Annex 2
OFTEL'S BROADBAND AND INTERNET BRIEF
KEY HEADLINE
STATISTICS
| Narrowband access
| |
per cent UK homes with Internet access
| 45 per cent |
per cent UK SMEs with Internet access
| 63 per cent |
Number of UK homes with Internet access
| 11 million |
Number of UK SMEs[2] with Internet access
| 643,000 |
Broadband access |
|
Cable modems |
|
End users of cable modem services
| 196,000 (as at end December 2001) |
Availability of cable modems |
- Telewest available to 4.9m homes |
- 95 per cent broadband capable
| |
- ntl available to 8.4m homes |
|
| —56 per cent broadband capable
|
DSL | |
UK households covered by DSL |
60 per cent (around 13 million homes) |
End-users with ADSL installed |
126,000 (as at end of December 2001) |
Operators and service providers that have taken
up BT's wholesale ADSL products
| 200 |
BT exchanges DSL enabled | 1010
|
Exchanges prepared for Local Loop
Unbundling (LLU)
| 61 (16 physical co-location, 45 distant |
Unbundled loops connected | 164
|
| |
SUMMARY
— Oftel supports the Government's aims to make the
UK the best environment for e-commerce by the end of 2002 and
for the UK to have the most extensive and competitive broadband
market in the G7 by 2005.
— Oftel wants to see choice and value for money
for all consumers. This includes choice of access speed (high
and low-speed access) for Internet access and other services.
— Oftel believes that competition is the most effective
way of achieving these goals.
— Competition is working:
— In narrowband, UK consumers now
have a wide variety of tariffs for dial-up (low-speed) Internet
access. These include both pay-as-you-go tariffs and unmetered
packages. UK Internet access prices for residential consumers
are now among the lowest in the world.
— In broadband, there is competition
at the infrastructure level between cable modem providers and
DSL, and numerous service providers competing with BT to provide
retail DSL services to consumers. Substantial progress has been
made in Broadband access in the UK and take-up has accelerated
markedly in the last year. Oftel has played an active role in
setting the regulatory framework for broadband markets, and is
working closely with Industry to pre-empt and resolve disputes.
— Oftel is monitoring closely the
evolving Internet access and broadband markets through quarterly
consumer surveys in the UK and a programme of regular international
benchmarking.
Key events since the previous brief
— DTI Secretary of State, Patricia Hewitt and e-Envoy,
Andrew Pinder, launched the UK online second annual report (4
December 2001).
— Publication of Oftel's latest international benchmarking
study of Internet access and broadband (7 December 2001).
— Cable end-users up by some 145 per cent since
July 2001 from 80,000 to 196,000 as at the end of December 2001.
ADSL-enabled end users up by more than 33 per cent since September
2001 from 90,000 to 126,000 as at the end of December 2001.
— Launch of "rate adaption" on further
BT wholesale DSL products to improve reach from exchange building
from 3.5km to 5.5km. Rate adaption is now available with wholesale
products used to supply businesses as well products used to supply
residential customers. This increases the number of consumers
able to obtain DSL services from 70 per cent per local exchange
to 90 per cent.
— Oftel publication of a draft Direction (21 December
2001) to resolve a dispute between BT, Energis and Thus on xDSL
interconnection at the ATM switch. Oftel is proposing to require
BT to provide two new interconnection products using both ADSL
and SDSL technology, which should stimulate competition at the
wholesale level and increase the types of broadband access services
available.
— Oftel publication of the final statement and direction
in relation to BT's service level agreement (SLA) for local loop
unbundling (LLU)—15 November 2001. This has required BT
to amend the terms on which it offers LLU services to operators
(the ANF agreement) and has set the service level standards that
BT must offer to operators wanting to unbundle BT's local loops.
— During December 2001, Oftel determined that operators
can have unescorted access to BT's exchanges in order to carry
out maintenance on their equipment. Escorted access will only
be necessary where BT would require its own contractors to be
escorted by a member of BT staff.
FORTHCOMING EVENTS
— David Edmonds addresses Internet Service Provider
Association event on broadband at House of Commons (15 January
2002)
— Publication of Oftel's final statement on effective
competition in dial-up Internet access (January 2002)
— Publication of consultation on amendments to the
FRIACO Direction (January 2002)
— Publication of quarterly consumer research and
Internet access study (January 2002)
— BT will introduce self-install variants of its
residential wholesale DSL product, reducing both the connection
and rental charges (January 2002)
— BT will introduce Service Level Guarantees (SLGs)
for its wholesale DSL products (January 2002). These will allow
service providers to claim compensation where BT fails to meet
specified targets for order provision and fault repair.
MARKET INFORMATION
38. Monitoring the Internet and broadband access market
Oftel regularly monitors the UK Internet and broadband access
markets and publishes its findings to aid transparency. Oftel's
International benchmarking study takes place every 6 months. The
latest set of results from Oftel's benchmarking studies of dial-up
Internet access and broadband, published in December 2001(based
on services available in August 2001), includes the UK, France,
Germany, Sweden, and the US states of Ohio and California. Oftel's
quarterly market research surveys ask residential and SME Internet
users about their use and experience of the Internet, along with
consumer awareness and use of broadband technologies.
AVAILABILITY
Narrowband
For residential and business users:
— Dial-up Internet access is available to all UK
households and businesses with a fixed telephone line. The vast
majority of UK ISPs are available to consumers nationwide, although
the cable companies' ISP services are more limited.
Broadband
For residential and business users:
— 60 per cent of UK consumers and businesses are
within the area of a DSL enabled exchange. 90 per cent of those
can obtain ADSL services with current technology.
— Cable networks pass approximately 50 per cent
of UK households—cable modem services available to around
38 per cent of all households. Telewest services are available
to 4.9 million homes, of which 95 per cent are broadband capable.
NTL services are available to 8.4 million homes, of which 56 per
cent are broadband capable. This equals around 9 million homes.
— Digital TV offers one-way broadband—available
to 99 per cent households. Two-way satellite is developing.
39. Leased lines (symmetric broadband) are available
throughout country from BT and businesses generally have the choice
of several competing operators in metropolitan areas. Oftel's
determination on partial private circuits (see below) should further
stimulate competition and lower prices.
TAKE-UP
Narrowband
For residential users (November 2001 survey):
— 45 per cent of UK households are connected to
the Internet
— 39 per cent of Internet homes use unmetered packages
For business users (November 2001 survey):
— 63 per cent of UK SMEs are connected to the Internet
(94 per cent medium-sized and 60 per cent small businesses). Three
quarters of small businesses used ordinary phone line/dial-up
access to connect to the Internet, whilst just a third of medium-sized
businesses did so.
— 37 per cent of SMEs with Internet access use an
unmetered package.
Broadband
For residential broadband users:
— Around three per cent of homes with Internet access
use broadband
For business broadband users (November 2001 survey):
— The number of UK businesses claiming to use a
broadband connection has risen from just over three per cent in
May to six per cent in November, comprising five per cent DSL
and one per cent cable modern. Industry subscriber figures are
unable to show which businesses are using broadband, but assuming
that users fall within the criteria of Oftel's sample one-250
employees, £50,000 minimum annual turnover) figures suggest
that five per cent of these businesses are currently using DSL
or cable modem. This equates to approximately one per cent of
all small and medium-sized businesses using DSL or cable modem.
2.4 PRICING (DECEMBER
2001 INTERNATIONAL BENCHMARKING
SURVEY, PRICES
AS AT
AUGUST 2001)
Narrowband
For residential dial-up users:
— the price of up to 40 hours per month dial-up
Internet access in the UK for residential users compares well
on average with prices elsewhere—only Germany is marginally
cheaper (by two per cent) for off-peak access and only the US
is cheaper (by 10 per cent) for peak access; and
— For unmetered access, residential prices in the
UK were similar to the US. France, Germany and Sweden to not have
widely available unmetered dial-up packages. For France and Sweden
this means prices for high usage in these countries are expensive.
Comparison of residential Internet access prices as at August
2001
Source: Oftel International benchmarking report, December
2001
For business dial-up users:
— for business metered packages, UK prices are higher
than elsewhere; and
— prices for business unmetered packages in the
UK are similar to those in the US. France, Germany and Sweden
do not have any unmetered dial-up packages making prices for high
users in these countries much more expensive. However, in Germany
broadband access is cheaper than unmetered dial-up in the UK and
US.
Comparison of business Internet access prices
Source: Oftel International benchmarking report, December
2001
Broadband
For residential broadband (DSL and cable modem) users:
— in the UK, the monthly charge for residential
higher bandwidth services was around £26, compared to £34
in France, £29 in Germany and £28 in the US;
— this relatively good position for the UK is due
to its cable modem services—a comparison of DSL services
only shows services in the UK to be more expensive than elsewhere.
Source: Oftel International benchmarking report, December
2001
For business broadband (DSL and cable modem) users:
— the results for business were mixed: for a basic
broadband service UK prices were lower than in France, close to
those in Germany but more expensive than in Sweden and the US;
however German prices rose above those in the UK for consumers
requiring a minimum bandwidth in excess of 500kbps (average over
both directions).
Source: Oftel International benchmarking report, December
2001
40. The International benchmarking study is expected
to be updated (for services available in February 2002) with publication
expected in May 2002. In addition to the quarterly consumer surveys,
Oftel has recently commissioned research looking at UK residential
consumers' use and perceptions of broadband Internet services,
including demand for services, benefits, costs consumers are prepared
to pay, driving factors and switching behaviour. Results from
this research will be published in January 2002.
41. Oftel is also proposing to carry out an additional
benchmarking exercise to establish whether, and if so, why, UK
consumers are making more or less use of Internet broadband access
than other countries. The results are expected to be available
early next year.
KEY REGULATORY
AND MARKET
DEVELOPMENTS IN
DIAL-UP
(NARROWBAND) INTERNET
ACCESS
Current Technology
42. The UK has a vibrant dial-up (also known as `narrowband')
ISP market with both pay-as-you-go and unmetered packages available
to consumers. Industry sources estimate that there are over 400
ISPs operating in the UK. Unlike much of the rest of Europe (including
Germany and France), an offshoot of the incumbent does not dominate
the competitive UK dial-up retail market. Over 80 per cent of
online households and 76 per cent of SMEs with Internet access
use a dial-up PSTN connection to the Internet. A further 9 per
cent of households and 23 per cent of SMEs access the Internet
via a dial-up ISDN line.
Current Product Offerings
There are a number of dial-up Internet access packages available
to both residential and business consumers. These include:
| Metered (pay-as-you-go) | Subscription + cost of calls or No subscription—cost of calls only
|
Partly unmetered | Subscription + free usage at certain times/for a certain amount of time + call costs at other times
|
Fully unmetered | Subscription + unlimited free usage + no + call costs
|
| |
Metered
43. The UK pioneered the pay-as-you-go model, which has
been copied by many other countries. Packages are now available
which offer consumers Internet access at rates below the price
of local-rate voice calls. Some packages include a monthly subscription
fee in addition to the cost of calls, whereas others are `subscription-free'.
44. Subscription-free Internet access led to a rapid
growth in the number of Internet users in the UK, and is likely
to remain a good option for occasional or light users, and those
who do not want to commit to a contract. However, the number of
consumers using pay-as-you-go packages has fallen as more unmetered
services have become available. In November 2001, 61 per cent
of Internet households were using metered packages to access the
Internet (21 per cent subscription-based, 40 per cent subscription-free).
Unmetered
45. Unmetered packages can be fully or partly unmetered
and have been available for some time. However, the availability
and take-up of unmetered packages has grown significantly over
the last 12 months. This is partly the result of Oftel's directions
requiring BT to make available unmetered wholesale Internet access
products (called FRIACO, see below). This has allowed more ISPs
to compete in offering unmetered access and offer greater choice
to consumers. Several ISPs offer FRIACO-based, fully unmetered
retail packages for around £12.99—£14.99 a month.
46. BT's SurfTime Internet access products include unmetered
Internet calls for a fixed monthly fee, as well as offering cheaper
pay-as-you-go prices and discounted telephone calls. However,
they do not include the costs of Internet service provision: in
addition to SurfTime, consumers need to purchase Internet service
provision from a participating ISP.
47. The Cable operators also offer their customers unmetered
Internet access. Some of these unmetered packages require customers
to spend a certain amount of money on their telephone calls each
month.
48. In November 2001, 39 per cent of Internet homes claimed
to use some type of unmetered access (28 per cent fully unmetered
and 11 per cent partly unmetered). Oftel estimates that three
and a half million customers already subscribe to unmetered packages.
Alternative means of dial-up Internet access
Mobile
49. The mobile phone will be another important technology
for accessing the Internet (70 per cent of the UK population are
mobile subscribers). Services like these are already available—Oftel
research shows that 7 per cent of UK residential consumers owns
a WAP mobile phone. With the introduction of `2½ G' technologies
providing higher data rate communications, WAP services are becoming
faster and therefore more user friendly.
50. So-called "2½ G" technologies, such
as General Packet Radio Service (GPRS) which allows packet data
transmission on GSM networks have been deployed by BT Cellnet
and Vodafone. GPRS data rates will be up to 40kbps initially.
BT Cellnet launched the first GPRS service to business customers
in June 2000. BT Cellnet and Vodafone now both offer consumer
and business GPRS products. Orange already offers a High-Speed
Circuit Switched Data (HSCSD) product to business customers, which
provides data rates of 28.8 kbps.
Television
Access to the Internet via the television is likely to become
increasingly common as web-enabled TV set-top boxes and games
consoles become more popular. Consumers can also buy web-enabled
TVs (for example, the Bush TV that simply uses the TV as a monitor).
These devices are already available and are being used by a small
number of consumers. Accessing the Internet in this way may be
more convenient for some people who cannot afford, or do not like
the complexity or using a computer. Latest published figures show
that over 8.5 million UK households have digital television. For
more information on satellite access see satellite broadband below.
What is Oftel doing?
51. Oftel has taken action in a number of areas relating
to dial-up Internet access to ensure fair competition.
Pricing of Voice and Internet Calls
52. In November 1999, Oftel removed the link between
the pricing of Internet calls and price of voice calls to enable
ISPs to price more flexibly.
FRIACO (flat rate Internet access call origination)
53. In May 2000, Oftel made a direction requiring BT
to make available an unmetered wholesale Internet access product
(called FRIACO) to enable other network operators to offer their
own unmetered Internet access products in competition with BT.
In February 2001 Oftel required BT to offer other network operators
a new wholesale unmetered Internet access product known as ST
FRIACO (Single Tandem FRIACO).
54. At present, Oftel is facilitating industry discussions
on the feasibility of enhancements to the existing FRIACO products
and on the development of a new IP interconnection FRIACO product.
IP interconnection would provide a more efficient means for operators
to connect to BT's network and has been recognised as the best
long-term option for handling the growth in dial-up Internet traffic.
In addition, Oftel is reviewing the FRIACO adjustment ratio, which
is used to calculate the price of FRIACO.
Effective Competition Reviews of dial-up Internet Access
000-01 effective competition review of dial-up Internet access
was published in July 2001. Oftel carries out effective competition
reviews to assess the level of competition in a particular sector
and to ensure that regulation is appropriate. Oftel has measured
levels of competition against a number of indicators including
price, consumer behaviour and market shares. A separate effective
competition review of Internet connectivity was published in August
2001. Oftel has consulted widely on both reviews—the deadline
for each was 30 October 2001. Oftel is due to publish a joint
final statement on effective competition in the New Year (2002).
Oftel Internet Forum
In order to communicate with the Internet community more
effectively, Oftel established a dedicated forum called the Oftel
Internet Forum (OIF). This supplements Oftel's existing regular
meetings with key companies, trade bodies and consumer groups.
Oftel uses the Forum to gain opinions and ideas about key regulatory
developments. It is also used to inform the Internet community
of key regulatory developments. The OIF meets about four times
a year, each time addressing a particular issue.
Minutes of previous meetings:
19th September—ISPs' terms and conditions
23rd March 2001—Internet consumers—well informed
and adequately represented?
KEY REGULATORY
AND MARKET
DEVELOPMENTS IN
BROADBAND INTERNET
ACCESS
55. Roll-out of broadband services started later than
in some other countries in Europe, possibly due in part to the
availability of flat-rate Internet access products which may have
met some demand. However, since launch, take-up has increased
rapidly and the prospects for future growth look promising.
56. The UK has one of the most competitive marketplaces
in Europe for broadband, with competition at the infrastructure
level between cable providers and DSL and numerous service providers
competing with BT to provide retail DSL services to customers.
Operators have the choice of local loop unbundling, shared access,
wholesale services and now xDSL interconnection services with
which to deliver broadband over BT's network.
57. There is also some limited provision by fixed radio
that, together with mobile radio and satellite technologies, should
in future also be able to deliver broadband services more widely.
Larger business users access broadband services via leased lines.
58. Downstream data rates (from the network to the customer)
are usually higher than upstream rates (from the customer to the
network) since the kind of information that needs to get to the
user—including still and video images and sound—requires
a higher data rate. Data rates on the upstream path can be smaller
since user responses usually involve small quantities of data
only e.g text.
Broadband Cable
59. Both NTL and Telewest offer high-speed Internet access
over their cable networks via cable modems. Data rates are 512kbps
downstream and 128kbps upstream.
60. Telewest charges £50 connection and a monthly
fee of £33 or £25 if you subscribe to other Telewest
services. NTL charges £25 for installation and either £150
for the modem and a £20 monthly fee, or a monthly charge
of £25 including the cost of the modem. Customers can also
pay around £30 per month to receive telephone and digital
television services bundled with broadband Internet access.
61. Most of NTL and Telewest's cable networks are broadband
ready, but not all. Both operators are working to upgrade their
networks where necessary. The availability of NTL's service has
increased as the service has been made available to 500,000 more
potential subscribers in the South East by the end of 2001. NTL's
availability has now increased to 56 per cent from 50 per cent.
62. According to publicly available figures at the end
of December 2001, Ntl has around 101,000 customers of their cable
modem service (up from 52,000 in July 2001) while Telewest reports
that it has around 95,000 cable modem customers (up from 38,000
in July 2001).
Digital Subscriber Line (DSL)
63. DSL creates a high-speed digital connection over
an existing telephone line using a pair of modems, one at the
user end and the other at the Exchange. DSL is the major competing
access technology to broadband cable.
Competition between Service Providers: BT's Wholesale Asymmetric
Digital Subscriber Line ('ADSL') Service
64. The downstream data rate of ADSL is much higher than
the upstream data rate. DSL is a distance-dependent technology,
which means that it is normally available to those consumers who
live within 3.5km of their local exchange.
65. BT's key products are:
— IPStream 500: an entry-level ADSL product aimed
at the residential market. It uses rate adaptive technology to
extend the range from 3.5km to 5.5km from the local exchange at
the expense of slower upstream speeds.
— IPStream S: available in 500, 1000 and 2000 kbps
variants. Its higher prices and better service quality means that
it is aimed at the SME market.
— VideoStream: enables the provision of video-on-demand
services.
— DataStream: enables the provision of IP-based
networks, such as corporate intranets.
66. There are around 200 operators, service providers
and corporates that have signed a contract for BT's wholesale
ADSL products, including BT's own service provider, BTOpenworld,
which we estimate has around 50 per cent of the market. The number
of end users with ADSL installed is increasing at a rate of around
10,000 per month and stood at 126,000 as of the end of December
2001. Around 30 per cent of these end-users are businesses.
67. BT has enabled 1010 exchanges covering 60 per cent
of households for the delivery of ADSL wholesale products (up
from 839 exchanges covering 50 per cent of UK households in May
2001). BT has made no commitments regarding roll-out past this
date though is working with development agencies to develop broadband
services in rural areas. Information on rollout is available at
www.bt.com/broadband.
68. On 1st September, BT reduced its wholesale monthly
rental charge for IP Stream 500 from £35 to £30 a month
to enable BT's wholesale customers to stimulate take up by end
users. The connection charge for VideoStream was also reduced
from £625 to £50 for 6 months from 1st October 2001.
Wholesale rental charges will fall further on 15th January when
BT introduces self-install variants of its IPStream products,
called IPStream Home & Office. Connection charges will fall
to £50 (ex VAT) with monthly rental charges starting at £25
(ex VAT) for IPStream Home.
69. Kingston Communications introduced its own wholesale
ADSL product, RapidTime, on 4 October. The product is currently
only offered by Kingston's own ISP, Karoo.
70. For more details on future developments, pricing
and what Oftel is doing, click here [ADSL fact sheet].
Local Loop Unbundling ('LLU')
71. LLU enables competing operators and service providers
to create their own ADSL products rather than having to buy BT's
ADSL products on a wholesale basis. Under LLU, operators and service
providers are able to install their own equipment in BT's exchanges
in order to offer their own broadband services to end users.
72. The LLU condition in BT's licence came into force
on 8th August 2000. This sets the legal framework and obligations
on BT and gives Oftel powers to act if problems occur. In addition,
the EC Regulation on LLU came into force on 2nd January 2001.
Since the introduction of LLU, Oftel has intervened on numerous
occasions on its own initiative and at the request of operators
to settle detailed issues relating to the terms and conditions
under which it is offered.
73. Unbundling is available at all of BT's exchanges
and BT is accepting and fulfilling orders on a business as usual
basis. As at January 2002, co-location facilities have been prepared
at 61 exchanges (16 for physical co-location and 45 for distant
co-location). 164 unbundled loops have been connected. Take-up
of unbundling is increasing, but is lower than was originally
anticipated, due in part to the adverse economic climate which
has affected operators' plans for investment. Most unbundled loops
are being used to deliver tailored services to SMEs and businesses.
74. Oftel has recently issued a number of documents relating
to LLU. In summary these are:
— Direction on BT's service level agreement.
http://www.oftel.gov.uk/publications/broadband/llu/sla1101.htm
Oftel has set out the service levels that BT must
offer to operators wishing to unbundle BT's local loop. The direction
has set out the compensation that BT must pay to operators, where
it fails to meet these service levels. For example BT will have
to pay operators £10 for each working day an unbundled loop
is unavailable and £80 per operator for each working day's
delay in providing co-location facilities.
— Direction on access to BT's exchanges by third
parties http://www.oftel.gov.uk/publications/broadband/llu/escac1201.htm
Oftel has determined that operators can have unescorted access
to BT's exchanges in order to carry out maintenance on their equipment,
unless escorted access is required for BT's own contractors.
— Draft direction on backhaul
http://www.oftel.gov.uk/publications/broadband/llu/back1201.htm
LLU backhaul is a wholesale service, which provides a link between
an operator's equipment at a BT exchange and an operator's point
of interconnection with BT's network. Oftel is proposing that
BT be required to provide backhaul services at a cost oriented
price.
For more details on what is happening on LLU and what Oftel
is doing, please see the Local Loop Unbundling Fact Sheet.
Leased Line Access
75. Leased lines are permanent high capacity telecommunications
links supplied by network operators to predominantly business
users, providing dedicated capacity to the user. Operators and
services providers also use leased lines to supply, for example,
backhaul for mobile networks and connections to the Internet for
Internet Service Providers. Leased lines may be provided at a
variety of bandwidths. These range from analogue to digital circuits
up to 622 Mbps.
76. Oftel initiated a review of the national leased line
market as a result of concerns about the extent of competition
in this market (particularly on the wholesale side). In August
2000, Oftel published a consultation document on national leased
lines, which found the market not to be effectively competitive.
In the light of responses to the consultation document and a request
from Energis for a direction in relation to permanent private
circuits (PPCs), there have been several major developments in
Oftel's national leased lines policy:
(a) Following consultation, Oftel issued a final Direction
to BT on 29 March 2001 allowing BT eight weeks to conclude negotiations
with ten operators regarding the provision of cost orientated
PPCs at all bandwidths. The Direction allowed BT a further six
weeks thereafter to make the products available to all Annex 2
operators. Constructive negotiations between BT and OLOs continued
past the initial eight week stage and resulted in the OLOs signing
commercial agreements with BT for the provision of PPCs.
(b) BT launched PPCs on 1 August 2001 and since then,
approximately two thirds of operators' retail private circuits
which were eligible for migration have been migrated to the wholesale
product. The availability of wholesale PPCs at all bandwidths
makes it possible for operators to achieve cost savings of over
30 per cent.
(c) Since 1 August, Oftel has received requests for determinations
on a number of issues from seven of the OLOs. OFTEL has decided
to deal with some of the issues on a `fast track' basis and to
issue a Determination on them within a substantially reduced timescale
compared to normal determinations. The remaining, more complex
issues will be determined by the end of January 2002.
(d) Oftel will publish a final statement on the state
of competition in the leased lines market alongside the second
Determination described above. The statement will include Oftel's
conclusions on the need to regulate wholesale prices on some or
all partial private circuits, in the light of developments following
the March Direction and Oftel's decisions on the most recent disputes.
Broadband Fixed Wireless Access
77. Broadband fixed wireless access (`BWA') allows high-speed
data connections using radio links between an aerial located on
the user's premises and a base station, rather than using a telephone
line or a cable television network.
78. Tele 2 currently offers commercial BWA data-only
services for business and residential users in the Thames Valley,
(Reading, Wokingham, Bracknell, Windsor, Slough), Leicester, Nottingham,
Coventry, Leeds, Bradford, Uxbridge (including Heathrow), Crystal
Palace (including Croydon) and Bristol using spectrum at 3.4GHz.
Additional cities due this quarter are Birmingham, Bath and Sheffield.
79. The Radiocommunications Agency (`RA') auctioned spectrum
for BWA at 28GHz in December 2000. Energis, Norweb, Faultbasic,
Broadnet, Chorus Communication and Eircom won licences in seven
out of fourteen regions, collectively covering 60 per cent of
the UK's population. There were no bidders in the remaining seven
regions. There is no current commercial deployment and no times
given by the winners as to when they might deploy, although trials
have started in at least one area.
80. The 28GHz licences that were not awarded in the auction
will be made available from mid October 2001 at the original reserve
prices (varying from £1 to £2 million), and with the
same conditions as previously (minimum coverage, no backhaul etc)
for 12 months.
81. Other operators have spectrum that could be used
for higher bandwidth fixed wireless access services but deployments
have been limited. For example, there has been some trial deployment
by Ntl of 10 GHz equipment for its customers.
82. Zipcom (formerly Radiotel) has a FWA licence suitable
for narrowband services. Atlantic recently closed their FWA services
following administration. The future of Ionica's 3.4GHz and 10
GHz spectrum is also currently under consideration and a number
of FWA licences are expected to be made available.
Mobile Higher Bandwidth Wireless Access
83. The Universal Mobile Telecommunication System (`UMTS')
is a so-called "third-generation (3G)," broadband, packet-based
system to be deployed in Europe for the transmission of text,
digitised voice, video, and multimedia to mobile computer and
phone users. The likely data rates range from about 144 kbps for
fast moving users in rural areas, up to 384 kbps for slow moving
users in urban/suburban areas, and perhaps up to 2Mbps for indoor
users on pico cells (indoor base stations).
84. The UK auction for 5 UMTS licences was held in April
2000. The winners of this competition were the existing 4 GSM
operators and TIW (which subsequently sold the licensee to Hutchison
Whampoa). Due to lack of widespread availability of 3G handsets,
commercial services may not be available until well into the year
2002, although Hutchison has stated plans for mid 2002.
Broadband Satellite Access
85. At the moment, some satellites in orbit around the
Earth can offer broadband services, however data transfer has
traditionally been in one direction only (from the network to
the end user). Interactive applications have recently become available
whereby a narrowband return path via the PSTN is used. The big
two players in Europe are Eutelsat and SES (which operates the
Astra fleet).
86. In July 2001, BTOpenworld announced that it would
soon be offering two-way broadband satellite services to consumers
in more remote parts of the UK (beginning in Northern Ireland
and the Highlands and Islands of Scotland). BT will be in partnership
with the satellite operator Gilat and expects to offer this service
to home-based, small and medium sized businesses from November.
This service will probably be based on VSAT (Very Small Aperture
Terminal) technology.
87. Eutelsat has submitted a proposal to the Department
for Education and Employment's (DFEE) `Wired Up Communities' initiative.
This proposal will offer satellite Internet access to homes in
Cumbria, using the PSTN as return path.
BACKGROUND AND
DEFINITIONS
Oftel's Aims
88. Oftel's approach is to promote competition in the
provision of access to the Internet and broadband services, thereby
giving consumers a greater choice, better value and higher quality
and spurring take up. Oftel seeks to match the level of regulation
to the level of competition in the market, while continuing to
protect and inform consumers where the market cannot do so.
Government Initiatives
89. The Government's aim is to make the UK the best place
for e-commerce in the world by 2002 and to make the UK a leading
knowledge economy and ecommerce nation. Major Government targets
are:
— UK to have the most extensive and competitive
broadband market in the G7 by 2005
— Ensure that everyone who wants the Internet has
it by 2005
— Ensure that all Government services are online
by 2005.
90. The Office of the e-Envoy [OeE] is leading the Government's
drive to get the UK online and to ensure that the country, its
citizens and its businesses derive maximum benefit from the knowledge
economy. A UK Online Broadband Stakeholder Group has been set
up, chaired by the e-Minister, to assist the Government in the
development and implementation of broadband strategy. The group
published an initial summary of its recommendations (25th September
2001) to drive forward the rollout of broadband services in the
UK.
Definitions
91. This brief summarises the key developments in the
market for Internet and broadband services in the UK, and describes
Oftel's involvement in these markets. `Dial-up' or `narrowband'
Internet access is used in this brief for access speeds up to
and including 128 kilobits per second (kbps). `Broadband' is used
in this brief to refer to higher bandwidth, always-on services,
offering data rates of 128 kbps and above.
2
SMEs are defined as businesses with 1-250 employees and minimum
turnover of £50,000. Back
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