Ofcom Invites UK ISPs to Supply the New 10Mbps Broadband USO

Ofcom has today formally invited UK ISPs to express their interest in becoming suppliers for the new Universal Service Obligation (USO), which from 2020 will make it possible for anybody in a slow speed area to request a minimum broadband download speed of 10Mbps+ (1Mbps upload).

By 2020 it’s predicted that fixed “superfast broadband” (24Mbps+) networks should be available to around 98% of premises across the United Kingdom. As a result the focus of the government’s new USO will be on helping to cater for those in the final 2% (estimated to be somewhere around 600,000 premises in 2020 or c.900,000 if measured today).

Specification for the 10Mbps USO

* A minimum download “sync” speed of at least 10Mbps (Megabits per second).

* A minimum upload “sync” speed of at least 1Mbps.

* A medium response time with end to end latency of no more than 200ms for speech applications.

* A maximum sharing between customers (contention ratio) of 50:1.

* A minimum data allowance of 100GB.

* A technology neutrality design (can be delivered via a mix of fibre based and wireless solutions).

The USO is NOT an automatic service upgrade and as such it will only give people the “legal right” to “request” a 10Mbps+ capable broadband connection, albeit only in poorly served areas where no future upgrades are planned to deliver even faster speeds within the next year (necessary to limit any potential conflict from network overbuilds).

Furthermore the government also confirmed in March 2018 (here) that the obligation would be funded by industry (e.g. ISPs), must adopt uniform pricing (i.e. cost the same no matter where you live), will have a cost threshold of £3,400 (i.e. you may have to help pay for it if the costs go above this) and support demand aggregation (i.e. multiple properties in an area could help to bring the deployment cost down).

Today’s new ‘Call for Expressions of Interest‘ document thus focuses on which suppliers wish to be considered as potential Universal Service Providers (USP), either on a national or regional basis; and what their delivery plans would be. “We will consider whether different providers could be designated in different areas of the UK, or whether the designation of a single national provider would better meet our objectives,” said the regulator.

However picking suppliers won’t be easy. So far only BT and KCOM have shown any serious interest in supporting the USO, while other ISPs have largely rejected any notion of taking on such a significant legal and financial burden (example). But at the last update Ofcom noted that they had since received “expressions of interest from some smaller market players” in being designated as USPs.

Ofcom Statement

Existing UK network infrastructure means that the majority of USO eligible premises will be connected to BT’s copper network or will be in areas where BT’s network is present, except in Hull, where KCOM has an extensive presence. These two providers are therefore able to incrementally expand and upgrade existing network infrastructure more easily than alternative providers.

Designating BT and KCOM as Universal Service Providers for the broadband USO may therefore be the quickest and most efficient means of ensuring that consumers are able to request USO services at the earliest opportunity. In addition, designating BT and KCOM on a national basis may also simplify the process for consumers (as they will not need to check which Universal Service Provider serves their area) and enable more efficient delivery of the USO due to economies of scale.

However, we recognise that alternative providers which operate networks on a national or sub-national scale may be able to deliver the USO more quickly or more efficiently than BT or KCOM, and should not be excluded from consideration. Without assessing whether there is interest in delivering the USO from alternative providers, and how they would approach this, we cannot make a full assessment of which providers would be the most appropriate to designate.

We are therefore keen to understand whether there is interest in delivering the USO from any alternative providers (i.e. other than BT and KCOM) and whether this is on a national or sub-national basis.

The USO itself would then be funded by the industry via a Universal Service Fund (USF), although as it stands we still don’t know precisely how much funding will be available or precisely where Ofcom will extract it from. Sadly today’s document only clarifies the processes involved in securing funding for the USPs and not the detail of where that money is to be found.

Ofcom’s hunt for suppliers will remain open until 20th August 2018 and in the following month they will consult on the procedural regulations for setting out how they propose to designate USPs, which will be followed by a final decision on the chosen providers and further USO details before the end of 2018. “We expect to make our final decisions by Summer 2019, after which consumers will be able to make requests for connections,” said the regulator.