|
Memorandum submitted by BT
Broadband Speed
1. BT is pleased
to provide these comments on the questions raised by the Committee around the
topic of broadband speed and related matters. There is no doubt that the
communications sector has a vital role to play in helping the
2. The Government's Digital Britain Report of 16 June sets out a broad range of proposals related to the future development of the digital economy. BT is supportive of the Government's plans in the area of fixed network developments and is keen to work with others in pursuit of them.
3. This paper focuses on the questions the Committee has asked around the topic of broadband speed. In doing so we touch on some of the related issues covered in the Digital Britain report itself, but this input does not constitute a response to that report. We would, of course, be happy to elaborate on any of the topics if the Committee wishes.
Question 1: Is the target for universal access to broadband at a speed of 2Mbs by 2012 ambitious enough?
4. Achieving universal access to broadband at 2Mbs by 2012 will require significant investment using a mix of technologies and a considerable planning effort. The role of the proposed Network Design and Procurement Group will clearly be a key factor in achieving the most efficient use of the planned £200m in public funds to support the commitment and we await further details of how this new body will operate.
5. When achieved, this availability of a 2Mbs service would represent a threshold minimum access entry to enable people in some 2 million households that are currently unable to achieve broadband at such speeds to benefit from a full range of services beyond general internet browsing and email, such as faster music downloads, BBC i-Player, and real time standard definition TV streaming (e.g. BT Vision on demand and the proposed Canvas joint venture involving BT, BBC, ITV and Five). These are the services that will drive demand and are all made possible with a 2Mbs link provided it is stable, consistent and uncontended.[1] Of course, many customers already enjoy speeds much greater than this and consumer behaviour and demands will change over time. Expectation over what constitutes an essential minimum speed is likely to evolve.
6. BT is continuing to develop the technology that lies behind existing broadband, and has recently announced details of a trial at eight locations across the country of its Broadband Enabling Technology (BET), which delivers broadband (with a minimum downstream speed of 1Mbs) over much longer distances than has been possible previously. This could play a major role in delivering broadband to current "not spots" - i.e. homes that are currently too far away from their local exchange to receive a broadband service. The cost of providing 2Mbs service to the last few customers would be prohibitive and make the achievement of 100% coverage highly unlikely. However, if there is funding to help meet the additional costs involved in deploying the technology, BET could offer a reliable and cost-effective solution to assist the Government's ambition of delivering a minimum 2Mbs service to virtually all UK homes by bonding two copper lines over BET wherever possible.
7. This
Universal Service Commitment forms part of an ambitious set of measures to
improve digital inclusion and participation across the
Question 2: Is the Government right to propose a levy on copper lines to fund next generation access?
8. The move to next generation access, which in practice means the move to the
installation of fibre, as a means of providing for even faster broadband speeds
in the future, is now generally seen as a critical part of the
9. The Government concluded in the Digital Britain Report that there is a case for public investment to ensure that super-fast broadband is rolled out further and faster than would be feasible purely on commercial grounds. We applaud this policy ambition since it is likely that such investment will be good for the economy as a whole, including stimulation of the creative industries.
10. Most countries that have deployed fibre networks have either benefited from direct government intervention in the form of loans and/or tax breaks or a very different regulatory philosophy that recognises platform based competition and the realities of wider converged communications and TV market. We have always made clear that we believe in a pro-competitive approach and we are committed to offering fibre access on an open, wholesale basis, whilst acknowledging that this approach can make the business case for rolling out fibre more challenging.
11. As
with all revenue raising measures, there are always alternatives and this case
is no exception. If the policy ambition
is for the
Question 3: Will the Government's plans for next generation access work?
12. The
13. We have already announced
that we will invest £1.5 billion in rolling out super-fast broadband to around
40% of the homes and businesses in the
14. NGA infrastructure requires significant
investment and the returns are as yet uncertain. Some have suggested that there should be a
requirement to provide so-called 'passive' services, whereby the wholesale service takes the form of access to a
network element such as duct, or dark fibre i.e. without any enabling
electronics attached. A requirement to provide 'passive' services
would make it more difficult for any existing network operator to justify the
investment case. This could jeopardise the Government's hopes for Digital
Britain. Instead, we believe that whoever deploys an NGA infrastructure
should make available from it appropriately priced
wholesale active line access services on a non-discriminatory basis, using
industry standard interfaces. In this way the Government can ensure the
continuation of the competitive landscape that has made the
Question 4: Are companies providing the speed of access which they promise to consumers?
15. Ofcom has recently published a report
on its research into broadband speeds for the 6 months to April 2009. This shows that on average customers are receiving 4.1Mbs as
against an average headline speed of 7.1Mbs. BT's standard offering currently
is of up to 8Mbs and we are making even higher speed broadband available over
copper using ADSL2+ technology. This new
service, which will increase average speeds by up to three times what is
possible now over copper, is currently available to 40% of the
16. BT believes that customers should know what they are getting when they sign up for broadband. We believe in total transparency for the customer and, therefore, provide a customised speed estimate on their lines to consumer customers before they sign up for broadband from us. It is, of course, impossible for BT or any other ISP to guarantee speeds since these will depend on a number of factors, including home wiring, the number of customers accessing broadband at the same time, etc. All networks operate on the basis of shared resource amongst customers and at peak times speeds will be slower than at quieter periods. A simple analogy is that the average speeds possible to achieve when driving on motorways reduces during 'rush hour' as the motorway lanes become congested.
17. It is also important to remember that speed using DSL technology is a function of line length and line quality. BT has been at the forefront of technological improvements over many years that have seen broadband extended to ever greater distances from exchanges, bearing in mind also that the key measurement is line length and not distance from the exchange as the crow flies. The new trials of BET (see para 6 above) are but the latest manifestation of this technical evolution.
Question 5: To what extent does current regulation strike the right balance between ensuring fair competition and encouraging investment in next generation networks?
18. A regulatory regime to reflect the dynamic competitive market we have in the UK, to provide the right framework for that competition to flourish, and to encourage the level of investment needed to keep the UK as a leading digital economy, should embrace some basic principles:- · wholesale access to enduring bottleneck facilities, focussing on the deepest levels of network infrastructure where competition is economic and sustainable · a level playing field between market participants · technological neutrality · rates of return that reflect the investment risk involved
19. Regulation must be forward looking and should reflect the reality of the
wider converged communications market rather than a narrower focus on
traditional telecommunications. To do anything else would be to misunderstand
the way that technology and markets have changed and will continue to evolve.
The
20. As an example, we are, therefore, encouraged that Ofcom's long drawn-out investigation into the pay TV market has concluded that competition and innovation have suffered as result of Sky's monopoly and has published its proposed remedies for this distortion, requiring Sky to offer its premium channels in the wholesale market. The outcome of this consultation will impact on every consumer who would like a choice of suppliers, lower prices and access to premium sports or movie channels.
21. However,
it is very important that Ofcom stands by its plan to make a full set of
channels available and to set clear prices for them: competition will not be
enabled if only a few channels are made available. A successful conclusion to
this consultation will send a very clear message to the industry and to users
about the way in which the markets have changed and about how things will
develop in the future. In doing so, they
would provide a stimulus to innovation in applications and services and help to
support the vision for next generation access investment. In other countries,
pay TV and access to attractive content have been important drivers to
facilitate investment in next generation access. At the moment, the
Question 6: Are there any other views stakeholders think the Committee should be aware of?
22. In all the talk about broadband speed and
where the UK lies in comparison with other countries, the underlying truth is
that modern communications networks are vital to the economic and social
well-being of nations in the 21st century. They provide the
conditions for countries to be competitive in the global economy and they
provide the framework within which competition and innovation can provide
customers, both businesses and consumers, with real benefit in terms of new
services and value for money. This is not, therefore, an academic issue for the
23. Operators around the world are investing in 'super-fast broadband' - usually fibre - to provide speeds in tens or even hundreds of Megabits per second. As mentioned earlier, BT plans to invest £1.5 billion in fibre-based, super-fast broadband to as many as 10 million homes and businesses by 2012, and this will deliver services with top speeds ranging from 40-100Mbs with the potential for even higher speeds in the future. BT wants to extend this coverage as far and as fast as possible, but the commercial case for doing so at present is difficult to make.
24. Identifying the services that will drive demand for super-fast broadband is, therefore, important and as these develop then the commercial case will become easier. People have, for some time, talked about and been searching for, the 'killer application' - so far without success. But we can summarise some important principles:- · super-fast broadband and the increasing number of network-connected devices will move the internet beyond the bedroom or study and into the main living spaces; · modern communications are vital for economic and social reasons; · video, in particular HD video, is a key application, requiring increased bandwidth for multiple, concurrent users in the home to simultaneously see, hear, and share high quality content; · community and social networking will become quicker, richer and more inclusive; · there is already good social acceptance of new media and communications; · IPTV (streaming and on-demand) will also be a primary application driver.
29 September 2009
[1] Contention in the access layer, where multiple customers share an access link resulting in lower speeds at busy times, is generally a feature of the cable and mobile access technology. ADSL is typically un-contended at the access layer, whereas cable TV is contended within the local access link and mobile and satellite access services are contended across all customers within the given mobile footprint. |