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Scotland Fear 10Mbps Broadband USO Plan May Extend BT’s “Monopoly”

Tuesday, August 8th, 2017 (3:33 pm) - Score 913
digital scotland go faster broadband

The Scottish Government has issued a letter to the UK’s Department for Digital (DCMS) that warns against accepting BT’s proposed investment of up to £600m to deploy a new 10Mbps+ Universal Service Obligation for broadband, which they fear could extend BT’s “monopoly position in rural areas.”

At the end of last month BT proposed a voluntary plan to invest between £450m to £600m so as to ensure that everybody in the United Kingdom could access a minimum broadband download speed of 10 Megabits per second by the end of 2020 (here). The UK Government gave the offer a warm welcome and said it would be considered as part of their consultation, although they also hinted that some aspects of BT’s offer needed more discussion.

At present fixed line “superfast broadband” (24Mbps+) connections are already estimated to cover around 93%+ of UK homes and businesses and the Government’s Broadband Delivery UK project predicts that this could reach 97% by 2020, which leaves around 3% of premises in predominantly rural areas (plus some disadvantaged urban spots) to suffer from slow connectivity; this is where the USO will focus.

Under BT’s plan their “fibre broadband” (FTTC/FTTP) network would be extended to reach around 99% of premises, while the remaining 1% would be catered for via a mix of Satellite (0.3%) and fixed wireless access based solutions.

However the Scottish Government claims to be concerned about the impact on competition and alternative network providers’, which is partly because they’re currently in the middle of their own work to develop the R100 programme. This aims to “extend superfast broadband [30Mbps+] access to all” by 2021 (here), although their ambitious target has yet to be supported by a detailed plan or solid info. on funding.

Fergus Ewing, Scotland’s Rural Economy Secretary, said:

“The emerging USO proposal risks undermining that engagement by apparently concluding that it will not be commercially viable for any provider other than BT to deliver in white areas.

What has emerged as a result risks entrenching, even extending, BT’s monopoly position in rural areas and could deter alternative suppliers from bidding for R100 contracts.

That would be a hugely negative outcome and one that would serve to undermine and frustrate the Scottish government’s digital ambitions.”

The concern has some merit, particularly with ISPs like Gigaclear and TrueSpeed now piling big chunks of private investment towards bringing “full fibre” broadband networks to rural areas. On the other hand the Scottish Government seem to overlook that BT’s proposal would be private investment, not public. A related consultation by Ofcom also found that no other suppliers (excluding KCOM in Hull) wanted to take on the legal and financial responsibility of a USO.

Similarly some community network projects in Scotland have recently indicated to ISPreview.co.uk that the proposed R100 programme is also causing problems (example), with some sources of public investment opting to wait and see what the Scottish Government has planned. Similar echoes of uncertainty also surrounded BDUK’s early plans, before the contracts were signed and coverage identified.

Meanwhile for BT it’s fast becoming a case of damned if you do, damned if you don’t. BT would perhaps be quietly happy if the public sector decided to pick up the tab and / or handed responsibility to other operators. After all the most remote rural areas are very expensive to reach and often not commercially viable, at least not without support from the public purse or some other investment incentive.

In response to all this the Culture Secretary, Karen Bradley MP, merely reiterated the Government’s USO proposal and said, “whichever of the two approaches we go with in the end, the driving force behind our decision-making will be making sure we get the best deal for consumers.” Not having to spend a lot of extra public money or impose a tedious new industry levy upon ISPs may also be part of their thought process.

UPDATE 4:15pm

Sadly the full letter isn’t in an easy format to copy and paste, so we’ve edited together this rather large image version of it instead.

scotland broadband uso letter bt

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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13 Responses
  1. Steve Jones

    The simple answer to that is for Scotland to be left out of the USO plan and for them to produce their own. Given that Scotland will have a higher proportion of properties which are sub-10mbps, then I’m sure that OR would shed no tears if they didn’t have that responsibility.

    • MikeW

      I agree – something to exclude areas is needed.

      Just like BDUK projects couldn’t work where commercial interests would deploy within 3 years, the USO shouldn’t be applied where either commercial or BDUK projects are planned to deploy. R100 should be included in this restriction.

      That should be a key distinction in comparison with the existing voice USO: Rather than applying everywhere regardless of competing networks, the new USO should only apply (or only apply a subsidy) where there is no competing service.

  2. craski

    R100 sounds brilliant but the Scottish Government seem to think they are are going to be inundated with bids from alt-nets for areas which have not been financial viable to cover to date. It all sounds great and living in an no spot, I do hope “something” happens but at the moment the R100 expectations seem somewhat disconnected from the harsh reality.

    • altlolnet

      CBS expect it’ll be in a couple of large lots to large companies, there will be no alt nets getting a look in

  3. gerarda

    They are spot on with the comment that a 10Mbps USO held at that level for several years when the Govt is encouraging FTTP to be rolled out would just make the digital divide worse. Any USO should be set at 50% of the average national download speed, and reviewed at least every three years.

    • CarlT

      You’re going to pay for it, right?

    • Steve Jones

      @Gerarda

      Great idea. So how is that going to be financed and/or who do you think will accept the responsibility to subsidise this service?

    • George M

      Well the latest survey shows that the UK has an average download speed of 16.51Mbps so half that is 8.255Mbps, well below the USO.
      http://www.ispreview.co.uk/index.php/2017/08/new-global-country-ranking-places-uk-31st-average-broadband-speeds.html

    • Matt

      George we both know that will raise to above 10Mbps by 2020 when the USO comes into effect.

    • gerarda

      George- Ofcom data gives an average a lot faster than that- which is probably why they are looking at a 20Mbps model.

      Steve – the USO will need Government subsidy. Just a pity so much public money has already been spent increasing the speeds of those who already had a USO level service or better

    • Steve Jones

      @gerarda

      Relatively little of the money was spent on those who could already get 10mbps (and if we look at the BT books the net grant money booked is £600m, which is the real level of subsidy for the 4.5m premises dealt with – there is about £450m to be spent on extensions). In any event, even if all those 4.5m premises were on over 10mbps, at some point in the not too distant future, ADSL would not reach your USO target of 50% of national average so would have to be subsidised anyway.

      However, at least you have stated it would require public subsidy, and that is one of the options Ofcom are looking at. However, it’s not obvious that the government will be very keen on this given the other calls on the public purse for health, pensions, social care, prison systems and so on. My guess is that they are looking for an economically and commercially sustainable solution which will (probably) not include making an open ended BB bandwidth requirement in the USO. Being able to stream multiple 4K video channels might be nice, but is it a real social priority in a world where counties like mine (Oxfordshire) have withdrawn all bus subsidies due to demands placed on education and social service budgets?

    • gerarda

      @steve

      The government has £56 billion and rising to waste on Hugely Stupid 2 – so it’s priority are somewhat questionable.

    • George M

      @Matt
      Don’t underestimate the UK public’s appetite to not spend money. So if people don’t upgrade from ADSL then average speeds will stay low.
      I live in an FTTP area and it has been possible to get it installed for 6/7 years now (on trials at first but available retail for several years). I’m still amazed by how many properties still do not have FTTP but live with the sub 3Mbps ADSL that is possible in our locations.
      And why haven’t they upgraded? Cost, plain and simple. As Talktalk and Sky refuse to touch WBC FTTP, people will go for the cheapest option (ADSL) which is likely to be one third of the cheapest FTTP package. (If not free with some other products)

      @gerarda
      I know OFCOM use different report, just pointing out the issue with saying “average speeds”. Our dear politicians who decide policy aren’t necessarily known for using the authoritative data source if it doesn’t suit their narrative.

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