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

Wednesday, Oct 12th, 2016 (9:55 am) - Score 1,872

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.

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 X (Twitter), Mastodon, Facebook and .
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