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Ofcom Model a 20Mbps Broadband USO Option for the UK Government

Tuesday, Aug 1st, 2017 (12:25 pm) - Score 1,525

Most won’t have noticed but Ofcom has published an update to last year’s cost analysis for the proposed broadband Universal Service Obligation, which reveals that the Government asked them to model a 20Mbps (2Mbps upload) USO option and it might be better value for money.

On Sunday the Government set out their final plan to adopt a minimum broadband download speed of 10Mbps (1Mbps upload) for the new Universal Service Obligation (here) and they also revealed that BT had voluntary offered to deploy it, albeit at an expected cost of £450m – £600m (to be recouped from charges on existing products and services).

However yesterday saw another change slip in under the radar, which is worth a mention. Ofcom’s original cost modelling for the USO proposed three scenarios (here); the first two scenarios were different approaches to a 10Mbps USO and the third was a 30Mbps option. At the eleventh hour Ofcom has also produced, at the Government’s earlier request, modelling for a 20Mbps USO and they’ve corrected a few errors (updated model).

Additional broadband USO scenario

The Government asked Analysys Mason to model an additional technical broadband scenario to inform its policy making. Under this new scenario, the download speed was set at 20Mbit/s and the upload speed at 2Mbit/s. The other technical specifications were kept the same as Scenario 2 (i.e. in terms of latency, contention ratios and data usage cap).

The modelling of this new scenario required changes to the modelling of the three broadband scenarios set out in the December report to ensure that all four scenarios were being modelled on a comparable basis. The modifications are explained in more detail in the Analysys Mason addendum.

Correction of modelling errors

In carrying out additional checking of the Analysys Mason modelling work, two errors were found which applied specifically to the modelling of the FTTC technologies. The first error was identified in the FTTC VDSL2 coverage area calculations in the stylised cost model.

The second error was that the FTTC LR-VDSL technology was assumed to be capable of delivering download speeds of 30Mbit/s over radial distances of up to 2.8km when in fact the distance should have been limited to 1.8km.

The upshot of correcting for these two errors is that more infrastructure is required to serve the eligible premises than originally assumed with both FTTC technologies and the result is that the estimated deployment costs have increased. The main impact of correcting for these errors has been to increase the estimated costs for the higher speed scenarios.

Unfortunately much of Ofcom’s updated analysis is still based on coverage data from last year (i.e. 1.4 million [5%] of UK premises being unable to get fixed line speeds of 10Mbps+), although we know that this figure has now dropped to around 1 million and it will of course fall further by 2020 (implementation date). In any case here’s a sample of Ofcom’s updated tables, which were published yesterday.

ofcom broadband uso cost estimates 2017

The 2020 cost is the most relevant since that’s when the USO will be implemented and by then the coverage of faster fixed line broadband networks will have significantly improved. The cost of Government’s preferred 10Mbps (Scenario 2) USO comes out at around £1bn, while it’s £1.3bn for a 20Mbps USO and £1.7bn for 30Mbps.

However, the Government has indicated that they also intend to cap the cost per property at a threshold of £3,400 (same as the original USO for phone lines), which could be aggregated by a community. Adopting this approach would reduce the total cost of the USO by between -£360m (Scenario 1) to -£590m (Scenario 3). This more or less gets us to BT’s ball park figure for their voluntary 10Mbps proposal.

The Government’s Department for Digital, Culture, Media & Sport (DCMS) has claimed that the 10Mbps USO would benefit the UK economy to the tune of £2.2bn and going to 20Mbps might produce a benefit of £2.5bn, which suggests that the faster USO could end up being better value for money.

Admittedly such estimates are always tricky to pin down, although it would be easier to achieve a 20Mbps USO than it sounds and that’s because 97% of premises are already expected to be covered by a “superfast broadband” (24Mbps+) capable network by 2020. Add in the modified LR-VDSL (FTTC) technology and this coverage becomes almost universal.

Nevertheless the Government appears set to pursue a 10Mbps USO, but it’s worth remembering that this is only a minimum. We should point out that the Broadband Stakeholders Group has also published some estimates of their own, albeit not for the 20Mbps option (here).

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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