BT’s £600m rural broadband offer rejected
Broadband users could have the legal right to access a broadband connection of at least 10 Mbps by 2020 (C) PA
December 19, 2017
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The government is to reject an offer from BT to connect 1.1m rural homes to superfast broadband in favour of giving homeowners in remote areas the legal right to demand an upgrade.
The government has been weighing up the respective benefits of BT saying it would improve broadband speeds in sparsely populated areas, or pushing ahead with a so-called universal service obligation system similar to that used for fixed-line telephone services. Three people with direct knowledge of the situation said the government would on Wednesday opt to push on with a USO model that aims to give people the legal right to access a broadband connection of at least 10 Mbps by 2020. The move will require secondary legislation to set out the design of the USO.
Ofcom, the telecoms regulator which said last week that 1.1m homes and offices still don’t receive a decent broadband connection, will also work with the government on how best to connect rural areas. BT’s rivals, including Sky and TalkTalk, had raised the prospect of legal action if BT’s offer was accepted as the cost of the work, estimated to be between GBP450m and GBP600m, would have been spread across the broadband industry. The rivals argue that it would be their customers paying without seeing any benefit and that they had not been consulted on the plan.
BT first made an offer to the government to close what is called the “digital divide” between rural and urban broadband speeds two years ago before making the firm proposal in July. It has argued that it could start work immediately if the government accepted its offer, while passing secondary legislation could further slow progress down. BT and the Department for Digital, Culture, Media and Sport declined to comment.
The initial push to introduce a USO proved troublesome, with some politicians pushing for a higher minimum speed to be introduced. Ofcom has previously described the 10 Mbps speed as a “floor” that could be raised over time. The USO debate has provided a litmus test for the legal separation of BT and Openreach, its networking unit, after the telecoms company agreed to a series of measures with Ofcom in March to strengthen the independence of the division.
Openreach builds the network used by most of the country’s largest broadband providers and has been criticised for not investing more in full fibre networks as its parent has lavished billions on buying up exclusive sports rights. Ofcom said this week that the UK had upgraded 87 per cent of the country to a superfast line but only 2 per cent of those connections were “full fibre” lines at the end of 2016. That compared to 97 per cent in Japan, 86 per cent in Portugal and 63 per cent in Spain.
The UK had the same ratio of full fibre lines as Nigeria, according to the Ofcom statistics.