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10Mbps USO Confusion as Hopes Fade of Universal Superfast Broadband

Monday, May 9th, 2016 (11:19 am) - Score 916
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Last week a media storm was caused after one newspaper dredged up an extract from the Government’s on-going consultation on the proposed 10Mbps Universal Service Obligation (USO) and used it to infer that the final 5% of the UK (most rural areas) would be left behind, but the reality is more complex.

One of the reasons we didn’t write up our own take on the story last week is because we’d already covered it on 23rd March 2016 (here), when the Government’s consultation was first published, and we even highlighted the same controversial statement in a later edit. But since then we’ve read a lot of the articles and most overlook some crucial points. Just to recap, here’s the bit that’s been causing so much angst and perhaps rightly so.

USO Consultation Statement

We believe that, for those premises that will not have been reached by commercial investment or by the Government’s interventions by the end of the current planned programmes, the time has come for a demand-led approach.

Given the high costs of providing broadband access to premises in remote areas it is right that this is done on request, rather than rolling it out and waiting to see if people in those areas want to be connected.

We know from the various interventions that the Government has made to date that it is unlikely that everyone will want to be connected, even if that option is made available to them, and so we do not believe that an additional broadband roll-out programme at this time is proportionate or would represent value for money.

The final paragraph is a bit of a language fudge if ever we saw one, not least because there seems to be plenty of evidence to show that uptake of “superfast broadband” (24Mbps+) services is often higher in rural areas since those are the communities that have been left most disadvantaged through years of considerably slower connectivity. Meanwhile the BDUK and BT scheme has reported many times stronger uptake than originally envisaged.

Similarly saying “it is unlikely that everyone will want to be connected” is an incredibly vague statement and could be applied almost anywhere in the UK because you will always find people who want nothing to do with the Internet, both in urban and rural areas alike.

On top of that if all you offer the remotest of communities is a deeply restrictive and inferior subsidised Satellite solution, with a few better quality wireless network alternatives in a small number of areas, then perhaps don’t expect wildly positive take-up. Some communities have also expressed concern that by taking such solutions they may rule themselves out of future state aid supported upgrades to the fixed line network, which is a narrative that local authorities often fail to clarify or combat.

Fast broadband, but only “on request”?

Finally, there’s the issue of “done on request“, which some newspapers have perhaps twisted to suggest that faster broadband won’t be rolled out automatically at all to the final 5% and once again the reality is always more complicated. In order to understand this we must first look at the current USO.

Ofcom’s existing USO only requires that BT / Openreach (and KCOM / KC in Hull) deliver, following the “reasonable request of any End-user” (i.e. demand-led), a telephone service that includes the ability to offer “data rates that are sufficient to permit functional internet access” (here); strictly speaking this only covers ancient dialup (28.8Kbps) connections.

The current telephony USO also sets a cost threshold of £3,400. For connection costs below this, households pay a standard connection charge to BT of £130 (ISPs sometimes reduce or remove this). For the most expensive to connect premises, consumers have the option of covering any construction charges over this threshold (could add £££ thousands), alongside the standard connection charge.

One of the reasons this “request” approach exists is because it is not realistic to expect telecoms cables to already be present over 100% of the country’s land mass and Openreach also needs legislative flexibility to account for new build houses (i.e. the house often exists before you connect it up); BT may only find out that the build has been completed when a customer orders the new service.

The other issue is one of simple cost. If the USO was ever truly universal and had no cost cap then somebody could build a small house on top of a mountain and expect the telecoms operator to connect them up for a tiny setup fee, even if it might cost the operator tens or even hundreds of thousands of pounds to do the complex engineering.

The good news is that most people don’t build on top of a mountain and as such the USO costs are usually more controllable, but bringing a 10Mbps USO into play may present more of a challenge; depending upon the final approach.

Where are we really with the final 5%?

As it stands the Government’s Broadband Delivery UK programme currently aims to make “superfast broadband” available to 95% of premises by 2017/18. After that around 300,000 very remote rural UK premises have the option of taking the ‘up to’ £350 subsidy for a Satellite service (or a wireless network, if you’re lucky), which reflects a bit under 1% out of the final 5%.

We also know from BT and BDUK that the final contract completion, thanks to reinvestment from clawback and better than expected deployment savings (partly due to a greater than originally anticipated focus on rolling out cheaper FTTC vs more expensive FTTP), should push the actual coverage total to a hair over 96% and separate altnet expansion may eventually help this pip to nearly 97%.

At this point we’re now talking more about filling the final 2-3%, which is roughly where the 10Mbps USO is going to be focused and Openreach’s existing “fibre broadband” network could more easily be put within reach of those through upgrades like Long-Reach VDSL (FTTC). So in most cases a future USO compliant network may actually be present BEFORE you request the new line, but there will always be exceptions just like under the current USO.

On the other hand we have moved with the USO’s focus from talking about 24Mbps+ speeds and instead it’s 10Mbps+ for the final 2-3% or so. In that sense there’s no escaping the inability to deliver universal coverage of 24Mbps+ capable fixed line connectivity, which some will see as a betrayal since many supporters of the Conservative Party (Government) hail from rural areas.

A 10Mbps USO might fill the gap if it existed today, but by 2020 it will already be starting to look slow (the consultation has hinted that the speed could eventually be raised again). On top of that Europe’s Digital Agenda, which expects all EU states to put speeds of 30Mbps+ within reach of every household by 2020, may be missed (not many countries are actually expected to achieve this goal, but the UK will at least come very close).

Equally it’s a fact that you have to spend a lot more money to connect smaller communities, where getting a return on that investment becomes extremely difficult. The USO will certainly require some funding and not all of that is expected to come from BT (or KCOM in Hull).

The Government are musing over the possibility of applying a broadband levy (tax) to ISPs and their customers, although this would be controversial in some quarters (example). Alternatively we’re still waiting to see details of the proposed Broadband Investment Fund, but the initial outline suggests that it’s more intended for alternative network operators.

In the meantime the USO is currently still in the consultation phase and no decisions have been taken. As such the positive side of all the negative media coverage last week could be that it prompts the Government to adopt a more robust solution for the USO, but right now they’re still in defence mode.

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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
29 Responses
  1. Avatar wirelesspacman

    “We are giving every home the legal right to request…”

    Erm… … presumably, this means that before Ed came along to save the day people could get taken to court, fined, thrown in gaol if they were ever to request such an outrageous thing?? 🙂

    • Avatar Steve Jones

      I think you’ll find it request as in the provider will be legally obliged to make a proper consideration of the request and it’s reasonableness, maybe having to take into account other things (like could the cost be shared over several properties – indeed as a project).

      It’s rather like the legal right to request part flexible working hours. Clearly employees could always to that, but now there’s a legal framework and it has to be assessed for its reasonableness, the results of which can (at least in theory) bee legally tested.

    • Avatar wirelesspacman

      Perhaps the muppet should have said that then? 🙂

    • Avatar Steve Jones

      Political statements wrapped round with caveats tend not to get through. Perhaps from design, perhaps because nobody in the media is prepared to listen. We know a BB USO isn’t unconditional. Those who cared to think about it will realise that there is not a single (property) based utility with an unconditional requirement to deliver service. Any particular level of BB was always going to have limitations. However, time and time again it seems clear the public like simple, strong messages and don’t really care too much for detail. Well, that’s until it affects them.

      Then there was BDUK. The politicians set the priority headline figures (coverage) so a nice simple message went out. Anybody with a remotely working brain would surely have realise that 90% or even 95% coverage is going to leave a significant part of the population unserved. Yet it took a couple of years into the project before a lot of MPs suddenly realised the implications and that they were going to get a lot of angry letters for the foreseeable future. Just 5% of a typical MPs constituency is about 5,000 people, or maybe 1,500 premises (and many more in some areas). That’s plenty enough to fill an MP’s inbox…

      You do wonder if MPs are actually able to work out the implications of policies which they nod through.

  2. Avatar Patrick Cosgrove

    With BT now trumpeting its future £6m investment, I wonder if there’s some sort of deal going on the background on the lines off “Lay off Openreach separation and we’ll extend deeper into rural areas (at our on pace) once we’ve hoovered up all the subsidy for FTTC that we can lay our hands on.”

    • Avatar wirelesspacman

      Oh, you are such a cynic Patrick! 🙂

      Suspect you mean £6bn rather than £6m though.

    • Avatar Patrick Cosgrove

      Thanks. Yes, I did mean £6bn, and I am utterly cynical, especially with a government for whom u-turns is more of an addiction than class A drugs.

    • Avatar FibreFred

      If separation was going to happen it would have by now

  3. Avatar karl

    “…the Government has made to date that it is unlikely that everyone will want to be connected…”

    Yet the muppets want us to do everything online either now or in the future from tax returns, car tax, job hunting, voting, toll road/congestion voucher/credit buying etc, etc, as just a few examples.

    • Avatar Chris P

      @Karl
      You dont have to use an Internet connection to your home to do any of that, any available Internet connection will do.
      Until relatively recently a lot of people would just do that at work, or an Internet cafe (remember those).
      If you live in a rural setting your there for the scenery or cost. If it’s cost can you afford line rental, Internet access and the cost of a pc? If it’s scenery then you should contribute to the true cost.
      A terraced house with shared walls costs less to build than a detached house, it’s also cheaper to run gas electric and sewage services to an estate of properties than just a few. Same with BB, the true cost is tens of thousands but shared over lots of customers is reasonable.

    • Avatar karl

      “You dont have to use an Internet connection to your home to do any of that, any available Internet connection will do.
      Until relatively recently a lot of people would just do that at work, or an Internet cafe (remember those).”

      OMG please tell me you are not really advocating people should go online and fill in a hell of a load of personal information government sites require for online services including in some cases giving credit card information, bank details, birth records and national insurance as just a few examples over an open connection at an internet cafe? Not that you would even have an internet cafe in an area which has poor connectivity in the first place.

      As for do it at work… Around a quarter to a third of businesses still do not use the internet and far far more than that do not spend their working days in front of a computer or anywhere near one. Even if you do use a computer in your job i personally would argue you are at work to work, you are not there to spend 2 hours of your working time completing something like the familys tax returns and to get paid while you do it. There are too many people, mainly idiots already wasting productivity time at work as they feel the first thing to do in the morning is to use their deluded self importance to let facepalm followers know they had 2 slices of toast for breakfast. You want to add to that situation even more.

      Being rural does not even come into what i stated it so not sure what that little ramble is about 5% may not have access and most of that 5% may be rural. There are a far greater number that either can not use the internet or have no desire to. There are even members of society where using the internet would be against their religion.

      Anyone thinking moving all government services over time online is a good idea is a fool.

  4. Avatar Phil Coates

    So let me get this straight. For those of us Taxpayers in the 5%, we have contributed to the BDUK scheme through income tax and Council Tax. Once (and if) a 10Mbps USO is in place, if we want any faster speeds we will have to pay again?

    Considering we keep being told how ‘important’ the rural economy is, Vaizeys current suggestion looks more than a little two-faced.

    Yes I know you can fill an online form in on dialup but Skype, Netflix. iPlayer etc which augment many peoples lives just don’t work.

    I cannot see how the rural economy can be maintained when the gap between the haves and the have-nots keeps getting bigger.

    In my own village, half the homes have fibre and the other half do not because we are attached to a different exchange 7km away – is BTs network planning somehow our fault?

    • Avatar MikeW

      I’m not sure income tax was used to fund BDUK – didn’t central funding come from excess TV licence fee?

      If the USO ended up with an ECC threshold of £3,400, and users can pool their allowance, then I imagine that half a village could readily fund the extension of fibre from the other half. Surely it would only take 10-20 users to get a fund that matches the kind of bills Openreach have been giving communities.

    • Avatar Steve Jones

      As MikeW has pointed out it was, indeed, money that came from “top slicing” the licence fee that provided the central funding for BDUK. I seem to recall that there was some money left over from budget that had been taken from the licence fee to assist in the digital switch-over (for those who couldn’t afford it. Given that the BBC now has to cover the cost of the free over-76s licences, that’s no longer tenable.

      Of course, the licence fee is still a tax. There is also the match funding issue as well.

    • Avatar karl

      Please provide more information about the TV license funding the BDUK. As far as im aware all BDUK projects are either made up of direct government funding, EU funding or local authority.

    • Avatar karl

      “The BBC licence fee will no-longer be ‘top-sliced’ by to pay for government-funded superfast broadband roll-out in rural areas as part of a controversial compromise that will see the broadcaster pay for free licenses for over-75s.”

      Thanks for managing to find that, sounds from my memory more like what happened.

  5. Avatar FibreFred

    “So let me get this straight. For those of us Taxpayers in the 5%, we have contributed to the BDUK scheme through income tax and Council Tax. Once (and if) a 10Mbps USO is in place, if we want any faster speeds we will have to pay again?”

    Yep sounds like it, although I’m sure you pay taxes for many many things you never directly benefit from yourself.

    • Avatar Phil Coates

      Oh I agree. The writing was on the wall when the word ‘rural’ was removed from the BDUK website some time ago.

      Thing is, the 5% has been known about since ?2012 when BDUK kicked off.

      Its perplexing that

      1) its only being addressed now when most of the money has been spaffed elsewhere and

      2) If the end game had been made definitively clear 4 years ago, those of us in such communities would have had 4 years to try and find alternative solutions.

      As it stands where I live, there is yet another OMR going on to spend the clawback from BT. We won’t know if we are included until that is complete and modeled. By that time, more clawback may be available and the cycle starts again.

      I am sure it would be best just to go ahead and name the postcodes now which will never get anything other than the USO – I suspect this is known.

    • Avatar Steve Jones

      The majority of people who were in commercially served areas also paid their taxes which went into the project and haven’t seen any benefit either. That’s just the way it works. Some people live in place where there are (publicly subsidised) railway services, some don’t. There are even a few railway franchises where there’s no subsidy at all (indeed the reverse). The travellers on those services are still paying their taxes.

      That’s the way it works. It’s not always “fair”. The economics of provision just get in the way.

    • Avatar karl

      “Yep sounds like it, although I’m sure you pay taxes for many many things you never directly benefit from yourself.”

      I guess the difference is other things he does not benefit from will be his choice to use them or not. I can not think of a single government funded thing or service where all members of society have a choice as to if they do or not not want to use it except broadband. Though i freely admit i may be wrong if you would like to give an example of where a specific group of society funds the government via their taxes which they will never use.

  6. Avatar tonyp

    5%? That’s 1 dwelling in 20 isn’t it? An awful lot of dwellings which need not be served! I hate being in the 5%!

    As mentioned above, HM Gov. expects a lot to be done online and DEFRA require farmers to register animals and other items online. You cannot get more rural than farms. With average web pages as 2.3Mb it must be extremely frustrating and time-consuming for farmers who have enough problems getting reasonable prices for their produce.

    • Avatar Steve Jones

      The latest indications are that (with clawback/gainshare & economies) that BDUK might get as far as 97% coverage at 24mbps. There seems to be hints that the 10MBps USO speed can reach around 99% without new funding. However, when it comes to that final 1% (perhaps 25,000 properties), then it’s really problematical.

      Taking it above 10mbps would be even more demanding. The 99% at 10mbps back-of-the-envelope calculations appear to be based on stretching technology over copper to the limit. Some more remote cabinet. Long reach VDSL, cannibalising ADSL frequencies for use from the cabinet, perhaps some doubling up of pairs.

      Beyond that (unless wireless is an option – and there’s a distance/speed trade-off there too) then it’s serious money extending fibre into the boon-docks.

    • Avatar karl

      Where do you factor in already enabled areas/cabinets and people that can not get 24Mbps from them?

  7. Avatar MikeW

    Remembering that this is still just a consultation, and we don’t know whether there has been enough of a response to tell the government it is wrong…

    If this the remaining broadband market is going to be switched to a demand-led rollout, I sure hope that there will be ways for communities to pool that demand.

  8. Avatar Patrick Cosgrove

    I think the authors of the articles in last week’s Telegraph were perfectly aware that what is proposed is only at the consultation stage. But as whatever is eventually decided will be part of the Digital Economy Bill this summer, they risked being accused of sloppy journalism in favour of adopting the precautionary principle by making people aware of what might be adopted. Blink and it’ll be law. “Mess with rural voters at your peril”, they said. I hope government has listened.

  9. Avatar gerarda

    The Government conveniently ignores the uncomfortable truth that allowing BT to put in a 95% solution has made the cost of dealing with final 5% much higher than it would have been. With a 12-15% BDUK failure rate much of the 5% will be properties connected to, but too far away from, an FTTC cabinet. The lack of contiguous footprint for these areas and the consequent destruction of any viable method of bringing superfast to them was obvious back in 2012 but brushed under the carpet.

  10. Avatar BrianH

    Its so frustrating, 4 years of just being told to wait, things will improve, then its now 2 years and you might get something better.
    If there is cap on cost, something needs to be done to regulate it, when BT priced 650m of cable at £4500 11 years ago, we laid it to save the additional £2000 they wanted to lay it.
    Its not just the low download speeds that are a problem, the slow 0.38Mb/s upload cause many restrictions.

    The superfast scotland program was simply connected the easy premises, and left it difficult for the altnets to get the numbers, helping to preserve btopenreach’s monopoly.

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