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Small UK Businesses Demand Action to Improve Broadband

Wednesday, October 16th, 2019 (8:28 am) - Score 1,007
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A new report from the Federation of Small Businesses (FSB) has demanded action from the UK Government after they surveyed 1,136 small businesses. The results found that 30% of such firms still receive ISP download speeds of less than 10Mbps (rising to 39% in rural areas) and nearly half struggle with “unreliable mobile signals.

The report – ‘Lost Connectivity‘ (PDF) – appears to be almost oddly focused upon the forthcoming broadband centric Universal Service Obligation (USO), which from 20th March 2020 will set a minimum required download speed of at least 10Mbps (1Mbps upload); imposing a legally-binding responsibility on KCOM in Hull and BT – in the rest of the UK – to deliver it in areas where such speeds are not possible.

NOTE: At present Ofcom says 578,000 premises cannot receive 10Mbps+, but most of the USO will be delivered via 4G based Mobile Broadband and only a small portion (c.40K to 50k) will be tackled via fixed line “fibreFTTC / FTTP upgrades. Meanwhile BT believes that c.100,000 may be too expensive for the USO to upgrade.

However we’d normally expect such studies to be focusing upon “superfast broadband” (30Mbps+) coverage or the Government’s recent talk of universal “full fibre” or “gigabit-capable” connections, which might be arguably of more interest to a lot of businesses. On the other hand it’s worth remembering that demands vary by business (e.g. a fish and chip shop can live with 10Mbps but a graphic design firm is going to need a lot more).

Otherwise almost half (47%) of small businesses also said the speeds they receive are often lower than what was promised by their ISP when they first signed up. Indeed 70% of those that currently receive download speeds of less than 10Mbps report that this is lower than the speeds they were promised.

On the other hand the survey also found that over half (52%) of small businesses plan to upgrade to ultrafast “full fibre” (FTTP) connectivity when it becomes available in their area. Likewise 72% of those that currently receive download speeds of less than 10Mbps plan to upgrade to full fibre when it becomes available.

The report also explores mobile connectivity, with its data showing almost half (45%) of small businesses cannot get a “good connection” on their mobile phones (rising to 57% in rural areas of the UK).

Summary of FSB Broadband Survey Results

Download speeds:
• 30 per cent of small businesses receive download speeds of less than 10 megabits per second (Mbps).

• 39 per cent of small businesses in rural areas receive download speeds of less than 10 Mbps.

• One third (33%) of small businesses consider their broadband speeds to be insufficient for their current needs, rising to 40 per cent when considering their future needs.

• 39 per cent of small businesses in rural areas consider their broadband speeds to be insufficient for their current needs, rising to 46 per cent when considering their future needs.

• Over two thirds (68%) of small businesses that currently receive download speeds of less than 10 Mbps consider their broadband speeds to be insufficient for their current needs, rising to three quarters (75%) for those considering their future needs.

• Only 74 per cent of those that currently receive download speeds of less than 10 Mbps think that they will benefit from the Universal Service Obligation (USO).

Digital infrastructure:
• Full fibre and leased line connectivity take up among small businesses (14%) is much higher than the national average (estimated to be 2%).

• Over half (52%) of small businesses plan to upgrade to full fibre connectivity when it becomes available in their area.

• 72 per cent of small businesses that currently receive download speeds of less than 10 Mbps plan to upgrade to full fibre connectivity when it becomes available in their area.

Reliability and value for money:
• 41 per cent of small businesses consider that their broadband is often unreliable.

• Almost half (47%) of small businesses report that the speeds they receive are often lower than the speeds they were promised by their provider when they first signed up.

• 70 per cent of small businesses that currently receive download speeds of less than 10 Mbps report that this is lower than the speeds they were promised by their provider when they first signed up.

• Almost half (49%) of small businesses that currently receive download speeds of less than 10 Mbps are paying over £40 a month for their broadband, with a quarter (25%) paying over £60 a month.

Mobile:
• 45 per cent of small businesses experience unreliable voice connectivity.

• 57 per cent of small businesses in rural areas experience unreliable voice connectivity.

• Almost half (47%) of small businesses experience unreliable data connectivity.

• 59 per cent of small businesses in rural areas experience unreliable data connectivity.

• Around a third (34%) of small businesses are willing to upgrade to 5G when it becomes available in their area.

Broadband and mobile:
Impact of poor broadband or mobile connectivity on small businesses’ performance and growth:

• Just under a third (32%) of small businesses have been prevented from contacting, or being contacted by, customers.

• 31 per cent of small businesses report that it is has been a barrier to the growth of their business. This figure rises to 49 per cent for small businesses that currently receive download speeds of less than 10 Mbps.

• 26 per cent of small firms say that they have lost business or sales as a result, rising to 36 per cent for those that currently receive download speeds of less than 10 Mbps.

One curious figure above is where the FSB notes that “full fibre and leased line connectivity take up among small businesses (14%) is much higher than the national average (estimated to be 2%).” By the looks of those figures they’re examining overall UK take-up, rather than take-up in areas where full fibre has actually been deployed (currently covers around 9%+ of UK premises and on Openreach the take-up in such areas is around 23%).

We also think it’s a bit odd to add leased lines into a comparison with the national average, which will include homes where people generally don’t have their own dedicated private circuits.

Mike Cherry, FSB National Chairman, said:

“Unfortunately, an unreliable internet connection and poor phone signal are familiar challenges for small businesses across the UK.

Trying to communicate with new and potential clients while you can’t access your emails or your phone signal drops out is not only frustrating but, as we see in this new research, causes the loss of vital business. This is hugely problematic for small firms, hampering the productivity of the UK’s army of small businesses and sole traders.

These findings are particularly stark in rural areas where even more business owners are struggling to communicate with customers.

Government is promising ambitious full fibre and gigabit capable broadband targets, which are very much welcomed, but now must translate words into action to help millions of small businesses. There’s still a huge number of small firms not even getting download speeds of at least 10 Mbps – what is termed as a ‘decent’ connection. We need Government to fully commit to every premises receiving at least that by the end of 2021 by overcoming the infrastructure and market related issues that are preventing this.

Targeting not spots and creating a shared rural network would go some way to help bridge that communication gap in the countryside, allowing mobile phone users to connect, regardless of what network they are on.

Improving digital connectivity is an urgent priority to ensure our 5.8 million-strong small business community remains the engine of the UK economy.”

An Openreach Spokesperson said:

“We agree with the FSB’s call for faster action and this report highlights many of the issues that we’ve been working with Government, Ofcom and the wider industry to address.

We’re determined to build the future-proofed broadband that the UK needs and we’re investing billions of pounds into our new full fibre network, reaching another business or home every 28 seconds.

So far, 12.7 million businesses and households have upgraded to superfast broadband on the Openreach network, but such services are available to almost 28 million UK premises, so we’d encourage all companies to check whether better connections are available.”

We suspect that the “end of 2021” target mentioned above could be tricky, particularly since the USO system may potentially receive a flood of requests when it first goes live (assuming people know how to correctly make such a request and to which providers). Ofcom allows ISPs up to 12 months to act upon such a request (i.e. in some areas it will take roughly that amount of time to build a new network or possibly longer).

One other crucial point on the 2021 date is that the USO is NOT an automatic upgrade, which means that people do need to request it before anything can even be considered for deployment. Obviously not everybody is going to request this at the same time and so there’s plenty of scope for deployments completing well after 2021 (e.g. if somebody requests in late 2021).

We should also mention that the focus upon the USO could be confusing as that’s primarily intended for residential upgrades, while businesses may often have different options available vs domestic solutions (e.g. if the firm is at the larger end of the SME spectrum then it may opt for a dedicated leased line).

Finally, the FSB makes a series of recommendations for the Government to improve their approach, although many of the items they list are already being implemented (e.g. more funding, full fibre for new builds). Meanwhile some of the others, such as the 2025 target for “full fibre” or “gigabit-capable” broadband, seem to have been watered down or quietly dropped by the Government to become “as soon as possible” (here).

FSB Broadband and Mobile Recommendations

Broadband speed and type of connection
• Government, industry and regulators should work together to remove barriers to deployment and installation of full fibre, in order to deliver full fibre connectivity to all premises by 2025. If that is not possible in some of the most remote areas, those premises should be gigabit capable by 2025, which widens the scope of technologies available to achieve such a connection. (p22)

• Government should provide more funding, or incentivise funding from telecoms providers, to provide full fibre or gigabit capable connections for the hardest to reach premises. (p23)

• Government should review existing voucher schemes, and other stimulus schemes, to ensure that funding is targeted to those that need it the most. (p16)

• Government, Ofcom, BT and KCOM should run public awareness campaigns about the Universal Service Obligation (USO) before it launches in March 2020. (p19)

• Ofcom must hold BT and KCOM fully to account for any unnecessary delays in the implementation of USO connections. (p19)

• FSB is calling for a public commitment that, as a minimum, no premise should receive download speeds of less than 10 Mbps by the end of December 2021, irrespective of whether they have proactively asked to be connected under the USO. (p20)

• FSB recommends that, where possible to implement within the USO installation timeframes, BT should use full fibre or a gigabit capable connection to connect properties eligible for a USO connection. (p20)

Broadband reliability, market interaction and cost
• Government should make it mandatory for new build properties to have full fibre connectivity, or be gigabit capable in places where full fibre will not be a feasible solution. (p25)

• Business and industrial park owners should actively work with providers of full fibre to connect their premises. (p25)

• Ofcom should make the Voluntary Codes of Practice compulsory, as they outline best practice, and providers should not be operating if they do not adhere to best practice. Any future codes of practice should be made compulsory, to create a level playing field for suppliers, and to protect all customers. (p26)

• Ofcom should improve the advice it provides online, and find new ways to reach customers to provide them with the information required to make informed decisions. If Ofcom cannot find a useful way of doing so, they should instead focus on ensuring that the market suppliers provide the relevant information. (p28)

• Ofcom should mandate broadband providers that cannot supply a service in an area to be transparent about the possibility that a separate provider can supply a connection instead. (p29)

• For the USO, a fairer affordable safeguard cap should be set at £35 a month, to protect USO customers. (p31)

Mobile connectivity
• Ofcom should ensure that the 3.6-3.8 GHz spectrum band (for 5G) auction takes place as scheduled, without delays. (p34)

• FSB supports a shared rural network. If necessary, government and Ofcom may need guarantees from the mobile network operators in exchange for removing coverage obligations and subsidising some of the extra costs involved. (p34)

• Ofcom should also ensure that the 700 MHz spectrum band (for 4G) auction takes place as scheduled, without delays. (p34)

• Funds raised from both of the 2020 spectrum band auctions should be ring-fenced to be spent on infrastructure improvements. (p34)

Impact on small businesses
• Ofcom should extend the existing compensation schemes so that they also apply to business contracts. (p37)

Connectivity in the devolved nations
• The Scottish Government should publish their revised timetable for the delivery of the R100 programme as soon as possible. (p39)

• The Scottish Government and UK Government should develop a memorandum of understanding regarding the development and deployment of digital infrastructure interventions. (p39)

• The UK Government should instruct Ofcom to develop a plan to close the mobile coverage gap between UK nations within the next four years, and future market interventions should be designed to benefit all parts of the UK. (p39)

• The National Infrastructure Commission for Wales should continue to address market failure trends in Wales ahead of rollout for technologies such as broadband and 5G mobile coverage in its 30 year infrastructure plan. (p40)

• The Welsh Government should fund market interventions similar in scale and ambition to Superfast Cymru to ensure Wales is at the forefront of digital connectivity. (p40)

• UK and Welsh Governments should continue to work with mobile operators to expand the network coverage for mobile internet, especially with the onset of 5G. (p40)

• The Welsh Government should work with Ofcom to ensure that regulation of mobile networks includes greater investment in Wales’s harder to reach areas. (p40)

• The Northern Ireland Executive must ensure that support for new infrastructure available through Project Stratum is unrestricted by postcode, to benefit all those who need it. (p41)

• The Department for the Economy in Northern Ireland should ensure unserved premises are able to register their lack of connectivity through a touchpoint for business owners and consumers. This should be monitored closely until a sufficient threshold of service is met. (p41)

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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 Twitter, , Facebook and Linkedin.
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7 Responses
  1. Avatar NGA for all

    These are big numbers. It would have been useful if they managed to work out how many could or could not order an upgrade when the survey occurred.

    The mis-selling of private circuits to solve a distance problem would also have been useful to explore and how many of these could now switch to FTTC or FTTP.

  2. Avatar Fred

    I wonder how many pay for a business service?

  3. Avatar FibreBob

    The figures seem very silly. I wonder who they selected to be part of this survey.

    As well over 90% of the country has access to superfast speeds… I doubt very much that 30% of small businesses have less than 10%.

    Unless small business are mostly found in the sticks 🙂

    • Avatar John

      Strangely enough the sticks tend to have FTTC, but many city centres do not. For instance the Sheffield centre has only ADSL2.

      When government gave grants it only did so for areas that it was not commercially viable for BT to pay themselves. So BT only did those areas and neglected others.

  4. Avatar Oleg

    I am small business as well in London
    I am photographer + video – I have team for edit video and photo but I can’t upload, as I have 39down 13 upload – one photo 100 mb –

  5. Avatar Brian

    I have a small business, a farm. As such we are expected to carry out much of the paperwork online, yet have only access to a slow adsl line. Currently can see coverage from two of the main mobile networks (Three and EE), both of which claim excellent coverage, that is a lie, coverage is patchy both indoor and outdoor, and has significantly deteriorated in the last year. Mobile coverage in one of the local village centres is also poor, and we know of others having difficulties on other mobile networks as well.

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