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An Update on Rural Connectivity: Government Response to the Committee’s Seventeenth Report of Session 2017–19

Third Special Report

The Environment, Food and Rural Affairs Committee published its Seventeenth Report of Session 2017–19, An Update on Rural Connectivity (HC 2223), on 18 September 2019. The Government response was received on 9 March 2020 and is appended to this report.

Appendix: Government Response

Introduction

The government is grateful for the Committee’s comprehensive inquiry into rural connectivity. We agree with the Committee that access to digital connectivity is essential to participation in modern life for citizens in the UK, and is also a critical enabler of successful businesses. This is true throughout the UK, whether an urban or a rural area.

Government recognises the particular issues that arise when addressing connectivity challenges in rural areas. With lower population densities, difficult topology, greater areas to cover, and often more exposure to adverse weather conditions, delivering reliable, affordable and future proof communications services can present commercial service providers with unique challenges. This often means that government must actively monitor, encourage, and where appropriate, intervene to ensure that rural areas are not left behind and that any ‘digital’ divide between rural and urban areas can be closed.

The government is already committed to tackling this challenge. The Future Telecoms Infrastructure Review (published in July 2018) proposed an “Outside-In” approach to funding initiatives, in order to ensure that less commercially viable areas (including many rural areas), benefit from the deployment of new fixed and mobile broadband services in parallel with commercial rollouts in other, typically urban and suburban areas. Furthermore, the government intends to commit £5billion of funding to address gigabit-capable networks in the hardest to reach parts of the country, and we are working extensively on how to rapidly achieve this ambition, with the support of industry.

Government recognises the potential to improve productivity in the rural economy through better availability of digital connectivity to rural businesses, and that lack of appropriate services can constrain ambition, performance and growth of such ventures. We recognise that there is still a lack of fast reliable broadband in many rural areas and are addressing the issue with a significant amount of government funding, and we continue to take action to remove barriers to network rollout. Going forward, many rural businesses can access future gigabit capable connectivity more affordably through Building Digital UK’s current voucher schemes, and when they are located close to other public buildings acting as ‘hubs’ for local fibre rollouts.

We recognize that citizens and businesses in rural areas are more likely to be dependent on access to digital government services than urban dwellers. Government recognises the need for digital platforms to take into account user experience (including connectivity) and Government Data Services work at the design and development stage to undertake user needs assessments and to pilot, test and assure new services. Government departments follow these standards, for example DEFRA’s new Environmental Land Management scheme, which will be tested and trialled with rural users before deployment. Government departments will continue to provide support via alternative, non-digital channels where there are accessibility issues.

The committee rightly focused significant attention on the universal service obligation that will come into effect on 20 March 2020, ensuring a ‘basic safety net’ for broadband connectivity is available in the UK. The government has ensured that there is a legal obligation on two designated Universal Service Providers to fulfil requests from eligible citizens and businesses to access a minimum level of service at an affordable price within a short time frame from request. Through this mechanism, and other commercial and government supported rollouts, it is expected that 99.8% will have the right to request ‘decent’ broadband services. Participation in the universal service obligation does not preclude consumers from accessing other infrastructure investment schemes in the future, and the timetable for the universal service obligation is deliberately short in order to ensure than the gaps in provision are quickly addressed.

Coverage of rural and remote areas can be uniquely problematic when planning mobile networks, and government notes the committee’s reference to the continued existence of ‘not-spots’ and ‘partial not-spots’. On 25th October 2019, the government announced in-principle support for a Shared Rural Network programme, which is a proposal from the Mobile Network Operators to collectively increase 4G mobile coverage throughout the United Kingdom to 95% by end of 2025. This will be underpinned by a legally binding coverage commitment from each operator. Government is working with OFCOM and the mobile network operators to ensure that any commitments and coverage obligations arising from this are delivered at both the UK and Devolved Administration level. We are working towards a formal agreement later this year.

Finally, we note that Recommendation 3 (on advertised speeds) and recommendations 17–19 (on mobile coverage measurement, targets and obligations) are addressed to OFCOM, and it is not appropriate for the government to comment on or respond to behalf of independent bodies. As such, this response focuses only on those recommendations addressed to government.

Rural Coverage and the Urban/Rural Digital Divide

Recommendation 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).

The government’s use of 24Mbps to describe superfast broadband is a result of our State Aid submission to the European Commission in 2011/2012. Subsequent to State Aid approval, an EU definition of superfast broadband as 30Mbps emerged and OFCOM adopted this in line with other European regulators. However by that point 24Mbps was already worked into the procurement specification and targets embedded within our State Aid approvals. To track progress against that original approval and business case we necessarily do still use the 24Mbps definition but we also dual report on the coverage figures at 30Mbps. The actual difference in coverage levels for the two targets is relatively minor.

This dual definition of superfast broadband becomes increasingly obsolete as we establish new targets for nationwide gigabit capable network coverage - the definition for which is not subjective as it clearly relates to technologies that can deliver more than or equal to 1,000Mbps or 1Gbps.

Conclusion 2 (no recommendation, included for completeness): 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).

No response required (as no recommendation given, and the topic is addressed in other recommendations and responses).

Recommendation 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).

OFCOM

Recommendation 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).

Government recognises the importance of ensuring that communities and citizens in rural and remote areas have the connectivity they want and need. We support connectivity in these areas through public subsidies from the Superfast Programme, the Local Full Fibre Networks Programme, the Gigabit Broadband Voucher Scheme, and the Rural Gigabit Connectivity Programme. This has seen superfast connectivity and full fibre connectivity improve in rural areas. The Gigabit voucher scheme had by October 2019 issued over 2,300 vouchers,1 with many homes and businesses now in the process of redeeming them for gigabit capable connections.

The Future Telecoms Infrastructure Review recognised that the hardest to reach areas must not be forced to wait until the rest of the country has improved connectivity and proposed an “Outside-In” approach to deployment, as the government looks to achieve nationwide coverage of gigabit networks as soon as possible. The government is actively engaged in monitoring the rollout of gigabit-capable infrastructure in the UK, and developing an intervention programme to support delivery, where required. To support this, the government recently announced an intention to commit £5billion of funding to support deployment of gigabit capable networks in the hardest to reach areas of the UK, including rural areas.

Deploying new networks to rural and remote areas takes time, particularly due to low population densities and topographic challenges. Government will continue to take action to remove barriers to network rollout and to ensure that those in the hardest to reach areas are not left behind and benefit from improvements as quickly as possible. We will closely monitor deployments and coverage as we begin to scale up our interventions to these areas, which are predominantly concentrated in rural areas.

Recommendation 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).

Building Digital UK’s Superfast programme has helped bring superfast coverage up to 96%, focussing on areas that did not previously have broadband access, and has now moved its focus to full fibre roll out in harder to reach areas under the existing State Aid notification. This programme was needs-based, rather utilising Barnett allocations.

DEFRA’s Rural Broadband Infrastructure Scheme is part of the Rural Development Programme for England 2014 - 2020. The scheme was announced in July 2017 with £30m funding. The closing date for applications was 31 May 2018. To enable all approved applications under the scheme to be supported, funding was increased from £30m to £75m in 2018 and further increased to £79m in 2019. There is no further funding available for this scheme and projects must generally be delivered by 31 December 2021. Under the scheme, by October 2019, 22 applications were approved and up to 18,400 business premises and 67,500 domestic premises are intended to benefit from the available funding.

DCMS secured £200m at Budget 2018 for our Rural Gigabit Connectivity Programme. This programme will upgrade public sector buildings to act as gigabit capable connectivity hubs for surrounding areas with vouchers available to incentivise further deployment. This funding is available nationwide. Certain regions, including Cornwall, parts of Wales and the Borderlands were prioritised based criteria on including superfast availability levels and relative rurality. The first hubs built through this scheme are in schools, many in rural areas.

The Shetland Islands successfully bid for ~£2m of Wave 3 funding in the DCMS Local Full Fibre Networks (LFFN) scheme, with a plan to connect 21 public buildings (council buildings, schools, care centres, and NHS Shetland premises) with gigabit capable fibre, as well as potentially addressing over a 100 homes. This project will extend the Council’s existing fibre network to Yell and Unst.

The Future Telecoms Infrastructure Review committed the government to an “Outside-In” policy to ensure the hardest to reach areas receive support in parallel to the market’s commercial deployments. The Future Telecoms Infrastructure Review also suggested starting with areas that currently do not have access to superfast broadband services, and for which the productivity and societal gains would be maximised given the low baseline of existing connectivity.

The £200m for the Rural Gigabit Connectivity Programme is the first part of the “Outside-In” approach. The intended £5 billion of infrastructure funding announced by the government in 2019 will continue this, supporting the deployment of new networks in these hardest to reach areas where the costs of deployment mean that they are not likely to be viable for commercial investment. These investments will be allocated on a ‘needs-basis’, rather than allocated via the Barnett formula.

Digital public services in rural areas

Recommendation 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).

As explained in response to previous recommendations above, the government has a number of programmes designed to improve connectivity in rural areas. Whilst ‘Digital by Default’ is in line with citizens’ expectations of government in the digital age, Government departments will continue to provide support via alternative, non-digital channels for people who for example do not have access to computers, who are elderly, or may have accessibility issues. The potential for gains made through savings on service delivery made as a result of improved connectivity for access to digital services is further discussed in the response to recommendation 8 (below).

Recommendation 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).

All digital government services sit on GOV.UK, which is run by the Government Digital Service. The GOV.UK team continually optimises the platform to ensure that pages are as lean and simple as possible and improve front end performance. For example, the standard colours and font have been updated, resulting in significant reductions in the files used to load them. For users accessing GOV.UK over slow internet connections this should make a real difference. In addition, progressive enhancement is used in developing GOV.UK. Progressive enhancement is a way of building websites and applications which is based on the idea that you should start by making your page work with just hypertext markup language, before adding more complex elements. In addition to making pages more robust, this approach specifically helps users with device or connectivity limitations to use the service.

In addition to work to optimise the platform, the Government Digital Service offers guidance and direction to all areas of government. As well as advocating progressive enhancement in the development of services, Government Digital Service offers specific advice on testing and managing front-end performance, which helps service teams improve both the speed and overall user experience of government services. This specifically benefits users who live in an area with poor connectivity.

All digital services developed across government must also conform to the Service Standard, which lays out the principles of building a good service. Government Digital Service assures services against the standard at key points in their development through service assessments. The service directs teams to address the needs of rural users with limited connectivity in two points:

Point one of the standard directs teams to “Understand users and their needs”, which entails doing user research to understand what users need. This should always include an understanding of the constraints users operate in, including the technology available to them.

Point five of the service standard directs teams to “Make sure everyone can use the service”, which entails developing a service that everyone can use, including people who don’t have access to the internet or lack the skills or confidence to use it. That includes ensuring that there are effective, usable alternatives for those who cannot use services online.

These points should ensure that all government services are designed to be operable with the minimum possible technology requirements - including connectivity - and that where technological barriers remain, alternative channels are available.

Specifically in relation to Defra services, Defra rigorously applies the Government Digital Service service standard to its own digital services and its Arm’s Length Bodies. Defra continues to maintain a number of telephone helplines to ensure that people have an alternative non-digital option to access its services. A current example of digital service development in Defra is the planned new “Environmental Land Management” scheme. This service is part of the evolution of government payments to landowners when the UK leaves the EU towards rewarding environmental outcomes. The new environmental land management digital service will be tested throughout development and trialled repeatedly with target users before the national pilot is launched to understand how well the service operates and to allow any necessary improvements to be made. The development team is already undertaking user research with farmers with no internet connection and poor mobile phone connectivity.

A further example can be evidenced through the Rural Payments Agency’s Basic Payment Scheme. To support customers with no connectivity, ural Payments Agency inspectors have previously used satellite units, providing connectivity for customers in their locality to enable them to register to the digital service. Rural Payments Agency has also collaborated with a number of charitable/not-for-profit organisations to offer customers the opportunity to complete their forms online using the satellite service. A number of these organisations continue to assist customers to complete online applications. If customers cannot access the basic payment scheme on-line service, the Rural Payments Agency will provide printed scheme guidance and paper application forms. It is worth noting that online basic payment scheme applications were 86.7% (in the third quarter of 2019) of the total received, compared with 80.5% in 2016.

Recommendation 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)

The government considers service performance required for access to services, through consultations and the gathering of evidence at each stage of the development of digital infrastructure strategy. The Future Telecommunications Infrastructure Review noted that the speed, resilience and reliability that consumers will rely on and businesses will need to grow would ultimately require a full fibre and 5G service on a wide-scale, “in order for the UK to remain globally competitive, and support the regional rebalancing of the economy by creating new opportunities, in areas like health, education and public services”.

The government recognises the need to evolve available services beyond minimum thresholds (recently set for universal service obligation broadband, through stakeholder consultation on the universal service obligation requirements, including written submissions) and Superfast, to gigabit-capable connectivity, in order to future proof consumer and business access to digital services. The government is actively engaged in monitoring the rollout of gigabit capable infrastructure in the UK, and developing an intervention programme to support delivery, where required, in the hardest to reach parts of the country.

The extent of availability of broadband connectivity is regularly published by OFCOM, in the Connected Nations report. This is provided annually, and with four monthly updates. It includes the availability of decent, superfast, ultrafast and full fibre connectivity, as well as providing more regular quarterly updates. This information on the availability of connectivity services can be compared to the digital service connectivity requirements from government departments and platforms.

Estimation of the direct and indirect benefits of improved connectivity is made during the evaluation and decision making process for designing and implementing interventions made by government, including explicit investment decisions. This is typically through evaluation of cost benefit ratios for options within each programme, with reference to the Treasury green book. In order for benefits to be quantitatively considered, a sufficient evidence base must exist, and there must be a reasonable confidence that such benefits would be delivered, should the intervention be made. For the current portfolio of government services, it is considered that the majority can be achieved using universal service obligation level connectivity, assuming reliable connection is maintained. However, future services may require Superfast (or better) connectivity, and this is a driver for the UK Gigabit Programme announced during 2019.

Broadband

Recommendation 9: The principle of access to a universal minimum broadband service via the universal service obligation is important. It provides an essential legal platform to ensure universal coverage. We therefore welcome the Government’s commitment to delivering a broadband universal service obligation. However, the current specification of the universal service obligation 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 universal service obligation 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 universal service obligation 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 universal service obligation is not obsolete. (Paragraph 47).

As set out above, the universal service obligation is just one part of an extensive programme of work to improve broadband connectivity in rural areas. The universal service obligation is intended as a safety net to ensure no-one is left behind on unreliable and slow speeds, and applies to residential and commercial premises. The specification and reasonable cost threshold was subject to two government consultations and a technical report by OFCOM. OFCOM’s report determined that the 10 Mbps download speed and other technical criteria would meet the needs of a typical household for now and estimated that a reasonable cost threshold of £3,400 would ensure that 99.8% of the UK would have access to a universal service obligation level broadband connection. The Universal Service Obligation Order2 requires the designated provider to aggregate demand so the reasonable cost threshold can be combined across multiple premises, and that as many people as possible can be connected. Where the costs of connection exceed £3,400, people have the option of paying the excess costs, undertaking some of the deployment themselves to help reduce costs or using an alternative technology.

The government recognises that consumers’ needs will evolve over time and is committed to keeping the universal service obligation specification under review. However, we do not agree with the Committee’s recommendation of an immediate review of the universal service obligation before it has even been implemented in March 2020. The regulations and legislation set out an existing trigger mechanism for a future review, based on market developments (i.e demand). It is also possible that consumers connected under the current universal service obligation will receive higher than the minimum specification.

Government has committed to supporting rollout of gigabit capable broadband to the least commercial premises through our “Outside-In” approach. The government has already pivoted the existing superfast broadband programme towards full fibre provision and launched the £200 million Rural Gigabit Connectivity programme to rollout gigabit broadband to the most rural and remote areas of the country. In addition, on 30 September 2019, the government announced an intention to commit £5 billion of new funding for UK Gigabit Programme, which will subsidise the rollout of gigabit broadband in the hardest to reach parts of the country.

Recommendation 10: The universal service obligation is one of several measures to deliver universal broadband coverage. It is important that implementation of the universal service obligation 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 universal service obligation 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 universal service obligation. 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 universal service obligation 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 universal service obligation provision should not cost more than £45 per month (adjusted for inflation). (Paragraph 48).

As set out above, the universal service obligation is intended as a safety net to ensure no-one is left behind on unreliable and slow speeds. As a result, premises are only eligible for the universal service obligation if they do not already have access to an affordable broadband service that meets or exceeds the technical specification. To ensure a coordinated approach with other publicly funded broadband schemes, such as Building Digital UK’s superfast programme or the Scottish Government’s R100 programme, premises that are due to receive an equivalent or more highly specified service than the universal service obligation under one of these schemes within 12 months are not eligible for the universal service obligation. Participation in the universal service obligation should not preclude future participation in other (gigabit) investment programmes, where another step-change in experience is involved.

The Electronic Communications (Universal Service) (Broadband) Order 2018 requires OFCOM to ensure that any designated service provider offers universal service obligation broadband connections and services at prices that are affordable and uniform throughout the UK. OFCOM has sought to deliver this through a commitment from the designated service providers, BT and KCOM, to provide universal service obligation services for no more than £45 per month. OFCOM has committed to introduce a mandatory safeguard cap in the future should it prove necessary.

Recommendation 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).

OFCOM’s Communications Market Report 2019 found that superfast broadband connections accounted for 59% of all fixed broadband lines at the end of 2018. This is an increase of 17% during 2018–2019, and means that just over half of all households at that time took a superfast connection (as some 13% of households did not take a household internet connection)3.

Government will continue to work with OFCOM and industry to drive the take-up of superfast broadband and bolster consumer engagement in the telecoms market. Government has recently provided £500,000 to 30 local bodies involved in its superfast programme to undertake demand stimulation activities, in areas that had received subsidies through the Building Digital UK programme. The Building Digital UK team is also working on a research project, which will look at the barriers and drivers of take-up of superfast broadband, including in rural areas, as part of the government’s ongoing analysis of its superfast programme. Finally, OFCOM has launched the Boost Your Broadband website to help consumers identify faster and cheaper broadband deals, whether from their existing provider or by switching to a new provider.

Government and OFCOM are also taking action to bolster broader consumer engagement in the broadband market. For example:

Recommendation 12: Delivery of the universal service obligation 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).

The Future Telecoms Infrastructure Review considered the differences in local market conditions across the UK and recommended an approach to ensure parts of the UK would not be left behind. Government typically measures coverage of premises (both residences and business premises) to set broadband coverage availability targets, rather than population coverage targets. The Future Telecoms Infrastructure Review concluded that, under the right investment conditions, commercial investment was viable to around 80% of premises in the UK. This leaves the final 20% of UK premises which will require support from government to ensure timely rollout of gigabit-capable networks.

Whilst the Future Telecoms Infrastructure Review concluded that the hardest to reach 10% of the UK would not support commercial investment without subsidy, a further c.10% of premises may be commercially viable for investment by one operator but given the uncertain business case, government intervention may be required. Our analysis suggests that these areas will be a mix of rural and remote areas and some more urban premises, and we are considering the best ways to address particular areas. The Future Telecoms Infrastructure Review was clear that investments through our “Outside-In approach” would start those premises without access to superfast broadband.

If left to the market, we would expect the hardest to reach 10% would not be served, and the next hardest 10% would be the last to be served. Intervening in these areas with £5billion of public subsidy will ensure that networks are deployed in parallel to, and at the same time as the rest of the UK.

However, while our long term ambition is to deliver nationwide gigabit-capable networks, we recognise that many still struggle to receive decent broadband services, which fundamentally limits what digital services they can access. We introduced a universal service obligation for broadband as a minimum safety net, so that everyone across the UK has a clear, enforceable right to request affordable broadband of at least 10 Mbps, from a designated provider, up to a reasonable cost threshold of £3,400 per premise. OFCOM, who is implementing the universal service obligation, announced that eligible consumers will have the right to request these connections from March 2020.

Recommendation 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).

The government announced in 2019 an intention to commit £5billion of public funding to accelerate gigabit-capable network rollout in areas least likely to be covered by commercial rollouts is a deliberate measure intended to ensure that progress on future-proof infrastructure can be made simultaneously in rural and urban areas of the country, to avoid rural areas being ‘left behind’. Government, including DCMS and Building Digital UK, has progressively adapted supply and demand side broadband interventions in response to market, technology and operator demand. The government intends to continue the current schemes whilst preparing and launching the “Outside-In” gigabit-capable interventions in rural areas, in order to maximise lessons learned and maintain momentum in the rollout of infrastructure to previously underserved consumers. The fact that the funding will be required across a number of years, with a degree of certainty that can allow appropriate resource and IT system development and commitment to capital deployment (also by third parties) is well recognised, including by DCMS. The government also recognises that the best use of both capital and time will be required to achieve our ambitions, as well as the removal of previously identified ‘barriers to deployment’.

Recommendation 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 raised £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).

On 25 October 2019, the government announced in-principle support for the Mobile Network Operators Shared Rural Network proposal to reach 95% geographic mobile coverage by 2025 (further details are set out under recommendation 20). This in-principle support remains subject to detailed negotiations with the mobile network operators, but our ambition is to reach a final agreement on the Shared Rural Network early in 2020.

Until such time as we reach final agreement with the mobile network operators, the government remains open to all funding proposals that would improve mobile coverage and represent value for money. This includes OFCOM’s consultation plans to include two coverage obligations in next year’s 700 MHz and 3.6–3.8 GHz spectrum auction. This would likely see two mobile operators increase their geographic coverage to 90% each by 2024, for a maximum discount in the range £300m-£400m per obligation.

Recommendation 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).

The government published its response to ‘Ensuring tenants’ access to gigabit capable networks” on 10 October 2019. The subsequent legislation: Telecommunications Infrastructure (Leasehold Property) Bill was introduced into the House 15 October 20194.

New Build Connectivity is a priority for government. Ensuring new homes are built with the future in mind, ready to accept the next generation of digital infrastructure, remains vitally important. Over 50 responses were submitted to the government’s consultation on how to improve new build connectivity. These have been reviewed and DCMS officials are now working with key stakeholders across government and industry to finalise this policy.

Recommendation 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).

The government published its Future Telecommunications Infrastructure Review in July 2018. This set out the government’s target to connect 15 million premises to gigabit broadband by 2025, and nationwide coverage by 2033. In light of the progress that has been made since the Future Telecoms Infrastructure Review was published, the government has set a new ambition of rolling out gigabit broadband coverage by 2025.

The government is considering what existing measures it can accelerate and new measures it can introduce to enable the speedier deployment of gigabit broadband. On 30 September 2019, the government announced an intention to commit £5 billion of funding for the next stage of the UK Gigabit Programme - which will subsidise the rollout of gigabit-capable broadband in the hardest to reach parts of the country. The government will make further announcements in due course.

Mobile data services

Recommendation 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).

OFCOM

Recommendation 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).

OFCOM

Recommendation 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)

Recommendation 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).

Improving mobile coverage in rural areas is a priority for the government. We want the UK to have high-quality mobile coverage where people live, work and travel. We are committed to extending geographic mobile coverage to 95% of the UK, as well as providing an uninterrupted mobile signal on all major roads.

On 25 October 2019, the Government announced in-principle support for a Shared Rural Network programme, which is a proposal from the mobile network operators to collectively increase 4G mobile coverage throughout the United Kingdom to 95% by end. It will be underpinned by a legally binding coverage commitment from each operator.

The plans will see mobile network operators invest £530 million, opening up and sharing their existing infrastructure, to close almost all “partial not-spots” (areas where there is currently coverage from at least one but not all operators) and each reach 88% geographic coverage by 2024. Government, subject to reaching a final agreement, is then prepared to invest ~£500m to go even further to eliminate “total not-spots” (those hard-to-reach areas where there is currently no coverage from any operator). This State Aid will be subject to the approval of the European Commission or (depending on the circumstances of EU Exit) the Competition and Markets Authority.

The SRN will provide extra coverage to 280,000 premises and 16,000 km of roads. The proposal will see the biggest improvement in Scotland, Wales and Northern Ireland.

If we are unable to reach an agreement with mobile operators on their Shared Rural Network proposal within an appropriate timeframe, the government will continue to explore all possible options for meeting our mobile coverage target, including OFCOM’s original coverage obligations proposed as part of the 700 MHz and 3.6–3.8 GHz spectrum auction, and rural roaming.

1 Update: By the end of January 2020, over 28,000 vouchers had been issued and 19,000 beneficiaries connected through this scheme.

2 The Electronic Communications (Universal Service) (Broadband) Order 2018, http://www.legislation.gov.uk/uksi/2018/445/contents/made

3 Update Jan 2020: Similarly, OFCOM’s Connected Nations Report (2019), published in Dec 2019, found that 57% of the 94% of UK premises able to sign up to Superfast services had done so.

4 Update Feb 2020: The Bill fell when Parliament was dissolved in November 2019, and was reintroduced on 8 January. It completed its Committee Stage in the House of Commons on 11 February, and the remaining Commons stages have been provisionally scheduled for 10 March.



Published: 16 March 2020