techuk response to the Government Consultation on A New Broadband Universal Service Obligation

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1 techuk response to the Government Consultation on A New Broadband Universal Service Obligation April St Bride Street T London F EC4A 4AD techuk Representing the future Contact: Raj Sivalingam Exec Director, Telecommunications and Spectrum T E

2 Introduction #techuk About techuk techuk is the trade association for the digital technology industries. We represent the companies that deliver the digital economy from healthcare, transport, public services to financial services, defence, communications and entertainment. 900 companies are members of techuk. By shaping crucial developments such as the Internet of Things and 'smart', they are defining today the world that we will live in tomorrow. Collectively they employ more than 800,000 people, about half of all tech sector jobs in the UK. These companies range from leading FTSE 100 companies to new innovative start-ups. The majority of our members are small and medium sized businesses. Representing companies right across the digital communications infrastructure value chain from fixed, wireless / mobile and satellite operators, network and equipment suppliers, as well as technology and component makers, techuk is in an ideal position to provide a cross industry perspective on the issues raised in this consultation. Overview response Overall position 1. techuk very much supports the underlying aims encompassed in this consultation, in terms of ensuring both, world class connectivity in the UK to maximise economic and social opportunities, and (the prime focus of this consultation) digital inclusion so that every UK individual and organisation is able to avail themselves of the increasing benefits that the internet and online world brings. However our member companies have concerns as to whether it is the best mechanism to deliver the latter objective and would like to see a systematic analysis of the options and the unforeseen consequences. World class broadband 2. Broadband (fixed and mobile) connectivity underpins the digital economy, which in turn holds the key to our wider economic prospects as well as in tackling many of societies challenges. Thus we support the Government s ambition to ensure that the UK s communications infrastructure continually evolves to provide fit for purpose connectivity to facilitate our economic and societal ambitions for the 2020s. However although part of the equation, we believe that world class is not solely about headline broadband speeds. For us, it is more about the quality of experience and functionalities needed for individuals and businesses to derive benefits from the online world from enjoying video on demand and using social media to keep contact with friends and family to undertaking online purchases, interacting with online public services and indeed conducting basic business functions. A study conducted for Ofcom 1 suggests that quality of experience for consumers improves with increasing 3. 1 Actual Experience PLC for Ofcom, Internet performance Evaluation Insert position/consultation paper title here Page 2 of 5

3 access speeds up to 8-10 MBits per second (MBps). Beyond this, it is suggested that there is currently only a marginal benefit from further increases in speed until connections of 40 MBps and above are reached when there is a small improvement relating to consistency. Clearly customer expectations may well increase over time, as technological capabilities develop and innovative new services appear. A study 2 by the Broadband Stakeholder Group (BSG) suggests that the median household will require a download speed of at least 19 Mbit/s by Similarly, as reported in the consultation document, another study on broadband speed requirements of SMEs conducted by BSG 3 estimated that the median downstream demand for small businesses (recognising the associated wide variety of business activity and thus broadband usage) would rise from 5 MBps in 2015 to 8.1 MBps in On the other hand, with rapidly expanding use of the internet by people and things, overall fixed and mobile data volumes continue to escalate. According to Cisco s Visual Networking Index (May 2015), annual global IP traffic will triple between 2014 and 2019 reaching 2000 exabytes. It is vital that the communications infrastructure, continue to evolve to accommodate the demand. These trends suggest that a mix of technologies for communications infrastructure is needed alongside a steadily increasing penetration of fibre into the infrastructure. Thus world class connectivity should be a broad based concept composed of a range of broadband speed availabilities and price, as components of a set of measures on quality of experience technology neutrality enabling a variety if technologies including fixed line (fibre, copper, cable), fixed wireless access, mobile and satellite solutions to tackle the diverse range of connectivity challenges / opportunities, and variability according to population density and geography in terms of choice of technologies, speeds (albeit above the baseline level discussed below), numbers of service providers and set up costs,. This is not dissimilar to the geographic variations in the size of houses or access to medical services. 5. Establishing and maintaining next generation communications infrastructure is a high investment activity. It is therefore vital that Government both at central and local levels do everything possible to reduce costs and maximise investment incentives in order to maximise commercial viability to as wide an area across UK as possible. UK current position 6. Thanks to substantial industry investment, reinforced by public funding, significant momentum has been built in the availability of (superfast) broadband: superfast broadband (30 MBps) is available to 90 % of premises and this is expected to reach 95 % next year. The knock on effect of this is that availability at the lower baseline of 10 MBps will be somewhat higher than 95 % by the same time frame. 4G mobile broadband from at least one mobile network is already available to 98 % of premises and this coverage is expected to be available from all 4 operators next year. As a 2 Broadband Stakeholder Group/Rob Kenny, Domestic Demand for Bandwidth 3 Broadband Stakeholder Group, The Broadband Requirements of small business in the UK Insert position/consultation paper title here Page 3 of 5

4 result, UK has the highest superfast coverage and the fastest roll out of 4G mobile broadband networks in Europe. 7. Fixed wireless access is also an effective technology for providing fast and economic broadband services up to superfast speeds to homes and businesses particularly in underserved areas. #techuk 8. Furthermore, satellite operators, particularly those with Ka-band satellite systems can today provide these businesses and citizens with ubiquitous high quality, reliable and increasingly affordable broadband solutions. Services offered have various headline download speeds typically ranging from 5Mbps to 24Mbps and data allowance options from 5 to 100Giga Bytes per month. These services cater for all types of users from light users requiring access for s and web browsing to heavy users who will use the service for streaming and the download of data heavy files. 9. It is worth also noting that under the satellite voucher scheme, the existing Universal Service Commitment offers the current safety net to any premise, without it, broadband speeds of at least 2 MBps. Digital inclusion and universality 10. With internet and online services playing an increasingly crucial role in our working and social lives, digital inclusion is a priority. Universal availability of broadband services such that everyone is able to access at least a baseline / safety net set of electronic communications activities such as keeping in touch with friends and family via social media, watching video on demand, conducting online purchases, and interacting with public services. techuk wholeheartedly supports the principle of universality, with an expectation that, where superfast broadband services is not available, everyone should be able to have access to at least a service that enables this baseline functionality. 11. In achieving universal access to broadband an equal, if not more important, priority is to redouble efforts to ensure that everyone has the confidence and skills to benefit from the internet and online services. In numbers, there are more people digitally self-excluded in areas with reasonable broadband coverage than those unable to access broadband at speeds greater than 10 MBps. Government should do more on this too. Conclusions 12. In considering mechanisms for ensuring universal coverage, we must remember that the communications service providers are businesses. And as in the case for all businesses, they must secure reasonable and sustainable returns for their investments, without which the very services they offer consumers become insecure. In some areas where the (geographic) concentration of available customers is low such as in rural and some urban areas, the business case for investment becomes challenging. 13. The best way to ensure that the above momentum (on the implementation of superfast broadband in the final 5 %) continues is by making sure that the policy and regulatory environment maximises investment incentives for industry and hence the rolling out of the commercial networks out as far out as possible. We therefore welcome current Government initiatives on cost reduction (eg. on reducing red tape in Insert position/consultation paper title here Page 4 of 5

5 the planning regime, enabling access to public sector land and roof tops, ensuring a pro industry philosophy by local government interlocutors) but we need to see tangible results on this for industry. 14. As stated above techuk members have concerns that the proposed approach on the Universal Service Obligation (USO) is not the best way to achieve the universality principle. Any mechanism to ensure the latter should go with the grain of the wider ongoing initiatives, on superfast broadband in the UK, delivering results. As such we believe that a systematic review of any unforeseen consequences should first be undertaken, in particular covering potential negative effects on investment and momentum towards the wider implementation of superfast (and indeed ultrafast) broadband a more thorough understanding of the numbers and areas of the premises that are likely to remain (following the current initiatives) unserved in terms availability of baseline broadband speeds of around 10 MBps scope for amending the current USC to achieve present objectives whether the (two) conditions for an USO set out in the Universal Service Directive, described in the consultation document has been met 15. The Government s cost reduction initiative should be more strongly outcome focussed to bring down the above excluded premises to below say 150,000. For these, satellite services offer ready ubiquitous coverage consistent with the baseline 10 MBps speed and potentially higher. These along with services using fixed wireless access technology represent viable solutions to support universality. 16. In recognising the externalities to be gained from broadband availability, Government was right to grasp the nettle in terms of providing public funding to boost the superfast broadband coverage from around 75 % to the current 95 % or so. The same logic suggests that there is a strong case for public funding to close the remaining gap. Response to questions Q1: Do you have any concerns about the approach that has been set out here? Please see Paragraphs 1 and 13 Q2: We do not propose to specify speed in primary legislation. Should speed be specified in primary or secondary legislation? techuk s current position is that the baseline speed for the expectation on universal access to broadband should be specified in secondary legislation rather than in primary. Q3: In terms of giving the Secretary of State a power to direct Ofcom to review the USO, should Government have a continuing role in the USO, or should this be a matter for Ofcom? Yes. Universality is very much associated with societal objectives and so it is right that the Secretary of State has a continuing role on policy towards universality. In terms of reviewing any objectives towards universality to take account of developments in user demand and evolutions in technology and services, techuk s positon is that this should be compatible with the industry and technology cycles for upgrading broadband networks. Insert position/consultation paper title here Page 5 of 5

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