Broadband - Business, Innovation and Skills Committee Contents

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.


  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 2008Back

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 2008Back

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 Broadband Connect costs £17/month in non Sky Broadband areas but £5/month for Sky Broadband Base in areas covered by their network. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 23 February 2010