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Scotland Seeks Fair Funding and Criticises UK 10Mbps Broadband USO

Monday, April 16th, 2018 (8:33 am) - Score 987
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The Scottish Government‘s Rural Economy Secretary, Fergus Ewing, has called on the UK government to correct the “grossly unfair” 10Mbps Universal Service Obligation (USO) for broadband, which appears to be in conflict with Scotland’s own £600m plan to deploy 30Mbps+ broadband to nearly all homes.

At present a little over 93% of Scottish premises can already access a 30Mbps+ capable fixed “superfast broadband” network and this deployment has been largely supported by the existing £428m Digital Scotland project with BT (Openreach), which has been rolling out a mix of their 80Mbps capable FTTC and Gigabit capable FTTP technologies. Not to mention separate commercial deployments from Virgin Media etc.

The existing programme is now entering its final extension phase and in response the Scottish Government has developed the R100 programme, which aspires to make 30Mbps+ capable broadband networks available to 100% of the country by the end of 2021 or March 2022 as a financial year (here and here). Several suppliers including BT, Gigaclear, Axione and SSE Enterprise Telecoms are known to be bidding.

We should point out that the current R100 contract notes that there are 178,948 premises eligible for intervention across three regional lots, although it’s been previously predicted that around 280,000 premises could be left without access to superfast broadband once the Digital Scotland project completes. As such we won’t know what kind of % coverage will actually be achieved until later this year or early 2019.

Meanwhile the UK government, which currently expects 98% of the United Kingdom to be covered by superfast broadband come the end of 2020, has recently committed to proceed with the implementation of a “legally-binding” and industry funded Universal Service Obligation (USO) that will set a minimum broadband speed of 10Mbps (1Mbps upload) for all from 2020 (here); primarily aimed at catering for the final 2% and only “on request” from an eligible end-user.

Scotland’s Dilemma

Suffice to say that the Scottish Government appears to perceive that the legally-binding 10Mbps USO is in some degree of conflict with their own non-binding R100 programme, although strictly speaking the USO is more of a legal backstop than a replacement for non-binding coverage commitments with faster speed targets.

Nevertheless the SNP dominated Scottish Government does have a point and as such they’ve recently written to the UK Culture Secretary, Matt Hancock MP, in order to make their grievances known and hopefully extract a more favourable balance of funding for Scotland.

Fergus Ewing (SNP), Scotland’s Rural Economy Secretary, said:

“This USO will be funded by industry, who are in turn likely to pass on the costs to consumers across the UK. If excluded from the USO, people in Scotland would get nothing back despite contributing funding. This is grossly unfair … This is indicative of the UK government’s approach to broadband roll-out thus far, which has been to ignore the needs of Scotland, particularly our rural areas, and instead rely on an entirely industry-led model, which would leave large parts of rural Scotland completely disconnected.

The collaboration we seek would allow us to unlock significant savings to which Scottish consumers have a right. I have therefore asked the secretary of state for digital for clarity about whether the UK government intends to collaborate and avoid cutting Scottish consumers out completely.”

The clash over broadband between Westminster and Holyrood is of course nothing new and we’ve been here several times before (see here and here), although previously the Scottish Government’s main gripe with the USO was focused more on the contentious prospect of a voluntary (non-binding) deal being done with BT.

The argument now appears to have shifted since the UK decided against a voluntary BT agreement in order to pursue a binding USO, which has yet to choose any suppliers or set out its final technical solution and funding arrangements (Ofcom’s job). Those final details of how the USO will work are of course vital for understanding the potential impact upon Scotland’s R100 plan.

In response the UK Government (DCMS) has merely reminded that the USO would be designed to benefit the whole of the UK and is only a minimum required performance level, which could be increased in the future. However this seems unlikely to resolve the on-going clash of coverage aspirations, funding and political ideologies that tend to fuel such debates.

Legally speaking Westminster does have responsibility for improving broadband in Scotland, although as with past programmes this does not prevent the devolved government from pursuing grander non-binding improvements of its own. Sadly broadband is increasingly one area where the differing approaches could be sowing the seeds for further division.

Leave a Comment
11 Responses
  1. Avatar Steve Jones

    A bit of a nonsense and special pleading there. Firstly, Scotland has benefited from the USO on telephone services for decades given the higher proportion of more remote and rural properties that have been serviced. Perhaps the way round this would be for Ofcom to calculate wholesale charges for Openreach products separately for the constituent elements of the UK and then the problem goes away. Then any element of cross-subsidisation will be purely internal to that geographical area including any issue with regard to USO policies and the degree of cross-subsidisation.

    However, if it did mean that the prices for (say) MPF & WLR rose in Scotland to cover the higher costs, then that might not be popular locally.

    The logic of all this implies that all the utilities would have to be treated similarly (just as water services are with geographically determined price regulation).

    • Avatar Steve Jones

      nb. I should also add another thing that could be done is for the Scottish government to receive a pro-rata amount of any industry levy for the 10mbps USO service. That’s assuming there is an industry levy of course. It would be relatively simple to administer.

  2. Avatar Joe M

    Scotland’s demands sounds fair to me. BT rolls out fiber to the cabinet and then cables the last mile with copper. What for? Sounds like someone has forgotten direct fiber is 20x cheaper and 20 faster to roll out and cabinet can be removed. And if dark fiber daylight robbery tax that goes to subside everything unrelated to telecom is abolished which BT doesn’t pay but all its competitors must pay, then we can all finally have fair fiber. Or better still, Scotland can abolish BT and Ofcom from regulating its telecom infrastructure and bring in better systems emulating countries with faster fiber infrastructure. Confiscating the ducts and renting it out to all comers would be first step. The more duct you use, the more you will pay. So if you put fiber like 10gbit or 100gbit, you pay less and less automatically. And this duct usage fee can be offset against any costs when confiscating the ducts. So the ducts can be confiscated immediately and the incumbents that lost the ducts effectively end up with a few years of free usage for the ducts.

    • Avatar wireless pacman

      Oh dear…

    • Avatar Joe

      @wireless: Commendably restrained response

    • Avatar TheFacts

      ‘BT rolls out fiber to the cabinet and then cables the last mile with copper’

      I think you will find the copper is already there…

    • Avatar New_Londoner

      @Joe M
      “Confiscating the ducts and renting it out to all comers would be first step. ”

      You mean “nationalise the ducts”? If so, paid for by the public purse presumably? Who gets to calculate the price? Why would the current owners want to relinquish those assets?

      Or do you mean “steal the ducts”? In which case you’ll need to prepare for years of litigation by the current owners – both the companies and their shareholders.

    • Avatar New_Londoner

      @Joe M
      “And if dark fiber daylight robbery tax that goes to subside everything unrelated to telecom is abolished which BT doesn’t pay but all its competitors must pay, then we can all finally have fair fiber”

      You need to do your homework properly. This has been tested in court and via the European Commission, with them finding that the alternative treatment of BT, Virgin and KC was equitable to the arrangements for other providers.

    • Avatar GNewton

      @New_Londoner: How is the high fibre tax compatible with the government’s goal of promoting more fibre builds?

  3. Avatar Meadmodj

    Whether it is Central, Devolved or Local Government announcements regarding their support for BDUK, Fibre incentives or now USO it is unclear to me what proportion industry, consumers, local or central tax payers are now contributing to UK Broadband. What is clear is that there will remain around 1% of premises that do justify a inclusivity subsidy which will need to be equitably distributed. Those affected by USO aren’t just in the remote areas.

    There is no doubt that Fibre costs have come down significantly and latterly the relevant technology on the ends which will will continue. However as BT has won BDUK contracts based on a large use of FTTC (to get the numbers up), I can only assume that it is cheaper to rollout even even though full fibre would be a more strategic investment for the UK long term as Giga speeds can be provisioned later.

    As for a free for all on local distribution duct no thanks. I haven’t had a telephone line issue for over 30 years mainly because the cables and joints lay undisturbed. In addition there are very few bores actually free and the fibre is installed alongside the copper. I had a shared drive once with three neighbours, never again.

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