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Ed Vaizey MP Moots “Gigabit Britain” for 2025 and 10Mbps USO by 2018

Thursday, April 14th, 2016 (10:10 am) by Mark Jackson (Score 1,275)
ed_vaizey

The Government’s Digital Economy Minister, Ed Vaizey, has told a select committee inquiry into digital connectivity that he would expect to start seeing “gigabit” (1000Mbps+) speed broadband from 2020-25 and that the 10Mbps Universal Service Obligation (USO) should be “coming on stream” towards the end of 2017 or 2018.

At present it’s widely expected that BT’s commercial G.fast roll-out, which will commence from next summer 2017, and Virgin Media’s on-going cable network expansion should bring broadband speeds of around 300Mbps to most of the UK (around 60-70%) without recourse to public funding by 2020/25.

But Ed Vaizey also spoke a lot about reaching Gigabit speeds after BT and Virgin Media have completed the above commercial investment, which could perhaps replicate the existing Broadband Delivery UK programme in order to push that out to nearly universal coverage.

However G.fast would struggle to deliver Gigabit speeds unless the node exists right outside your home, although BT has also talked about ramping up their Gigabit capable FTTP roll-out. Similarly we expect that Virgin Media’s future DOCSIS3.1 upgrade could deliver Gigabit speeds.

Ed Vaizey, Digital Economy Minister, said:

“I’ve started talking about a Gigabit Britain, which I wouldn’t necessarily see as ending in 2020.

But I think the next phase we want to see is the kind of speeds that people are going to expect over the next decade. 100-300Mbps is kind of what people talk about, but I think Gigabit Britain trips off the tongue more easily than a 100 meg to 300 meg Britain.

I fully expect to get to a specific tipping point at the end of this decade in terms of those kinds of speeds being seen by the majority of people. But I think that we as a Government need to think very hard about what we do to achieve the same kind of near universal roll-out that we have achieved with superfast broadband. But I would give it a time-scale up to sort of 2025.”

After that Vaizey took time out to praise the BDUK and BT deployment of superfast broadband (24Mbps+) connectivity and confirmed that the clawback (gain share) mechanism in related contracts requires BTOpenreach to return part of the investment when take-up of the new service passes beyond the 20% mark. So far £129m has been confirmed for reinvestment to help boost coverage and Vaizey said, “we’re on course to clawback £250m, maybe more. I think it’s been a very cost effective programme.”

The minister also separately suggested that Devon and Somerset should have signed a deal to expand local “fibre broadband” coverage with Openreach last year, which in the end didn’t happen because the contract negotiations broke down over issues of cost and time-scale (here).

Ed Vaizey said:

“We’ve had fun and games with Devon and Somerset. I would much rather they’d gone on and signed phase 2 with Openreach, but they got themselves worked up about delivery and you will find that there have been occasional incidences where there has been a breakdown in communications. So I think that’s unfortunate, but at the end of the day although we work in partnership with local authorities we’re not going to mandate to them who they should contract with.”

Finally, a lot of early discussion was focused upon debating the future 10Mbps Universal Service Obligation (here), which saw Vaizey warn that he couldn’t “guarantee” that every single premise is going to get 10 Megabits per second or more “but it should be potentially possible.”

At present there are several related USO consultations running (here and here) and Vaizey confirmed that he intends to legislate for it as part of a future Digital Economy Bill (not to confused with the infamous 2010 legislation), which he “hopes” to publish in June or July 2016. The good news is that it could then be ready for introduction far sooner than the aforementioned 2020 date, with the minister suggesting a date “towards the end of 2017 or 2018.”

In terms of funding, Vaizey noted that they were considering either an industry led approach, support from the public purse or a combination of both. Much like the current USO for telephone lines, “there would be a potential cap on the amount of public funding if a particular connection will cost many thousands of pounds” (the current telephony USO sets a cost threshold of £3,400).

It’s also generally expected that any public funding would focus on helping those in the final 5% of the UK to achieve the USO, although all of this remains very much subject to the on-going consultations.

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35 Responses
  1. FibreFred

    Lol you have to love politicians who make decisions and goals based on what “trips off the tongue” more easily

  2. DTMark

    Hint: the government will put more money in.

    Effect: commercial investment minimised.

    Result: goals will not be met.

    • FibreFred

      “which saw Vaizey warn that he couldn’t “guarantee” that every single premise is going to get 10 Megabits per second or more “but it should be potentially possible.””

      Forget funding the goal can’t be met. If every single premise can’t get it, how is it a USO?

    • DTMark

      The only way that I can see that it can done is with continued threats to split and then to forcibly nationalise Openreach, a service obligation for fixed-line providers to supply a minimum of 10Mbps, and a further obligation to provide to everyone within reach of the network at capped costs with extra charges to the customer in very specific circumstances only.

      This will rather target BT’s deployment of G.Fast which then end up having to be deployed bit-by-bit in a reactive way to specific poles and distribution points every time someone served by them can’t get 10Mbps.

      When BT moans that this is costing a lot of money to get to specific areas, the government will remind them of all the money that they have had, that their position as the government’s favourite might be threatened as might further government money, force Virgin and other private operators to offer some form of “PIA” to BT, and that they promised to roll out 300Mbps to most of the country anyway so 10Mbps is no great shakes and stop moaning about it.

      If that doesn’t work, rinse and repeat the part about nationalisation again.

    • Steve Jones

      @FibreFred

      Like the existing USO for the phone service, it would be a qualified one. Perhaps they ought to call is a QUSO.

    • Steve Jones

      @DTMark

      Forcibly nationalise Openreach? Have you any idea how much that might cost in compensation (hint, think of amounts around the £20bn mark). Or are you suggesting confiscating Openreach (quite apart from legal issues, this would be highly destabilising to the utilities and might well conflict with EU laws). That’s before you get into actually finding public money to invest and start dealing with the EU state aid rules.

      Of course that doesn’t mean government doesn’t have plenty of pressure it can apply, but if it gets it wrong and investment dries up due to uncertainties then it could blow up in their face.

    • DTMark

      It wasn’t my suggestion of how things should be done, more a prediction of what will be done.

      Splitting Openreach remains on the table at the moment and will probably remain that way unless BT “behaves”.

      Whatever concessions the government wanted from BT, they seem to have got for the time being.

    • FibreFred

      “Behaves” sounds more like blackmail

      If Openreach were going to be split it would be done now and not at some later date when a minority cannot get 10Mbps.

  3. Steve Jones

    Reading between the lines, with the increased estimate of clawback, there’s been a lot of behind-the-scenes negotiation on the 10mbps USO. I suspect something like 99% can be reached at 10mbps using a combination of the existing public money, increased clawback and some bits of new technology. A cost-cap on the USO is going to be controversial, even if it does apply to phone lines. That’s because it’s going to impact many more premises (certainly in the tens of thousands, quite possible into the hundreds of thousands). A figure of £3,400 might be enough for a pole or two and stringing some copper wire a couple of hundred metres. It’s not going to pay the costs of running several km of fibre back to the nearest aggregation point.

    Perhaps there’s a way of aggregating demand from several households, although I suspect simply multiplying a maximum cost figure of (say) £3.5k per household over 20 premises to provide a £70k budget won’t wash either.

    Maybe some halfway house is possible whereby it is possible to recover higher installation costs can be recovered by (contractual) higher rental costs for a defined period. So that the excess FTTP construction costs for a group of premises can be recovered over a longer time (perhaps 20-30 years). A bit of a nightmare to administer, but some fresh thinking is required.

    • DTMark

      .. or, we could state that no more government money will be handed out, carry out a review of the poorly served areas, get alt-nets involved and leave them to it, saving the taxpayer a fortune, maximising private investment and building towards something vaguely future-proof.

    • FibreFred

      Why don’t the alt-net’s do it now?

    • DTMark

      Largely because of BDUK. The government doesn’t want them to.

    • Steve Jones

      @FibreFred

      Of course Gigaclear are doing something rather like it in that they target small/medium settlements and will install their network when they get an appropriate proportion of premises signed up (in a contractually binding way). At the moment (looking at their accounts) they are burning their way through their capital in doing so but presumably (assuming they’ve done their sums right) it ought to turn profitable. However, I suspect there’s only so much capital people are willing to invest using this model at this stage. Also, they have to choose targets carefully as it’s difficult to compete with existing superfast networks, especially where there’s a lot of sunk cost. It also doesn’t help the more isolated properties.

    • FibreFred

      So BDUK is preventing alt-nets from rolling out into all of these hard to reach areas that have poor connectivity at the moment?

      How so?

    • DTMark

      That debate has been done to death over the years.

      By excluding perfectly sensible wireless network options through a set of terms specifically applied to them that do not apply to fixed line operators – namely, that the wireless provider must then deploy fibre later on, and providing government money to overbuild them only to realise belatedly that it always was the most sensible option for the most outlying areas from the start.

      By enabling BT to ‘put a stick in the sand’ by way of a promise of an upgrade at some indeterminate date well outside of the original 2015 BDUK scope, meaning that investors would have to be insane to compete with the State-sponsored favourite.

      By making promises that were never going to be fulfilled leaving residents rightly very angry that there is still no technology plan that works with an ancient phone network configuration when there was no affordable way of doing that from the outset.

      Further by enabling BT to upgrade non-contiguous areas rendering neighbouring areas unviable by lack of planning and handing BT too much power to decide (even to veto), thus excluding private investment from the start. Then later going back with ‘cap in hand’ when the money runs dry and the areas which were always the most expensive have been ignored.

      By changing the original goals so as to be able to claim BDUK success when from what I can see, all the BDUK projects have been a spectacular failure when measured against the goals set when the money was put up and an even more spectacular failure when measured against the original DCMS project objectives.

      And finally by still preventing any sort of market from opening up by hinting that any semblance of a market is to be strongly discouraged and that BDUK III and IV might be on the way. As was eminently predicable and predicted as soon as the government embarked on this path.

      “The definition of madness is doing the same thing over and over expecting different results”.

    • FibreFred

      So that’s it then? Alt-net’s can’t deploy anywhere for fear that BT may at some point also deploy a network

    • Dave

      Why do you have to complicate every thing? In most cases to reach 10Mbs all Openreach have to do is untangle their copper lines, which they have got in to a complete mess over the last thirty years.
      There is no chance of Openreach every using new technology. It’s always at least 10 years old by the time it’s deployed. And everybody else has moved on.

    • Chris P

      Really Dave? Can you substantiate that claim that OpenReach just have to untangle their cables for all including the last 1% to get 10mb/s and also that BT technology is always at least 10 years old?
      My openreach vdsl 2 modem in 2013 was cutting edge at the time, i’m sure sky and openreach would have preferred to just install 1 box instead of 2 like they do now, but i guess that was the cheapest option back then.

    • Steve Jones

      @Dave

      No amount of untangling is going to alter the 2.5km straight line distance between my brother’s house and the local cabinet. That will only hit a 10mbps USO by either pushing fibre further into the network or, just possibly, an updated ANFP and use of longer reach FTTC services.

      In any event, cables aren’t tangled. There will be some non-optimal routes. They might not follow direct routes for historical reasons (and to avoid running over private land which incurs major ongoing costs). But that’s far from mere untangling. Rerouting copper is very expensive, labour intensive and it’s usually much better to push fibre deeper into the network.

  4. Pete Woods

    “All” we need now is the several billion pounds in funding ;), relaxed regulations so Openreach can just dig up the roads and we’re away…

  5. karl

    More “aims” or rather aimless dribble and false promises over broadband, who would had thought it.

  6. Phil Coates

    Although his approach is refreshing compared to most politicians, I was surprised that he referred to some companies ‘whinging’ about their BB and I found his outright dismissal of multiple claims from County Coucils of obstructive BT/OR practices a little concerning.

  7. NGA for all

    Now £250m. Interesting to see how long this sits in BT’s accounts before it is converted to coverage. How much FTTdp in rural can this deliver?

    • themanstan

      and all the time it is gaining interest.

    • Steve Jones

      As far as we can tell, £129 has already been paid over. The £250m is clearly a projection which depends on takeup rates being sustained. Clawback money sits in local BDUK projects, not BT’s accounts.

    • Steve Jones

      That’s £129m of course.

    • NGA for all

      @Steve – no local authority has reported the receipt of this money. We can wait to see the reduction in the capital accrual in BT’s accounts.
      The early offer of this excess does not mean it is handed over.

    • themanstan

      contractual terms mean they are effectively in Escrow, with monthly interest being applied.

    • TheFacts

      @NGA – in which part of the BT Report & Accounts would you find financial details of BDUK projects?

      ‘We can wait to see the reduction in the capital accrual in BT’s accounts.’

    • NGA for all

      @The facts – each quarter BT must report its state aid receipts, and associated notes references the capital accruals, DEC said c£179m from memory, that needs checking. Chanmugan sometimes adds ‘colour’ which is recorded in the results call.

    • NGA for all

      @Steve – This is BT response to the committee on this matter.
      3.3 How much of the clawback amount has been returned to local authorities via investment funds already? None.
      None as yet since any gainshare amounts would first be paid into the re-investment fund to enable further fibre build, with any remaining funds returned to the local authorities at contract end with interest. Since no BDUK contract has yet reached contract end the re-investment funds are still active. BT has however offered to bring forward the expected gainshare amounts in recognition of the better than expected take-up levels we have seen on the current contracts compared to our original bids and to offer more fibre coverage with this early gainshare value, in addition to any Phase 2 (SEP) contracts under contract change control.

  8. NGA for all

    @themanstan – good, we need to see it. We need an actual escrow not some virtual version which is frigged about at will. The Investment Fund where all this money was to be lodged does not appear to be in operation.

    This money needs resource for in fill and commitments on FTTdp for the most part. The money was there to fix the difficult bits as well.

    The impact of the lapsed state aid measure has not been discussed.

  9. I also would like to see more infrastructure-level competition going on in the UK, especially around the suburban areas. At the moment, B4RN, Gigaclear, Hyperoptic and others are running their own Gigabit broadband efforts to particular areas like rural districts or apartment blocks. What could easily happen could be to see other companies lay down infrastructure in to the suburban areas and this could be facilitated by effectively taking the “pits, poles and pipes” away from Openreach so they can’t have exclusive access to that infrastructure. Then other operators are encouraged to drop fibre optic in to the “pits, poles and pipes” to provide their own infrastructure-level service.

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