3 Universal Service Commitment
Background
17. The roll-out of broadband has provided 99%
of the population with access to some form of broadband service.[13]
However, the speed an individual connection can be expected to
achieve is dependent on a number of factors. These include:
- the distance of the user from
the telephone exchange or the telecoms cabinet;
- the time of day; and
- the equipment and wiring that the consumer is
using at home.[14]
18. The current average UK broadband speed is
4.1Mbps, but many areas experience speeds well below that average.[15]
We deal with advertised connection speeds later in this report,
but there are two particular geographic locations which tend to
be more likely to suffer from below average connection speed.
They are:
- rural areas which are far from
the telephone exchange building; and
- suburban areas which are often on the periphery
of neighbouring exchanges and far from the telecoms cabinets [Cabinets
are the green structures which can be found on pavements].
The Government has proposed to address this problem
with the introduction of a Universal Service Commitment for the
delivery of a 2Mbps connection to virtually every household by
2012.[16] This has the
potential to provide significant benefits to rural areas and,
in particular, to rural businesses whose competitiveness often
depends on effective communications. The Minister confirmed that
£200 million had been allocated as the "central resource"
needed to deliver the commitment, but that further funding may
be sought from industry, Regional Development Agencies or local
authorities.[17]
Finding a suitable speed for commitment
19. The Government's 2Mbps target is an attempt
to balance a reasonable connection speed with the cost of providing
that service and the number of homes to which the service would
be extended. The following table, provided by the Department,
demonstrates the level of services which can be delivered according
to connection speeds:
| 256 kb/s
| 512 kb/s
| 1Mb/s
| 2 Mb/s
|
| Basic internet browsing
| As before plus |
As before plus | As before plus
|
| Instant Messaging | Basic video streaming
| iPlayer | Download music album in 5 minutes
|
| Email | Tele-health
| SecondLife | Long-form video (MPEG4)
|
| VoIP | Faster internet browsing
| P2P file-sharing | Video conferencing via TV
|
| Online radio |
| Fast internet browsing
| |
| Basic video call |
| Download audio CD in 10 minutes
| |
| Network storage & backup
| | 'Near-VHS' PC conference call
| |
Capability
of different internet connection speeds[18]
20. We found a consensus among internet service
providers that the level of 2Mbps was appropriate. TalkTalk, which
provides about 25% of the United Kingdom's broadband connections,
argued:
The proposal has had its critics who claim it is
not ambitious enough. In fact what they are implying is that more
money should be spent to achieve higher speeds. These critics
have not presented any argument or evidence to suggest that additional
spend will deliver additional net benefits.[19]
Dr Whitley, the Group Strategy Director of BT, believed
that 2Mbps represented a "good notional aspiration for a
minimum".[20] The
2Mbps level for the Universal Service Commitment was also welcomed
by the CBI:
The average speed currently experienced by consumers
in the UK is 4.1Mbps per second which makes the USC speed of at
least 2Mbps below the average at which most of the UK households
operate, but still among the most ambitious commitments in Europe.[21]
21. However, others were less convinced. Mr Holoway,
Managing Director, IT Support Line Ltd, believed that the Government
could have been more ambitious rather than "just stumping
for 2Mbps", and argued that the target could have been set
between 5Mbps and 10Mbps.[22]
Mr Jonathan Stearn, Head of the Disadvantage Programme, Consumer
Focus, believed that the 2Mbps level was chosen on the basis of
what was achievable rather than what was desirable.[23]
In addition, we received written evidence from Digital Region,
a provider of an NGA network in Yorkshire, which argued that 2Mbps
left a lot to be desired "in the provision of the additional
capabilities of Next Generation Access, such as Quality of Service,
multiple service providers across a single connection, guaranteed
bandwidth."[24]
22. There is a balance to be struck between the
desire for ever faster broadband connections and the costs attached
to applying a Universal Service Commitment at a minimum level.
Given the case made for 2Mbps
by Government and Internet Service Providers, and the services
which 2Mbps will deliver, we agree that the Government has set
the Universal Service Commitment at an appropriate level. However,
our support is contingent upon a clear definition of what 2Mbps
represents.
Defining 2Mbps
23. While we agree, in principle, that the Government
has set the USC at an appropriate level, it became apparent that
there was no clear definition of what 2Mbps represented. The Advertising
Standards Authority offers the following description of the variable
nature of connection speeds, and the problems in monitoring those
speeds:
an individual's connection is not consistent - it
can fluctuate according to the time of day - and [so] the difficulties
of creating a meaningful message for consumers about the speed
of a broadband service quickly become clear.[25]
24. The Minister noted the importance of a clear
definition,[26] and offered
the following description of what he believed 2Mbps represented:
"It is the speed which gives access to most
of the service that are currently in use and in our memorandum
we provided a table setting out the applications to which that
level of service will give access. You are right, of course, that
because of the nature of DSL there is some variability in what
is provided. It can sometimes vary at different times of the day.
We think it is the right level of service to give access to the
applications which are widely used."[27]
Pressed for a more precise definition, Mr Timms responded
that "we will give virtually everybody access to a line capable
of delivering 2Mbps".[28]
However, he also gave the following qualification:
It is not a guarantee that under any circumstances
2Mbps functionality will be available because there is a degree
of variability about that. But the service that is provided will
be capable of delivering 2Mbps.[29]
In supplementary evidence, the Department said that
it expected that a connection provided by the Universal Service
Commitment would be "a 2Mbps downstream connection for all
practical purposes, and deliver 2Mbps most of the time allowing
for the occasional drop in headline speed".[30]
25. The Department subsequently stated that the
connection the USC would provide "should look and feel like
a 2Mbps commitment as someone in areas served by the market would
understand it."[31]
This is not a helpful statement. What a 2Mbps connection
"feels" like is subject to the time of day the user
tends to use the internet. Someone whose use is restricted to
the evenings (i.e. peak hours) would have a very different feel
of 2Mbps to someone whose use was confined to the mornings.
26. Although the Minister believed that there
was "clarity" on the Universal Service Commitment,[32]
Rachel Clark, Deputy Director of Broadcasting and Content, Department
for Business, Innovation and Skills, explained that a more detailed
specification would be carried out by the Network Design and Procurement
Group:
In [the department's] view the technical specification
is something that needs to be done with [the Network Design and
Procurement Group's] knowledge and expertise, so we would want
the procurement team in place [before making the] technical specification.[33]
27. We are concerned that the
Government is committed to a Universal Service Commitment of 2Mbps,
with a budget of £200 million, without a clear definition
of what it means. The criteria upon which any significant spending
is based must be made clear. Together with the Network Design
and Procurement Group, the Government needs to address this issue
as a matter of urgency.
28. We believe that the Universal
Service Commitment should deliver a minimum
2 Mbps under normal circumstances, to all users. This achievable
objective would provide a greater range of services to all areas
of the United Kingdom.
Delivery of the Universal Service
Commitment
29. Delivery of the Universal Service Commitment
will be the responsibility of the Network Design and Procurement
Group (NDPG). The Group has been created by the Department and
is to be responsible for:
"structuring and running the procurement process,
overseeing delivery, ensuring active stakeholder engagement, and
accountability for the value for money use of the direct public
contribution to the Universal Service Commitment."[34]
30. The Government is waiting for the Network
Design and Procurement Group to draw up the technical specifications
on the commitment and has stated that it will "be their top
priority when they are appointed early next year."[35]
Currently, without a working definition from Government, it would
seem the Network Design and Procurement Group will define its
own objectives based upon the budget that the Government has allocated.
31. Currently, the Network Design
and Procurement Group will define its own targets, delivery mechanisms
and terms of reference. This is not acceptable for the delivery
of the Universal Service Commitment. The Government must publish
a set of publicly available guidelines, defining what the targets
are and the best practice for delivering them.
32. The problems surrounding delivery are potentially
compounded by the method of tendering contracts. The Government
believes that in many low speed areas "a fibre to the street
cabinet solution may well be the most economical."[36]
However, Digital Britain states that the tendering of contracts
will be based on a reverse auction[37]
without setting out the details for that auction.[38]
We are concerned that the reverse auction process would favour
the cheapest rather than the most cost-effective solution. When
asked if value for money or cost alone would be the main criterion
for the reverse auction Ms Clark from the Department, stated:
The procurement process will need to explain absolutely
clearly fundamentally what it is we expect bidders to deliver
and within that we need to look at value for money[39]
33. Mr Timms acknowledged that nature of the
tendering process had not been clearly defined:
Precisely what mechanism they will use […] I
agree there is space for debate, and quite an important debate,
but I think that value for money is certainly an important consideration.[40]
34. While we accept it is appropriate
that the Network Design and Procurement Group be consulted in
designing the procurement process, the Government needs to state
expressly that value for money will be a cornerstone of its procurement
model rather than proceed with a purely cost-based reverse auction.
35. It is the Government's ambition that, where
appropriate, Next Generation Access (NGA) should be used to deliver
the USC, and that for 1.5 million homes this may be the most cost-effective
solution.[41] We believe
this is sensible as it limits the prospect of two sequential publicly
subsidised upgrades—first, under the USC and second, under
the Final Third programme, which we consider in the next section
of this Report. That said, the level of demand for NGA remains
uncertain and may not be at a uniform level across the country.
For example, demand may be higher in rural areas as those communities
often receive a poor service over the current network. There is
an opportunity to address these uncertainties by using the communities
who receive Next Generation Access under the Universal Service
Commitment as market bell-weathers to indicate the strength of
demand in areas that the market would not consider viable.
36. In order to maximise the
benefits of the Government's ambition to provide the Universal
Service Commitment through Next Generation Access networks, we
believe that where possible the economic data of the upgrade should
be placed in the public domain. This offers the opportunity to
use the USC as a testing ground for the roll-out of Next Generation
Access.
13 "BT to speed up 24Mbps ADSL Max broadband penetration",
www.broadbandanalyst.co.uk, 24 September 2009. Back
14
Ev 48 Back
15
Ofcom, UK Broadband Speeds Report 2009, July 2009 Back
16
Department for Business Innovation and Skills, Digital Britain,
July 2009, p 53-54 Back
17
Q 167 Back
18
Ev 41 Back
19
Ev 150 Back
20
Q 21 Back
21
Ev 75 Back
22
Q 64 Back
23
Q 64 Back
24
Ev 98 Back
25
Ev 49 Back
26
Q 147 Back
27
Q 148 Back
28
Q 151 Back
29
Q 154 Back
30
Ev 44 Back
31
Ev 44 Back
32
Q 159 Back
33
Q 157 Back
34
Department for Business, Innovation and Skills, Digital Britain,
July 2009. p 58 Back
35
Q 157 Back
36
Department for Business, Innovation and Skills, Digital Britain,
July 2009, p 54 Back
37
A bidding system where the lowest bid wins. Back
38
Department for Business, Innovation and Skills, Digital Britain,
July 2009, p 65 Back
39
Q 164 Back
40
Q 164 Back
41
Department of Business, Innovation and Skills, Digital Britain,
June 2009, p 54 Back
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