Memorandum submitted by Communications
Consumer Panel
1. ABOUT THE
COMMUNICATIONS CONSUMER
PANEL
The Communications Consumer Panel was established
under the Communications Act 2003 as an independent, evidence-based,
advisory body. Its role is to influence Ofcom, Government, the
EU, and service and equipment providers so that the communications
interests of consumers and citizens are protected and promoted.
The Panel is required by the Act to have particular
regard to the interests of vulnerable consumers, including the
elderly, people with low incomes, people with a disability or
people living in rural areas. The Panel's remit also covers the
interests of small businesses. Small businesses are defined as
businesses with up to ten employees.
The Consumer Panel is made up of ten part-time
members with a balance of expertise in consumer issues in the
communications sector. There are members representing the interests
of consumers in Scotland, Wales, Northern Ireland and England.
Panel members are appointed by Ofcom in accordance
with Nolan principles, and subject to approval by the relevant
Secretaries of State. Ofcom also funds the Panel and provides
a small support team, equivalent to four full-time employees.
Team members are Ofcom employees, but work for and in the interests
of the Panel.
2. SUMMARY
Evidence from consumers
— Our evidence shows that broadband is
highly valued and will soon be essential for everyone.
— There is broad support for government
intervention to ensure people can get access to broadband wherever
they live
Universal broadband commitment
— The key test for the success of the universal
broadband commitment is whether people everywhere in the UK will
be able to use the online services and carry out the activities
that they value in a reliable and consistent way.
— A speed of 2Mb/s is enough to support
the services that people are using and value now: accessing information,
communicating and carrying out transactions, and entertainment
services, such as downloading and streaming TV content.
— There are a number of issues that need
to be considered as part of the implementation of the commitment,
including:
— Ensuring consumers know which services
they will and will not have access to with a broadband speed of
2Mb/s
— Ensuring consumers have a right to redress
if the Government's chosen supplier does not deliver the requisite
level of service at a reasonable price
— Placing the interests of citizens and
consumer at the centre of the work of the Network Design and Procurement
Group
— It is important that the 2Mb/s universal
service does not become outmoded. The service should be procured
and delivered in a way that enables the level of service to be
reviewed at a defined point and increased easily and efficiently
should this prove necessary.
— The review should include a consumer
test to ensure that the level of service does not become too far
out of line with the average speed and enables everyone to use
the services and carry out the activities that consumers believe
are necessary to participate fully in society.
— The universal service commitment and
the Final Third project are linked: if progress on the Final Third
project stalls, future-proofing the universal broadband commitment
will become even more important.
Next Generation Broadband
— Next-generation super-fast broadband
has the potential to deliver significant economic and social benefits
for UK citizens and consumers, as described in the report published
by the Panel last year in collaboration with the Broadband Stakeholders'
Group and the Department for Business, Enterprise and Regulatory
Reform A framework for evaluating the value of next-generation
broadband.[61]
— It seems likely that the proposal to
subsidise this investment through a 50 pence tax on the monthly
price of fixed line phone rental will go ahead. Given that, we
think it is essential that there is a thorough analysis of the
advantages and disadvantages, in order to identify ways in which
potential inequities can be managed. Potential issues include:
— People on very low incomes for whom 50 pence
a month could be significant. Steps should be taken to raise awareness
of BT's social tariff, BT Basic, among this group.
— Older people are more likely to have
a fixed line and less likely to have broadband than other groups
so will effectively be subsidising the rollout of services that
they may not use.
— The 50 pence tax may hamper efforts
to get more people connected to current-generation broadband if
it exacerbates the trend towards people giving up their fixed
line for mobile.
— One of the potential benefits of next-generation
broadband that might justify public subsidy is better, more interactive
public services. But under the Government's plans, next-generation
broadband would probably be available to only 90% of the population.
— There is also the question of who would
own the network. Should the public have a share in the network
they have subsidised?
Broadband Speeds
— Consumers need accurate information about
the speeds they can expect. Currently there are considerable differences
between the headline speeds advertised by many providers and the
actual speeds consumers receive.
— The Panel originally raised the issue
of broadband speeds with Ofcom and industry in 2007.
— Ofcom's research provided useful evidence
of the speeds consumers are actually getting. The voluntary code
developed by industry is a welcome step, but the jury is still
out on whether this will be sufficient.
— When it comes to the implementation of
the universal service commitment consumers must be entitled to
minimum speeds of 2Mb/s. Up-to speeds will not be sufficient.
Digital Participation
— Making services available is only part
of the challenge. There also needs to be a stronger focus on promoting
digital participation.
— To get online and participate people
need to understand the benefits; be able to choose the products
and services that best suit their needs; know how to use and maintain
the equipment; and interact with and evaluate content online.
— The Panel welcomes the Government's decision
to set up a Consortium to promote digital participation, and the
creation of the Digital Inclusion Champion and Taskforce. We need
coordinated action to enable the 15 million people who are
not connected to get online.
— The delivery of universal and next generation
broadband should be considered in the context of these wider initiatives.
Conclusions
— As broadband is an increasingly essential
part of the way that people live their lives, it is vital that
everyone in the UK is able to use the services and carry out the
activities that broadband makes available, and to do so in a reliable
and consistent way.
— To achieve this it is essential to view
the initiatives flowing from the Digital Britain report as a package
of measures that are interlinked.
— The commitment to funding investment
in next-generation broadband in parallel with market-led rollout
is crucial. If this were to waiver it would make reviewing and
upgrading the 2Mb/s become even more important.
— Similarly, efforts to make communications
services available must be accompanied by work to encourage digital
participation.
3. INTRODUCTION
With the Digital Britain final report the Government
has made a substantial and welcome commitment to enabling people
throughout the UK to use digital devices and services to extend
their participation in society and so reap the economic and social
benefits. The report has the potential to deliver real benefits
for consumers and citizens.
— By 2012 we can expect to see 2MB/s
broadband and digital terrestrial TV available throughout the
UK.
— By 2012 we can expect more public
services to be available online.
— By 2017 we can expect the rollout
of next-generation super-fast broadband to 90% of the UK, which
would be a substantial improvement on what the market alone is
likely to deliver.
From the perspective of consumers and citizens,
these initiatives add up to a significant package that includes
many of the things that the Panel has been arguing for over the
last few years and particularly during the Digital Britain process.
But in many cases, we have yet to hear the Government's detailed
implementations plans and the Panel will be examining these plans
closely to ensure that the interests of consumers and citizens
are protected and promoted.
4. THE IMPORTANCE
OF BROADBAND:
EVIDENCE FROM
CONSUMERS
In its response to the Digital Britain interim
report, the Panel told the Government that the level of the universal
service commitment should be determined by applying a "consumer
test", ie people everywhere in the UK will be able to use
the online services and carry out the activities that they value
in a reliable and consistent way.
A consumer test should be applied only after
finding out what consumers think. So the Panel commissioned research
to find out what services and applications people value and, therefore,
what speed of service is needed. We also wanted to test how widespread
is the belief that broadband is essential and find out what role
people think Government should play in stimulating broadband availability
and take-up.
The research included both qualitative and quantitative
components. The qualitative research comprised of 16 extended
focus groups across the UK, while the quantitative research was
a face-to-face survey (via a nationally representative omnibus)
of more than 2,000 adults UK-wide. Our report, Not online,
not included: consumers say broadband essential for all, sets
out the findings in detail and is available on our website: http://www.communicationsconsumerpanel.org.uk/smartweb/not-online-not-included/not-online-not-included
Below, we have set out a summary of those findings
most relevant to this inquiry.
— Most people with broadband at home feel
already that they could not be without it. 73% of such people
described it as essential or important.
— People with broadband at home value it
more highly than their mobile phone, land line or digital TV.
— Most people (regardless of whether they
have broadband or not) consider that it is essential for some
groups of people to have broadband at home, notably people with
school-age children and people who are physically isolated.
— Most people consider that in the near
future it will be essential for everyone to have broadband at
home. 84% agreed (46 strongly) that it should be possible to have
broadband at home, regardless of where people live. 81% agreed
(42% strongly) that it is everyone's right to be able to have
broadband at home.
— People who do not have it are expected
to be at a significant disadvantage. This is because people expect
that more vital services will be delivered solely online in the
future, or be provided offline in a way that penalises people
who access them in this way, perhaps at a higher cost or lower
quality. It is expected that people will miss out in respect of
a wide range of services and activities: shopping, banking, school
work, public services, and downloading TV content.
— Of the activities that broadband is used
for currently, people place most value on accessing information,
communicating and carrying out transactions. These activities
do not require a particularly fast broadband connection. But,
a considerable proportion of people are now using the internet
for relatively new entertainment services, such as downloading
and streaming TV content. Activities such as these require a faster
broadband connection of around 2Mb/s.
— There was broad support for the Government's
decision to intervene to ensure that people can get consistent
access to broadband wherever they live, and 80 per cent agreed
(32% strongly) that Government had a role to play in helping people
gain the confidence and skills to make full use of broadband at
home.
5. UNIVERSAL
BROADBAND COMMITMENT
As set out above, the Panel's research shows
that it will soon be essential for everyone to have broadband
at home. This highlights the importance of making broadband available
throughout the UK at an adequate minimum speed. The Panel therefore
welcomes the Government's universal broadband commitment.
The key test for the success of the universal
broadband commitment is whether people everywhere in the UK will
be able to use the online services and carry out the activities
that they value in a reliable and consistent way. The Panel's
research shows that 2Mb/s is enough to support those activities
and services that people value and are using at the moment: accessing
information, communicating and carrying out transactions, and
entertainment services, such as downloading and streaming TV content.
The key task will be to ensure that the commitment is implemented
effectively.
There are a number of issues that need to be
considered as part of the implementation of the commitment. Government
should make clear to citizens and consumers which services they
will and will not have access to with a broadband speed of 2Mb/s.
It should also be the Government's responsibility to ensure that
2Mb/s is available to everyone; it should not be up to consumers
to show that they cannot get it. The Government should also ensure
that the universal service commitment has legal force and that
if its chosen supplier does not deliver the requisite level of
service at a reasonable price, then consumers can get redress.
The Network Design and Procurement Group that
will be responsible for implementing the universal broadband commitment
should make the interests of consumers and citizens central to
its work, including setting the service quality requirements that
will be placed on the operator or operators that are contracted
to implement the commitment.
It will be important to make sure that the commitment
to deliver a 2Mb/s universal service does not become outmoded.
This is particularly important in the context of the Government's
commitment to make public services available online. For instance,
while 2Mb/s is fast enough for those services on which people
currently place most value, it will not support services such
as telemedicine that require similar upload and download speeds.
We appreciate that the Government's plan to
stimulate the rollout of next-generation super-fast broadband
should hopefully mean that the universal service does not become
outmoded. But a contingency plan is needed and the universal 2 Mb/s
service should be procured and delivered in a way that enables
the level of service to be reviewed at a defined point and increased
easily and efficiently should this prove necessary. The review
should include a consumer test to ensure that the level of service
does not become too far out of line with the average speed and
enables everyone to use the services and carry out the activities
that consumers believe are necessary to participate fully in society.
The universal service commitment and the Final
Third project are linked: if progress on the Final Third project
stalls, future-proofing the universal broadband commitment will
become even more important.
6. NEXT-GENERATION
BROADBAND
The Panel welcomes the Government's plans to
encourage greater investment in next-generation super-fast broadband.
The Panel believes that this has the potential to deliver significant
economic and social benefits for UK citizens and consumers. These
benefits were described in the report published by the Panel last
year in collaboration with the Broadband Stakeholders' Group and
the Department for Business, Enterprise and Regulatory Reform
A framework for evaluating the value of next-generation broadband.[62]
We believe that the question of how to deliver
next generation broadband to the third of the population likely
to be outside private sector investment plans—the Final
Third—should not be left until some indeterminate point
in the future. But the fund proposed by Government to stimulate
rollout to the Final Third should not be used as a substitute
for, or to subsidise, market-led roll out of next-generation broadband,
and should be deployed only in those areas that commercial companies
would not reach otherwise.
We would have liked to see a comparison of different
funding mechanisms. However, it seems likely that the proposal
to subsidise this investment through a 50 pence tax on the
monthly price of fixed line phone rental will go ahead. Given
that, we think it is essential that we have a thorough analysis
of the advantages and disadvantages, particularly with regard
to the equity of the proposal, in order to identify ways in which
potential inequities can be managed. Potential issues include:
— People on very low incomes for whom 50 pence
a month could be significant. Steps should be taken to raise awareness
of BT's social tariff, BT Basic, among this group.
— Older people are more likely to have
a fixed line and less likely to have broadband than other groups
so will effectively be subsidising the rollout of services that
they may not use.
The Panel would also like to understand the
likely impact on fixed-mobile substitution. If the trend towards
people giving up their fixed line is exacerbated by the introduction
of a tax, this could have an impact on efforts to get more people
connected to current-generation broadband.
The Panel also notes that one of the potential
benefits of next-generation broadband that might justify public
subsidy is better, more interactive public services. But under
the Government's plans, next-generation broadband would probably
be available to only 90% of the population.
Any judgement on the suitability or otherwise
of 50 pence tax must take into account all of these issues,
as part of an assessment of the likely impacts and how these could
be mitigated.
There is also the question of who would own
the network once it had been built with the help of public subsidy.
Although the Government is not proposing to build a new network
itself, should the public have a share in the network they have
subsidised?
7. BROADBAND
SPEEDS
Whether consumers are receiving 2Mb/s or superfast
broadband it is also important that they have accurate information
about the speeds they can expect. Currently there are considerable
differences between the headline speeds advertised by many providers
and the actual speeds consumers receive.
The Panel originally raised the issue of broadband
speeds with Ofcom and industry in 2007. Since then, Ofcom has
produced useful evidence of the speeds consumers are actually
getting. The most recent research, published by Ofcom in July
this year[63]
found that:
— The average broadband speed in the UK
in April 2009 was 4.1Mb/s. This compares to an average "up
to" headline speed of 7.1Mb/s.
— The actual speeds received varied widely.
Fewer than one in ten (9%) of the sample on 8Mb/s headline packages
received actual average speeds of over 6Mb/s and around one in
five (19%) received, on average, less than 2Mb/s.
— Those living in urban areas received
significantly faster speeds than those living in rural areas.
— Consumers with all ISPs experienced a
slowdown in actual speeds during peak evening hours (8-10pm),
with speeds in this period around 20% slower than over a 24-hour
period.
The report shows a variation of as much as 1.8Mb/s
from the best to the worst speeds (excluding cable), almost as
much variation as the Government's proposed universal service
commitment (USC) of 2Mb/s. We believe that this research provides
a strong case for providers to use average rather than up-to-speeds
when advertising broadband services.
The voluntary code developed by industry, and
which came into force in January this year, is a welcome step,
but the jury is still out on whether this will be sufficient.
The research also makes it clear that when it
comes to the implementation of the universal service commitment
consumers must be entitled to minimum speeds of 2Mb/s. Up-to speeds
will clearly not be enough.
8. DIGITAL PARTICIPATION
Making services available is only part of the
challenge of enabling everyone in the UK to use digital devices
and services to participate fully in society, and in the process
boosting the economy. We agree that there needs to be a stronger
focus on promoting digital participation, which is defined in
the report as:
"Increasing the reach, breadth and depth
of digital technology use across all sections of society, to maximise
digital participation and the economic and social benefits it
can bring."
We think this is a useful term that encapsulates
the full range of consumers' and citizens' needs. To get online
and participate in a digital world people need to understand the
benefits; be able to choose the products and services that best
suit their needs; know how to use and maintain the equipment;
and interact with and evaluate content online.
The Panel welcomes the Government's decision
to set up a Consortium to promote digital participation among
the 15 million people who are not online, and the creation
of the Digital Inclusion Champion and Taskforce to focus specifically
on the six million who are both digitally and socially excluded.
These, and other groups such as the Consumer Expert Group who
have been tasked with reporting on the particular issues that
people with disabilities face in using the internet, are a crucial
part of delivering the Universal Service Commitment, ensuring
that people have the skills and confidence to use digital technology
once it is available to them. The delivery of universal and next
generation broadband should be considered in the context of these
wider initiatives.
To ensure that these initiatives are effective,
it is important that there is effective coordination between the
various bodies; that they have clear priorities; and that progress
is evaluated against those priorities.
9. CONCLUSIONS
As broadband is an increasingly essential part
of the way that people live their lives, it is vital that everyone
in the UK is able to use the services and carry out the activities
that broadband makes available, and to do so in a reliable and
consistent way.
To achieve this it is essential to view the
initiatives flowing from the Digital Britain report as a package
of measures that are interlinked. For example, the Government
has committed to funding investment in next-generation broadband
in parallel with market-led rollout. If this commitment were to
waiver this would have significant implications for the commitment
to the universal rollout of current-generation broadband with
a downstream speed of 2Mb/s; it would make it more important to
make provision for the level of this commitment to be upgraded
when necessary.
Similarly, efforts to make communications services
available must be accompanied by work to encourage digital participation.
This means addressing a very wide range of needs and the Digital
Participation Consortium and Digital Inclusion Taskforce will
need to work effectively with each other, and with the many different
groups involved in delivery at local level.
The Panel will continue to engage with the issues
addressed in this paper, and welcomes the opportunity to participate
in this inquiry.
25 September 2009
61 The report is on the Panel's website: http://www.broadbanduk.org/component/option,com_docman/task,doc_view/gid,1009/Itemid,63/ Back
62
The report is on the Panel's website: http://www.broadbanduk.org/component/option,com_docman/task,doc_view/gid,1009/Itemid,63/ Back
63
Available at: http://www.ofcom.org.uk/research/telecoms/reports/broadband_speeds/ Back
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