Electronic Communications (Universal Service) (Broadband) Order 2018 — House of Lords, 2018-06-05
Topic: Technology
Thomas Ashton (Conservative, Centre-right): My Lords, I am grateful to all noble Lords for their contributions. We are faced with a dilemma here. On the one hand, people such as my noble friend Lord Cathcart are begging for anything to be done to allow them to have some decent connection. By decent, I mean something that would enable him to receive his emails and documents. On the other hand, many noble Lords have said that we have lacked ambition. The last, very compelling speech from the noble Lord, Lord Mendelsohn, castigated the Government for their lack of ambition and for setting incoherent USOs, to sum up his speech very briefly I have to remind noble Lords that the purpose of the universal service obligation, as outlined in the universal service directive, is to ensure the provision of services to all users. Noble Lords have mentioned Europe, which at the moment has coverage of about 76%. The universal service directive applies only to fixed broadband; it does not apply to mobile. Indeed, the European Commission itself has twice reviewed mobile and concluded that social exclusion does not exist The universal service obligation does not exist to promote investment; it exists to make sure universal services are indeed universal and a legal right. It is intended as a safety net. The noble Lord, Lord Foster, said that that safety net lacks ambition; we will deal with the Government’s ambition elsewhere in my speech. Interestingly, the noble Lord also admitted that he would benefit from the USO and cannot wait to have it Premises in the USO footprint will be the hardest and most costly to reach in the country. The Government’s position is that the current specification of the USO is sufficient at present and strikes the right balance between meeting consumers’ needs and ensuring that it is proportionate and deliverable. That was not a random decision. The Government carefully considered and consulted on a range of options and three different scenarios that Ofcom modelled: a basic 10 Mbps service; the preferred 10 Mbps service with additional specifications, such as upload speeds, latency and data caps; and the 30 Mbps or superfast service. The 10 Mbps was selected because data usage drops considerably below this, indicating broadband activity is more restricted with speeds under 10 Mbps. Further evidence from Ofcom shows that a speed of 10 Mbps meets the needs of typical households I would also point out that 10 Mbps is a higher speed than virtually every USO across Europe. Sweden may be higher. However, we fully recognise the USO will need to be revised over time as consumer needs evolve, so that it continues to meet people’s needs in the years to come. The Government will be closely monitoring this Ten Mbps will make a considerable difference. The noble Lord, Lord Foster, gave a list of things that he is currently unable to do, including combating loneliness—and the noble Lord, Lord Cathcart, mentioned downloading documents. Setting it at 10 Mbps will allow all those things that he mentioned to take place As has been mentioned, that is why the Digital Economy Act 2017 provides for the Government to direct Ofcom to undertake a review at any time, and it includes a specific requirement for a review to be undertaken when 75% of premises subscribe to broadband services of 30 Mbps or higher. By the way, despite what the noble Lord, Lord Foster, said, there is virtually no difference between the two definitions of "superfast" that Ofcom, Europe and the Government have been using. At the moment, it is 95% for the Government and 94.9% for 30 Mbps, so it really is not a significant difference As I said earlier, the 10 Mbps USO is a safety net, but the Government have much greater ambitions for connectivity across all parts of the UK, so on that I agree with most noble Lords. In his motion, the noble Lord, Lord Stevenson, referred to the third superfast scenario. Thanks to BDUK and £1.7 billion of public money, over 95% of UK premises already have access to superfast speeds, with savings and clawback due to deliver at least another 2% of coverage. The majority of this access has been delivered by providing fibre to the cabinet. However, we are not content with that, and I agree with the noble Lord, Lord Stevenson, and others. In his speech to the CBI last month, the Chancellor set a national target for full fibre—not just to the cabinet, but all the way to the premises. Our aim is for full fibre to 15 million premises by 2025, and all premises by 2033. So the Government are not short on ambition Likewise, at the Fibre Investment Conference, organised by the DDCMS and Ofcom in April this year, the Secretary of State spoke about creating a world-leading environment for investment in full fibre, and reaffirmed how vital full fibre is to building the capacity this country needs. That is why the Government are delivering a series of measures to realise these ambitions. The local full fibre networks programme and gigabit broadband voucher scheme are delivering fibre connections now and incentivising further commercial investment. The £400 million Digital Infrastructure Investment Fund is helping to finance alternative network providers, and the Treasury is further supporting investment through business rates relief for operators who install new fibre. The DDCMS future telecoms infrastructure review will soon publish a report looking at how we can create the best possible market structure to drive investment, and hit the Government’s targets to provide full fibre to all consumers The USO is part of these plans, but a higher speed USO would increase the direct costs of delivery as well as increasing the number of eligible premises. This may result in greater costs on consumers’ bills, and would increase competitive distortions. It would increase the risk of negatively affecting commercial incentives to invest. It is therefore crucial that, as a safety net, the USO works to support, and not unduly distort, the current and future market. The potential for market distortion limits what the USO can achieve I will try to respond to some of the points which noble Lords made. The noble Lord, Lord Aberdare, asked how the USO is going to be enforced. The order has been passed by both Houses and is now with Ofcom to implement. It will designate the provider and the industry cost-sharing fund. Ofcom expects this to take two years and it will consult on the provider this summer, so it is already working on that. That point was also made by the noble Earl, Lord Lytton. Once it is in place, the USO will enable the noble Earl to do exactly the things which he is complaining he cannot do now, so he should be glad about it The noble Lord, Lord Mendelsohn, talked about the needs of businesses, and of course he is right that in some cases a 10 Mbps speed is not sufficient. If you have a high-data business, that would not be ideal: for example, actuaries, whom I used to deal with, have huge data files. However, it will support many small businesses, and it provides access to every government service available.