Fourth Special Report
The Scottish Affairs Committee published its Fifth Report of Session 2017–19, Digital Connectivity in Scotland, HC 654, on 23 July 2018. The Government response to the Report was received on 6 September 2018, and is published as an appendix to this Report.
Appendix: Government Response
Recommendations
5. We recommend that the UK and Scottish Governments take steps to improve their relationship on broadband delivery and find ways to effectively work together to provide coverage to the whole of Scotland, putting past disagreements behind them. (Paragraph 32)
The UK Government accepts this recommendation. As part of a visit to attend the Edinburgh International Culture Summit, an introductory bilateral meeting between Jeremy Wright, DCMS Secretary of State and Michael Matheson MSP, Cabinet Secretary for Transport, Infrastructure and Connectivity has been arranged for Thursday 23 August to discuss future relationships and effective working. We anticipate further Ministerial meetings in the future.
At a working level, officials in DCMS have a good working relationship with their Scottish Government counterparts. For example, Broadband Delivery UK within DCMS has been supporting the R100 (Reaching 100%) Team. In addition, the LFFN programme undertook a number of regional events during November and December 2017 to promote our Challenge Fund to public bodies. The Scottish Government provided the venue for the Glasgow regional event on the 12 December 2017, and delivered a presentation on their R100 programme and ways of working with LFFN.
The Chancellor announced 13 successful bids for Wave 1 of the LFFN Challenge Fund in the Spring Statement on 13 March. Amongst this group is a bid from the Highlands of Scotland for £4.7m.
6. We recommend that the UK Government increase its current level of investment to reach the last 5%. (Paragraph 37)
The UK Government is already taking action to improve broadband coverage across the UK, including for the 5% of premises that do not currently have superfast coverage. Phase 3 of the UK Government’s superfast programme is seeking to address superfast coverage in as much of the remaining 5% of UK premises as possible. In addition, those premises without access to download speeds of 10 Mbps and upload speeds of 1Mbps will be able to request it under the Universal Service Obligation (USO), which is now with Ofcom for implementation by 2020.
Further, the Future Telecoms Infrastructure Review was published on 23 July 2018 and sets out a national, long-term strategy to deliver the government’s target for 15 million premises to be connected to full fibre broadband by 2025, with nationwide coverage by 2033. Full fibre broadband will provide the UK with gigabit capable broadband, which is also more reliable and resilient than superfast broadband that relies on part-copper lines.
One of the FTIR’s key recommendations is for Government to pursue an ‘outside in’ strategy to support deployment of full fibre to those around 10% of areas that are not likely to be reached commercially. The UK Government has already started investing in the UK’s full fibre future through its Local Full Fibre Networks programme. However, further funding of some kind will be required to complete an outside in approach. The government will determine longer-term options to do this as part of the forthcoming Spending Review process.
Any such programme will operate in parallel with the market deploying full fibre to commercially viable areas and will be phased and likely to start with areas that do not currently have superfast. The UK Government will work with stakeholders to consider how our FTIR ambitions can complement existing programmes such as the USO and R100.
7. We recommend that the UK Government reviews the specification of the USO in the next 6 months, as it has already made provision for in the Digital Economy Act, to ensure the policy is designed to meet the evolving needs of consumers. To keep pace, we recommend that the Government consider increasing the 10Mbps minimum download speed, and specify that this should be the speed consumers receive at all times, including peak periods. (Paragraph 41)
The UK Government does not accept this recommendation. The USO is designed to act as a safety net to ensure everyone can access a minimum level of connectivity. According to Ofcom, a broadband connection with a download speed of at least 10Mbps does meet the needs of a typical household and enables households to stream films in HD, watch catch-up TV, make a video call and browse online—all at the same time.
As we set out in our response to the USO consultation, we believe that the current specification strikes the right balance between ensuring universal access to decent broadband whilst at the same time ensuring that market distortion is minimised. Depending on who is designated as a Universal Service Provider(s) and the technologies used to deliver USO connections, consumers may well receive higher than the proposed minimum specification.
The Government has been clear that minimum levels of connectivity under the USO will need to be increased as consumer needs change. The USO was designed with this in mind with a specific power for the Secretary of State in the Digital Economy Act to direct Ofcom to review the USO. The Act also stipulates that the specification must be reviewed when superfast broadband has been taken up by 75% of UK premises.
A decision on when to review the USO will be taken in the light of market developments, technological changes and evolving consumer needs.
8. We call on the UK Government to set out in its response to this Report what additional support will be provided for consumers where the cost of connecting their premise is above the USO cost threshold, to ensure those consumers can enjoy the same basic standard of service that is enjoyed by the rest of the UK. (Paragraph 45)
Policies on universal availability often include caps. We consulted on a £3,400 Reasonable Cost Threshold (RCT) as part of our USO consultation. The majority of respondents agreed that £3,400 was broadly at the right level. The Government’s view is that a threshold at this level strikes a proportionate balance between providing widespread coverage of decent broadband coverage and ensuring that the costs for industry and all consumers are proportionate. Ofcom estimate that the £3,400 threshold will ensure that 99.8% of UK premises will have access broadband meeting the USO specification or higher. Where the cost of providing a connection exceeds £3,400, consumers have the option of paying any excess costs, doing some of the deployment work themselves to help reduce costs, aggregating demand to bring the cost per premise below the cost threshold, or purchasing a satellite connection from a commercial satellite provider.
11. We recommend the two Governments establish a joint USO working group to coordinate activity between the two programmes. One of the first jobs of this group should be to explore the feasibility of combining the on-demand elements of R100 with the USO to ensure that R100 funding does not displace industry funding provided under the USO. (Paragraph 53)
We agree that regular interaction between DCMS and the Scottish Government is necessary to coordinate activity between UK Government and Scottish Government programmes. This interaction already happens on a regular basis and therefore a joint USO working group is not necessary. As we set out in the Future Telecoms Infrastructure Review, we are committed to considering how our connectivity ambitions can complement existing programmes, including the rollout of the USO.
13. We recommend that the Gigabit Voucher Scheme works closely with business groups to raise awareness of the available funding and support businesses and communities to create viable bids. (Paragraph 66)
The Gigabit Broadband Voucher Scheme (GBVS) is supplier-led, meaning we expect suppliers to lead on demand stimulation for the scheme. BDUK work closely with suppliers on the scheme, and have produced a pack of branding assets, marketing guidance, and template documents for them to use when promoting the scheme. We also support supplier’s marketing efforts for the scheme directly through our central DCMS social media accounts, and provide ministerial quotes for them to use in press releases.
We have also appointed a stakeholder engagement manager for the scheme, who works closely with local bodies to assist them with promoting the scheme to businesses and residents in their localities. We make all our marketing and branding assets available to local bodies, and provide ongoing support in their promotional efforts. We continue to work with other organisations who can help to promote the scheme including Federation of Small Business and the Institute of Directors. We also regularly publish case studies from businesses that have benefitted from the scheme, which we promote on our website at gigabitvoucher.culture.gov.uk/for-businesses/case-studies/.
14. The UK Government should consider dropping this requirement [for at least half the value to be for businesses] for bids in rural areas of Scotland, which will allow more communities to take advantage of the scheme. (Paragraph 67)
An SME can benefit from our Gigabit Broadband Voucher Scheme (GBVS) with a voucher worth up £3,000, while a resident can benefit from a voucher worth up to £500. For residents to benefit from the scheme, they must be part of a group project, which means at least half of the total value of the vouchers in the project must be for businesses. This means the minimum ratio required for a group project to have parity of value between business and residential vouchers is at least one business to every six homes.
The scheme is open to sole traders and small offices registered to a home address. This means that SMEs do not have to be limited companies—they only have to provide evidence of trading from an address. In rural areas in particular, many businesses are either sole traders or operating from premises that also double as a residential address. Therefore in practise we are finding that for a growing number of successful residential projects, including in extremely rural areas, this ratio of 1:6 is not proving to be a barrier to accessing the scheme.
This ratio approach does however require communites to work together, find all of the interested homes and businesses in their area, and aggregate their voucher demand together in a united way. We are continually evaluating the scheme as it progresses and so far we are finding that this maximising of demand ultimately strengthens the case for a network operator to invest in digging fibre to that area.
22. We recommend that both the UK and Scottish Government work together with local authorities to develop a joint approach to addressing regulatory barriers to infrastructure deployment, and set out what progress it is making in response to this Report. (Paragraph 118)
DCMS’s Barrier Busting Task Force has a positive working relationship with the Scottish Government and meets regularly with representatives from the Digital Directorate as well as the R100 programme. There is a common objective between DCMS and the Scottish Government to lower and remove the barriers to deployment.
We expect the relationship to further strengthen following the release of the Future Telecoms Infrastructure Review, as we consider options to improve operators’ access to tenanted properties and the connectivity of new build developments. We will be coordinating with the Scottish Government’s Digital Directorate as we develop legislation to ensure that where UK legislation is applicable in Scotland it meets the needs of the Scottish people. Where legislation is needed in Scotland, we will be providing any and all necessary support to ensure that comparable legislation can be passed in the Scottish Parliament should the Scottish Government wish to bring this forward.
Alongside this, the Task Force will work with colleagues in Scotland to create a league table of local authorities who have proactively worked to encourage the deployment of digital infrastructure, and those who have room to improve. The Task Force will also work with colleagues in Scotland to create national toolkits for Street Works (Road Works) and Access Agreements (Wayleaves), able to take into account variations in legislation between the Parliaments in Westminster and Holyrood.
Published: 12 October 2018