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Update – Broadband Universal Service Obligation

Since our original article was written there has been an update on progress towards a UK Universal Service for broadband.

 

On 19th June 2018 Ofcom published a request for expressions of interest to service providers to become the Universal Service Provider for broadband for all or part of the UK. The Universal Service Obligation will give homes and businesses the right to request a broadband connection that delivers at least 10Mbps downstream and 1Mbps upstream provided that the cost to deliver the service does not exceed £3,400. The technical specification for the USO further states that the contention ratio must be no higher than 50:1, the service capable of downloading 100GB per month and latency low enough to allow effective VoIP calls (stated as 200ms).

 

If the cost of installing the connection exceeds £3,400 consumers and businesses will be given the option to pay any additional construction costs. Once installed the ongoing cost of the service cannot be greater than a comparable service elsewhere in the country.

 

Ofcom may appoint one service provider nationally or different providers for different areas depending upon the response to expressions of interest. BT and Kcom (in Hull) are the natural providers but Ofcom is interested in expressions of interest from others down to a local authority sized area. The actual procedure for appointing a USP will be the subject of a further consultation in September 2018.

 

Ofcom could set up an industry fund to retrospectively compensate the Universal Service Provider if it agrees that the USP is under an unfair financial burden in meeting the obligation.

 

The consultation closes in August 2018. Ofcom is expected to make the final decisions by the summer of 2019 after which consumers will be able to make requests for connections.

 

Original article …

 

Broadband Universal Service Obligation

Shortly before last year’s General election the UK Government passed into law the Digital Economy Act 2017. It’s a collection of legislation covering the use of wireless spectrum, ticket touts, online pornography and direct marketing. Acknowledging that a high tech economy requires a decent network to start with the first part of the act deals with “Universal service broadband obligations”. The act specifies that every household has a legal right to request a broadband service of at least 10Mbps download speed. Please finish reading this article before calling your solicitor though.

 

The concept of a Universal Service Obligation goes back to the creation of the Penny Post, Rowland Hill’s idea that for 1 old penny a letter could be sent anywhere in the country regardless of distance or location. The introduction of the Penny Black democratised the postal service and led to a surge in letter writing among literate Victorians who could now spread their ideas, politics and gossip throughout the country. Commerce flourished and doubtless many Victorians shared sketches of their cats doing hilarious things with each other. The new hobby of stamp collecting followed shortly afterwards.

 

The Universal Service Obligation later covered telephone service and now covers broadband.

 

The way the USO works with telephone service is that the government designates BT as the Universal Service Provider who must provide a telephone line on request unless the cost of connection exceeds £3,400 (about the value of a mint Penny Black stamp today coincidently). If the cost to BT exceeds that threshold the customer can opt to pay the additional costs of providing the service. So here the comparison of a telephone USO fails the comparison with the Penny Post, there is no expectation that all consumers will pay the same cost for their service. As an aside, the modern day USO for letters and parcels actually excludes premises where delivery would take more than a 15 minute round trip. So there are many remote places excluded from a mail delivery service.

 

The 2017 act amends the Communications Act 2003 allowing the Secretary of State, through Ofcom, to designate a service provider to enact the USO. This is expected to happen in early 2018 and it is expected that BT will be the service provider charged with the USO for most of the UK mainland and they will be given until 2020 to comply with the act.

 

There will be a cost threshold for the broadband USO, it has been suggested this will be around the same £3,400 point. However given the nature of broadband a group of nearby users all demanding service could have their costs aggregated.

 

So whilst there will be an obligation to provide the service it will not necessarily be at an affordable cost for some businesses. We can reasonably expect that National and regional government schemes to subsidise some of the excess costs will be rolled out such as the current Welsh “Access Broadband Cymru” and “Ultrafast Connectivity Voucher” schemes.

 

The 2017 Act puts into law only a minimum download speed of 10Mbps. Acknowledging that technology changes the 2017 Act gives Ofcom the power to change the 10Mbps download figure upwards in the future and to also include upload and other technical requirements as they see fit. It is speculated that there might be a minimum upload speed of 1Mbps and a minimum data cap of 100GB data transfer per month. Contention ratios and minimum latency guarantees might also be stated.

 

An Ofcom report shows that currently 1.1 million premises (4%) are currently unable to achieve the 10Mbps download figure and it is expected that BT will deploy Long Reach VDSL to meet most of these premises. It is expected that some very remote places will only be able to get “broadband” service from a satellite Internet provider which will not necessarily meet any additional technical specification targets for latency, upload or data throughput.

 

The technical specifications may not necessarily meet all business needs. Some business that want to extensively use cloud services or have a large upload requirement will find that the minimum specification is not suited to their requirements and the only option remains leased lines which can have prohibitive excess construction costs associated with them.

 

If you have a rural business that needs better connectivity rather than hanging on for the USO to be enacted, which may deliver a service that is lawful but doesn’t meet your needs you may be better off exploring what is currently available alongside subsidy schemes.

 

At Spitfire we have many customers with rural businesses that currently cannot get anywhere near 10Mbps download which hampers their ability to run their business as effectively as they could. The broadband Universal Service Obligation is welcome and puts the UK alongside Switzerland, Finland and Spain in establishing a legal right to an Internet connection but it does not take effect until 2020 and the act imposes no cost cap on what the service might cost.

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