Legal threat hangs over UK decision on faster rural broadband

An announcement is expected this week on how best to upgrade the connections of 1.1m homes in rural areas (C) PA

Nic Fildes[1], Telecoms Correspondent

December 17, 2017

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The threat of legal action by rival broadband companies is hanging over a UK government decision this week on how best to upgrade the connections of 1.1m homes in rural areas.

An announcement is expected in the coming days over whether a GBP600m offer from BT to improve broadband speeds[3] in sparsely populated areas is acceptable to the government. One senior telecoms executive said the government was running out of time if it wants to hit its pre-election promise of all homes having a connection of at least 10 Mbps by 2020. But BT’s rivals, such as Sky and TalkTalk, have threatened to launch a judicial review if the government accepts BT’s offer.

One person at a rival broadband company said the industry was concerned that BT had struck a “closed-door deal” to solve the problem without consulting any other providers. BT’s proposal hinges upon an increase in the wholesale cost of accessing its network and its rivals argue that it would be their customers paying for the work without seeing any benefit. Other companies have complained that the government would be allowing BT to in effect lock in its monopoly position, because smaller companies targeting rural areas with new fibre would have no input into the debate over the rollout.

The government’s alternative is to insist on a universal service obligation (USO) under which rural broadband users will have the legal right to demand an upgrade. Having such a system would deliver the manifesto pledge of everyone having “access” to faster broadband, the government said. Dana Tobak, chief executive of Hyperoptic, which invests in full fibre networks, said that bringing in a USO in order to boost rural areas could distort the normal competition in urban areas, where BT’s rivals are laying their own networks.

“We would also advise that any urban USO will cause market distortion, either directly or indirectly, if BT is chosen as the only USO provider and current market interventions and forces are not allowed to play out sufficiently.” BT’s deal could also face opposition from rural groups. Ross Murray, head of the rural landowners association the CLA, has warned: “The universal service obligation is necessary because it creates an inalienable right that can be enforced by the premise owner.

It cannot be replaced by a cosy deal with just one company allowing it to deliver connection how it sees fit.” Matt Hancock, the UK’s digital minister, last month denied reports that negotiations with BT had broken down because of the legal threat from BT’s rivals. He said the government had “made progress” in exploring both a statutory USO and BT’s offer.

Ofcom, the telecoms regulator, said last week that 1.1m homes and offices — about 4 per cent of properties — still cannot get an adequate connection of 10 Mbps.

That figure rises to 17 per cent for rural areas.


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