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BT proposes to proactively fulfil UK government’s goal of universal broadband

The UK government is considering an offer from BT to provide universal broadband access to properties across the country in a move which could see a potential new regulatory universal service obligation (USO) for broadband scrapped.03 Aug 2017 The government has the power to introduce a new USO for broadband through provisions contained in the Digital Economy Act[1], which was introduced into UK law earlier this year. It has opened a consultation on how such an obligation could be designed, which builds on a report by Ofcom[2] published late last year.

However, the government said that it is assessing “voluntary” proposals from BT in parallel with its consultation on the regulatory USO. BT’s plans could see universal broadband access made available “more quickly” than “under a regulatory approach”, the government said. In addition, it said “many premises” would also have access to broadband services offering download speeds of “substantially more than” 10 Megabits per second (Mbps), which is the minimum download speed which the government has proposed to initially require broadband services to deliver under a USO.

BT would fund the investment in the new networks and recover its costs from customers. “No decision has been taken, and the government will carefully weigh the merits of the two approaches,” the Department for Digital, Culture, Media and Sport (DDCMS) said in a statement. “Unlike under a regulatory USO, the proposal from BT is to proactively build the necessary network infrastructure to connect the majority of households and businesses rather than wait for this to be done on request.” According to the government’s statement, BT would be able to deliver broadband connectivity with download speeds of at least 10 megabits per second (Mbps) to about 99% of homes and businesses in the UK by 2020 using a mix of technologies, including fibre to the cabinet, fibre to the home and fixed wireless.

The services on offer would also provide for a minimum of 1Mbps upload speeds and conform to a number of other quality standards and “requirements to minimise delays”, it said. Under the plans for a regulatory USO, the government has proposed to mandate 10Mbps download speeds together with “additional quality parameters”, including minimum upload speeds of 1Mbps for their service, restrictions on the sharing of bandwith across customers, a duty to minimise delays in the transmission of data over the broadband networks, and a requirement to allow customers to download at least 100GBs of data every month under the service on offer. The government said it was open to the use of a range of technologies, including fibre to the cabinet, fibre to the home and fixed wireless, 4G and satellite, to deliver a regulatory USO.

If a regulatory USO for broadband was introduced, providers subject to the regime would only be obliged to make their services available to premises where the cost of doing so was “reasonable” and where premises do not already have access to a broadband service “which meets the USO specification”, according to the government’s proposals. “We are proposing that the reasonable cost threshold for premises to be connected should be set at ?3,400, which would provide coverage of around 99.8% of all premises, based on Ofcom’s modelling, on the basis that it achieves a high level of coverage, before reaching the very expensive cost per premises in the final 1%,” the government said. Services delivered under any USO for broadband would be subject to “uniform pricing” to ensure people and businesses in remote rural areas “are no worse off than those in urban areas”, the government said.

The government has proposed that the telecoms industry fund the investment in new broadband networks to deliver the services required under a regulatory USO. “Our view is that a cost-sharing mechanism which allows costs to be shared across a number of industry players ought to provide sufficient funding to deliver the USO without overly burdening industry or any one single provider,” it said. “Ofcom will consult on the design of an industry fund.” Ofcom would have the power to impose “wholesale access obligations” and set prices for such access where a broadband provider subject to the new regulatory USO has significant market power, the government said.

The DDCMS consultation is open until 9 October. Culture secretary Karen Bradley said: “The government is taking action to ensure that people everywhere in the UK can get a decent broadband connection as soon as possible. We warmly welcome BT’s offer and now will look at whether this or a regulatory approach works better for homes and businesses.

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.”

References

  1. ^ the Digital Economy Act (www.out-law.com)
  2. ^ a report by Ofcom (www.out-law.com)

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