report is vast and so we’ll finish up with a few interesting statistics.

Some Other Highlights

* Average monthly per-capita fixed broadband data use in GigaBytes was highest in South Korea at 48.6GB per person in 2014 (over twice that in 2009), followed by Japan at 32.3GB per person (also more than double the 2009 average) and Sweden at 31.5GB per person. Of the 18 comparator countries, the UK had the fifth highest average data volumes in 2014, at 22.3GB per person, up 64% on the previous year.

* Some 82% of UK respondents were satisfied with their overall service, the highest proportion among all of the countries. At least three-quarters of respondents in the UK were also satisfied with every other measure of fixed broadband service (download speed 77%, upload speed 76% and reliability 76%). Funnily enough respondents in Japan were the least satisfied, with 55% of respondents being satisfied with their service overall.

* Singapore had the highest number of mobile internet (excluding messaging) connections per 100 people in 2014, at 183 connections (they sure do love mobile services!). By comparison the UK had 87 connections per 100 people, ranking us a middling 8th overall.

* The UK had the highest per-capita spend on e-commerce in 2014, at £1591 per head. E-commerce expenditure per head in the UK was over 50% higher than in the US, the next highest-valued market, which had an average spend of £918 per head.

The full report can be read here, assuming you have the time or sanity to conquer it.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
16 Responses
  1. Avatar Noel says:

    This doesn’t show the whole picture – with France, Spain, Portugal and most of the rest of the EU adding thousands of homes and businesses to FTTH every day, the UK in 2020 will look a complete joke.

    1. Avatar Ignition says:

      Heya BreakUp.

  2. Avatar Ignition says:

    TL;DR Interesting stuff, highlighting the important of strong infrastructure competition in many cases, and how important massive amounts of state funding are in its absence.

    Very interesting stuff on many levels.

    Clearly the UK went for the approach of getting NGA of some kind out to as wide an audience as possible rather than building FTTP to a smaller proportion of the population and this is reflected in the data.

    The satisfaction numbers indicate the obvious – most in the UK are happy with what they are getting. It may not be the symmetrical gigabit that we all apparently need but people are happy, and their connectivity serves them.

    The FTTP numbers for the UK are very disappointing, however these sadly represent the commercial and regulatory environment in the UK. We have very few companies that are building FTTP at all, and only one of those with plans to build to any kind of real scale.

    The drive for LLU in the 2000s with the resultant changes to the marketplace ensured that the commercial case for FTTP as far as BT goes would be a weak one, with the regulatory burden of requiring the networks to be open access putting the nails in the box.

    That people are happy despite using hybrid networks weakens the business case across the board for FTTP. People don’t want to pay more for FTTP, they’re happy with their FTTC/N. (FTTLA is not a correct name for most cable networks, it specifically refers to fibre-deep networks where there are no intermediate coaxial amplifiers between fibre optic node and premises.)

    The government has played its part in making it easier for new networks to be built and hopefully this will continue, however for this to be effective Sky, TalkTalk, and to a lesser extent Vodafone will have to stop constantly complaining to Ofcom in an attempt to get cheaper access to Openreach copper, open the cheque books and build. If they think the business case is there it’s about time for them to prove it.

    BT are probably struggling to justify G.fast to shareholders, let alone the additional expense for FTTP. If someone with the financial muscle of Vodafone or to a lesser extent Sky were to simply state clearly that they want to build a network BT would have far more justification. My evidence for this is Ireland. Eircom built out a VDSL-heavy NGA network, in come Vodafone in co-operation with the ESB and Eircom have almost immediately embarked on a much higher fibre diet. That is competition at work.

    I’ve seen some really bizarre comments in this section. People saying that BT are hopeless while simultaneously demanding that they do all the leg work. The rather bizarre statement that BT are actively preventing 3rd parties from building networks by, err, not building the FTTP networks themselves. If anything BT not building FTTP should, surely, make the case for others to build FTTP stronger.

    Virgin Media are the only ones building. Time for others, if they are serious about the UK’s broadband future and not merely clinging on to their Ofcom-assisted LLU revenue, to do it themselves, if they think they can do it better than Openreach.

    If merely renting copper loops from BT and being able to sweat the copper they don’t even own is enough to break the business case for them to invest despite that, unlike BT, they can keep any networks they build for their own exclusive usage, their PR bluster is shown up for what it is.

    Bored of listening to Sky whinge, and they’ve been doing it for a really long time. If they aren’t going to make clear they’ll invest now, when it could lead to them weakening BT Group substantially by strengthening the argument for separation of Openreach, it seems reasonable to think it’s off the table.

    TalkTalk, anyone who glances at their balance sheet knows they don’t have the resources to build FTTP to any scale. Their comments about extending the York build to any scale are pure PR.

    Vodafone wanted some Liberty Global assets, especially the UK. With this no longer an option thanks to John Malone’s aversion to paying tax no idea whether this will translate into their doing it themselves, or trying for Virgin Media et al again.

    Hyperoptic are awesome. A small company that, unlike the big boys, is just getting on with it, an MDU at a time.

    Gigaclear have their niche but will never be massive.

    1. Avatar Steve Jones says:

      Well thought out comment. As you point out, Ofcom went hell for leather on opening up the local copper loop network with extremely tight regulation. They also prevaricated over the NGA regulation such that even the FTTC build out was delayed as there was no regulatory certainty over what was going to happen. There was also precisely zero encouragement for OpenReach to build out an FTTP network as there was a vanishingly small chance of the revenue to pay for it (as it would compete with low cost copper and cable networks).

      The business case for g.fast will, indeed, be a difficult one although it might get forced in urban areas if there’s the prospect of a gradual loss of customers to VM.

      In all this an OR/BT split is an irrelevance. If the market regulation does not encourage investment by OR, it will not be surprising if it doesn’t happen.

      Also, if OR were to invest a lot more it absolutely requires commitment from the major customers (BT Retail, TalkTalk, Sky and, in the future Vodafone) as to volumes and marketing. It should not be forgotten that only BT Retail committed to pushing sales for GEA/FTTC and only BT Retail of these customers support GEA/FTTP.

      For major broadband infrastructure investment to pay, this means the major ISPs upselling and providing some opportunity for increased OR revenue streams. With Ofcom favouring minimising the price of the pure copper MPF and WLR products, this isn’t going to change.

      Also, for those that think OR can just make arbitrary decisions about capex, think again. No provider of capital (equity or banker) is going to subscribe to this without a prospect of a return.

      The regulator sets the market conditions. What appears is a result of the structure of that market.

    2. Avatar GNewton says:

      @SteveJones: “In all this an OR/BT split is an irrelevance. If the market regulation does not encourage investment by OR, it will not be surprising if it doesn’t happen.”

      I have to disagree. At the moment Openreach does not act like a normal business, which isn’t good for BT shareholders either. To get an idea, just take a brief look at review sites like Trustpilot, ISPReview, or even BTs own business forum. Openreach has severe issues that need to be resolved. This is even acknowledged by Ofcom who itself is partly to be blamed for the broadband mess in the UK, having created very unfavourable market conditions for fibre investments.

    3. Avatar Steve Jones says:

      @GNewton

      A separated OR will have the same shareholders, the same customers and the same priorities. It’s revenue potential is essentially dictated by Ofcom regulation which concentrates on minimising prices. Given that OR’s products are all tightly price regulated, it won’t be allowed any downstream revenue then the that pressure on minimising costs will remain. OR shareholders will, like the current ones, invest on the basis of return as OR is, by regulatory decision, not a growth business. The shareholders will therefore demand a decent yield and are not going to authorise a big increase in cost, and Ofcom seem to be in no mood to ease the pressure either.

      Also, many of the issues are due to the numerous hand-offs of between SPs and OR. Given that many SPs even outsource the customer handling (often to India), that’s yet another set of interfaces. Without a direct OR retail customer interface, it’s bound to be indirect, convoluted and prone to communication issues. This is the structure that Ofcom have bequeathed. (Very different to VM or altnets who can have more direct communications).

      So the likelihood is an OR shareholders will continue to want the yield. Many institutions, like pension funds, buy defensive shares such as BT for the yield.

      Regulators can have perverse effects on markets. Witness what is happening with the electricity supply industry which is teetering on the brink of major outages (we can very close in November) as regulatory structures have choked off investment. Ofcom’s regulation achieves one goal (minimising ADSL costs), but it has unfortunate impacts in other areas.

    4. Avatar Al says:

      You could perhaps make a case for Ofcom minimising ADSL cost in LLU areas but it has been less succesful in non-LLU areas. With people in those area often paying more for an inferior service than that provided in LLU areas.

    5. Avatar MikeW says:

      Nice post, Ignition.

      I too am very pro the widespread nature of the current approach – it’ll be interesting to see where those FTTP-keen countries stop their rollots as too expensive.

      @Steve
      “In all this an OR/BT split is an irrelevance.”

      Like Ignition, I don’t see Sky’s demands as doing anything whatsoever for anyone’s fibre ambitions (whether you prefer gradual stepwise, or one-step full FTTP). I see it as curtailing those ambitions.

      I only hope that Ofcom makes their choice based on the fact the nation needs to spend billions on the access network over the next few decades, and chooses the best way for that to happen.

      I’m not sure that’ll happen with a split, and I’m really sure it won’t happen if Openreach are split, but Ofcom keep them shackled with the same regulation (as Sky want).

      The biggest thing stopping a leap to full FTTP is the competition from cheap copper. But the cheap copper is from Openreach anyway, but at a low price enforced by Ofcom.

      Instead, Openreach need tools to help fund the fibre deployment. Some will involve changing the relative price of copper, and some will involve setting long contract times.

      The interesting thing with contract lengths – at the wholesale level – is that the wholesaler needs a long period to get a return, so would like a long contract. But it doesn’t care which retailer holds the consumer contract … so long as there is one. I wonder if there is a way to manage that – so that instead of demanding one long contract, it just demands a sequence of short ones.

      Incidentally, @GNewton, all the problems you see with Openreach is because they need to make wholesale access to the copper loop as cheap as Ofcom dictates it. If you want better service from Openreach, you need to pay for it – which means putting the wholesale price up.

      Right now, the industry is being screwed into a bargain-basement corner by the regulator.

  3. Avatar John Miles says:

    Yes have to look at all the stats.

    UK has 13 NGA connections per 100 pop, France has 4.
    UK consumes 22 GB per head, France 13 GB

    In fact UK has the highest per-capita data consumption of all European counties in the survey except for Sweden (32 GB)

    So UK actually has more effective BB connectivity, and uses it a lot more. Not quite such a ‘complete joke’

    1. Avatar Steve Jones says:

      People seem to forget that it’s the economic value and the social exclusion factors that matter most. We are at the point where speedy provision of universal usable service is surely more important than chasing speed stats, and that ought to be the priority.

  4. Avatar chris conder says:

    Boils down to we need some more competition, because that makes OR up their game. They are overbuilding the B4RN fibre network with dual cabs now, one for phones and one for fibre. At great expense to the taxpayer, whereas they say other bigger villages are ‘uneconomic’ to provide their superfast to. It proves once and for all that they are literally holding us to ransom with their monopoly, and only competition makes them upgrade. Cities would still be on dial up if we didn’t have Virgin.

    Copper cannot deliver on long lines. They will palm us peasants off with satellite, as they have already stated. They also said yesterday on parliament tv that 3% of the people who can’t get superfast are urban. As we have always said. Cities have long lines too, and if Virgin isn’t in the area they are doomed.

    The facts are slowly starting to appear, and although FTTC has been a quick fix for faster speeds for many, it has not addressed the issue of the final third. Those who can’t, and never will get this lift. Not that it will last long, 30Mbps will be the dial up of the next decade. With no upgrade path. Gfarce won’t be any use, no power to it. Too expensive to install and maintain. The whole job will be to do properly one day.

    Let us hope for more like Hyperoptic and Gigaclear to lead the way to real connectivity, that will deliver whatever a customer needs, wants, and will pay for. Wherever they live. That is what the funding was for, not to cherrypick the urban fringes.

    Being ahead in Europe isn’t that amazing, the rest of Europe is pretty stuffed too, as incumbents there are sweating copper assets as well. The countries who are laying real fibre are going to be the leaders of the future. We’ll just be a laughing stock. What we have should be free. The infrastructure for fttc was there, that is why it is relatively cheap, and why we have such high take up amongst those who can actually get it. Our focus should be on getting the right infrastructure in place now for the future. Not patching up what we had and rebranding it as ‘fibre broadband’ because it isn’t.

    Until every citizen has a fit for purpose connection we are just manipulating statistics to make excuses for a failed Digital Britain. The speed doesn’t really matter, what matters is that speed can be increased when needed, to whatever is needed. And you can’t do that on copper.

    Leave the 79% alone openreach can make their own excuses when the time comes, and concentrate on the rest. Support altnets. Get competition going. Get some real fibre. M%O.

    1. Avatar TheFacts says:

      2/3 of the final 1/3 will have NGA (~90%) so why do you say it’s all about the final third?

      ‘What we have should be free.’ So do you support a ~£30B government funding scheme for 100% UK FTTP?

      Both altnets and BT can install FTTP. BT have installed more FTTP than any other company? It’s all about the funding.

      What’s the relative costing for a estate (roads and pavements) of 250 premises with 1 FTTC cabinet v. FTTP?

    2. Avatar GNewton says:

      @TheFacts: “So do you support a ~£30B government funding scheme for 100% UK FTTP?”

      Wasn’t that your own proposal a while ago? Besides, where do you get this high end figure from? Experiences from e.g Cornwall and other fibre areas suggests a lower figure for fibre deployment.

    3. Avatar TheFacts says:

      Not a proposal. The exact amount is not important other than it’s a lot.

    4. Avatar GNewton says:

      @TheFacts: So what is your latest suggestion on how to manage and finance a nationwide fibre deployment?

  5. Avatar FibreFred says:

    And according to some, we are SO far behind and in the slow lane. 🙂

    We are ahead in Europe, don’t pay any attention to that even though I’m sure quite a few people said including yourself Chris we were behind.

    Keep up the good false propaganda people 😉

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