Universal Service Obligation for Broadband

Matt Warman Excerpts

Thursday 8th October 2020 Commons Chamber

[The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)]

I congratulate my hon. Friend the Member for Eddisbury (Edward Timpson) on securing this debate and allowing me to update the House on the broadband universal service obligation.

In 2003, when the first telephony universal service obligations were introduced, the requirement for internet services was that they were functional. Almost 20 years on, the world has changed considerably. Covid has accelerated that change further, digitising almost every part of our everyday lives and making the infrastructure that connects us more important than ever.

That is why, as my hon. Friend says, this is at the top of the Government’s agenda. Our need for access to fast broadband speeds has grown rapidly. and with it the capability of the UK’s broadband infrastructure. Some 95% of all consumers in the country are now able to access a superfast service, while 57% can get ultrafast speeds, but the Government recognise that the benefits of increased speed have not always been universally felt, with some consumers still unable to access the full benefits of an increasingly digitised society.

In 2018, therefore, the Government introduced the broadband universal service obligation to give consumers a digital safety net—a new legal right to request a decent broadband service that works in the way that my hon. Friend has so eloquently described. It protects customers from paying too much by putting in place safeguards to ensure that the decent broadband service is provided at an affordable price. Since the USO’s launch in March, Ofcom has worked with the telecoms industry, which I would like to thank for its ongoing co-operation, to map the availability of decent broadband services, premises by premises.

As a result of that mapping, consumers can now contact their universal service provider, usually BT, to check whether they are eligible to request a connection under the USO. If they are not, because a decent service is already available at an affordable price from a supplier—possibly by 4G or other means—they are given specific details. I am eager to see that process working as well as it can. Government and industry have done excellent work building new infrastructure in remote locations, reducing the number of premises potentially in need of the safety net provided from 2.3 million in 2016 to just 189,000 earlier this year.

While covid-19 restrictions led to an agreement to launch the USO in a manner that reflected temporary constraints on BT and Openreach capacity, BT has recently informed me that it has notified or reminded consumers at more than 40,000 premises that they may be eligible to apply and, pleasingly, that it has a high-volume mailing programme running to notify the remainder. That has yielded applications leading to approximately 4,000 quotations and more than 500 approved projects to date, several of which are already complete, despite the typically rural and challenging locations. According to BT, more than 4,000 premises are within the scope of projects approved so far, with more in the pipeline.

However, I appreciate that, for those consumers who are currently unable to access a decent broadband connection, that will bring little comfort, and I know many of those people live in Eddisbury, as my hon. Friend said. That is why the Government and Ofcom are working hard to ensure that the universal service obligation is implemented correctly, and any issues that are raised by either constituents or hon. Members are fixed as soon as possible. Before I outline what the Government are currently doing to address the issues he raised, I want to reassure hon. Members that I am taking this issue extremely seriously, as, I know, is Ofcom.

I turn now specifically to the issue of high quotes that have been received by some customers from one of the universal service obligation providers. Many people who have been waiting patiently for the eventual launch of the USO have written to me to express their disappointment and a feeling of unfairness about the way the quotes have been calculated. They are rightly surprised that one household is expected to foot the bill for a piece of infrastructure that will benefit many of their neighbours as well. I will elaborate on some of their concerns for the benefit of the House.

It would appear that initially, USO applicants were routinely being asked verbally for six-figure sums without further information or context, which created some confusion. I understand that more information is now being provided after discussion with Ofcom, but still, in in some cases, such as one correspondent from the constituency of Burton, contributions for costs in excess of £50,000 were requested when the neighbouring community was already connected to fibre.

Some of the quotations are eye-watering—in many cases, beyond local average incomes and, in the case of one quotation in the constituency of Copeland, substantially more than the average house price in the area. Another correspondent from the Staffordshire Moorlands constituency was unable to understand why her quote under the USO was essentially the same as a previous quotation from Openreach under a community partnership scheme, which would have covered the entire community.

Of course, there are situations where applicants cannot see all the technical issues involved when replacing their lines, but local constituents are often very well informed, having lived in these locations for generations, and sometimes their helpful suggestions to reroute cables reflecting current realities, instead of following ancient paths defined by our Victorian ancestors who first laid out the networks, will be valid. I urge BT to think creatively and to take sensible planning decisions when generating these quotations.

When this issue was first brought to my attention, I was equally surprised. Although I cannot promise that every quote received by customers will be lower than the cost threshold, I believe that every quote should be calculated in a fair and transparent manner, as my hon. Friend the Member for Eddisbury suggests. When we legislated in 2018 to introduce the USO, we included provisions that require Ofcom to ensure that

“in calculating the cost of providing a broadband connection to a particular location, due account is taken of the extent to which the cost may be shared between multiple locations”.

Although some of the premises eligible for the USO are extremely remote—I am aware of an initial quote of more than £1 million for one island community, but it did require a subsea cable—constructing new networks to reach many of them will be expensive. There are, however, many areas such as those indicated by my hon. Friend where people could reasonably expect costs to be shared and fairly distributed. That is why I have written to the chief executive of Ofcom, Dame Melanie Dawes, to outline my concerns and to ask Ofcom to keep me informed of its progress in resolving this matter.

I have been assured that Ofcom and BT remain in discussions about the most appropriate way to move forward, but I reassure Members that customers who either get a quote from BT or proceed on the basis of a quote that has been provided will not be disadvantaged by any new resolution. I encourage BT and the independent regulator Ofcom to agree on a resolution to this issue; however, I understand that Ofcom is now seriously considering enforcement action. I also want to make it clear that, although there may be a reduction in quotes for some applicants to the USO, it is not guaranteed to reduce them all, especially where a customer has no or very few neighbours nearby who are also eligible for the scheme.

To illustrate that point, more than 250 premises that may be eligible for the USO are situated over a mile from their nearest neighbour, whether they are eligible for the USO or not. Furthermore, around 5,000 potentially eligible premises are over three miles from the nearest existing fibre, though that is reducing all the time as the Government and industry expand further the reach of gigabit-capable networks. Our efforts to address the current issues will therefore likely bring little comfort to consumers who are being asked to pay quotes that they cannot afford, but that is why, as well as introducing the universal service obligation this year, the Government have also launched a series of other measures that consumers and businesses can take advantage of.

As my hon. Friend said, the Government are investing further in the next generation of broadband connections. Earlier this year at the Budget, my right hon. Friend the Chancellor of the Exchequer announced £5 billion to help to connect the hardest-to-reach premises in the UK with gigabit-capable broadband. That will ensure that people living in rural areas, such as those represented by my hon. Friend and across the country, will be able to access the fastest broadband speeds at the same time as their urban counterparts. Closing the rural-urban speed divide is a crucial part of levelling up across the country. We are making progress with developing the programme, which will deliver those new gigabit-capable connections via procurement from early next year.

In the meantime, as my hon. Friend will no doubt be aware, we will continue to develop improved connectivity through new phases of the superfast delivery programme, which is now supplying mainly full fibre connections. Connecting Cheshire and Building Digital UK are currently evaluating and assuring bids for further delivery within his constituency, which we expect will be announced before the end of the year. Finally, the gigabit voucher scheme is already available to constituents in rural areas, including many of my hon. Friend’s constituents in Eddisbury. Those vouchers offer £1,500 per residential premises and £3,500 per business for gigabit-capable broadband. I encourage consumers in my hon. Friend’s constituency, and indeed in yours, Madam Deputy Speaker, to go to the gigabit broadband voucher website to see if they are eligible. Some authorities are also topping up our own nationwide scheme through localised voucher top-ups. More information on that is also available on the gigabit voucher scheme website.

In the meantime, as my hon. Friend will no doubt be aware, we continue to develop improved connectivity. I thank him once again for raising not only the general matter of broadband, but the really important issue of making sure the universal service obligation delivers in the way that it was envisaged. Again, I thank him for raising this matter and for the opportunity to provide an update to the House. I hope to see progress on this important issue in the near future.

Question put and agreed to.