Environment, Food and Rural Affairs CommitteeWritten evidence submitted by BT Group plc
1. BT is pleased to provide evidence, with regard to broadband, on the question: “The Rural Communities Policy Unit is the Government’s centre for rural expertise. Its priorities are housing, broadband, services, transport and fuel. Are these the correct priorities for the Government to focus on?”
Introduction
2. Rural broadband is at the heart of our business as well as being an important focus for government policy. We believe that it should be treated as a priority by government in order that the “digital divide” is further addressed and the rural economy can fulfil its potential. Broadband has the power to transform the life, work and play of each and every one of the millions of people living in rural areas.
3. Superfast broadband will further boost the rural economy by providing businesses with access to the same facilities as businesses based in towns and cities, and reach out to customers worldwide. Businesses will be more flexible around where they are based, bringing employment to areas where people traditionally leave to find work, and existing rural businesses will be able to conduct their business with the same efficiency as others who are able to access information easily and send complex documents or use burgeoning online services.
4. We aspire to wider rural coverage and can reach more areas with superfast broadband, with public funding support. We are looking to secure some of the funds government will make available.
5. Our approach can be summarised as follows:
we continue to explore options for extending fibre to rural areas;
we welcome the Government’s plan to make £530 million available in this parliament via Broadband Delivery UK (BDUK) to extend fibre to what are otherwise non-commercially viable areas;
Defra’s £20 million Rural Community Broadband Fund should also play an important part in helping rural communities find solutions for their areas which are outside commercial fibre broadband deployment plans and in the final 10% which may not be covered with their local authorities’ original BDUK allocation. The £20 million Fund is delivered as part of the Rural Development Programme for England (RDPE) and is a joint fund with BDUK which will help communities get high-speed broadband services to the most hard-to-reach areas;
we believe it is possible to make fibre broadband available to more than 90% of UK premises by working with local councils and devolved governments. BT is bidding for BDUK funds to make that happen. The Defra funding will help communities play their part to go further still;
the creation of partnerships and a shared vision is critical, and arrangements in Northern Ireland and Cornwall & the Isles of Scilly show this works; and
BT has already won tenders in four areas under the BDUK funding process: Wales, Lancashire, Rutland and Surrey.
6. It should be noted that 99% of UK premises currently have access to some sort of broadband connection. For broadband availability, the UK already leads Europe. 90% of premises already have access to speeds of more than 2 Mbps, enough to stream standard quality television or video pictures. The challenge is to increase speeds, spread broadband access further and raise take up to drive economic activity. Work on this is well under way.
7. The key variables of network deployment: population density and distance to existing network capacity are particularly important in driving the costs of network build. In some parts of the country, where population is dispersed, the investment case for deploying a fibre network is challenging.
8. We are pleased to work with RCPU on the following aspects of our determination to ensure that broadband reaches even further into the UK.
Preventing the Digital Divide Between Rural and Urban Areas
9. BT is bidding for central government funds made available through BDUK, and also working with local councils to ensure fibre is deployed beyond the two-thirds of the UK where we see a commercial case for fibre investment. If our bids are mainly successful, we envisage being able to reach over 90% of UK properties with superfast speeds, and we are trialling alternative solutions to lift speeds for remaining properties.
10. As fibre-optic cable is rolled out across the UK to enable superfast broadband, the main mechanism for limiting any digital divide is central Government funds. £530 million is being made available by central Government this parliament, disbursed through BDUK to as well as the £20 million Rural Communities Broadband fund in conjunction with Defra. This funding will help connect the so-called “final third”, the parts of the UK where no company currently sees a commercial case for deployment, given population density and topographical factors.
11. This funding is to a large extent being matched by local authorities, further enhancing the ability to deliver superfast broadband to rural areas. If this central and local authority money is spent effectively, we estimate that fibre optic connections can be made available to more than 90% of UK premises.
12. We are testing technical solutions that will enable us, with suitable funds, to deliver improved broadband to the remaining properties, which lie mainly in very rural areas. The £20 million rural community’s broadband fund will enable communities to tender for solutions to help with this. BT is keen to play its part. Wherever possible, we shall examine innovative ways to work with local communities on delivering fibre-based solutions. However, rolling out fibre optic cable may not be viable in some of these areas, even with public funding. Alternatives are likely to involve radio-based solutions.
13. In Bute, for example, we are testing a solution in which broadband signals are carried over unused parts of the TV airwaves spectrum. Households receive a broadband signal through the TV aerial. This trial of broadband over TV “white space” is delivering enhanced broadband speeds to areas of the island that were previously broadband “slow spots”. The speeds may be sufficient to enable households to, for example, stream high definition TV over broadband. We intend to trial the white-space solution in Cornwall as a next step.
14. In Cornwall, we are already trialling a solution which envisages delivering enhanced broadband speeds over mobile telephone frequencies. This trial of the use of LTE wireless technology (so called 4th-generation wireless) is in partnership with Everything Everywhere. The trial has successfully connected areas which were previously broadband slow spots. When trials are complete, we can compare the effectiveness of white space against LTE solutions. There are regulatory issues to be resolved around use of radio-based options. Decisions would be required from Ofcom before these solutions could be deployed more widely, but trials show they have potential. We are also developing our existing satellite broadband services, primarily for rural business use, into a product suitable for residential customers. Satellite connections may well be an option for places where “white space” and LTE do not work. Using satellite is more expensive and unlikely to deliver the same speeds as “white space” or LTE, but could still be a solution to connect the most isolated parts of the UK.
15. If BT were successful in securing funds to deliver services using p to the final third using public funds, then they would be delivered primarily via BT’s Openreach infrastructure. The Openreach network is made available on equivalent terms to all communications service providers in the UK. We strongly believe that this is the best way to ensure that customers in the final third receive all the benefits of retail competition that are available elsewhere in the UK. We believe it is important to guard against the creation of local monopolies by funding organisations that then fail to provide consumers with a choice of service providers.
16. BT is already working to overcome the digital divide in Cornwall and Northern Ireland—two parts of the UK which have secured public funds and pioneered early rollout of superfast broadband. In Cornwall, for example, a £132 million partnership funded by the EU, BT and Cornwall Council, and managed by Cornwall Development Company, is bringing superfast broadband throughout Cornwall and the Isles of Scilly, making it one of the best connected places in the world by 2014. Over 10,000 businesses will be connected to superfast broadband and the investment programme will create 4,000 jobs, safeguard a further 2,000 and help attract new businesses to the area.
Regional Variations in the Communications Market
17. There are regional variations that impact the ability to deliver broadband services, for example, variations in topography and population density. In our view, the issues can best be addressed through a combination of private and public funding to ensure roll-out of better broadband speed across the UK.
18. The communications challenges in very rural areas are different from those in very urban areas or indeed those in semi-urban areas. Roll-out prospects are affected by the UK’s geography and social history. For example, there is a tendency for English villages to be “clustered” around a central point with relatively dense population centres within the village boundary. This means they are often better suited to deployment of fibre optic cable than, say, more dispersed rural communities in some other parts of the UK, where rural populations are often more dispersed, with housing centred on individual land holdings across a rural area.
19. These regional variations impact the commercial viability of broadband solutions. This is illustrated clearly in the work of the Broadband Stakeholder Group on costs of deploying fibre broadband in the UK. Its September 2008 report The costs of deploying fibre-based next-generation broadband infrastructure highlighted the significant uplift in expected deployment costs for the final third, where population density and other factors influencing the civil engineering costs of deployment start to increase significantly. (http://www.broadbanduk.org/component/option, com_docman/task,doc_view/gid,1036/) This report also highlighted the dramatic cost difference between delivering FTTP and FTTC solutions, with the former forecast to cost in excess of £30 billion, ie, well beyond the current commercial or public budgets allocated to address this issue.
Conclusion
Public funding has crucial part to play in helping final-third homes and businesses gain the benefits of high-speed broadband services. Additional funding to help rural communities in the most hard to reach areas is welcome as a catalyst for communities to find the most relevant and cost-effective solutions for them. BT looks forward to working with all communities to deliver services wherever possible and find solutions for commercially challenging areas. We welcome Defra’s interest and focus on communications as an important driver for rural economies and will continue to work with the department on these issues.
October 2012