Digital Economy Bill — House of Lords, 2017-02-22
Topic: Technology
Jonathan Mendelsohn (Labour, Centre-left): My Lords, I am pleased to move Amendment 1 in my name and that of my noble friend Lord Stevenson of Balmacara and the noble Lords, Lord Fox and Lord Clement-Jones. I thank Ofcom for its helpful advice and clear and comprehensive responses to our questions, as well as the excellent documents it has published on the matter. I also thank the Minister for his willingness to listen. I hope he appreciates that we have also listened carefully. We have not moved amendments that, while touching on important aspects of broadband policy and its delivery, are not appropriate for the Bill These amendments are about making the universal service obligation meet the Government’s objectives and should rightly appear on the face of the Bill. We provide for further definition to be placed as was originally planned in regulations after this Bill, but they provide the correct framework to set them out properly. Placing these limited areas on the Bill ensures that the universal service obligation provides an operable legislative framework and mixes the right amount of direction, constraint and enabling. In short, these amendments set a floor for the USO; they create the means to ensure that progress can be properly monitored and reported, and they provide an aspiration to ensure that the universal service obligation helps to set a direction and does not become a limiting factor Amendment 1 makes a series of changes to the Bill. It places the universal service obligation for broadband on the face of the Bill and sets the following conditions: a target for broadband connection speeds of 2 gigabits or more; a minimum standard of 30 megabits download speed; that rollout must be rural and SME-focused; a requirement on the Secretary of State to ensure fair competition; and a universal service obligation for mobile coverage. In proposing the introduction of proposed new subsection (2BA) we ensure an explicit commitment to the initial, universal service obligation download speed of 30 megabits The case for this is made most strongly in Ofcom’s technical advice to the Government on the broadband universal service. Its evaluation of three options is carefully written but it essentially puts the Government in a tough spot. It is clear that the only option that meets all the requirements is scenario 3, with download speeds of 30 megabits and upload speeds of 6 megabits, and other aspects which are all in the amendment. But given that it will remain a question of cost it leaves the Government to introduce that constraint. However, here is where the report is most valuable. Detailed work by Ofcom and its consultants suggests that the worst option, scenario 1, will cost £1.1 billion; scenario 2 —which is also 10 megabits, with a couple of frills—will cost £1.6 billion; and scenario 3 will cost £2 billion. Crucially, the costs per household resulting from the economies of scale provided by option 3—the option which provides for 30 megabits download speed and 6 megabits upload speed—move down from scenario 1 and are almost the same as scenario 2. The economic case for an additional £800 million is extraordinarily well justified It is also clear that in defining what decent broadband is, the report indicates that 10 megabits will not be sufficient. It argues that this may be sufficient today, but not by the time the USO is proposed to be delivered. Even if it is possible that data usage might not require any more—a point that it says is unlikely, even when the technology gains in compression and transmission techniques—other issues such as contention rates and latency would render 10 megabits unfit for usage in a very short time. The best the report can muster in defence of a 10 megabits download speed is that if it were adopted it would have to be reviewed almost immediately. The case is compelling and it is economically justified—I look forward to the Minister’s agreement on this Proposed new subsection (2BB) suggests that the rollout prioritises that the universal service obligation needs to be met in areas of low population density before providers can deploy their networks in urban areas. This ensures that the economic models encompass the entire economics of a rollout rather than cherry picking the most profitable parts, which inherently leads to the outlying parts becoming uneconomic and uncommercial. This also ensures that the government funding is most efficiently employed in meeting the right outcome. During Committee I outlined the well-known German example of how to tender on an outside-in basis in relation to the mobile market, and how companies which said that it was uneconomic here were able to produce and deliver commercial models in Germany. It is not therefore a surprise that this model is used more widely now as a template to modify, and it would improve the universal service obligation for us to do so as well Proposed new subsection (2BC) places a duty on the Secretary of State to ensure that the market is sufficiently structured to benefit from all the advantages gained by competition, and to make sure that there is some focus in ensuring that the needs of SMEs are properly addressed. It is clear that while they are demand-led, without some explicit focus, their needs will not be adequately addressed Proposed new subsection (2BD) introduces mobile network coverage into the umbrella of the universal service obligation. This reflects the current patterns of consumer and citizen behaviour, and the increasing use of mobiles as the growing means—particularly in younger demographics—of accessing all sorts of digital and other services. Ensuring that social exclusion is properly met requires embracing mobile requirement, and this can be easily met by addressing the 5G tendering through the German process, or even limited forms of roaming.