My Lords, I am glad that we are at last able to start this very important Committee. I should immediately declare an interest, which is that I suffer at my home in the country from extremely bad broadband, although we are lucky enough to be able to use microwave technology to do something about this. In addition, last night when I tried to ring my wife from central London on my mobile telephone to complain how overworked I was, I was unable to get a signal. So, I can absolutely sympathise with my noble friends Lord Arbuthnot and Lord Inglewood; I recognise the problems, particularly for rural areas and SMEs, and the Government agree with quite a lot of what has been said in terms of aspirations. I think we will differ when we come to decide how the USO should be used to fulfil those aspirations, and exactly what its role is.
The Government have a clear digital agenda, and our ambition is for world-class digital connectivity. We are determined to ensure that the UK has the digital infrastructure that our businesses and citizens need both now and in the future. The Green Paper published on 23 January makes digital infrastructure a central pillar of the Government’s proposed industrial strategy and identifies good digital infrastructure as a driver of growth.
We support the spirit of Amendment 1, requiring that the universal service order should define a gigabit-speed broadband universal service obligation—or USO—delivered via full fibre to the premises. We differ in that we do not think that the broadband USO is the right tool to use at this stage in the development of the UK’s digital infrastructure market. To pick up on the point of the noble Lord, Lord Aberdare, the rationale for a USO is to prevent social and economic exclusion. It does this by ensuring that where the market does not deliver, a minimum set of communication services are made available, on request, to everyone, no matter where they live or work. In doing so, it takes account of the prevailing technologies enjoyed by the majority of people: the USO follows the market, it does not drive market change. The UK’s fibre market is at an early stage of development—currently only 2% of UK premises have full-fibre connection—so I do not think we have reached the stage where there is a case for
introducing a gigabit-speed USO. It is not a prevailing technology used by the majority and it is not needed to prevent social and economic exclusion.
We do, however, agree that more extensive fibre connectivity is crucially important to the UK’s future digital growth. We are planning now for the networks that are going to be needed to ensure continued economic growth and development across the UK in both urban and rural areas. In the Autumn Statement we announced more than £1 billion to support digital infrastructure, targeted at supporting the rollout of full-fibre connections and future 5G communications. The Government are consulting on how we might further encourage full-fibre rollout.
Amendment 2, in the name of the noble Lord, Lord Fox, proposes a superfast broadband specification for the USO. This specification is, as the noble Lord said, in line with scenario three of Ofcom’s USO technical advice, which the Government commissioned to help inform the design of the USO. All the scenarios set out in Ofcom’s report are being given careful consideration. Once that work has been completed there will be a public consultation on the design of the USO and the specifications that will be included in the universal service order, including the minimum speed.
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The noble Lord’s amendment also proposes that the minimum speed should be reviewed annually. I agree that it will be crucial to monitor progress of this important consumer measure. Ofcom’s USO report foresees that it would monitor the broadband USO on an ongoing basis to ensure that it is effective in meeting the needs of consumers. Alongside this, it also proposes periodic full-scale reviews to assess whether the technical specification for the USO needs to be changed. As noble Lords will be aware, the Bill already includes a power for the Government to direct Ofcom to undertake such reviews.
In Amendment 3, my noble friend Lady Byford has proposed that the minimum broadband speed for the USO should appear in the Bill. She proposes a speed of 10 megabits or more, which is one of the scenarios included in Ofcom’s USO technical report. Last March, when the Government consulted on their proposed road map for implementing the broadband USO, they sought views on whether the minimum speed should be set in primary or secondary legislation. The vast majority of those who responded agreed that the minimum speed should be specified in secondary legislation. As many noble Lords have said, technologies and service capabilities continue to improve rapidly, and it is important that any specifications can be updated over time to take account of these developments. As the noble Lord, Lord Mendelsohn, said, and with whom we agree, secondary legislation can be revised more readily and is therefore a more appropriate means to specify the minimum level of service.
My noble friend proposed that the cost threshold for each USO connection should be set at £4,000, and that communities should be allowed to pool individual requests and explore alternative delivery mechanisms. I am afraid that this would not be possible under the universal service directive, which provides the regulatory framework for the broadband USO. To ensure provision
upon receipt of a reasonable request from a consumer, a USO connection is delivered by the universal service provider designated by Ofcom. Consumers will not be able to choose which company provides their USO connection, as not all communication providers will be designated. However, as part of the ongoing work on the design of the USO, we are considering how individual consumer requests to be connected can be aggregated so that communities can benefit.
My noble friend’s Amendment 7 would change the power to direct Ofcom to review the broadband USO into a mandatory duty. In its technical advice on the USO, Ofcom explained that ongoing monitoring of how the USO meets the needs of consumers and businesses would be necessary. It also foresees that there will be a need for less frequent, full-scale reviews of the USO’s technical specification. On that basis, I do not think the existing review power needs to be changed.
Amendment 9 inserts a new clause requiring an independent evaluation of the delivery of superfast broadband by Broadband Delivery UK. BDUK has already been subject to considerable scrutiny of the value for money of the public investment and the level of competition in the rollout programme. It has been given a clean bill of health.
BDUK has published online its plans to evaluate the impacts of the superfast broadband programme over the next five years, as required by the European Commission’s decision to grant state aid clearance, in order to ensure that the programme complies with the terms for using public funds in the deployment of broadband. Superfast broadband projects under the previous state aid decision were subject to an independent evaluation report carried out by the economic consulting firm Oxera. Oxera’s report, which is available online, concluded that BDUK had complied with the terms of the state aid decision, been effective in its role in increasing broadband coverage, and had not created undue distortions of competition. In addition, BDUK has been the subject of two value-for-money and delivery reviews by the National Audit Office and the independent projects authority. Further evaluation is therefore unnecessary and would not add value to those already undertaken.
Amendment 10 calls for SMEs to be prioritised in the rollout of the broadband USO. The broadband USO will have an important role to play in improving SME broadband connectivity, particularly in rural areas. It will deliver economic benefits by providing SMEs with the connectivity that they need to participate in and drive the digital economy. It will, however, be delivered on demand, rather than via a rollout programme, and the extent to which SME connectivity can be prioritised will depend on whether a USO connection is requested. As part of the USO implementation, we will make sure that small businesses have the information they need on the eligibility criteria and the connection process so that they can take advantage of the USO.
We have also been consulting on further support for business broadband. The full-fibre rollout consultation, to which I referred, included the option of a further full-fibre business broadband voucher scheme, alongside other options for supporting the rollout of full-fibre
networks locally. We will publish the findings of this consultation and the next steps alongside the summary of the findings of the business broadband review.
Amendment 11 calls for steps to be taken within 12 months of the Bill coming into force to ensure progress on a number of broadband issues. I do not think that there is a need for these measures to be set in primary legislation, as work is already in train on each of them. As I noted at the outset, this Government have a clear digital agenda and our ambition is for world-class digital connectivity. Good progress has already been made, but there is still, we agree, lots more to do. Commercial and publicly funded rollout of superfast broadband continues. More than 90% of UK premises already have access at speeds of 24 megabits per second or more—89% if measured on the basis of 30 megabits per second. We expect to reach 95% coverage by the end of this year. We have committed to reinvest funding from efficiency savings and clawback to extend superfast broadband to as many homes and businesses as possible, including in hard-to-reach, often rural, areas, which would otherwise have been left behind by commercial providers.
We are working with regulators and industry to ensure that advertising for broadband more accurately reflects the actual speeds that consumers can expect to receive, rather than a headline “up to” speed available only to a few. Broadband speed claims made in advertisements are regulated independently by the Advertising Standards Authority, which is currently reviewing its guidance on broadband speeds, with a report due in spring this year.
Measures elsewhere in the Bill give Ofcom powers to ensure that consumers receive automatic compensation when something goes wrong. Ofcom will issue detailed consultation on the exact form of automatic compensation measures.
With that rather detailed explanation—I apologise—I hope that noble Lords will feel able not to press their amendments.