The Broadband Stakeholder Group (BSG) has warned that designing the proposed 10Mbps broadband universal service obligation (USO) will be extremely complicated.
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The USO, which will give everybody in the UK the legal right to request and receive a broadband connection with a minimum speed of 10Mbps, was signed into law last week in the Digital Economy Bill.
However, MPs rejected a proposed amendment by the House of Lords for the USO to be set at a more ambitious 30Mbps, saying such a task would be too challenging, and likely subject to extensive legal challenges.
In its new report, Impact of a broadband USO in the UK, the BSG said that while it was generally supportive of universal quality broadband access, designing a USO that met that goal whilst providing value for money and limiting competitive distortion was a complex matter.
“This report rightly highlights the complexity of designing a broadband USO that is both cost-effective and built to achieve digital inclusion across the country. Our report adds to the evidence base on the best way that a USO can positively contribute to the goal of universal good quality broadband, and we look forward to engaging further in this debate with government,” said BSG chair Richard Hooper.
The BSG noted in particular that the cost threshold for each premises covered by the USO will be critical in terms of the scale of the funding needed and the number of premises likely to be affected.
The cost threshold is best defined as the maximum cost-per-premise at which the designated universal service provider (USP) – which is likely to be BT – would be required to provide the broadband USO service. If the cost to connect a premise ran higher than that, the USP could decline to serve it and the customer could either volunteer to pay the difference or choose a service with a lower specification than the USO.
Read more about the USO
- The Digital Economy Bill has received Royal Assent during the pre-election wash-up period, but a Lords amendment demanding a legal minimum broadband speed of 30Mbps has been ditched due to take-up concerns.
- Ofcom’s summary of responses to its consultation over the proposed broadband universal service obligation reveals many service providers do not want to take on the job.
The TechUK-backed advisory group has conducted its own research that suggests a cost threshold of £1,500 to £3,000 would maximise the net public benefit to the UK’s coffers. The lower estimate would be based on a 10Mbps USO covering 500,000 premises.
Without a cost threshold, this could cost £930m of public money, but with a cost threshold of £2,000, the BSG predicted this would fall to £180m.
The BSG added that further information would be needed to assess the economic benefit for each USO connection, and, in order to provide an accurate cost-benefit analysis, as part of the government’s approach to designing the USO.