Digital Economy Bill (First sitting)

Calum Kerr Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 11th October 2016 Public Bill Committees

[The Chair]

The acoustics in the room are terrible. If Members and witnesses could really speak up, that would be very helpful.

Sean Williams: To answer from our perspective, we are willing to enter into a binding legal commitment that we will deliver at least 10 megabit broadband to 100% of premises by the end of 2020. Our objective with this is really to give the Government and Ofcom comfort that we can get on and do this.

I would emphasise that I think that there is a lot of competition, as the Baroness just mentioned. We have Virgin expanding their network, we have Gigaclear and Hyperoptic expanding their network and we have the mobile operators expanding networks that can deliver 10 megabit broadband by 4G. There is a lot of competition to deliver this. For our part, we are willing to undertake to make sure that every single premises can get 10 megabits by the end of 2020.

Baroness Harding: The MP for Devizes raised a very good question. I am a firm believer that competition will do the majority of this, and we should try our damnedest to make the private sector fund most of this through competition, but I think there is a fair chance that in three or four years’ time a number of your constituents will not have broadband that they think is good enough.

I promise that I will not take up the whole session on this, but I think that the solution is to separate Openreach completely and put a universal service obligation on an independent Openreach. Once you have an infrastructure entity that is not owned by one of the retail providers, that takes away a lot of the industry issues with the public subsidy in some shape or form needed to get proper fibre for that final few per cent.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

Q Given that broadband speeds have doubled in the past three years, and that the pace of demand is accelerating, I find it staggering that we should say to rural constituents, “You are second-class digital citizens and must accept 10 megabits.” How do we bring forward a scheme that ensures that, in areas where they want to go further to ensure that they keep up or even get ahead, the universal service obligation does not peg them at a low speed? How could we design a flexible, regional USO model? Has that been considered by anyone on the panel?

Sean Williams: I do not want to occupy a disproportionate amount of air time here. We think that, by the end of 2020, we will be able to deliver fibre broadband speeds to probably 97% or 98% of households across the whole country, and at least 10 megabits to everybody by then, unilaterally and without any public funding or a USO. That will continue to go on after that as we continue to innovate networks.

We also have a commitment to deliver ultrafast broadband—more than 100 megabits—to 10 million premises, and fibre-to-the-premises deployment to another 2 million premises by 2020. There is going to be an awful lot of network investment, which, by the way, can only happen in an integrated, end-to-end business case.

[Calum Kerr]

Q Mr Williams, do you think that a tactical, on-demand USO only provided by BT can really provide the strategic outcome—a direction toward “gigabit Britain”—that I think we all agree is a matter of when and not if? If we continue to do this in a piecemeal fashion surely all we are going to do is cement the digital divide, rather than close it.

Sean Williams: To get these networks out to as many premises as possible, by as many providers as possible, through competition and commercial market action is exactly the right solution. To get good networks out to everybody, both mobile as well as fixed, it is important that everybody has an incentive to invest. Through competition and commercial investment, we will get to the answer.

[The Minister for Digital and Culture (Matt Hancock)]

Q I welcome the commitment from BT to reach 100% of premises by 2020, but I ask for a point of clarification on language. Mr Williams, you referred in the percentages to “fibre” and, separately, to “fibre to the premises”. Can you confirm that by “fibre” you mean a combination of fibre and copper and that by “fibre to the premises” you mean pure fibre? The use of the term “fibre” reflects statistics that I understand mean fibre to the cabinet, so I find confusing the offer to households being “fibre plus copper”. I would be grateful if you clarified that.

Sean Williams: I am happy to. When I use the term “fibre broadband”, I mean fibre to the cabinet, which is a combination of rolling out fibre further into the network but with copper into the end premises. When I use the term “fibre into the premises” I mean fibre all the way into the building. I apologise for being unclear.

When I say we will deliver fibre broadband, it will largely be, in my view, through a combination of fibre and copper, but we are also very positive about fibre to the premises and typically deploy fibre to the premises in all new building sites and in lots of Broadband Delivery UK areas. We are developing fibre to the premises solutions that are particularly targeted at small and medium-sized enterprises. We have made a commitment that we will get ultrafast broadband speeds, which is both fibre and copper, and also fibre-to-the-premises solutions to 1 million SMEs by 2020. We have heard the prioritisation that the Government have put on getting very good broadband speeds to small and medium-sized enterprises and we have made a commitment we will get that to 1 million of them by 2020 as well.

--- Later in debate ---

[Nigel Adams]

Q I suspect that the Bill is not going to be subject to the most detailed discussion around the country. However, as a question to both of you, having had an opportunity to analyse the Bill, if we were all pitching this to our constituents across the country, what do you see as the key benefits for consumers?

Pete Moorey: The telecoms sector needs to catch up with where consumers are. That is part of what the Bill is trying to do: we need to recognise that people increasingly see their mobile phones and broadband as essential items. Yet we know that customer satisfaction is very low and that people are increasingly frustrated about their inability to get a signal or to get the broadband speed they are paying for.

There are critical things in the Bill that will start to bring the telecoms sector kicking and screaming into the 21st century. For me, those elements include switching—I think it is incredible that we do not have provider-led switching in the telecoms sector. Automatic compensation is very important. With water, electricity and gas, if we lose a connection we get a compensation payment, but that is not the case in telecoms. The appeals process, which we have heard a lot about this morning, has had a chilling effect on the regulator’s ability to introduce measures that would both improve competition in the sector and better protect consumers.

The final area, for us, is nuisance calls, which we know are some of the biggest bugbears that people face—they are sick to death with receiving annoying calls and texts. To put the ICO guidance on nuisance calls into statute is another step towards tackling that everyday menace.

James Legge: Yes, I think that switching and compensation are important: it is important to hold the feet of the telecoms companies to the fire. But there is possibly an opportunity in the legislation to empower the consumer. At the moment, we have a sort of opaqueness around data and provision. We do not have address-level data. If I want to decide where I am going to get my mobile or broadband from, I cannot just put in my address and find out that the company that provides the best service is x. I have to sign up to someone. Then I can test the level of my service through their internet connection as a customer.

If there was more transparency, and if people had the information to hand, they would be able to make better choices. The market would also be more competitive for mobile or broadband providers, because if they do not provide the coverage, they will lose customers. It is no good waiting for someone to sign up and then find out that switching is jolly difficult, so customers say, “Well, I’ll just put up with this and complain”. We do that terribly well.

We should be able to say, “No, sorry. You didn’t tell me this. I didn’t have the data. Your service is appalling. I’m switching, and it is easy.” The level of switching at the moment is extremely low. A previous witness suggested that there was general contentment, which is not my experience.

[Calum Kerr]

Q There has been a lot of discussion in this session about fixing mobile coverage. Do you think that the Bill will achieve that? It comes down to licence obligations. If we want to do it, we need to set the right licence obligations. I accept that you are going to get less money.

On the electronic communications code changes, if we want the measures to be about driving more coverage, should we actually just exclude existing sites—you will have a lot of landowners and we will have local government bodies that will lose a lot of money—and say, “Access will change but, in terms of valuations, let’s exclude existing sites; this is about you going to new sites and doing them more cheaply”?

James Legge: I had thought—if I have understood the question correctly—that the Minister indicated previously to the House that it was not going to be retrospective.

[Calum Kerr]

Q It is not retrospective, so you will not revisit deals. Essentially, when a site comes up for renewal, the valuation of that land will be treated differently, so costs will drop dramatically. My suggestion is that they should be excluded from a valuation perspective, and the old rules apply for valuation.

James Legge: So you keep the old rules at the renewal point for old sites.

[Calum Kerr]

So you will still see some price erosion, but not as much.

James Legge: I would have thought that anything that brings the cost down for the providers when it comes to rolling out and upgrading infrastructure—

[Calum Kerr]

Q This is existing infrastructure.

James Legge: But a lot of it needs upgrading.

[Calum Kerr]

Q They will be allowed to do it, but the rental cost of that land would go down.

James Legge: Well, we would agree with that. If the rental goes down and it costs less to upgrade the infrastructure, that is a good thing from our point of view. Presumably that would be under the newer system, not the older one. My understanding—and this may be wrong—is that the new code values land and access in a slightly different way, and the cost should be less to the person putting the infrastructure in. I had a discussion with the Local Government Association about that issue. The LGA said that it would potentially get slightly less money on public land, but that there are savings at the other end. If, for example, you have more efficient provision of digital government—“digital by default”—there could be savings at the other end. The LGA has a slightly mixed view. Yes, it might lose some income but, ditto, landowners will—

[Calum Kerr]

Okay. I do not think you understood my question, but I will leave it there.

[The Parliamentary Secretary, Cabinet Office (Chris Skidmore)]

Q Mr Moorey, let us return to your comments about Which? being hamstrung by a lack of data sharing. Could you give a fuller explanation of that? Will you put on record the views of Which? about the public services delivery power, and the potential benefits that it might bring, particularly to the most vulnerable in society?

Pete Moorey: As I said, we are broadly supportive of the measures in the Bill. We are hamstrung from two perspectives. The first is a service delivery perspective. When we are delivering something such as our Which? elderly care website, we want to have the richest possible data available to help people make decisions. Yet on occasions when we have gone to certain local authority providers or certain care home providers, we have had an inability to gather that data and provide it in a comparable way. There is also the need to get that information in a clear and comparable format so that organisations like us can do that much better. It is something we have worked on a lot over the past few years with regard to universities. We are starting to see some of the data coming through at the kind of level that students want when they are making those choices. Clearly, having such legislation would better allow us to do that.

--- Later in debate ---

[The Chair]

It was not the last question.

[Calum Kerr]

Q Have you considered whether automatic compensation should be not just for download speed but for upload speed? On the USO, have you put forward proposals on other, more granular levels, such as cost and latency as well as upload and download?

Pete Moorey: Our general view on compensation is that it really should be down to the regulator to set the specific areas that are covered. It needs to do that with consumers, and it needs to be based on consumer expectations. We need to look hard at what the consumer expectations in this world are. If you look at things like water and energy, actually a lot of those compensation levels and what they cover have not been reviewed for some time. We would not want a situation in telecoms where an arbitrary figure of £30 or £40 was set for particular things and then over time that was not addressed.

[Calum Kerr]

Q They are on or off-type services, though, which, to go your point, should do what it says on the tin. There should be a more granular—

Pete Moorey: Absolutely, and it should meet customers’ expectations for that service.

[The Chair]

I am afraid that brings us to the end of the time allotted for the Committee to ask questions. On behalf of the whole Committee, I thank the witnesses for their evidence. Thank you very much.

Examination of Witnesses

Jeni Tennison and Mike Bracken gave evidence.