Broadband and the road to 5G Contents

4Demand for gigabit connectivity

61.Supporting take-up of gigabit broadband by businesses and consumers will be key to its roll-out: demand stimulation not only supports the investment case for industry in gigabit-capable networks but ensures that everyone is able to benefit from them equally.135 TalkTalk told us that “this means that rolling out new networks is not just a construction challenge but a commercial one”,136 which was echoed by Felicity Burch, Director of Innovation and Digital at the CBI, who told us that “some of the issues around broadband connectivity are less to do with getting the fibre in the ground and more to do with the demand for fibre”.137 Evidence suggests that despite the technical benefits of gigabit-capable broadband and 5G we have outlined, consumers will still need to be persuaded to upgrade to them. Research by the Broadband Stakeholder Group on take-up of gigabit broadband in other European countries identified “four pillars that drive adoption: strong demand, a well-informed customer base, a willingness to pay for fibre, and a high usage of data-intensive services”.138

The consumer case for gigabit-capable broadband

62.At present, gigabit-capable infrastructure is being rolled-out ahead of demand; to date, only about 30% of those premises that can access full-fibre broadband have taken it up.139 This is a long-standing issue: only about half of the premises that could access superfast broadband have actually taken up superfast connections.140

63.That said, the relative success of the superfast programme could mean people do not feel the need for faster broadband.141 When Which? surveyed consumers at the end of June, 70% said their existing broadband had met their needs during lockdown and “only a fifth” were more likely to upgrade since the pandemic.142 This builds on 2019 research that found “consumers tended to feel their current connection was fine, despite experiencing problems”, which in turn “leads some consumers to not perceive a need to move to a higher quality service”.143 Head of External Affairs Richard Piggin told us that “if we are going to roll-out improved connectivity across the country, we need to ensure that there is consumer demand for it and that consumers understand the benefits that improved connectivity would bring”, adding that “just because consumers think that their current connections are suitable for their needs, that does not mean that they will be sufficient in the future as consumer behaviours and needs change in three, four or five years’ time.”144

Tackling confusion about gigabit-capable broadband

64.Richard Piggin also told us that confusion about the broadband market and the relative merits of different speed and technologies discouraged consumers from upgrading.145 One of the main challenges Truespeed Communications faced was “re-educating customers on the fundamental differences between a high-quality fibre network, and the far poorer performance from copper-based services”.146 Indeed, research suggested that demand for superfast broadband was higher in areas with specific demand-side policies.147 For example, Dr Paolo Gerli and Professor Jason Whalley told us that aggregating demand ahead of roll-out improved understanding of broadband within rural communities:

When collecting expressions of interest was a requirement to trigger broadband roll-out, local campaigners committed to explaining the benefits of broadband to the other residents (including non-users). Our comparison suggested that this approach was more successful than marketing campaigns highlighting the benefits of broadband. The fact that the information comes from local and familiar sources (such as a local volunteer or a family member) contributed to overcoming the scepticisms and mistrust of non-users towards broadband and digital technologies.148

Although recognising that such communications strategies are likely to be led by service providers, TalkTalk nonetheless told us it “would like to explore the potential for a more coordinated cross-industry communications approach with Ofcom and Government”.149

The role of advertising

65.Consumers could be reluctant to upgrade because of confusion about the differences between broadband speeds. A number of full-fibre infrastructure providers argue that misleading advertising undermines the case for consumers to switch. For example, Octopus, Jurassic Fibre Limited and Swish Fibre Limited told us that:

there is a general need to get across the message that full-fibre is the only way to secure an instant, reliable, no-buffering, no-fault, ultrafast broadband service. Some operators deliberately play on consumer confusion by advertising as ‘fibre’, services which use copper from the cabinet to reach customer premises.150

Likewise, CityFibre told us that “as yet there have been no steps to address fake fibre advertising. Ofcom urgently needs to commence and conclude work to enable consumers to make informed purchasing decisions, including learning from Italy, where the regulator has introduced a simple traffic light system, categorising broadband products as copper, hybrid copper/fibre or full-fibre products”.151

66.The Government identified this issue as one of its strategic priorities, asking Ofcom “to consider whether the information available to consumers about the characteristics of different types of broadband services, and in particular full-fibre broadband, is helping consumers make informed choices”.152 We asked Ofcom’s CEO what more the regulator could do and she observed that there might be scope for greater clarity in the language that is used to market broadband. She told us:

The Advertising Standards Agency has looked into things like the use of the word “fibre” in the past and has found that consumers can navigate their way through because they know that what they need to look at is things like speed and cost, but it is something we need to keep under review. It is certainly something where all the operators are quite concerned that there is a lack of consistency at the moment.153

67.Likewise, the Minister for Digital Infrastructure told us that “we can do better than where we are now, and the ASA and Ofcom, working with Government and the industry, should be taking a look at that”; however, he highlighted that “there is a huge range of diversity of views within the industry on what the best way of doing this would be”.154 He questioned whether models from Italy, for example, which uses a traffic-light system to identify different broadband technologies, would suit the UK’s technology-agnostic approach, telling us:

What colour is a 5G connection? Is that green or amber? What colour in the future would a low-earth orbit satellite be? These are attractively simple […] But let’s not fool ourselves into thinking that it is really straightforward and we can just adopt one system from somewhere else, because I do not think anyone has cracked it perfectly.155

Keeping costs down

68.Pricing will be key to how consumers value gigabit-capable broadband. Drawing on the transition of customers to superfast broadband, when “notwithstanding improvements to quality, consumer adoption only moved from a low to high level when […] the price was more in line with lower speed products”, Sky told us that “widescale organic take-up of gigabit-capable broadband products should not be assumed”.156 TalkTalk drew on comparisons in France and Italy157 to argue that “high prices will act as a deterrent” to widespread take-up of gigabit broadband and therefore “services must be affordable to average consumers”.158

69.The Minister told us he expected that competitive pressures would mean gigabit-capable broadband resulting in only “modest” price rises, “in line with what we have seen historically”.159 Yet TalkTalk expressed concern that Ofcom’s proposed regulation of Openreach could result in higher prices for consumers and businesses in particular.160 It recommended that Ofcom “produce an impact assessment of its new price proposals to understand their impact in terms of demography and geography”.161

Tackling digital exclusion

70.Pricing of gigabit-capable broadband has clear links with digital exclusion. Dr Paolo Gerli and Professor Jason Whalley told us that the take-up of faster broadband speeds might “be discouraged by the affordability of broadband services and digital devices”. Analysis of the superfast programme indicates that “this is more likely to affect deprived urban areas, where the take-up of superfast broadband remained low even after BDUK deployed fibre networks”. Assuming that the adoption of gigabit-capable networks would follow a similar pattern and “lag behind in deprived areas”, they told us that “specific measures are needed to address urban digital divide(s), by delivering training to individuals with limited digital skills and subsidising the cost of connectivity and digital devices for low-income households”.162 Malcolm Corbett from INCA told us there had been discussions with the Greater London Authority about how the public sector could make gigabit connectivity more affordable. A process that enables providers to “deliver multiple local networks over one connection […] might provide a mechanism for the public sector to be able to provide connectivity to people who are particularly vulnerable or suffering from deprivation as a way of enabling them to get online without the same costs of doing so”.163

71.Ensuring that people have the digital skills to use faster connections is also vital to ensuring demand for gigabit-capable networks. With 11.9 million people in the UK lacking the basic skills required for day-to-day use of the internet,164 Sky argued that digital exclusion might “be a more significant policy issue than a differential geographical roll-out of gigabit-capable broadband”.165 Analysis of the superfast programme indicates that “various initiatives promoting IT skills within the local communities” have been beneficial to the take-up of better broadband within those communities. Academics recommend that “educational programmes should be designed to equip local communities and businesses with the skills necessary to take full advantage of these new technologies”.166

The consumer case for 5G

72.To date, commercial 5G roll-out by mobile network operators has focused on providing mobile broadband in towns and cities. This reflects the general increase in demand for mobile data by consumers: before COVID-19, the data consumed by O2 customers was “increasing by about 60% each year and doubling in some locations”.167 Ofcom has found that 5G connections are just as reliable as 4G, and quicker to respond to data requests, but whether that will be enough for consumers to upgrade to 5G is uncertain.168 While some consumers may not feel 5G’s faster speeds justify the cost, techUK expects that “consumers will increasingly adopt 5G-capable handsets as part of their replacement cycle”.169

73.Instead of a compelling consumer case for 5G, misinformation has taken root, as our sub-committee on online harms and disinformation has explored.170 The spread of false information linking 5G to the COVID-19 outbreak led to attacks on workers and infrastructure, resulting in £5 million in damages and service disruption for tens of thousands of consumers.171 Which? observed that “if these concerns gain further traction, even without firm evidence, it could make it more challenging for operators to roll-out their 5G networks in some areas”.172 The Black Country Local Enterprise Partnership considered the public’s lack of understanding about 5G to be linked to the spread of health concerns about the technology. It told us that mobile network operators:

must do more to help communicate the benefits of 5G, and to address any residential concerns regarding safety—maybe a national safety taskforce should be set up to run roadshows across the country. More is needed around myth busting and getting residents to realise the benefit of 5G.173

Three agreed that “more could be done—at a national and local level—to combat the general trend of wrongly linking 5G and health issues”.174 The Government and Ofcom recently published a guide about health claims related to 5G which it says “are completely unfounded and should not be used as a basis to block or delay 5G roll-out”.175

The business case for gigabit connectivity

74.The CBI’s Felicity Burch told us that even when businesses could access faster connectivity, many do not do so, as they “do not necessarily know the advantages that increased digital connectivity could have for them, such as […] developing new business models”.176 She cautioned that “relatively few businesses are aware of the kinds of advantages and potential game-changing options that 5G could deliver for them”, explaining that it tends to be those that are “relatively forward-looking” that invest in improved connectivity.177

75.To address this, the Government has committed £200 million to a national programme of “testbed facilities and application trials […] to foster the development of the UK’s 5G ecosystem, build the business case for 5G and lead the way in 5G research and development”.178 Again, however, the geographic coverage of 5G will be key to realising its benefits. Mobile network operator O2 told us that “many of the most innovative and transformative applications of 5G, such as smart cities and 5G enabled healthcare and agriculture, require almost universal coverage”.179 However, it also cautioned:

It will be challenging for the mobile industry to provide all of the investment to fully deliver such coverage […] The case, therefore, for government funding to support and extend the provision of 5G may strengthen over time.180

Connectivity Taskforce

76.There is a general consensus that most of the gigabit connectivity policy focus to date “has been very much on the supply-side”.181 TalkTalk therefore recommended that to inform policy Government and Ofcom should assess:

the likely take-up of full-fibre by customers over time and the impact on the pace of full-fibre roll-out and copper retirement plans. We note the work that Ofcom undertook to assess progress to digital TV switchover: a similar piece of work regarding FTTP roll-out and copper switchover would be a valuable contribution to policymaking.182

77.We also heard calls for DCMS to bring together consumer and business groups to form a taskforce to advise on making the case for gigabit-capable broadband.183 We were therefore pleased when DCMS launched the Gigabit Take-Up Advisory Group (GigaTAG), led by consumer and business groups and intended “to drive consumer take-up of gigabit speed internet connections”.184 The Minister told us that the taskforce will report in the new year on how to “create that virtuous circle of maximum demand that therefore facilitates maximum investment”. While he told us that “it is not the Government’s role to do the marketing of large commercial organisations that are going to make a significant return” from gigabit-capable broadband, he acknowledged that “this is ultimately a partnership with industry because […] we do want to see them roll-out the maximum possible extent, and part of that equation is seeing them get the maximum possible investment that comes from seeing high levels of demand”.185

78.Ensuring there is sufficient demand for gigabit-capable broadband must not be an afterthought and based on consumer behaviours and take-up of existing technologies, cannot be assumed to be a given. We are concerned that the Government has not given enough priority to this policy area to date and does not fully recognise the potential role that Government could play now. We await the findings of GigaTAG’s work and urge DCMS to act promptly on their recommendations.

135 TalkTalk (BRO0210)

136 TalkTalk (BRO0210)

137 Oral evidence taken on 21 July 2020, HC (2019–21) 645, Q19

138 Wik Consult and Broadband Stakeholder Group, ‘Moving to a fibre-enabled UK: International experiences on barriers to gigabit adoption’, (June 2020)

139 Openreach (BRO0194) para 64

140 Ofcom, Connected Nations 2019, (18 March 2020), p 18

142 Oral evidence taken on 21 July 2020, HC (2019–21) 645, Q1

143 Which? (BRO0024) para 4

144 Oral evidence taken on 21 July 2020, HC (2019–21) 645, Q1

145 Oral evidence taken on 21 July 2020, HC (2019–21) 645, Q4

146 Truespeed Communications Ltd (BRO0197) para 6

147 Dr Paolo Gerli and Professor Jason Whalley (BRO0033) para D1

148 Dr Paolo Gerli and Professor Jason Whalley (BRO0033) para D2

149 TalkTalk (BRO0210)

150 Octopus, Jurassic Fibre Limited and Swish Fibre Limited (BRO0214) para 4.3

151 CityFibre Holdings (BRO0112) para 7.1

152 Department for Digital, Culture, Media and Sport, Statement of Strategic Priorities for telecommunications, the management of radio spectrum, and postal services’, (29 October 2019), para 56

153 Oral evidence taken on 23 June 2020, HC (2019–21) 439, Q46

156 Sky (BRO0117)

157 See Wik Consult and Broadband Stakeholder Group, ‘Moving to a fibre-enabled UK: International experiences on barriers to gigabit adoption’, (June 2020)

158 TalkTalk (BRO0210)

160 TalkTalk (BRO0210)

161 TalkTalk (BRO0210)

162 Dr Paolo Gerli and Professor Jason Whalley (BRO0033) para D5

164 Oral evidence taken on 15 May 2020, HC (2019–21) 291, Q111

165 Sky (BRO0117)

166 Dr Paolo Gerli and Prof Jason Whalley (BRO0033) para D4

167 O2 (BRO0195) para 4.1

168 Ofcom, ‘Mobile matters’, (8 October 2020), p 19

169 techUK (BRO0122)

170 Digital, Culture, Media and Sport Committee, Second Report of Session 2019–21, Misinformation in the COVID-19 ‘Infodemic’, HC 234

171 Three (BRO0072), techUK (BRO0122), Mobile UK (CVD0240) para 38

172 Which? (BRO0024) para 18

173 Black Country Local Enterprise Partnership (BRO0153)

174 Three (BRO0072)

175 HM Government, 5G mobile technology: a guide, (27 August 2020)

176 Oral evidence taken on 21 July 2020, HC (2019–21) 645, Qq19,28

177 Oral evidence taken on 21 July 2020, HC (2019–21) 645, Q28

178 Department for Digital, Culture, Media and Sport (BRO0077) para 28

179 O2 (BRO0195) para 2.7

180 O2 (BRO0195) para 2.7

181 BT Group (BRO0188) para 43

182 TalkTalk (BRO0210)

183 BT Group (BRO0188) para 43, Which? (BRO0024) para 5, CBI (BRO0159) para 3.3

184 Department for Digital, Culture, Media and Sport, ‘Gigabit broadband rollout milestone reached, accessed 2 December 2020

Published: 22 December 2020 Site information    Accessibility statement