Memorandum submitted by the Commission
for Rural Communities (CRC)
The CRC was established in April 2005 and became
an independent body on 1 October 2006, following the enactment
of the Natural Environment and Rural Communities (NERC) Act. Our
role is to provide well-informed, independent advice to government
and ensure that policies reflect the real needs of people living
and working in rural England,[48]
with a particular focus on tackling disadvantage. We have three
key functions:
— Rural advocate: the voice for
rural people, businesses and communities.
— Expert adviser: giving evidence-based,
objective advice to government and others.
— Independent watchdog: monitoring
and reporting on the delivery of policies nationally, regionally
and locally.
The CRC exists to speak up for rural people
and communities, especially those experiencing disadvantage, and
ensure that policies take full account of rural needs and circumstances,
holding government and others to account for their delivery.
BACKGROUND TO
OUR EVIDENCE
During February and March 2009, the CRC undertook
a "rural proofing" analysis of the Digital Britain interim
report including research and consultation. More than 50 documents
were submitted to CRC for consideration through partners and the
Rural Services Network. We also commissioned independent analysis
of rural connectivity from a technical viewpoint; the first time
this has been done for Next Generation Access on a consistent
basis across England.
In June 2009, we brought together this technical
statistical analysis and "on the ground" consultation
to produce our report: Mind the Gap: Digital England—a
rural perspective. This definitive report provides our findings
on the potential impact of and opportunities for England's rural
economies and communities presented by the Digital Britain report.
In this submission, we focus on the technical
barriers to faster broadband speeds. However, these barriers are
compounded by a number of social factors unique to rural areas.
For example, 44% of the 17 million people at risk of digital exclusion
are over the age of 55. In rural areas the median age of the population
is six years higher than in urban areas and increasing by three
months every year, placing them at greater risk of digital exclusion.[49]
In short, lack of access to digital technology, inadequate broadband
and mobile telephone coverage combined with lack of engagement
with digital technology all contribute to a complex set of issues
for rural communities and lead to disadvantages including:
— limited access to online government services;
— limited job search opportunities and
options such as online training;
— lack of high-speed broadband coverage
stifling business innovation; and
— lack of access to educational and social
opportunities delivered by digital technology.
1. Overall rural findings
1.1 The true extent of broadband availability
has never been made publicly available. Only BT is in a position
to do this; they have previously said this is commercially sensitive
data.
1.2 The CRC therefore commissioned SamKnows,
the broadband information service, to research the likely ability
of existing landline broadband services, with a particular focus
on rural areas, to provide the speed required to achieve the Universal
Service Commitment (USC) of 2 Mbps.[50]
The research showed that:
— 12% of households in rural towns and
30% of households in villages and hamlets currently receive speeds
of under 2Mbps.
— 7% of households in rural towns and 17%
of households in villages and hamlets currently receive speeds
of under 0.5Mbps.
The following map shows the areas where ADSL
broadband services are likely to fall short of the proposed 2Mbps
USC, and where there is no mainstream alternative such as Virgin
Media cable services.[51]
This represents 813,000 rural homes:
1.3 The broadband speeds available in rural
areas are comparatively low, but despite this handicap, rural
households are still more likely to have broadband connections
than those who live in urban areas:
— 59% of rural households have broadband,
compared with 57% in urban areas.
— Take-up of broadband services in rural
areas as a proportion of the population, exceeded that in urban
areas in 2007-08.
1.4 However, based on Ofcom research,[52]
rural users are also more likely than their urban counterparts
to be dissatisfied with their overall broadband services and with
the speed of their service:
— Among consumers on 8Mbit/s packages,
the average speed for urban users is 15% higher than for rural
users.
— 42% of rural broadband users state speed
as their main reason for dissatisfaction, compared with 22% of
urban users.
1.5 Recent investment by BT should enable
99.8% of lines that are connected to a broadband exchange to receive
a 512kb/sec service. However, this merely gives rural communities
improved access to basic broadband, not the most competitive bandwidth
speeds. A number of factors influence the availability of faster
ADSL speeds in Rural areas:
1.5.1 Cable services are almost exclusively an urban
offering:
— Almost 60% of urban areas are able to
receive a cable-based broadband service of up to 50Mbps, compared
to 1.5% of villages and hamlets.
1.5.2 The same is true of competitive ADSL services
from Local Loop Unbundling (LLU) operators.[53]
— Urban residents might typically expect
to choose from five competitors to BT, many of whom will be offering
the faster ADSL2+ technology.
— In most of rural England, BT remains
the sole broadband provider.
1.5.3 The existence of line sharing devices, known
as Digital Access Carrier System (DACS), may further increase
the numbers of those unable to get broadband services.
— The number of copper phone lines laid
between an exchange and a rural village was calculated many years
ago and in many cases hasn't increased since.
— Rather than build new connections, BT
and its predecessor used line-sharing technology to meet the additional
demand.
— Communities that evolve and grow, developing
a more diversified economy, typically demand more phone lines
as the number of homes and businesses grow.
— Ironically, line-sharing technology is
therefore more likely to exist in communities with a higher than
average demand for broadband services. The precise scale of this
problem is unknown and while it is considered less of a problem
than line-length, it is a significant problem in some rural areas.
— We recommend that up to date data is
obtained from telecommunications providers to identify the true
extent of line-sharing.
2. 2Mb/s USC by 2012—ambitious enough?
2.1 Current rural demand: 2.1.1 In May 2008,
Ofcom published a report which assessed television, radio, internet
and communications habits across the regions and nations.[54]
The report found that rural households are now more likely to
have broadband connections and that take-up of broadband services
in rural areas, as a proportion of the population, exceeded that
in urban areas in 2007-08.
2.1.2 Ofcom suggested much of the demand in rural
areas was driven by the need for online shopping, banking and
communication:
— Buying goods online is more popular in
rural areas; about three-quarters of rural internet users say
they use the internet for transactions, higher than the UK
average of 69%.
2.2 Future rural demand:
2.2.1 Numerous reports have been produced over the
past three years examining the future needs of users for bandwidth,
all of which talk about the "inexorable rise" of demand
for bandwidth;[55]
eg the capacity to use an internet connection for several purposes
at once, such as videoconferencing while updating a large database
of customer requests.
2.2.2 New services and innovations which change the
way we live and work are constantly emerging eg BBC iPlayer, YouTube
and online banking. New services will require more capacity, and
that will put greater strain on the existing broadband network
in rural areas. The UK also has the highest number of public services
available online, some 89%, compared to around 70% in France and
Germany, which will continue to expand:
— Tele-health offers the potential to allow
home-monitoring of conditions for the most remote, and potentially
most costly, patients to reach.
— Highlights of the Olympics will be accessed
via the BBC's iPlayer.
2.2.3 Therefore, while we accept that 2 Mbps may
be sufficient to access public services on a "standalone"
basis, the reality of internet use is that standalone access is
not the norm and speeds in excess of the proposed USC would therefore
be required.
2.3 The potential for greater inequality:
2.3.1 Without intervention, polarisation of service
access and quality of delivery for people living in rural areas
will continue. This will therefore impact upon the lives of 20%
of the population as a whole.
2.3.2 The CRC wants everyone living in rural areas
to be able to access services at the same level as their urban
counterparts.[56]
2.3.3 The CRC believes that rural communities need
and deserve broadband speeds which will support them now and equip
them for the future. Rural communities do not deserve a stop gap
solution. See section 4.3 for further details of potential inequality
if NGA provision in rural areas is left to the market.
3. Is the government right to propose a levy
on copper lines to fund next generation access?
3.1 For full discussion of NGA funding and
delivery, please see section 4, below.
3.2 The CRC would expect to see a significant
(and, at a minimum, proportionate) share of funding generated
from the proposed levy re-invested in rural areas.
4. Will the government's plans for next generation
work?
4.1 CRC fully supports the case for Next
Generation Access but we also recognise, particularly in this
time of economic challenge, that the equitable roll-out of NGA
across all areas, both urban and rural is potentially a colossal
financial undertaking.
4.2 As with the history of roll-out of other
essential utilities we recognise that NGA roll-out will be more
complex and will take longer in more remote areas.
4.3 Rural homes will not be connected by
market solutions alone.
4.4 The models described in section 1.2
indicate that 813,000 rural homes may not currently be able to
receive a 2Mbps service. BT and Virgin Media are aiming to deliver
enhanced services in urban areas but the investment case for rural
areas is made against a backdrop of purely market and commercial
drivers. It therefore seems unlikely that a conventional "market"
solution will deliver for these customers.
4.5 Despite the potential of rural areas,
they are overlooked by service providers because their geography
creates a perceived barrier to investment. Understandably, existing
commercial investment models do not take into account the social
impacts and benefits alongside the economic ones.
4.6 CRC has employed Community Broadband
Network's modelling tools to estimate the "mean distance
between neighbours" as a proxy for the cost of deploying
NGA broadband—the greater the distance between neighbours,
the greater the cost of the civil engineering works to install
fibre-optic cables, for example.
4.6.1 Unsurprisingly, when this data is mapped it
highlights that the 60% of the areas most likely to see next generation
broadband investments are almost exclusively urban; geographically
tightly focused and densely populated areas.
4.6.2 We estimate that on average "rural"
homes as defined by the ONS are 30% farther apart than "urban"
homes, and therefore at least 30% more expensive to reach with
true NGA services.
4.7 The Digital Britain interim report states
it does not wish to "chill" private sector investment,
but the lack of Local Loop Unbundling in rural areas and absence
of cable alternatives in sparser areas shows that the investment
climate in rural areas is mainly "cold" for access to
NGA, despite increasing demand for broadband in rural areas. The
risk is that as rural residents and businesses demand more, the
market will fail to meet this demand and instead invest in a "digital
cities" strategy meaning that those living and working in
rural areas may not maximise their life chances or that businesses
will fail to reach their full potential.
4.7.1 This is borne out by the following map, which
shows the Openreach NGA pilot areas announced to date. Virtually
all are situated in areas with more than two operators:
4.8 The cost of providing NGA services to
rural communities via fibre-optic networks has been estimated
at over £1.5 billion.[57]
We therefore concur with the assertion of the Digital Britain
report that using some elements of the existing mobile phone infrastructure
and wireless spectrum to help achieve the USC is worthy of detailed
consideration. In considering this, the CRC highlight four which
require further research:
4.8.1Spectrum: Issues surrounding so-called 4G services.
4.8.2Coverage in rural areas: eg In many rural areas,
especially forestry and farming areas, mobile services are patchier
and data rates considerably lower, if indeed they exist.
4.8.3Backhaul from mobile base stations: It would
be necessary to understand how the connection from the base station
to the network can be scaled-up to deliver acceptable service
quality.
4.8.4Costs to users and download limits: If mobile
broadband is to become a practical solution for rural communities
then packages with similar transfer allowances to ADSL and cable
broadband packages will be essential.
4.9 There will also be the need to coordinate
a common set of standards for public services to be available
over mobile devices.
4.10 Satellite-based broadband was the mainstay
of many early community broadband services; almost any location,
which can see the southern sky, is likely to be able to receive
a satellite service. However, there are significant issues to
resolve:
4.10.1The cost of installation is still much higher
than terrestrial broadband options with costs often in excess
of £600.
4.10.2Technical issues exist: eg Satellite broadband
users experience around a ½ second delay (or "latency")
in sending and receiving signals, leading to problems with certain
internet applications.
4.11 A further issue is that applications
which involve exchanging information in real-time, such as secure
connections to e-commerce sites and VPN tunnels, and two-way multimedia
applications like telephony, video-conferencing or online gaming
are also not well supported by satellite technology. For these
reasons, satellite-based broadband can at best be considered an
inconsistent "stop-gap" solution.
5. Rural vs Advertised Speeds
5.1 Based on Ofcom's research, we know that
rural users are both more likely than their urban counterparts
to be dissatisfied with their overall broadband services and with
the speed of their service. They typically receive slower speeds
than urban users (among consumers on 8Mbps packages, the average
speed for urban users is 15% higher than for rural users).
5.2 Rural dwellers must also pay a premium for
faster services—Sky Broadband is available in urban areas
but rural residents typically pay £12 more for the service
per month.[58]
6. Regulatory Issues
6.1 The CRC recommends that existing and
future business incentives apply to digital technology and infrastructure
development ie installing fibre optic cable should be an approved
business expense and therefore tax deductable.
6.2 The CRC wants to see rural communities have
greater access to the broadband opportunities which schools can
offer, particularly the broadband infrastructure available to
schools.
6.2.1The CRC has been informed by the English RDAs
and others that Competition and State Aid regulations in support
of public sector procurement create a barrier to the shared use
of infrastructure; for example, a school's ICT infrastructure
being shared by local healthcare providers. The CRC has suggested
to Ministers that a framework contract between public sector departments
should therefore be developed in order to enable shared infrastructure
development.
6.3 CRC welcomes Planning Policy Statement
4 and would like to see, where appropriate, a significant proportion
of all new rural housing being designed and equipped to enable
home working through the accommodation of broadband accessibility.
September 2009
48 Rural is defined by the ONS as any settlement with
a population under 10,000. Back
49
Median age in urban areas; 38.5 years. Median age in rural areas;
44.4 years. Back
50
SamKnows estimated ADSL broadband speeds using their line-checking
service for the population centre for each of the 32,000+ ONS
"lower super output areas" (LSOAs) in England. Whilst
not perfect, the LSOA model does lead to a good understanding
of the main cause of slow speeds and not-spots, namely telephone
line length. Back
51
Derived from Samknows Data, produced for Community Broadband Network. Back
52
Ofcom, Nations and Regions Communications Market Report 2008. Back
53
"Local Loop Unbundling" is the process by which the
incumbent operator (generally BT) makes its local network (the
copper cables that run from customers premises to the telephone
exchange) available to other companies, to provide competition
and/or faster services. Back
54
Ofcom, Nations and Regions Communications Market Report 2008. Back
55
See "Predicting Future UK Residential Bandwidth Requirements",
Broadband Stakeholders Group, 2006; or "Quantifying the Broadband
Access Bandwidth Demands of Typical Home Users", Harrop W
and Armitage G, Australian Telecommunication Networks & Applications
Conference (ATNAC), Australia, December 2006, ISBN/ISSN 0977586103. Back
56
An increase in service users with access to good quality internet-based
services can shift the balance towards more online transactions
with subsequent savings for the taxpayer. Rural areas potentially
have the most to gain as some rural residents currently have to
travel long distances to meet with council officers and other
public sector organisations or service providers. Back
57
Broadband Stakeholder Group estimates the cost of providing NGA
to all of the UK at £30 billion. This indicates a working
cost of approximately £1.6 billion to provide NGA services
to rural communities who cannot benefit from the USC. Back
58
http://packages.sky.com/surf-Sky Broadband Connect costs £17/month
in non Sky Broadband areas but £5/month for Sky Broadband
Base in areas covered by their network. Back
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