Nick Herbert MP Calls for Radical Change to Improve UK Broadband

The Conservative MP for Arundel and South Downs, Nick Herbert, has today added his voice to the calls for a radical shake-up of the United Kingdom’s telecoms and broadband market, one that could see investment in true fibre optic (FTTH/P) infrastructure and the break-up of BT (Openreach).

Herbert’s editorial on Conservative Home begins by praising the existing Government’s efforts to improve national broadband connectivity, such as through its efforts to ensure that 95%+ of the UK can order a fixed line superfast broadband (24Mbps+) service by 2017/18 and its promise to deliver a legally binding 10Mbps Universal Service Obligation (USO) by 2020.

However the Arundel and South Downs MP then proceeds to warn that the current approach “will leave millions of households and rural businesses without superfast broadband or with speeds that are barely adequate for modern needs” and that much of the public funding may have simply “subsidised BT to connect households it would have supplied anyway.”

We recall that the purely commercial roll-out of BT’s “up to” 80Mbps FTTC service officially reached more than 66% of the United Kingdom before the Government’s Broadband Delivery UK programme largely took over. Indeed the operator may well have gone further, even without BDUK investment, although how much further is difficult to know (80-90% seems like a reasonable guesstimate given past work on ADSL2+ etc.); but it would have also taken a heck of a lot longer.

No doubt BT may also point to their G.fast plans, which aim to deliver broadband speeds of up to 300-500Mbps to 10 million premises by 2020 (roughly 40% of the UK) and have “most of the UK” covered by 2025. But we still don’t know how many premises will be left out of that deployment, especially since “most” may simply equal 60-70% again.

At this point it’s interesting to note that Herbert is somewhat pitting himself against his own party of Government, which he forgives by highlighting the limited budget as a result of austerity and the need to “get fast broadband out to as many households as soon as possible, with as little disruption as possible” via BT’s copper network; as opposed to spending more in order to “get fibre directly to each business or house” over a longer period of time.

Nick Herbert MP said:

“But the strategy has come at the price of building a network which may well not adequate for tomorrow’s needs. A decade ago, the iPhone hadn’t been invented; now, two thirds of UK adults own a smartphone, and over half of UK households have a tablet. We are seeing an explosion of data consumption that will only increase.

Back in 2012, the then Culture Secretary, Jeremy Hunt, observed that the inventor of London’s 19th Century sewage system, Sir Joseph Bazalgette, built in far greater capacity than was needed, arguing that “we are only going to build this once”. 150 years elapsed before we needed to plan for further expansion. In fact we have shown nothing like the same foresight with broadband. While other countries reap the benefits of a superior, fibre network, the UK will be left to play an expensive catch-up game as we struggle to meet future broadband needs on a network that has been built to meet the demands of today, not tomorrow. Less than one per cent of the UK has fibre to the premises, with very limited plans to improve on this.

The problems can largely be linked back to fundamental flaws in the current market structure. Openreach, as a monopolistic network provider fully owned by BT (though functionally separate), is simply not incentivised to deliver the investment and competition required for the network we need for the future.

Despite the Openreach network generating healthy profits and receiving public subsidies to deliver broadband in hard to reach parts of the UK, BT’s investment in the network has been flat, and in recent years growing below inflation. Meanwhile the company has invested heavily in other areas of their business, including acquiring EE and developing BT Sport.”

Herbert goes on to claim that “Openreach’s standards of customer service are notoriously bad” (e.g. leaving some homes without a working service for several months) and warns that the current situation has put BT “on track to regain a monopoly position and reversing the competition stimulated in 2005“, which he fears will simply end up making the situation worse.

BT may well contest some of those claims, particularly as the operator appears to meet Ofcom’s current standards for service delivery (this may otherwise say more about Ofcom’s standards than BT), but that doesn’t mean to say they, like other operators, don’t make plenty of mistakes and certainly we’ve covered a lot of service provision / other gripes over the past few years.

Similarly it may well be worth noting that had Margaret Thatcher (former Prime Minister) not moved to make BT more competitive / commercial in the early 1990’s then they might well have built fibre optic cable to nearly all premises by now, as was the direction they originally appeared to be taking. In that sense having total control of your market does have its upsides, albeit perhaps without the same affordability and ISP choice that stems from good competition.

In any case part of Herbert’s goal here is also to promote the release of a new discussion paper (Time for a Broadband Shake-Up?) for GovernUp, which similarly calls for “bold steps” to be taken by regulators and policy-makers to “transform the broadband market.”

The big question is, would an independent Openreach perform better for consumers and how could that be ensured? Only Ofcom and the competition regulator can deliver a final answer and right now the bets are still on a half-way house fix rather than full separation.

“There are two futures for the broadband market in the UK. One relies on more public subsidy, more regulation to squeeze better levels of service out of monopolistic providers, with inadequate infrastructure. The other future relies on competition to unlock investment and innovation by new providers, and responsiveness to consumers, delivering ultra-fast speeds,” said Herbert.

However we shouldn’t forget that separation may also have downsides, which could affect some of the very competitors that have helped to push BT and others to innovate their services by filling weak points with alternative infrastructure (e.g. Cityfibre). On top of that you rarely get better services and quality without also paying a higher price. But all of this depends upon Ofcom’s design.

At the end of all this there is at least one certainty, change.. whatever it’s form, won’t happen overnight and will take a time to fully implement before you can really feel its impact.