Superfast Fibre Broadband

Lord Foster of Bath Excerpts

Thursday 27th October 2016 Grand Committee

Asked by

[Lord Foster of Bath]

To ask Her Majesty’s Government what plans they have to ensure the rollout of superfast fibre broadband to homes across the country.

[Lord Foster of Bath (LD)]

My Lords, I am grateful for the opportunity for this short debate and to other noble Lords who will participate. I hope to argue that we are in danger of overselling how well we are doing on broadband rollout and that as well as promoting more use of fibre we need to do more to stimulate demand.

I begin by declaring that I live in the wilds of rural Suffolk, in a home as yet untouched by superfast broadband. I am not alone in having broadband difficulties —eight days ago, the DCMS’s connectivity Minister, Matt Hancock, addressing the Broadband World Forum, said, “This Friday I appeared on our local news programme with positive stats about broadband in Suffolk, but at the time I was on my hands and knees under my desk trying to fix my wifi, and it stayed off all weekend”. I know the feeling.

Yet as the LGA has said, broadband is a vital element in our everyday lives, as we shop and pay our household bills online, access our bank accounts and stay in touch with distant friends and relatives. Excellent digital connectivity is also a major driver behind growth, jobs and the creative industries. Without high-quality broadband services, residents will be increasingly cut off from digital local and central government services, including major programmes such as universal credit. Fast broadband services are also essential for all rural businesses, enabling them to reach their full potential by competing online.

Of course, many homes and businesses are more fortunate than I am in rural Suffolk. Indeed, it is quite easy to paint a rosy picture about how far we have come with broadband rollout. In the UK, more than 99% of premises have access to basic broadband, at 2 megabits per second—that is the best in the G8. About 90% of premises have access to broadband speeds of over 30 megabits per second—that is the highest of the big five EU economies, 8% higher than our nearest rival, Germany. By the end of 2017, it is confidently predicted that 95% of premises will have access to superfast broadband, being defined as 24 megabits per second and above. It all sounds pretty impressive and the Government’s plans in the Digital Economy Bill for a universal service obligation, clamping down on poor service providers, and the introduction of an easier system of changing service providers, as well as completing the 4G mobile rollout, should help make the picture look even rosier.

However, if we look more closely, the picture is less rosy. Take, for instance, the language that is used: the Government define superfast as broadband with download speeds of 24 megabits per second and above. However, across Europe superfast means 30 megabits per second and above, and even our own regulator, Ofcom, uses this higher-value definition. As my noble friend Lord Fox will discuss, download speeds are one thing, but what about upload speeds, which are so important for businesses?

What exactly is meant by “access to”? Access to superfast broadband is one thing, but having superfast broadband operating in the business or home is another. For example, only 30% of premises that have access to BT’s Openreach superfast broadband are using it. That is partly due to BT investing in fibre to the cabinet, but often not using fibre for the onward connection to the premises. So there may be a superfast cabinet nearby, but the connection to it from the business or home is usually copper rather than the far more efficient fibre. The degradation along the copper wire means that the so-called accessible superfast speed is nowhere near that at the premises.

BT’s efforts, such as long reach VDSL, to get faster speeds along copper may help, but compared with many countries across Europe we score low on fibre to the premises deployment. No wonder the CMS committee in another place said in July:

“The UK is a laggard by international standards in providing fibre connectivity”.

It talked of a lack of ambition in terms of fibre to the premises. With faster connections from cabinet to the premises like those offered by Virgin, the take-up is 42% instead of 30%. With full fibre to the premises it is likely to be even higher.

Of course, I welcome the exciting fibre optic developments by, among others, CityFibre, Hyperoptic and even BT, but we need a strategic shift to encourage fibre to the premises solutions for homes and businesses. In his speech, Matt Hancock, said, “fibre is the future”, and I look forward to hearing the plan for its realisation. We also need concrete action to promote new mobile technologies to play a critical role in enhancing the UK’s connectivity such as in remote areas, in on-the-go uses like self-driving cars and even in broadcasting. The UK should lead the world in 5G and the Government need to seize the opportunity in the 5G strategy that they have promised to publish next year.

However, it is clear that, even when truly superfast broadband is available in their homes, in businesses and on the go, far too few choose to take up the opportunity—not least older and less affluent people, who make up a high proportion of the 30% of the population who are non- or limited users of the internet. Higher take-up means lower unit costs. More importantly, as the Tinder Foundation and others have pointed out, only when we have a very high take-up rate can we achieve the huge benefits to individuals, businesses and the nation that superfast broadband offers. To date, the Government’s strategy has been to concentrate almost exclusively on encouraging, and partly financing, the development of superfast broadband structures. But a connected Britain is not just about the availability of superfast broadband. Driving take-up is just as important, and there has been a lamentable failure to address demand management. As a result, digital inclusion has already become a huge missed opportunity. Far more should have been done and now needs to be done to drive up demand through skills training, through marketing the benefits, by addressing barriers such as cost and by developing quality technology and content.

Of course I welcome the work being done by many others, such as BT, local councils, the BBC—through its Make It Digital programmes and apprenticeship schemes—and Barclays. But we need more, not least because the lack of digital skills is becoming a real constraint to economic growth. Indeed, 90% of all new jobs require digital skills, yet nearly three-quarters of large UK companies already say that they are suffering from gaps in digital skills. The recent government announcement on digital skills is welcome, but it is not a silver bullet and it does not go far enough. Without intervention beyond what is currently scoped, it is estimated that there will still be 7.9 million adults without basic digital skills in 2025. We need nothing short of a digital skills revolution.

Far more needs to be done to explain the benefits of getting online. The digital TV switchover was a great success, helped enormously by a brilliant marketing campaign. We need something similar to drive online take-up. The BBC’s iPlayer is already recognised as a great demand driver, and I welcome new connected TV services, from the likes of Freeview and Freesat, giving consumers catch-up TV for free from all our public service broadcasters. But more needs to be done to encourage new and exciting technological developments and high-quality content.

Furthermore, we have to address cost. Some 26% of non-users say that it is too expensive to have the internet at home. BT customers on benefits can have BT’s Basic + Broadband, but not all internet providers have such schemes. Last week the LGA, in its submission to the Government’s consultation on the Autumn Statement, called for all poorer households to get subsidies for fast broadband—as a social tariff. I hope very much that the Government will consider it part of their plans for the new universal service obligation. Following the freezing in October 2015 of the Government’s voucher scheme to help small businesses get online, it would be good to hear what the Government plan as its replacement.

Like water and electricity, reliable, superfast broadband should become universally available, and all our citizens should know what it can do and have the skills to benefit from it. Much has been achieved and more is planned, but unless we raise our ambitions still further, move from copper to fibre and address the demand management issues of skills, marketing, cost and content, the full potential will not be realised. I look forward to hearing the Minister’s reactions and details of the Government’s plans.

--- Later in debate ---

[Baroness Scott of Needham Market (LD)]

My Lords, like the noble Baroness, I shall focus on the question of rural broadband services and, like my noble friend Lord Foster, I am doing that from the perspective of someone who lives in Suffolk.

[Lord Foster of Bath]

Overrepresentation.

[Baroness Scott of Needham Market]

Overrepresentation of our lovely county, indeed. I live in a very small village, and it is a mark of how village life has changed that when we come together for our social events one of the main topics of conversation is how bad the broadband is and how it has taken all night to download a two-minute YouTube video. I accept that the joint efforts of BT and the Government have taken us to a position where almost all households now have access to basic broadband, but I also agree with the proposition that in today’s world that simply is not enough. I note that the Countryside Alliance estimates that 48% of rural premises are not able to reach the speed envisaged in the USO.

Rapid digitalisation has meant that a whole range of rural services now require a good broadband link. As the percentage of households covered by superfast broadband increases, so that digitalisation gains pace. That means that a small minority of households run the risk of being left behind. I also observe that, as the assumption is made that households have superfast broadband, the functionality of the websites themselves has changed. What looks like an exciting and thrilling website to some people is actually a nightmare if you are trying to use it in a rural area with poor speeds.

The purely commercial case would have taken superfast broadband in Suffolk to around 50%. I pay tribute to the local authority in Suffolk, which, at a time when so many local authorities are strapped for cash, has invested heavily to meet around half the extension costs. However, around 3% of people in Suffolk—I think it is about 5% in the whole UK—remain outside any funded policy commitment, so as it stands there is a real danger of a big divide for them. There has been some speculation that this will be dealt with on a demand-led basis. To my mind, that is very much a suboptimal solution. The problem is that as we near the high 90s, the cost per premises increases dramatically as the civil engineering works and the distances become more complex and therefore the value-for-money question for those last few households becomes more and more difficult. We need to think about the cost per premises across the whole venture, not an ever-reducing number of houses.

I have other concerns about a demand-led USO. What if one house wants it now and then the neighbour wants it in two years’ time? That is simply not a practical or economical way of doing business. If someone who does not want it now sells their house, the new people coming in may want it; so the demand-led model has real problems.

The BT community fibre grant scheme is very welcome but it is limited to communities with schools and, of course, many small villages no longer have schools. When I think about my very small village, there are a number of older people who are not interested in broadband, but we also have young families with small children and, as they get older, I worry about whether they will stay in the village if they do not have the access they need in terms of schooling and social media. Rural services, not only in villages but even in market towns, are declining rapidly as banks close and government and council offices shut their doors; for example, when the Ipswich tax office closes in a few years’ time our nearest tax office will be in Stratford, east London, so digital services are key. Of course, to add to the problem in many rural areas we have poor mobile phone coverage as well: 4G is pretty much non-existent where I live, so we do not have the benefit of that either.

Until May I was chair of your Lordships’ EU Energy and Environment Sub-Committee, which included agriculture. The last inquiry we carried out was about increasing resilience. Access to new information and innovation is key to helping farmers. Some of the most exciting innovators we saw told us how they were working from YouTube videos from around the world and how they use Skype, but very few farmers are far-sighted enough to make the investment; one farmer had invested in satellite. If farmers are to thrive in the new world to which the noble Baroness just referred, they need this, too.

Another problem is understanding what your speed actually is. It is usually given to you in terms of your postcode, but of course in rural postcode areas the distances are enormous, so these can be pretty meaningless and there is an issue about the masking of huge variations. We need to keep rural communities viable, not just in Suffolk or Devon but everywhere. Digital infrastructure is now as important to that as water, gas, electricity and roads.