FSB Warn Unreliable UK Broadband Hurts Small Rural Businesses

A report from the Federation of Small Businesses (FSB) – ‘The Growth Belt: Supporting Rural Small Businesses’ – has today highlighted the way rural businesses are struggling against a backdrop of mounting energy costs, poor transport links, and “unreliable broadband“.

Focusing upon the internet connectivity aspect. The new report found that 32% of rural firms have reported “issues” with internet reliability, compared to 17% of urban businesses. Furthermore, 14% say broadband speeds affected their ability to contact customers and 11% said poor connectivity reduced the competitiveness of their business – 5% even say this led to a loss of business sales.

The FSB’s main broadband related recommendation for tackling this would require the Government to update their existing Universal Service Obligation (USO) and its minimum requirements for both upload and download speeds (currently 10Mbps+ download and 1Mbps+ upload). But as we have seen before, this is easier said than done, and the FSB’s press release doesn’t clarify what the new level should be set at (30Mbps, 100Mbps etc.).

At the same time, it is worth remembering that demands vary by business. For example, a fish and chip shop can live with a slower link, but a modern graphic design or video editing firm may need a lot more speed.

FSB National Chair, Martin McTague, said:

“Our research highlights how rural small firms are the bread and butter of their communities, full of diversity and ambition. They provide local employment opportunities, drive innovation, and generate economic growth.

But after decades of promises from the Government, inadequate transport and poor digital connectivity are still putting these rural firms at a disadvantage. This hinders their potential to contribute even more to a sustainable and thriving economy. The VAT threshold is a barrier to growth for many, and charge anxiety and the need to use off-grid fuels means that the transition to net zero needs attention.

Our report offers concrete, feasible solutions to narrow the productivity gap and unlock these rural small firms’ full potential – not just for now, but for generations to come. The Government has the power to create a more sustainable and resilient economy that benefits everyone, no matter how small or how large their rural community is.”

The big problem here is that the USO has already proven itself unable to tackle tens of thousands of premises in some of the most remote and costly locations, such as those outside of both fixed line, fixed wireless and suitable 4G/5G mobile coverage (i.e. where upgrade costs can rise into the hundreds of thousands or even £1-2m territory). Put another way, simply raising the speed bar won’t work unless the funding and solutions are expanded to help tackle it, which would in turn require a significant overhaul (that will take time).

The USO itself also remains an industry funded scheme, which is mostly via BT and a little KCOM – that’s partly because no other ISPs were willing to take on the financial and legal responsibilities of supporting it. Instead, the Government seems to be trying to shrink the USO gap via their new £5bn Project Gigabit broadband rollout programme, which aims to reach “nationwide” (c.99%) coverage by 2030. Not to mention the £1bn Shared Rural Network (SRN) to expand 4G coverage.

On top of that, they’re also conducting various trials to see how Fixed Wireless Access (FWA) and LEO based satellite broadband networks (e.g. Starlink and OneWeb) could be harnessed to help tackle such problem areas. But overall, the current 10Mbps USO has been a bit of a letdown.

UPDATE 1:11am:

The full report is now online and appears to include a longer list of recommendations for digital connectivity, which we’ve summarised below.

Digital connectivity (p44)

➤ The UK Government should update the Universal Service Obligation minimum requirements for both upload and download speeds to ensure businesses have the right to decent broadband speed to meet their digital needs, and it should set a fairer safeguard cap at £35/month.

➤ The Department for Science, Innovation and Technology (DSIT) should ringfence a proportion of the remaining Project Gigabit budget to support projects that will help connect hard to reach and very hard to reach areas with superfast broadband.

➤ Ofcom should look to make current Voluntary Codes of Practice for broadband providers compulsory and extend the existing compensation schemes so that they also apply to business contracts.

➤ DSIT must ensure the Shared Rural Network does not fall behind its 2025 target of 95 per cent 4G coverage across the UK.

➤ Broadband providers should make it easier and cheaper for small businesses to leave broadband contacts before the minimum contract term has expired.