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

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.