Ofcom’s consultation on their Digital Communications Review closes on 8 October. It will shape the development of digital infrastructure for the next decade and beyond, and have a massive impact on the private companies that provide it. Ofcom could recommend a major shift in the competition framework that has made the UK a leading e-commerce market with low prices, or could even recommend the breaking up of BT. On 7 October, Ofcom’s CEO Sharon White will give a major public lecture at LSE. Claire Milne, visiting fellow in the LSE Department of Media and Communications, argues here that White and Ofcom not only have to find more radical solutions to BT dominance of the broadband market via Openreach, but they need to support consumer literacy and competence in order to make markets deliver for UK consumers.
Broadband furore
There’s an ever more evident gap between the government’s claims for its broadband strategy (“95% of premises within superfast coverage by 2017”) and the widespread experience of being unable to get even basic broadband – illustrated by disappointed comments, for example, from people living in Wales and from small businesses. In part-response to this public disquiet, back in March, Ofcom launched its Strategic Review of Digital Communications, which is now nearing an important milestone – the deadline of 8 October for responses to its July discussion document.
The central issues are how to stimulate investment to bring long-term, fit-for-purpose broadband to everyone in the UK soon (mostly by providing end-to-end optical fibre), while at least maintaining current levels of competition. Ofcom’s conclusions will have major effects on the UK’s digital infrastructure over the coming decade, but their ‘emerging views’, which take account of all input received and all available evidence, are due by the end of the year. This stage of consultations is often much longer, as was notably the case in the last Strategic Review ten years ago. This suggests that Ofcom already have a fair idea of their way ahead.
Opening Openreach
The big battalions of vested interests have been out there in force for months, arguing their cases over the management and status of Openreach. This BT-owned network access business provides the final wired connections to customer premises on which most broadband services depend; its investment and service performance have been much criticised in recent years. BT naturally prefers to preserve current arrangements, and points to the big financial (and potential legal) risks of upsetting them, while promising improved outcomes.
Meanwhile, many of BT’s competitors and customers both large and small, individually or in concert, are calling for radical reform to open up existing ‘passive’ infrastructure (like trenches, ducts and dark fibre) and to stimulate investment in fibre reaching all the way to customers’ homes and offices – and not just to street cabinets, as has been mainly BT’s practice. A letter to the Financial Times signed by Sky, TalkTalk, Vodafone, the Institute of Directors, the Independent Networks Co-operative Association, the Association of Independent Professionals and the Self Employed, and the Federation of Communications Services (representing smaller service providers), calls for a reference to the Competition and Markets Authority for a full investigation.
Buried evidence
It may sound as if this difference of perspective could be settled by a dispassionate analysis of facts. However, this is more easily said than done when vital evidence lies buried – both figuratively, within a private company that doesn’t see its interests served by digging it out, and literally, in the unknown condition and serviceability of many thousands of miles of ageing copper wires. Given this lack of evidence, estimates of the cost of network upgrades to give everyone fit-for-purpose broadband vary widely, and may go as high as £20 billion. While these are large sums of money, they are small by the standards of public infrastructure investments (for example in energy or transport), and arguably small compared with the long-term benefits.
While Ofcom (with those most in the know) tread gingerly over this treacherous ground, can the rest of us make any useful contribution to this review, and if so, how? Ofcom themselves are keen to point out that the review isn’t only about Openreach; competitive markets don’t work without engaged consumers, and one of the review’s areas of focus is ‘empowering consumers with the ability to assess their choices and make informed decisions’.
Getting consumers on board
Having been involved for a long time with telecoms consumer policy, I’d like to float a few ideas for consideration in this area. Though they are neither new nor original, maybe their time has come.
First, couldn’t Ofcom do more in the future to support consumer education, information and choice? In particular, rather than leaving most of the job to market-driven comparison websites, why not commission independent, comprehensive, consumer-friendly comparison tools, ideally incorporating real consumer experience on the TripAdvisor model? Knowing where to go for simple, authoritative advice should boost consumer confidence, and successful switching where warranted.
Second, to route network investment to where it’s most needed, what about an independently run open online ‘broadband marketplace’, where communities can muster their demand and service providers can offer to fulfil it, making efficient use of public subsidies? Will Perrin’s rural broadband manifesto explores this approach in some detail; it could help assuage trouble spots, both rural and urban, whatever the verdict on Openreach.
And third, the review offers the opportunity to abolish unnecessary cost barriers, which, as Ofcom’s affordability research shows, still exist for some households. What about a new General Condition of Authorisation, parallel in intent to the one obliging service providers to serve their disabled customers properly, requiring ‘no frills’ entry-level packages to be included in all consumer product portfolios?
This article gives the views of the author and does not represent the position of the LSE Media Policy Project blog, nor of the London School of Economics and Political Science.
You only have to look at the BT Wholesale estimator to observe just how bad the FTTC offering is to clearly demonstrate that it is not fit for purpose on bad quality lines and all lines of over about 1 km. BT’s investment in the infrastructure is virtually non-existent including large quantities of age-hardened aluminium alloy twisted pairs incapable of transmitting the higher VDSL frequencies. Yet there is no published plan for its replacement.
Furthermore BT have quite deliberately limited the available FTTC capacity of the larger Huawei 288 cabinets to 96 services as they did not install the second connecting duct costing around £50. Large numbers of cabinets can be spotted as being “High Demand”.E.g Shere 5 in Surrey which has been unavailable since mid December 2014. Other examples (taken at random) include Abinger 1, Crediton 10, Bramley 1 & 9, Ingleton 3. One has to question why BT are acting in this way.
Similarly why did BDUK sanction taxpayers’ money being spent on asymmetric shared fibres instead of point to point fibre. There cannot be a financial argument given a fibre costs less than toilet paper per metre. Far more probable is that shared fibre guarantees the continuing monopoly with seriously inflated costs to the consumer.
It is a waste of time trying to split openreach off, they have enormous legal departments and it will just be a fiasco.
Once openreach have leached the last vestiges of income from their obsolete copper infrastructure they will probably hand it all back anyway. They won’t have the money to make it all work any longer.
There is no competition in this country, despite the hype from openreach. Everyone buys from wholesale, and everyone is fighting for scraps to keep the prices low. That is why we have so much contention, throttling and capping. The poor ISPs are just fighting to stay afloat, but they all sell the same product from the same monopoly.
What we need is support for altnets building proper futureproof connections, that are fit for purpose now, but are easily upgradeable when needed.
The answer is put the money into the hard to reach places, build fibre rings everywhere, and show what a real broadband connection is. These fibre networks are low cost, low carbon and low maintenance. They will be cheaper and better, and soon these alternative networks will harvest urban customers. If openreach want to keep customers they will have to upgrade their infrastructure or go out of business.
Remember, if it wasn’t for Virgin competition in the cities we would all still be on dial up.
Virgin have proved it can be done, Hyperoptic and Gigaclear are taking it further, B4RN is proving even the remote mountain farms can be connected affordably, with gigabit fibre. What we need is for government to have baisc physics lessons, civil servants need to read up about comms, ofcom needs staff with brains who didn’t use to work for bt, and funders need to take a few risks instead of buying IBM. If not, we’ll stay tied to copper phone lines for another decade at least, and we’ll be the laughing stock of the new digital world.
Any country with a good phone system took the lead when they discovered they could get the internet to go down the lines. Now they are marketing it as fibre broadband, but it isn’t, and our ASA is powerless to correct the hype. Ofcom doesn’t stop them either, so the politicians believe it too. It isn’t fibre broadband unless it comes down a fibre.
Other countries who don’t have good phone networks are laying fibre. They will be the digital leaders.
We will be a third world nation, and its time we got our fingers out and got cracking.
It will cost a fraction of HS2. It will help every single citizen in more ways than can be imagined now.
Do not ask what it will cost to get a fibre to every home and business.
Ask what it will cost this nation if we don’t.
My village dug in a fibre for 18km over a mountain. We are all on our own fibre. This is my test result from my rural farm. What speed do you get? Mine costs £30 a month and phone lines are free, as many as you want. http://www.dslreports.com/speedtest/1248546
There is only one technology known to mankind that can delivery universal high speed bandwidth irrespective of where people live, and that’s laser light through gall fibre – in other words real fibre optic broadband or FTTH. That, combined with a fit for purposed fibre optic network design (which we also don’t have in the UK) is the only way we can compete in the broadband stakes internationally.
Every man woman and child in the UK would benefit from FTTH, a truly future proofed project if done properly, unlike the minimum £80Bn new railway which will save a few people a few minutes on their journey to and from Birmingham. HS2 is the wrong network for the wrong century. I don’t know why this is so difficult to understand.
Starting with 1000Mbps in both directions, FTTTH will track the development of real fibre optic broadband. Even today, Gigaclear and B4RN offer 10,000Mbps symmetrical services. Try to imagine the creativity that this would unblock, imagine the competitiveness of the UK if we ALL had access to this – wherever we lived in the country
£20Bn? A bargain and twice the price..