Don’t leap into a decision on a new broadband Universal Service Obligation

The government is currently offering a £1.1bn package of measures to support the market delivery of digital networks underpinned by full fibre broadband.

A key pillar of that plan, under the Digital Economy Act 2017, is to create a new broadband Universal Service Obligation (USO), which is geared towards everyone in the UK having access to a 10 megabits per second (Mbps) download speed by 2020.

Taking aside the not inconsiderable issue that 10 Mbps is barely enough for today’s needs, let alone those of the future, there is an immediate need to determine how a USO is structured, and also the timing for its proper implementation. It is important not to think that politics can trump reality.

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BT is currently offering the government the path of least resistance, and is proposing to charge their customers what is effectively a broadband tax to deliver on the USO. In the case of urban broadband specifically, accepting this offer would be a mistake, and ignores the reality that urban broadband provision faces challenges other than just funds.

For example, over 50 per cent of central London homes are situated in buildings requiring permission from their freeholders for new network installations (wayleaves). We’ve identified approximately 150k homes across the top 25 cities receiving less than 10Mb broadband, dependent on Freeholders signing wayleaves.

Most of these are being held up by local councils or private freeholders. Urban Fibre providers have funds to roll out to these units giving them access to full fibre – so it is preposterous to expect that BT can either magically conjure up signed wayleaves or tax its customers to build where others will offer a full fibre solution for free.

We believe that in urban areas specifically, any USO needs to work alongside and be complementary to measures already enacted. There’s already been over £3bn in announced funding going into mainly urban fibre broadband over the next few years. And there are many incentive programmes having just started or about to start that will potentially accelerate rollout plans. These include the Digital Infrastructure Fund, Local Full Fibre Network programme, Westminster Voucher Scheme, and the new Electronic Communications Code of the Digital Economy Act (which should help all providers wrangle wayleaves off of stubborn councils and freeholders).

To surmise, there is significant money and attention going into urban networks at the moment. And every commercial provider would prefer to service an area with low broadband speeds, over ones with either FTTC or Virgin. We need to take a breath and pause to understand the impact of these new programmes, specifically on the USO footprint.

It is frankly too soon to accept an urban regulated or voluntary solution. To leap into a decision now in terms of simply designating BT the Universal Service Provider will cause market distortion, both directly and indirectly.

Hyperoptic isn’t alone in being a market-driven provider of full fibre broadband. We’re investing every day across the UK’s cities, and consider areas getting less than 10Mb to be our highest priority. We’re doing this at our own risk and investing our shareholders’ capital in bringing the UK’s broadband up to standard.

Other alternative providers are doing likewise in both urban and rural areas. The market is to some extent doing what it should.

Therefore, leaping into a decision about a USO would undermine DCMS’ own efforts at fixing the country’s ailing broadband infrastructure properly.

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