Conclusions and recommendations
Rural coverage and the urban rural digital divide
1.There are a number of different technological solutions to provide connectivity to rural areas. There is in addition a confusing array of overlapping definitions, for example the different definitions of speeds accessible to consumers. To minimise confusion, where possible the Government, Ofcom and the devolved administrations should align their definitions. For example, the Government should adopt the definition of superfast broadband as 30 Mbps. (Paragraph 14)
2.Despite coverage improvements since our predecessor Committee’s inquiry in 2015, there are still clear disparities in broadband and mobile coverage between urban and rural areas, and between rural villages and sparser rural settlements. These divides are the cause of much frustration. The amount of data being used each year is increasing dramatically as people become gradually more reliant on good connection and fast speeds to engage in society. Poor coverage, exacerbated by the urban rural digital divide, is therefore increasingly impacting upon the quality of life in rural areas. This is worsened by the need to access services online; the Government going increasingly digital and rural agricultural payments requiring to be applied for online. (Paragraph 15)
3.Further frustration is caused by the unreliability of broadband connections, especially where the actual speed experienced is slower than the maximum download speed advertised. We therefore support the work Ofcom has done with the Advertising Standards Agency to ensure advertised speeds accurately reflect the consumer experience. Ofcom should continue to refine how broadband speeds are measured and advertised to the consumer, so that consumers are fully aware of the speeds they can get. In response to this Report, Ofcom should update us on whether the changes they have made so far have improved the consumer experience, particularly in rural areas where there are still long copper wire connections. (Paragraph 16)
4.Government acknowledges digital connectivity as a utility service. Rural communities therefore both need and deserve to have the same level of coverage as that experienced in urban areas, so they can run productive businesses and enjoy family life. The Government must continually invest in rural areas to reduce the disparities in digital connectivity between urban and rural areas, and between rural villages and sparser rural settlements. Previous interventions have, at best, kept the gap stable. The roll-out of new technologies such as full-fibre and 5G mobile data represent an opportunity for a step change, but also a risk that rural areas are left further behind. Therefore, in addition to national coverage targets, the Government should set specific targets for reducing the urban rural divide and put in place the investment to achieve them. (Paragraph 17)
5.Rural businesses are suffering considerably due to poor digital connectivity. Whilst we welcome the Government’s commitment to fixing the problem, the fact it has not collected specific information regarding the number of affected businesses, and the wider cost to the rural economy, as a precursor to designing effective policy, calls into question the priority it places on it. The Government should further increase its available funding for rural broadband projects, for example through DEFRA’s Rural Development Programme for England. Allocation of funding to the devolved nations should be needs based rather than Barnett allocations; for example, Scotland requires coverage to be provided to the west coast islands as well as Orkney and Shetland in the north, providing additional remote rural challenges. There should be greater transparency on how the UK Government estimates costs for its broadband programme and allocates funding across the UK. The Government should also conduct research into the impact poor connectivity is having on businesses in the rural economy, and the wider impact this is having on the national economy to underpin the case for longer-term action. (Paragraph 20)
Digital public services in rural areas
6.In theory, digital public services could particularly benefit people in rural areas who live further away from physical services. However, continuing to deliver a “digital-by default” strategy for public services, before solving the issue of connectivity in rural areas, has the potential to worsen the impact of the digital divide. Many people living in rural areas are struggling to access basic services due to poor connectivity and the increasing difficulty of accessing these services offline. Local councils and other local service providers are potentially being driven to develop cheaper digital services, further penalising rural communities due to a lack of consideration from central government towards the realities of poor connectivity. If digital connectivity is truly considered a utility, rural communities should not be denied it. Given the continued shift towards increasingly digital public services, the Government must prioritise delivering improved connectivity for people, primarily in rural areas, with no access to adequate broadband or reliable mobile signal. In the interim poor connectivity should be taken into account in the assumptions Government departments and the Treasury make on the savings possible via digital service transformation when allocating funds for local services. (Paragraph 30)
7.It is unclear whether there is any level consideration of rural needs across central Government in the design of digital public services platforms and policies. There should be requirements across Government to take account of connection speeds available in rural areas in the process of designing or updating digital public service platforms. In their response to this Report the Government should outline what work is currently done to ensure this. Any new digital public service platforms should also be trialled and assessed by rural stakeholders prior to roll out to ensure they are user friendly. (Paragraph 31)
8.The business case for public investment in rural connectivity is strengthened when account is taken of the additional costs in delivery of services to significant numbers of people in rural areas who are unable to access those services digitally. The Government should therefore collect, publish, and build this data into future investment decisions. (Paragraph 32)
Broadband
9.The principle of access to a universal minimum broadband service via the Universal Service Obligation (USO) is important. It provides an essential legal platform to ensure universal coverage. We therefore welcome the Government’s commitment to delivering a broadband USO. However, the current specification of the USO demonstrates a lack of ambition for rural areas. The upload speed has been set too low, especially for businesses, and it is likely that the 10Mbps minimum download speed will be obsolete at the time of, or soon after, introduction. We are also concerned that the £3,400 payment threshold means that the USO is not truly “universal” and that ineligible residents will feel misled by the Government’s stated ambitions to ensure that no one is left behind. The Government should commit to an immediate review of the USO specification as soon as possible to ensure it is suitably ambitious for rural areas. The review should determine appropriate upload and download speeds and review the reasonable cost criteria to maximise rural rollout of broadband. The review should be concluded as soon as is practicable to ensure initial roll out of broadband via the USO is not obsolete. (Paragraph 47)
10.The USO is one of several measures to deliver universal broadband coverage. It is important that implementation of the USO does not come at the expense of or replace other rollout initiatives, such as Building Digital UK’s remaining superfast broadband work, the Scottish Government’s R100 programme, and the planned roll out of full-fibre infrastructure. Crossover funding from the USO obligations to the Scottish Government R100 programme needs to be assessed and agreed for premises that are being addressed within the R100 programme but otherwise would be served via the USO. A co-ordinated approach between Government and commercial service providers is essential to ensure residents take up the available services, and do not get trapped with a slower alternative service than is available. The USO must act as a safety net for minimum broadband service delivery, not a ceiling. To protect consumers Ofcom should also set a mandatory requirement that USO provision should not cost more than £45 per month (adjusted for inflation). (Paragraph 48)
11.The challenges of delivering superfast broadband in rural areas are clear and well recognised. Whilst the Government should be commended for the increase in access to superfast broadband, take up of these services is still below 50 percent. A lack of awareness of the availability of faster broadband services and its benefits is therefore holding back both businesses and communities, particularly in rural areas. The low level of take up is also slowing down the final roll out of superfast broadband, and undermining the investment case for rolling out full-fibre more widely. This is likely to disproportionately affect rural areas where returns are likely to be lower. The Government must continue to work with Ofcom, industry and stakeholders to tackle the issue of low take up of available superfast broadband services, to ensure communities get the benefits and the full value of the public investment in infrastructure is realised. In tackling the issue of low take up, the Government should assess why many rural households do not access available broadband services. There may be particular issues affecting rural households, such as additional utility costs (for example, gas and electricity costs) causing affordability issues. It is important that the cost of connection does not become another factor exacerbating the urban rural digital divide. (Paragraph 52)
12.Delivery of the USO and full-fibre infrastructure should not distract from the delivery of superfast broadband to the final 5 per cent. Setting population targets for coverage is a beneficial way for ensuring as many people as possible are reached. However, such targets can also lead to a feeling of people being left behind in the hardest to reach areas. When setting initial population targets for coverage, Government must have an understanding of how many people and which geographical areas will be left behind and aim to prevent such an outcome. (Paragraph 53)
13.Ensuring rural areas have equal priority as urban areas is an important principle which we fully support. The Government appears to have learnt its lesson with the proposed outside-in approach in the Future Telecoms Infrastructure Review (FTIR). However, we remain cautious about how the outside-in approach will be delivered in practice and await further funding and policy announcements. The proof of the Government’s commitment to the principle will be in the next multi-year spending review. Delivering full-fibre on time and cost-effectively will require a nationwide integrated approach and DCMS must learn the lessons from mistakes made in previous roll-out projects. The Government must ensure that there is efficient use of public subsidy and that any existing money sitting in the accounts of commercial service providers is used to fund infrastructure upgrades. The Government must also commit appropriate levels of funding across the life-time of the programme in the next spending review to ensure delivery of the ambitions outlined in the FTIR. (Paragraph 58)
14.The UK Government should also consider additional opportunities to prioritise funding for rural mobile coverage and broadband rollout. The sale of 3G licences in 2000 raise £22.5 billion, which could have been used to prioritise rural areas. The sale of 4G licences in 2013 only raised £2.3 billion but this still could have a substantial rural contribution. Future licencing sales and income streams should be considered as a means to target non-commercially viable roll out of mobile and broadband connectivity. (Paragraph 59)
15.Whilst the Committee supports the Government’s existing barrier busting efforts, more needs to be done to ensure the right policy and legislative framework exists to prevent a deepening of the digital divide. Reform of current wayleave arrangements and delivery of full-fibre connections in new builds is essential to ensure an accelerated full-fibre roll out. It will require legislative change and a balancing of numerous competing interests, so is likely to take time. The Government should release the outcomes of its consultations, including on ensuring tenants’ access to gigabit-capable connections and new build developments, and announce how it intends to bring forward required legislation as soon as possible. (Paragraph 63)
16.The target of 2033 for universal full-fibre roll out lacks urgency and ambition for rural areas. The Committee, therefore, welcomes the ambition underpinning the new Prime Minister’s commitment to achieve universal full-fibre broadband by 2025. However, given previous assessments of the time necessary to achieve universal full-fibre, including by the independent National Infrastructure Commission, we are sceptical that this target will be achieved without substantial new, long-term, public investment and potentially controversial regulatory reforms. Given the relative immediacy of the new target date of 2025, the Government must release a statement as soon as possible to explain how it intends to meet it. In accelerating its targets for full-fibre roll out, the Government must honour its commitment to its “outside-in” approach to ensure hard to reach rural are prioritised. (Paragraph 67)
Mobile data services
17.Despite improvements in national statistics for mobile coverage, stakeholder surveys continue to report that actual coverage varies from patchy coverage to complete lack of coverage in rural areas. We welcome the obligation in the Statement of Strategic Priorities that Ofcom must improve the quality and availability of its coverage statistics. Without accurate and detailed local data, it is easy for national policy makers to ignore the specific needs of consumers in rural areas. Ofcom should report coverage at a lower spatial level and include local 4G coverage targets in addition to national targets. Ofcom should also periodically test providers’ datasets against rural consumers actual experience, rather than relying upon simulated or predicted performance. (Paragraph 71)
18.Ofcom should set targets for both outdoor and indoor coverage. People living in rural areas shouldn’t have to step outside every time they want to use their phone, either for a phone call or the internet. Ofcom should include indoor coverage targets when setting coverage obligations. (Paragraph 75)
19.Rural communities have been told for too long to just wait and see with the unfulfilled promise that mobile coverage will be improved. On the eve of the roll out of 5G, rural communities will only feel more marginalised if they continue to be denied access to 4G, or even 3G. With many now regarding mobile data as an essential service, the Government and Ofcom has to be ambitious in setting coverage targets and obligations. (Paragraph 83)
20.Relying on competition between the Mobile Network Operators to tackle not spots and partial not spots in coverage has not worked. The Committee therefore supports a rural roaming solution to tackling poor mobile coverage in rural areas if the industry cannot find a comparable or better solution quickly. We await the detail of the Shared Rural Network proposal with interest, as we recognise it could have significant benefits for rural communities. Any arrangement must include legal guarantees on Mobile Network Operators (MNOs) to ensure they meet coverage targets. Any arrangement must include legal guarantees on Mobile Network Operators (MNOs) to ensure they meet coverage targets. Parallel to the talks over the Shared Rural Network, Ofcom should urgently conduct a specific review on the costs and benefits of roaming. Should a voluntary agreement between Government and MNOs not be reached by the end of 2019, the Government should instruct Ofcom to impose a rural roaming solution to tackle partial “not-spots”. (Paragraph 84)
Published: 18 September 2019