BT makes firm offer to meet USO broadband commitment

BT has made a firm offer to become the designated provider of the 10Mbps Universal Service Obligation broadband service

BT has made a formal offer to deliver the 10Mbps Universal Service Obligation (USO) broadband service across the UK, as the Department for Digital, Culture, Media and Sport (DCMS) kicks off a new consultation on the plans.

This formalises a previous offer made by BT to become the so-called universal service provider (USP) for the service which, as stipulated in the Digital Economy Act, will give everybody in the UK the right to request and receive a 10Mbps broadband service irrespective of their location.

At a Westminster evidence-gathering session during the progress of the Digital Economy Bill last year, BT’s chief strategy officer Sean Williams – who is stepping down later this year – told members of Parliament (MPs) that BT would very likely volunteer to deliver the USO.

“We have made clear our willingness to deliver 10Mbps to every premises in the country by 2020 without any further public funding or progressing the USO regulations,” said Williams at the time.

Earlier in 2016, an Ofcom-led fact-finding mission on the feasibility of a USO showed that there was little appetite among communications services providers (CSPs) to take on the USP mantle.

In its response to that consultation Virgin Media tried to absolve itself of any responsibility by saying that the cost burden would be fair on BT, while mobile operator Three tried to suggest that the USO should only apply to fixed access providers, and TalkTalk said there should be multiple, regional USPs, which would effectively rule it out.

Culture secretary Karen Bradley said BT’s offer would be considered alongside the consultation. “We warmly welcome BT’s offer and will look at whether this or a regulatory approach works better for homes and businesses,” she said.

“Whichever of the two approaches we go with in the end, the driving force behind our decision making will be making sure we get the best deal for consumers.”

The key difference between the two approaches is whether the USO service is to be delivered reactively or proactively.

Under the regulatory approach, the service would exist as a safety net, meaning that a 10Mbps service would be available to everyone to request regardless of where they lived. Meanwhile, BT’s approach would see Openreach proactively build the network infrastructure to connect the majority of premises rather than waiting for it to be done on request.

BT claimed its approach would mean that many of the premises covered by the USO would actually receive broadband speeds higher than 10Mbps, and that those covered would receive connections more quickly than can be delivered under a regulatory approach.

It added that the investment would be funded and costs recovered through wholesale charges levied on CSPs accessing the Openreach network to offer their own broadband services.

“This investment will reinforce the UK’s status as the leading digital economy in the G20. We already expect 95% of homes and businesses to have access to superfast broadband speeds of 24Mbps or faster by the end of 2017. Our latest initiative aims to ensure that all UK premises can get faster broadband, even in the hardest-to-reach parts of the UK,” said BT chief executive Gavin Patterson.

Patterson said the cost to BT would be between £450m and £600m, depending on the technology that is selected – this could be through slower fibre-to-the-cabinet (FTTC) using copper to bridge the last mile to the customer, fixed wireless access (FWA), or even fibre-to-the-premises (FTTP). The build would be complete by the end of December 2022 at the latest.

The government plans to work with BT over the coming months to develop its proposal, which will be legally-binding if accepted. However, this has already opened it to accusations of making deals behind closed doors, according to the Financial Times.

Smoke and mirrors

Meanwhile, the British Infrastructure Group (BIG), a group of MPs led by Conservative chairman Grant Shapps, released its second report on the state of UK broadband over the weekend of 29 to 30 July 2017.

In the report, BIG claimed that there were still 6.7 million premises in the UK that could not access a service of over 10Mbps, and not 1.4 million, as regulator Ofcom said in its most recent data, which dates from April and May 2016.

The BIG report said this difference had arisen because Ofcom was failing to differentiate between customers actively choosing not to take a superfast broadband service, and those that were failing to receive the download speeds that they were paying for.

“BIG therefore calls on Ofcom to urgently improve its data collection to create an accurate picture of the number of customers that qualify for broadband compensation,” wrote Shapps in the report’s preamble.

The group also called for the government to urgently progress USO legislation, and to make the current voluntary codes of practice for CSPs compulsory.

The BIG’s previous report, released in January 2017, came in for criticism for using out-of-date statistics and potentially misleading consumers by conflating the total amount of cash in the Broadband Delivery UK (BDUK) funding pot with the total amount of cash given to BT to roll out faster broadband.

The latest report was criticised by the Internet Service Provider’s Association (ISPA) which said the 6.7 million figure was unhelpful precisely because it conflated take up with coverage.

The ISPA referenced Ofcom data from June 2016 that said 95% of the public could access speeds of over 10Mbps, and Thinkbroadband.com data from July 2017 which suggests this has now risen to 97%.

Read more about broadband roll-out

“ISPA welcomes parliamentary interest in broadband and we have helped support MP’s local broadband campaigns, but it is important that research and reports that inform policy are robust. By failing to acknowledge the work that is already underway and selective use of data, this latest report falls short of this standard,” said ISPA council chair Andrew Glover.

Thinkbroadband editor Andrew Ferguson said the conflicting data on broadband had the feel of a “smoke and mirrors parlour game” to it.

“The report is not going to change the UK broadband landscape – it may mean a little time is wasted in meetings discussing the compensation side for broadband speeds, but compensation for broadband speeds is a lot more complex than dealing with compensation for total loss of service,” said Ferguson.

“We are sure Ofcom is well aware that if it was to mandate compulsory compensation, consumer broadband services would simply be sold at a level where the minimum guaranteed speeds were so low that they were not worth the page space they would occupy.

“While there are still plenty of people who only have access to slow broadband, more needs to be done to encourage others to sign up to the faster deals. There may be research needed on why some areas seem to have lower take-up than others, and the reasons are going to be very varied, just like the nature of towns and villages across the UK varies,” he concluded.

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