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There is little appetite among communications and other internet service providers (ISPs) to take on the role of a designated provider of broadband services under the proposed universal service obligation (USO), according to a briefing document from telecoms regulator Ofcom.
The regulator has been running a public consultation on the proposed USO, which would guarantee the right to request and receive a 10Mbps broadband service, and looks likely to form a major element of the government’s attempt to provide broadband services to the final 5%.
However, Ofcom found that while most respondents shared its preference for a “transparent and competitive” universal service provider (USP) designation process, with many respondents advocating the creation of regional USPs to ensure smaller companies were represented, there was little desire to actually be the USP.
“We note that although the majority of respondents called for a competitive designation process, most industry stakeholders did not express a willingness to become a designated USO provider,” said Ofcom.
“This could affect the degree to which there is competition in the designation process, although industry may be more willing to come forward for designation once the specification and scope of a USO are clear.”
BT had had input on exactly this point, said Ofcom. The telco had said it was difficult to identify how the USP could be designated before the technical details and scope of the USO were decided.
Virgin volunteers BT
Ofcom added that BT’s competitors, notably Virgin Media, argued that if a USO was deemed necessary, BT should be the designated USP because the provision of a 10Mbps service using long-reach VDSL was unlikely to be an “unfair cost burden” on the incumbent as long as it was required only to upgrade a cabinet where minimum demand levels exist.
Elsewhere, there was disagreement between other communications providers. Mobile network operator (MNO) Three argued that the USO should be an obligation for fixed providers only whereas network infrastructure supplier Arqiva said MNOs should be made to provide broadband connectivity where fixed-line suppliers could not.
Where respondents agreed was around the need for a competitive and transparent procurement process for the designated USPs. Most stakeholders, including the Independent Networks Co-operative Association (INCA) and the Broadband Stakeholder Group (BSG), supported this position.
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Notably, ISP TalkTalk emphasised the importance of multiple USPs rather than a monopoly, which it said would artificially inflate roll-out costs and retail prices. Fibre-to-the-premises (FTTP) supplier Hyperoptic suggested a reverse auction to help ensure the costs of providing the service were efficient.
Ofcom will provide its final advice to the Department for Culture, Media and Sport (DCMS) by the end of 2016.