Digital Economy Bill

Lord Fox Excerpts

1st reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 31st January 2017 Lords Chamber

These amendments are realistic and practical but provide a sense of ambition. They are to probe why we are not looking at these things in a more ambitious way, but they are all mechanisms which we can use. I beg to move.

[Lord Fox (LD)]

I will speak to Amendment 2 and make some comments on Amendment 1. Like the noble Lord, Lord Mendelsohn, I welcome the principle of a USO and we are having a healthy debate now. I will probe the Minister in detail about how the Government will respond to the Ofcom report. I was frankly surprised by the report’s language when it came out—it was a mere twinkle in our eye when the House last debated this. It referred throughout to “decent” broadband as a starting point, rather than “world-class” or “leading” or any of those things. As the noble Lord, Lord Mendelsohn, outlined, the work that has gone into modelling the need for broadband is, in one way, completely pointless. Most noble Lords are old enough to remember a time before the internet, or the industries which now use that medium, even existed. You could not have modelled how much bandwidth you would need today 10, 15 or 20 years ago. The industry that will use this network has not been invented so we cannot know what is necessary. Decent is fine but frankly we should be looking for the best possible. In Amendment 1 the noble Lord has set a very high bar.

In Amendment 2 we have taken as our text—as I am sure noble Lords can recognise—scenario 3 from the Ofcom report. It is really to test two things. One is the universal part of the USO. We are of the persuasion that universal means universal rather than 99-point-whatever-it-is per cent. I would be grateful to hear from the Minister what he believes universal means. On timing, we have heard various claims that by 2020 at the flick of a finger we could all have 10 megabits. There are many people where I come from in the countryside and from all over the country who would be very surprised if they could get 10 megabits. They are still struggling with ones and twos and upload speeds of practically nothing. The fact that apparently this is so easy and frictionless yet so far away for so many people seems slightly at odds. The point of Amendment 2 is very much to set what I think the previous speaker would call a less ambitious target, but one that we believe should be eminently achievable. I misspoke because it is not a target; the USO is a minimum. The noble Lord who spoke previously used the word “target”. One of the dangers is that this becomes the limit to our ambitions and it should not be. In many senses Amendment 2 is entirely compatible with Amendment 1. We have to get to Amendment 2 as a minimum but Amendment 1 and all the ambition enshrined within it can still be part of this formula.

Looking forward, we will be talking later about how we can assess the progress of this. At the moment we want an amendment that is designed to give the Minister enough pressure on Ofcom and Ofcom enough pressure on the service providers to deliver a minimum standard. It is inconceivable and unacceptable that we should be so down the pecking order at the moment. We will talk about other structural issues through the course of Committee but as a very minimum we believe Amendment 2 sets a standard.

[Baroness Byford (Con)]

My Lords, I have Amendments 3 and 7 in this group. I reiterate the expressions of support for this Bill given by earlier speakers. There are many aims in this Bill that I support but some specifics are worth raising at greater length. I perhaps should remind the Committee of our family interests in farming although, as far as this Bill is concerned, we are without any form of modern communication in any of our buildings. That might change in the future but clearly we are not an interested player in that part. I am a member of the CLA.

Amendment 3 is quite detailed—so I will not read it out—and tries again to tie things down more specifically than they are in the Bill. It seeks to guarantee clarity over what the consumer can expect from a universal service obligation on broadband. It will ensure that the USO delivers a minimum speed of 10 megabits—perhaps we might have further conversations about that—and that this is reviewed to reflect technological advances and increased demand. Once enforced the USO must also allow those who are not provided with access to broadband at the set minimum speeds a simple means of seeking financial redress if that is not resolved, which they can then use to find an alternative means of getting connected.

The CLA believes that this redress should mirror the reasonable cost threshold, which should sit just above the current landline threshold, at £4,000 per property. Small, rural communities should be able to pool this money to invest in alternative technologies and connection schemes that provide them with faster and more reliable—and potentially cheaper—connections compared to its being done individually. For these most remote premises, making use of a wide range of technologies, including wi-fi networks, satellite and mobile data to help provide universal coverage, will help to ensure that the introduction of the USO is a success and should be encouraged.

On my Amendment 7, which is about “may” and “must”, I need not argue the toss of the wording between the two words but feel strongly that “may” is a facilitator and “must” is a direction. I am sure that other noble Lords are probably heartily sick of receiving complaints from friends, neighbours, colleagues and family about the broadband service which they either have or are still unable to achieve at all. I have often spoken in this House of the areas that are not covered at all; of the services that advertise speeds “up to” but which achieve only a fraction of the implied promise; and of the difficulty of obtaining a helpful response from service providers when things go wrong.

The speed of change on the digital technology front is such that the Government must keep up with both the challenges and changes facing them and with their implications for society. No one can doubt that Ministers are very busy people, who are subject to a variety and quantity of pressures. I feel strongly that Parliament should assist them by indicating those priorities that are paramount. Most of us can have no idea of future provisions that will affect the universal service obligation. We ought to insist that whenever that obligation is affected, the Minister has to look closely at it more closely.

I wholeheartedly support the amendment in the name of the noble Lord, Lord Mendelsohn. I merely suggest that it be made clear that most farms—we spoke about rural areas—GP practices and businesses are small and medium-sized enterprises but are often not regarded in that way. My concern may be unnecessary, but I have read a great deal about the difficulties experienced by these enterprises, which are located in rural areas and which may not be recognised as belonging in that category of small or medium-sized businesses. Only last year, those who wanted to put forward their claims for the single farm payment were totally unable to do so in some areas because there was no broadband available, and in fact the department had to revert to accepting written paper applications, which people had been using for years.

My amendments are probing amendments, but it is important that our broadband is strengthened and is available to all. As was quoted, the NFU has suggested a speed of 30 megabits per second. Reliability is absolutely key to success in any area. As the noble Lord who spoke just before me quite rightly pointed out, many of the new businesses that have been formed would never have been started had they not had broadband access. If you look at rural areas and the growth in small and medium-sized businesses, many of them are based in those areas and give an option for employment for people in areas where it would not have been at all possible in the past. Therefore, delivery, accountability, setting challenges and holding to account are hugely important. I know that the Government are aiming at 100%, but it is often said that the aim is 95% or 99%. Often I wonder whether that refers to numbers of people or the areas covered. If it is on numbers of people, obviously it is easier in urban areas than in very rural areas.

I have tabled one or two amendments to the Bill that we will come to later. I support and welcome it, but there are areas which we need to strengthen, and I am glad to have spoken to my two amendments along with the other amendments that have been moved and spoken to already.

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[Lord Fox]

I am grateful that the Minister has brought up the matter of smaller and more populous transmissions for 5G, because one of the issues that he could consider when implementing this is to limit the amount of new ducting and work that needs to be done on our streets and in our towns. To enforce, or expect, the sharing of ducting across our towns—which is not necessarily forthcoming—would help us with that. Perhaps the Minister will consider that.

[Lord Ashton of Hyde]

An amendment on that issue may be considered later today. That, however, will be a little taster for later. I have, therefore, come to the end of my explanations and I hope that, with those reassuring words, the noble Lord will withdraw the amendment for the moment.

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Moved by

[Lord Fox]

8: Clause 1, page 2, line 23, at end insert—
“72B Universal service order: annual report(1) OFCOM must publish an annual report on the implementation of the universal service order for all areas pursuant to the provisions of this Act.(2) The annual report must include information on—(a) the number of premises that have been supplied with the minimum download speed as specified by the universal service order;(b) the number of premises that have been required to cover some of the cost of connection;(c) of the premises under subsection (2)(b), the average cost of connection per premises covered by residents, disaggregated by local authority area;(d) the number of premises that have chosen not to be connected via the universal service order after being provided with an estimate;(e) the amount of time on average it takes to provide an estimate and connect a premise, disaggregated by local authority area; (f) the percentage of premises nationally connected via fibre to the premises (FTTP);(g) the take-up of superfast broadband as a proportion of connected premises;(h) the measures taken by OFCOM, Government and others to increase take-up of superfast broadband;(i) the average time taken by named service providers to reconnect broken connections;(j) the number of community schemes set up in that year and the level of subsidy delivered to achieve this; and(k) the extent to which the rights of consumers are explained to them.”

[Lord Fox]

It transpires that since I last spoke in Committee—literally since I last spoke in Committee—I must now declare an interest: I have just received an email telling me that my broadband service conditions will change. The price has increased. I am virtually certain that the bandwidth has not.

Whether the Minister’s world-class targets, or the gigabit economy of the noble Lord, Lord Mendelsohn, is in play, the purpose of Amendment 8 is to address the issue raised very eruditely by the noble Lord, Lord Mitchell, which is that BT will miss its targets. The aim of this amendment is to introduce a way of monitoring performance regularly. There is a lot of talk about driverless cars but we do not want this to be without some serious driving. It is the central mechanism by which we on this side believe that the Minister and Parliament can drive performance on a regular basis. We talked, in Amendment 2, about an annual review of the USO, and we believe that this would be the precursor to that process. It is designed to create a sense of urgency and—to be honest—pressure, on both Ofcom and the service provider. Noble Lords will be aware that it is based on a suggestion, or proposal, of the LGA, but it has additional key measures designed to monitor progress.

It is perhaps simplistic to say so, but we should see ourselves—the Minister and Parliament—as the client in this relationship, Ofcom as the project manager and Openreach, or KCOM, as a contractor, and we need to be able to measure progress regularly. It is therefore not unreasonable to suggest some measures. Without going into huge detail, the measures address a number of issues. They address performance: paragraphs (a) and (f) look at minimum download speeds and the amount of fibre being installed on the premises. The economic aspects of (b) and (c) look at the cost of connection borne by citizens and the mean cost of connection. In (d), (e) and (i) we look at service levels, premises choosing not to connect, the time to get your estimate for connection and the time for repair—which many noble Lords will have experienced and should also be measured.

We then look at take-up and public acceptance, and my noble friend Lord Foster will pick up on some aspects of driving take-up. We need to look at the percentage of people opting to take this up and find ways of pushing it. We should have a way of measuring community schemes: in some senses the ease with which they can be established, and, frankly, the amount of resistance from the service provider that stops them happening. We also need to know that consumer rights— what they are receiving—are fully explained and understood, as I think the Minister has already said.

The reason for having an annual report is that we cannot rely on the Openreach mission to deliver this and we need to be able to put regular pressure, through Ofcom, on that delivery. Amendments coming up talk about the delivery model—the connection between Openreach and BT—but while we are in that situation, and even after, this amendment is a strong way of driving performance.

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[Lord Ashton of Hyde]

My Lords, Amendment 8 also relates to reviewing the delivery of broadband policy. We have spent some time discussing broadband policy and I do not wish to repeat myself by setting out the Government’s digital agenda again. We do not disagree with the urgency, and the noble Lord is right to mention it.

The amendment would require Ofcom to produce an annual report on progress in implementing the universal service obligation. We should remind ourselves that that is the point of this part. The amendment lists a number of areas that the report should cover, not all of which relate to the broadband USO. As noted previously, I agree that it will be crucial to monitor progress of this important consumer measure, but I think that it is reasonable that the reporting requirements should be decided once the design of the USO has been finalised, not before. This will be done following the consultation on the detailed design of the USO.

Some of the areas listed are already reported on by Ofcom. For example Ofcom’s Connected Nations report, which is published annually, already provides details of superfast broadband coverage and take-up, including the percentage of premises nationally connected via fibre. The length of time taken to repair lines is also monitored and reported on by Ofcom under its market review process. Ofcom also conducts mystery shopping exercises to check compliance with the broadband speed code of practice. Under Ofcom’s voluntary code of practice on broadband speeds, broadband providers agree to give clear information on broadband speeds to consumers when they consider or buy a home broadband service and provide redress when speed performance is low. Earlier, I mentioned the Advertising Standards Authority’s review.

The noble Lord, Lord Foster, mentioned take-up, as he did on Second Reading. We agree that that is an important issue. It is interesting that Ofcom’s report assumes an 80% take-up, which we will have to think about. We agree that it is important for the per-unit cost to reduce as it is rolled out. This will be one thing we can take into consideration in the consultation. He also mentioned the broadband voucher scheme. As I said earlier, the full fibre rollout consultation included the option of a further full fibre business voucher scheme alongside other options. We will publish the findings of the consultation and the next steps alongside the findings of the business broadband review.

Therefore, although we sympathise with the spirit of the amendment, we do not think it is the correct thing to do at the moment, before the decisions have been made, and I hope that the noble Lord will feel able to withdraw it.

[Lord Fox]

I must confess to being disappointed. The idea that because the service provider publishes some information to consumers, the point of the amendment is addressed, misses the point. Whatever else we have in our broadband service provision, it is not a free and fair market. It does not work as a market. The whole point that we are debating is that, if we were going to build this from scratch, we would not start from where we are now. I think it was the noble Lord, Lord Mendelsohn, who mentioned market correction. This is designed to enable us to maintain market correction of something that is not a market. We have deliberately created something that is completely agnostic as to what the universal service obligation should end up being, and it would be strengthened by the suggestions of the noble Lord, Lord Mendelsohn. I ask the Minister, in quiet reflection afterwards, to think again, but in the meantime, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

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[Lord Maxton]

My Lords, I too support these amendments, which are on the right lines. My only reservation is that if BT is already the owner of the line into a property—it could be a commercial one—who is responsible if a repair needs to be done: Openreach or BT?

[Lord Fox]

My Lords, we associate ourselves with Amendment 20. I was under the impression that Ofcom was already looking at the process of legal separation, and if this is designed to strengthen its arm and make sure that it happens, then we approve. At Second Reading, I talked about the desirability of full structural separation. We know that the pension deficit has been used as a reason. When that calculation was made, was the full effect of the EE acquisition factored into the pension equation? Now that there have been substantial changes in the make-up of the corporate parent, can a different argument be made on pensions?

In the recesses of my mind I recall something being attempted in York along the lines of Amendment 21. It foundered because there was no separation in the BT/Openreach model and the route to market proved very difficult. Perhaps to be successful Amendment 21 needs Amendment 20, if not full structural separation.

[Lord Mitchell]

My Lords, I will address Amendment 20. The separation of Openreach from BT is fundamental to the success of Britain being a leader in the digital economy in the 21st century. It is unanswerable that BT has been given a monopoly in fixed broadband connectivity. It displays classic monopoly behaviour: it controls the distribution, sets the prices and dictates the terms to its competitors. It has no incentive to improve the quality of its service—just the minimum. I would not be so vehement on this issue if BT was supplying a brilliant service, or even if it gave us believable market facts. Its broadband coverage is awful and it successfully lobbies to persuade Ministers and others that it is meeting its targets; it is not. It is undeserving of any government support, particularly in its ownership of Openreach. Why should it be granted this monopolistic licence to print money? Alternative owners will have a real incentive to improve the service.

Fixed and mobile connectivity are converging. The route may be different, but they are joining up: data are data. BT is rapidly taking on all the attributes of the overall monopoly supplier: all internet connectivity. If you aggregate its stranglehold in broadband, add its ownership of EE in mobile and then factor in its future 42% ownership of the 5G spectrum, it is overwhelming. We have a massive monopoly in the making. Separating Openreach will certainly clip BT’s wings and improve broadband connectivity.