Electronic Communications (Universal Service) (Broadband) Order 2018

Lord Mendelsohn Excerpts

Tuesday 5th June 2018 Lords Chamber

[Viscount Waverley (CB)]

My Lords, I have heard the despairing contributions this afternoon. How on earth is the UK going to become “global Britain”, which is the aspiration post Brexit?

[Lord Mendelsohn (Lab)]

My Lords, I thank my noble friend Lord Stevenson for moving this Regret Motion and giving us an opportunity to debate the order. I also thank him for an outstanding speech setting the right context for this, and I thank the noble Lord, Lord Foster, for an excellent speech that placed in context the consequences for small businesses. I share the frustrations of previous speakers—the noble Lord, Lord Aberdare, and the noble Earls, Lord Cathcart and Lord Lytton—about these speeds. I share it although I do not suffer from any of the difficult consequences, as they do.

I live in north London. We have three suppliers into the house. We have all sorts of cabling across the house, with boosters and all sorts of signals, but I have never achieved the stated packages from any of the services. We have problems of latency, contention and all those matters. In fact, my business has a dedicated phone line, which has boosters and other cabling to try to make sure that the signal is not lost, and we are fairly close to BT Tower itself—but our service is barely better than the much cheaper super broadband. It is frequently a problem that the claimed capacities are never fully achieved. That is something that we have to be very wary of, even when we establish a universal service obligation.

I turn my attention to the universal service obligation in this particular order. I want to make the simple point that the order does not achieve its objectives, and I would like the Minister to address that problem. When the Act was passed and the level at which the USO would be introduced was set, it was based on a series of assumptions none of which I believe to be true. I do not believe any more that it achieves the purposes of equity by trying to sort out the digital divide and deal with the problems of rural communities, and nor do I believe that it achieves any of the stated benefits of economic growth.

Some rather good documents on economic growth were produced by DCMS, and I thank it for the work that it did on that. In parenthesis, I acknowledge that the digital team at DCMS has steadily improved, and I suspect that if the same team had been around during the passage of the Bill last time we would not have been stuck with this level of USO. The economic growth benefits are said to be £257 million a year, which relates to:

“Local enterprise growth … Enterprise productivity growth … Increased teleworker productivity … Increased participation of carers and the disabled”.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

I apologise for interrupting. Were the figures that the noble Lord quoted from the USO? Is that what he was referring to?

[Lord Mendelsohn]

I will specify that the figures themselves are on page 3 of the impact assessment and are for the USO. The stated growth figures themselves came from figures previously reported by Ofcom and from other reports. I can cite the reports for the Minister, but they are all in the documents that I mentioned. The assumptions on which they were made were an extrapolation from higher numbers, so even now to suggest that these numbers are consistent with the service is suspect, largely because the key factor in what is happening in the market and in the use of these things is the software and other services that are laid on top of them, which are the applications that people use. There is an idea that this level of service can be delivered on figures a year later when software has increased in order to deal with a market of higher usage, but that does not mean we can achieve these growth figures.

The other options that were rejected, 20 and 30 megabits, still fulfil both objectives, whereas this order fails on both objectives. That has had counterproductive effects. It is certainly true for those of us who spend a lot of time in industry that by setting the USO at 10 megabits we have ended up in a situation where there has been a chill on potential investment from other players. Other people have not been able to enter the market, and even the main providers that are looking to bid have found it hard to justify business cases when the USO is at 10 megabits. That is a huge problem. I agree with all the speakers who have raised the issue that there will be a dramatic impact on our relative position with this low, unambitious target.

The Government’s argument is that the reason why the level has been set is that it is all Europe’s fault, or it is in the directive. I beg to differ. The directive is all about how you interpret it and we have chosen to interpret it in a more restrictive way than others have done, as well as offering interpretations of some of the aspects in the most limited possible fashion. The most significant one is about what the minimum specification is. The documents that were provided state that the connection should be available to,

“permit functional Internet access, taking into account prevailing technologies used by the majority of subscribers and technological feasibility”.

That interpretation has been highly restrictive in how we have looked at the issue. We assume that the sorts of things that people are using in these different areas are based on easy-to-apply averages, but that is not the case. When you start talking about 10 megabits as being the sort of level that people can use, you come to the wrong conclusion. If you are in the rural community and using many of the technological features that are now used to enhance your business, you will tend to use them on a mobile. When you look for a broadband wi-fi connection, you will find that it does not meet the requirements that you can gain if you can get access to 4G.