Universal Service Obligation for Broadband

Edward Timpson Excerpts

Thursday 8th October 2020 Commons Chamber

[Edward Timpson (Eddisbury) (Con)]

I am grateful to Mr Speaker for granting this debate and to the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Boston and Skegness (Matt Warman), for extending his Front-Bench stint to respond to it.

As someone from the last generation to be brought up in the analogue age, when pay phones, posted letters and patter by the water cooler were our default ways to communicate, Channel 4 was a novelty, and bookcases were full of books that we actually read, mobile phones and the onset of the internet age have been nothing short of a revelation to me. To the list of essential public utilities—water, gas, electricity and so on—can now be added broadband. It has rapidly become a critical part of our national infrastructure, reshaping the way we do business, access information and interact socially with the world around us.

Yet the speed, reliability and affordability of broadband across the UK are still playing catch-up with the new-found demand, leaving some communities, often rural, falling on the wrong side of what is termed the digital divide. That divide has been exposed and exacerbated further by the pressure put on all our broadband connections at home since the covid-19 outbreak in March. As the Minister said in the previous debate, up to 60% of the UK’s adult population were working from home during lockdown, as well as the millions of students who shifted to learning online.

It is therefore a real concern that despite the extensive efforts of those working in the telecoms industry and elsewhere, a recent survey revealed that a third of UK households are still struggling with inadequate broadband speeds, and that as banking and Government services increasingly move online, some communities have found themselves cut off from essential facilities.

In rural areas, including much of my Eddisbury constituency, continued poor connectivity represents a huge missed opportunity for economic development, let alone for help on other important and growing issues such as isolation and access to education. In 2018, 11% of rural premises, where more than 1 million small businesses are based, could not get a 10 megabits per second fixed-line connection, which is the speed required to meet a typical household’s digital needs—this is often named the “Netflix test”—and 24% could not get a 30 megabits per second, or superfast broadband, connection.

Let me put that into a local context. As of May 2020, Eddisbury had 2,162, or just under 5%, of all premises unable to receive “decent broadband”—this was two and a half times the national average. Drilling down further reveals figures of 9% for those living in Churton, Farndon and Malpas, 11.1% for those living in Dodleston, Tattenhall and Duddon, and 12.3% for those living in Audlem, Bunbury and Wrenbury. Depending on the subject matter, being 59th on a list of 650 constituencies can be a cause for celebration, but when the list is of which has highest proportion of residents unable to get good broadband it is not one to shout about.

That is why I was pleased to stand on a manifesto that committed a Conservative Government to delivering nationwide gigabit-capable broadband by 2025, which was backed up by the 2020 Budget statement, which confirmed a total of £5 billion to roll out full fibre across the country. Progress is being made. On 10 September, the telecoms regulator, Ofcom, revealed that more than 4.2 million homes—about 14%--across the UK were now able to access faster, more reliable full fibre services, which is an increase of 670,000 since January. But it remains a real challenge to accelerate the extension of fibre to those hard-to-reach locations where there is an inherent lack of digital infrastructure.

[Andy Carter (Warrington South) (Con)]

Does my hon. Friend agree that although organisations such as Connecting Cheshire have done a tremendous amount of good in constituencies such as mine, we still have villages that are isolated and cut off? Higher Walton, just outside Warrington, has no fast broadband at all. Organisations such as Connecting Cheshire can really make a difference in getting those sorts of villages really plugged into the network.

[Edward Timpson]

My hon. Friend is right on that. We live not far from each other, and suffer some of the same problems in our constituencies, particularly in some of those black spots, where residents sometimes do not know where to turn. Having a way of co-ordinating that effort to bring together some of the solutions for their poor broadband is a way of trying to ensure that no one misses out as we deliver on our manifesto commitment.

The Government have rightly sought to address this situation, through their gigabit voucher scheme, which I will leave the Minister to explain in more detail, and, as of March this year, through the new legal right to request a decent, affordable broadband connection from BT under the new universal service obligation for broadband. That is defined in law as a service with a download speed of at least 10 megabits per second and an upload speed of at least 1 megabit per second. Ofcom has also determined that a USO-compliant service must cost the customer no more than £46.10 per month. If the existing fixed-line or mobile solution does not allow that level of service, the USO also requires BT to upgrade the connectivity to meet or exceed those requirements, at no cost to the customer, as long as the necessary works cost less than £3,400. On the face of it, that is a significant step forward in ensuring that no household or business is left behind, but it is also fair to say that its implementation has brought with it some serious issues that threaten to undermine its laudable aims, not least in those cases where the cost of delivering on the USO far exceeds the £3,400 threshold.

Let me illustrate that. Where an individual household meets the criteria to trigger a USO broadband service, an installation quote is pulled together by BT to establish the work costs. Where they exceed £3,400, the additional costs must be met by the customer, and herein lies one of the fundamental limitations of the current set-up. Legally, the USO works quote can be calculated only for each individual household that has applied. The subsequent bill therefore cannot be shared out among a wider number of neighbours who would otherwise benefit from the upgrade if it was carried out. The total amount still falls on the shoulders of the original single applicant.

If that sum only dribbled over the £3,400 threshold, there may be some wider level of acceptance of that approach, but we know that quotes are landing on doormats, or, where possible, via email, significantly in excess of that number. For example, in Eddisbury, we have seen five-figure sums. My hon. Friend the Member for Clwyd South (Simon Baynes), the constituency next door, shared with me a quote for a resident in Llangollen of over £85,000. My hon. Friends the Members for North Norfolk (Duncan Baker) and for North West Durham (Mr Holden) and other colleagues have provided similar stories, not forgetting the well-publicised case of Mr Roberts in the Lake District, who was asked to contribute just over half a million pounds.

While accepting that the situation is often a result of the major engineering and planning work required to connect the hardest-to-reach premises, it still means that overall an estimated 60,000 premises will cost up to 30 times more to connect, with residents still having to fund the excess and some facing waits of up to 24 months to be connected. In the absence of a facility to spread the cost, this is asking the impossible for what should be the legally obtainable.

Eddisbury residents have also told me of not having had the USO properly explained to them, it not being clear who was responsible, and being told they were not eligible when they in fact were. I know that this was not and is not the intention, and I am very aware of and grateful for the work and commitment of the Minister in trying to resolve these issues, but it would be helpful to hear from him this afternoon how the Government are working, and propose to work, with BT, BT Openreach, the wider industry, Ofcom and others to formulate a new approach that does not penalise the consumer in this way, especially those in more remote areas, in the development and roll-out of digital solutions for every house in the UK.

In that spirit of collective effort, may I propose some ways of doing just that? For instance, it seems a nonsense that each individual household should be treated as a discrete case when surrounding houses could also be eligible or, if not, could significantly benefit from an upgraded broadband connection where costs are more equitably distributed. The irony of all this is that if someone were not to go down the USO route but to band together with their neighbours by way of a community fibre partnership or similar model, while also accessing the gigabit voucher scheme, they may well get their 10 megabits per second download, if not much faster, for nothing, or at least a much more realistic price.

The truth is that broadband is not an optional extra anymore in this digital world and rural consumers should not be expected to pay excessive amounts to be connected. Surely the way to go is to allow properties to share the costs under the USO, ultimately to help rural residents, and, depending on how many individuals are involved, to bring the cost below the current cost cap. To that end, it was encouraging to hear from BT that it is developing a way to enable customers to share excess quotes among their neighbours who would also benefit, where there are other nearby households that will share the upgraded infrastructure. Under this, customers would retain the legal right to trigger network build by paying all excess costs, but they would also be given the opportunity to meet the costs together with others. How that is communicated will also be crucial as, at the moment, someone receiving a jaw-dropping quote is only likely to have their confidence eroded in the belief that the system is fair and the market is functioning rather than failing. It may also be worth considering the impact of the obligation to charge VAT at 20% to those who do pay an excess cost on USO work—something that is not generally applied to publicly funded network infrastructure bills.

Will my hon. Friend the Minister update the House on what discussions are taking place and what progress is being made with BT, Ofcom and other key players to ameliorate the problems in the implementation of the USO, break down the financial and logistical barriers getting in the way of better broadband, and deliver a decent, affordable connection for all? Is he able to say more about the not insignificant £5 billion that will be spent to make this achievable and as timely as possible? Above all, can he reassure my constituents and many more across the country that this is an absolute priority for this Government between now and 2024—and, I hope, beyond?

There is no doubt that our national digital infrastructure has the potential to make or break many of the opportunities and challenges that we as a nation have lying ahead of us. The past seven months have simply magnified and accelerated the necessity for every house in every part of the UK to be able to play its part. It can be done, and I am confident that the Government will ensure it is done, but what my Eddisbury constituents want, whether through the USO or other means, is every support possible to help to make it an affordable reality. If we start getting nostalgic for the analogue age, we have not lived up to that perfectly reasonable request.