My Lords, as well as moving Amendment 1, I shall speak to Amendments 9, 10 and 11. These amendments cover the nature of the universal service obligation and the setting of standards—issues relating to market structure and how best to roll it out are dealt with in group 5—so these focus particularly on those aspects. These are probing amendments that address whether, in passing such an important Bill that makes a further step in developing our digital economy, the measures contained are sufficient, and whether this legislation will provide leadership and adequately address our future needs. It is important that we remain ambitious and have a flexible policy and, now that we have an industrial strategy, have the mechanisms to meet it.
There is of course a strong case for a universal service obligation. A “universal service” is an economic, legal and business term used in regulated industries to provide a baseline of services to every resident. It establishes the availability of a quality service at just, reasonable and affordable rates, which should be available to all consumers. Universal services were widely adopted across Europe in the 1980s and 1990s, and there is a case to say not just why we should have one but why we have not had it. It is therefore welcome that the Bill establishes it. Across the EU, only Finland, Malta and Spain have provided for a minimum broadband speed in national law—Germany is on the way to it—but this Bill is an important step. That reflects the fact that communications, such as broadband and the like, have become a fourth utility that is crucial to modern life. Citizens face more and more encouragement to be online to access public services, commercial services or other things, and there are now penalties for those who cannot access, or are not adequately served by, broadband or who find it difficult to use.
The universal service obligation is a critical part of the Government’s strategy to ensure that the current model of broadband delivery does not risk ending up in a two-tier service, dividing the digital haves and have-nots and exacerbating the potential for holding back Britain’s regional economies. The Government are providing funding to support the rollout of fast broadband to those areas of the UK where commercial rollout has not been sufficiently attractive or where the market structure has not developed to incentivise it adequately. This is mostly, but not entirely, in rural areas. The broadband universal service obligation will act as a safety net, allowing those with poor connections the legal right to request a fast connection.
The Bill contains enabling powers for the USO to be specified in secondary legislation. The download speed will be specified in secondary legislation, and is expected to be 10 megabits per second. Amendment 1 would write that ambition on the face of the Bill, and it sets out the speed and nature of the delivery—fibre to the premises—and covers contention and latency issues.
Prior to getting into the meat of the amendments, I think that it is important to see broadband in the context of mobile. The universal service obligation
should be on mobile as well, and we will come to that in later debates, but it is important to take note of it at this stage, because we are here following the market, not consumer behaviour. We are addressing much, although too little, of what is happening.
Ninety per cent of the UK adult population is online, which is about 48 million people. The share of adult users has held steady, suggesting that stubborn challenges remain to reach 100% use rates. Most room for growth lies in take-up and deeper usage of online services among the over-55s. With the growth of mobile, focus has shifted away from broadband, but the fixed broadband market is still slowly growing. Seventy-seven per cent of UK adult users connect to the internet via broadband at home, and this number has held steady. Regarding devices, laptops and smartphones, each of those boasted 38 million users; tablet ownership has been declining. Use of a desktop PC has been on a steady decline since March 2011, and this is forecast to continue over the next few years.
Mobile connectivity has become such an important part of our life that one of the central findings of the National Infrastructure Commission’s report was that,
“mobile connectivity has become a necessity. The market has driven great advances since the advent of the mobile phone but government must now play an active role to ensure that basic services are available wherever we live, work and travel, and our roads, railways and city centres must be made 5G ready as quickly as possible”.
Many in this Chamber will have digital services: many will connect via broadband; some will connect through 5G services; they are interrelated.
I turn to the issue of speed. The Government argued in the universal service obligation consultation early last year that 10 megabits per second was sufficient to enable,
“full participation in a digital society”.
Later, Ofcom was charged in its technical specification to model around that definition. It modelled 10 megabits per second—10+1 being the upload speed and 30+6 being a speed frequently mentioned by others.
Is 10 megabits per second really a sensible target? I would suggest that we look at the evidence supplied by Sean Williams, the chief strategy officer at BT Group, to the Committee in the other place. He stated that BT has,
“made clear our willingness to deliver 10 megabits to every premises in the country by the end of 2020 without any further public funding and without even really progressing the USO regulations”.—[Official Report, Commons, Digital Economy Bill Committee, 11/10/16; col. 5]
If it is that easy, is it a sensible target?
In its assessment on the technical specification, Ofcom made a very important point. Ofcom has published evidence showing,
“that a speed of 10Mbit/s is sufficient now to allow multiple users to simultaneously use the internet, including web browsing, video streaming, video calling and gaming”.
That would not be the opinion of my children, but that is another matter. It goes on to acknowledge that this minimum,
“may need to increase over time”.
Even if we took the argument that 10 megabits per second was sufficient at this stage, which I do not think is the case, it would not be a very sensible approach to start with.
What are our anticipated needs? Many representations have been made. I think the National Farmers’ Union made a very cogent argument as to the speeds it was looking at. It would need to establish, as a minimum, both upload and download of 30 megabits per second. Is that sufficient? European Union Governments are committed to providing this speed universally by 2020, and EU targets are now of 100 megabits per second by 2025. If the broadband USO is intended to be only a safety net, this means that there is currently nothing offered for the 5%, and they will have limited access to anything that is defined as superfast.
New York announced a plan that, by the end of 2018, there should be 100 megabits per second, and by the end of 2019 this should rise to 300 megabits per second. Included in the package to deliver this was an affordable broadband service to unserved, underserved and low-income residents. It is no accident that the list of top 10 countries does not include the UK but does include such luminaries as South Korea, Norway, Sweden, Hong Kong and the like. When it comes to an international comparison, looking at download speeds for fixed internet services, the UK currently resides in 23rd place. We may feel that we have achieved a huge amount, but we are only in 23rd place. If we aggregate download and upload speeds, looking for the average between the two, we drop another 15 places. That is hardly encouraging. I have to say that it is better than our mobile internet access, on which we are currently placed at 39.
A further point to make is about the nature of the digital economy. E-commerce underpins the UK digital economy. Much growth has come from online sales. Moving forward, we expect a lot of the drivers of e-commerce to be the additional interactive mechanisms —AI and other forms of activity—that require much greater speeds in order to encourage uptake. British brands enjoy great cross-border appeal among European and Asian shoppers. An important part of what we need to do, to give ourselves the infrastructure to be able to compete effectively, is to have the right broadband level.
However, this is not just about speed, and we do not just specify speed here. We go for a speed of 2 gigabits to be established by 2020. That is not an unrealistic objective. There are parts of the world servicing 10 gigabits already, so 2 gigabits is not an overly ambitious target, but it is not just about speed. There is the important issue of reliability and consistency. The noble Baroness, Lady Harding, made a good point in the Committee in the other place, when she said that,
“consumers and businesses would say that reliability and consistency are every bit as important as speed”.—[Official Report, Commons, Digital Economy Bill Committee, 11/10/16; col. 8.]
Indeed, for many people there has been a huge issue about the underinvestment in routers, which translate broadband speeds at a very low speed across the house, and among many international comparisons we have some of the worst performing routers.
Upload speed is also an important issue. We have no real specification for it, although it is as crucial as download speed.
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There is also an important argument about what mechanism we use. We believe that fibre to the premises is the right approach. The provision of broadband to new homes has now been established by a circular sent by the Government to local authorities. Through a voluntary agreement, the Home Builders Federation is now getting fibre to premises, which is an important initiative, but only around 2% to 3% of the UK is covered by fibre. In South Korea, as one would expect, it is over 60%, but this is also true of Japan and of Spain, whose land mass is twice the size of the UK. The argument has always been that having more flats and fewer single dwellings more than compensates for the size of those countries, but that does not hold good, as we now have multiple dwellings and conversions too. BT does not want to replace the copper and is looking at alternative technologies, such as G.fast, which is reasonable. It is currently commercially available and can possibly get to 100 megabits. However, it is only a theoretical construct that it can get to 1 gigabit and it would not give us a long-term plan. As to what would, I recommend the IoD’s outstanding report Ultrafast Britain which sets out the case brilliantly:
“Going forward, fibre to the premise has to be a big part of the solution for two reasons. In pure bandwidth limits, it is future-proofed. It also allows for modular innovation, linking up satellite, wireless, mobile and other connecting technologies for those areas of the country where laying cables is not financially practical, giving even the most rural businesses access to the digital economy”.
There is a very strong case for FTTP.
Our other amendments would ensure that Broadband Delivery UK, which is charged with delivering superfast, is held to the goals and targets that it sets. In its delivery plan in 2011, it said that its future goal was that the,
“UK continues to have the best superfast broadband network in Europe”.
We will not do this unless we establish realistic ambitions. We therefore propose that Broadband Delivery UK is challenged against the targets which it has set itself.
Amendment 10 tries to get government policy to focus and place primacy on the needs of small businesses, which have hitherto been ignored.
Amendment 11 is an attempt to encapsulate a framework—whatever drafting issues it may have—that does not just establish a USO but ensures that we have a mechanism to address Ofcom’s point about how the minimum needs to increase over time.
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.