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BT Says – We’ll Do the 10Mbps Broadband USO Without Public Funding

Wednesday, October 12th, 2016 (9:55 am) - Score 1,846
10Mbps UK Broadband USO

BT has said that the Government can avoid imposing a tricky industry levy on ISPs or using public funding to help pay for the proposed 10Mbps broadband Universal Service Obligation (USO) because they’ll take the full responsibility, as well as pushing superfast broadband (24Mbps+) to 97-98% of the UK.

Uncomfortable, that must have been how BT Group’s MD of Strategy, Sean Williams, felt after learning that he would be sitting right next to TalkTalk’s CEO, Dido Harding, and the boss of Three UK, David Dyson, during yesterday’s first House of Commons Public Bill Committee debate on the new Digital Economy Bill 2016-17. Both are arch rivals of the incumbent.

For the most part the event contained an ample supply of predictable responses, with both Harding and Dyson pushing for Openreach’s separation from BT. Meanwhile other operators’ also repeated the same positions that we’ve covered plenty of times before. Later Vodafone and Sky Broadband’s representatives would mirror Harding’s position.

However it is interesting to note that Williams used the event to give a much more specific and concrete pledge of support for the USO, as well as to confirm their expectation for future superfast broadband coverage (this roughly matches what Broadband Delivery UK have been saying since earlier this year about reaching around 97% by 2019).

Sean Williams, BT Group’s MD of Strategy, said:

“We have made clear our willingness to deliver 10 megabits to every premises in the country by the end of 2020 without any further public funding and without even really progressing the USO regulations. On the way to doing that, we will be building on the fact that by the end of next year we should have fibre broadband [FTTC/P/G.fast] coverage to 95% of the country.

As we get towards 2020, we will be building further fibre networks, so we expect to be getting more than 24 Megabits to 97% or 98% of the country, and then fixed broadband of 10 Megabits to 99%. We think that the last 1% needs to be done by 4G and satellite. Although we think about the issue as getting 10 Megabits by 2020, in our view the vast majority will actually be getting a lot more than 10 megabits by then.”

As reported before, Openreach (BT) are likely to harness Long Reach VDSL (FTTC) broadband technology in order to cater for the 10Mbps USO gap. But we suspect that those in the final 1% will not be especially happy with the idea of inferior Satellite connectivity being touted as an option; especially as that the current USO already allows them to have a fixed copper line, albeit not a 10Mbps one. However the costs involved can become a challenge for the most remote areas, although it remains to be seen if Satellite providers will want to take the on the USO’s legal responsibility.

Most of BT’s rivals also expressed a desire for the USO to be “more ambitious” and agreed with the proposal to keep its speed under review for future change. Sky’s Public Affairs Director, David Wheeldon, went further and called for “ubiquitous fibre to the premise, and we believe ultimately that the economy is going to depend on that. The USO will be a useful interim measure until we can get there, but one might hope that, over time, a USO will not be necessary if we have full connectivity across the country.” David late clarified that he did indeed mean 100% FTTP coverage, but no solid timescale or funding expectations were offered.

Shortly after that Virgin Media’s Daniel Butler lent his support to the USO and then pointed out something that a lot of people often overlook.

Daniel Butler, Virgin Media’s Head of Public Affairs, said:

“The debate around future-proofing the USO lacks one crucial bit of analysis. Bandwidth requirements might increase over time, but so too does the sophistication of networks in processing higher bandwidth applications.

Video streaming is a case in point. When video streaming became ubiquitous, companies started investing in better video compression, and as a result video compression rates have halved every seven years. Networks are getting better at dealing with higher bandwidth applications”

This is a particularly important point because around 60-70% of consumer Internet traffic is now video content, which as we explored earlier this year has benefited a lot from such advancements (here). Mind you video quality and resolution has a tendency to improve at a similar pace as speed, which can offset some of the improvements in compression etc.

Elsewhere Vodafone’s Head of Government Affairs, Paul Morris, called for smaller alternative network (AltNet) ISPs to be involved in the USO: “We should make sure that the smaller networks have an option to be involved in the USO, and, if they have the ambition, that they know that a USO provider is not going to over-build them.”

Mind you the legal and financial responsibility of a USO isn’t terribly attractive for many smaller ISPs, with one of Ofcom’s recent consultations pointing to a lack of support among smaller providers.

Ofcom hopes to set out the technical options for a USO before the end of 2016 and after that the Government will need to make a final decision about what direction to take. We suspect that the draw of being able to claim political credit for the USO, while at the same time lumping the responsibility on to BT’s shoulders, may be difficult for them to resist.

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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.
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9 Responses
  1. Avatar Chris

    Trouble is with Openreach is that they promise this, but they are unlikely to follow it through, they are full of promises but rarely deliver the goods!

    • Avatar wirelesspacman

      Agree Chris.

      This sounds to me very much like sleight of hand by BT/Openwretch to try and avoid USO regulation from Ofcom – and also to prevent public funds going to the excellent local fibre rollouts that are emerging more and more.

      I have been involved in USO “costing” projects over the years for a few European (not UK) regulators. One of the key considerations is the extent of what they term “indirect benefits”, which are used to (help) offset any calculated costs.

      Previously, Ofcom/Oftel has tended to take the simple view that the indirect benefits to BT have always met or exceeded the costs of USO. I think perhaps Ofcom should take BT at its word here that this is now also the case for 10 Mbps USO and get it written into formal regulation.

  2. Avatar Cecil Ward

    Pretty depressing, the satellite cop-out that I’ve been dreading. How is this BT complying with its USO responsibilities if it’s just pushing the hard parts onto some satellite company? The USO needs more than just a simplistic download speed headline number. It needs quality, latency, availability and to talk about guaranteed minimum upload and download speeds so that shared bandwidth doesn’t mean that the figures are just a con. And all users deserve to have a choice of ISPs, not just city-dwellers. It’s not good enough to be told you can only have one choice of ISP because the government has set up a monopoly in your area for USO 1% victims. This is what’s good about using BT for the USO, they wholesale, so lots of ISPs can use them as a USO carrier. In my view, no-one should be considered as a sole USO provider in an area unless they agree to wholesale. In my area, we’ve had experience of monopolies created due to these kinds of political mistakes before (the 0.5Mbps exchange-activate idiocy, and the horrid public-funded RF network in the Western Isles). I get the feeling that the MPs think that only home users exist when they’re thinking about the USO. Business users demand far, far more different things from their ISPs, upload performance, service quality, addressing, other protocols, the list is endless. That’s why a simplistic USO or the threat of monopolies=job-done mean that businesses have been forgotten. Small businesses often can’t afford to simply pay huge charges for fibre to be run to difficult locations.

  3. Avatar Dave

    I dont understand how can you have a USO but its only not for all.
    I dont want satellite, I could have had satellite 10/15 years ago why should I want it now. Its no the same thing!

    • Avatar MikeW

      Doesn’t it depend on what can happen with “excess construction charges”?

      If the broadband USO ends up like the existing voice USO, then the USO will apply to “all” (with exceptions, like holiday homes). However, it only requires BT to absorb the first £3,400 of ECCs. The householder has to pay everything above this – which might be tens of thousands.

      If “all” cannot afford the ECC payment, the existing USO isn’t really for all, after all.

      If the broadband USO ends up working the same way, then the 4G/satellite option becomes a fallback for those who cannot afford the ECC payment.

    • Avatar DTMark

      Who decides how much the service deployment will cost?

      If the “Excess Construction Charges” were only able to be charged when the nearest connection point is more than a mile away, then this might rather incentivise fibre penetration.

    • Avatar Steve Jones

      @MikeW

      There is no, not one, not a single public service in the UK that is not subject to some cost limit. It doesn’t matter if it’s water, sewage, PSTN, mobile phones, electricity, post, freeview or gas, at a certain point either there is no service or excess cost kick in. (Interestingly post has the greatest coverage – it requires address-by-address exceptions).

      Are you suggesting that (uniquely) 100% BB coverage has to be provided no matter what the cost?

    • Avatar MikeW

      ?

      Not sure how you reached that conclusion.

      I was explaining to someone who didn’t understand “how can you have a USO but its only not for all” that ECCs are precisely the way to do that.

    • Avatar Data Analysis

      Universal Service that is not Universal? Interesting concept.

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