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Universal Service Obligation for Broadband

Volume 681: debated on Thursday 8 October 2020

Motion made, and Question proposed, That this House do now adjourn.—(James Morris.)

I am grateful to Mr Speaker for granting this debate and to the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Boston and Skegness (Matt Warman), for extending his Front-Bench stint to respond to it.

As someone from the last generation to be brought up in the analogue age, when payphones, posted letters and patter by the water cooler were our default ways to communicate, Channel 4 was a novelty, and bookcases were full of books that we actually read, mobile phones and the onset of the internet age have been nothing short of a revelation to me. To the list of essential public utilities—water, gas, electricity and so on—can now be added broadband. It has rapidly become a critical part of our national infrastructure, reshaping the way we do business, access information and interact socially with the world around us.

Yet the speed, reliability and affordability of broadband across the UK are still playing catch-up with the new-found demand, leaving some communities, often rural, falling on the wrong side of what is termed the digital divide. That divide has been exposed and exacerbated further by the pressure put on all our broadband connections at home since the covid-19 outbreak in March. As the Minister said in the previous debate, up to 60% of the UK’s adult population were working from home during lockdown, as well as the millions of students who shifted to learning online.

It is therefore a real concern that despite the extensive efforts of those working in the telecoms industry and elsewhere, a recent survey revealed that a third of UK households are still struggling with inadequate broadband speeds, and that as banking and Government services increasingly move online, some communities have found themselves cut off from essential facilities.

In rural areas, including much of my Eddisbury constituency, continued poor connectivity represents a huge missed opportunity for economic development, let alone for help on other important and growing issues such as isolation and access to education. In 2018, 11% of rural premises, where more than 1 million small businesses are based, could not get a 10 megabits per second fixed-line connection, which is the speed required to meet a typical household’s digital needs—this is often named the “Netflix test”—and 24% could not get a 30 megabits per second, or superfast broadband, connection.

Let me put that into a local context. As of May 2020, Eddisbury had 2,162, or just under 5%, of all premises unable to receive “decent broadband”—this was two and a half times the national average. Drilling down further reveals figures of 9% for those living in Churton, Farndon and Malpas, 11.1% for those living in Dodleston, Tattenhall and Duddon, and 12.3% for those living in Audlem, Bunbury and Wrenbury. Depending on the subject matter, being 59th on a list of 650 constituencies can be a cause for celebration, but when the list is of constituencies with the highest proportion of residents unable to get good broadband, it is not something to shout about.

That is why I was pleased to stand on a manifesto that committed a Conservative Government to delivering nationwide gigabit-capable broadband by 2025, which was backed up by the 2020 Budget statement, which confirmed a total of £5 billion to roll out full fibre across the country. Progress is being made. On 10 September, the telecoms regulator, Ofcom, revealed that more than 4.2 million homes—about 14%—across the UK were now able to access faster, more reliable full fibre services, which is an increase of 670,000 since January. But it remains a real challenge to accelerate the extension of fibre to those hard-to-reach locations where there is an inherent lack of digital infrastructure.

Does my hon. Friend agree that although organisations such as Connecting Cheshire have done a tremendous amount of good in constituencies such as mine, we still have villages that are isolated and cut off? Higher Walton, just outside Warrington, has no fast broadband at all. Organisations such as Connecting Cheshire can really make a difference in getting those sorts of villages really plugged into the network.

My hon. Friend is right on that. We live not far from each other, and suffer some of the same problems in our constituencies, particularly in some of those blackspots, where residents sometimes do not know where to turn. Having a way of co-ordinating that effort to bring together some of the solutions for their poor broadband is a way of trying to ensure that no one misses out as we deliver on our manifesto commitment.

The Government have rightly sought to address this situation, through their gigabit voucher scheme, which I will leave the Minister to explain in more detail, and, as of March this year, through the new legal right to request a decent, affordable broadband connection from BT under the new universal service obligation for broadband. That is defined in law as a service with a download speed of at least 10 megabits per second and an upload speed of at least 1 megabit per second. Ofcom has also determined that a USO-compliant service must cost the customer no more than £46.10 per month. If the existing fixed-line or mobile solution does not allow that level of service, the USO also requires BT to upgrade the connectivity to meet or exceed those requirements, at no cost to the customer, as long as the necessary works cost less than £3,400. On the face of it, that is a significant step forward in ensuring that no household or business is left behind, but it is also fair to say that its implementation has brought with it some serious issues that threaten to undermine its laudable aims, not least in those cases where the cost of delivering on the USO far exceeds the £3,400 threshold.

Let me illustrate that. Where an individual household meets the criteria to trigger a USO broadband service, an installation quote is pulled together by BT to establish the work costs. Where they exceed £3,400, the additional costs must be met by the customer, and herein lies one of the fundamental limitations of the current set-up. Legally, the USO works quote can be calculated only for each individual household that has applied. The subsequent bill therefore cannot be shared out among a wider number of neighbours who would otherwise benefit from the upgrade if it was carried out. The total amount still falls on the shoulders of the original single applicant.

If that sum only dribbled over the £3,400 threshold, there may be some wider level of acceptance of that approach, but we know that quotes are landing on doormats, or, where possible, via email, significantly in excess of that number. For example, in Eddisbury, we have seen five-figure sums. My hon. Friend the Member for Clwyd South (Simon Baynes), the constituency next door, shared with me a quote for a resident in Llangollen of over £85,000. My hon. Friends the Members for North Norfolk (Duncan Baker) and for North West Durham (Mr Holden) and other colleagues have provided similar stories, not forgetting the well-publicised case of Mr Roberts in the Lake District, who was asked to contribute just over half a million pounds.

While I accept that the situation is often a result of the major engineering and planning work required to connect the hardest-to-reach premises, it still means that overall an estimated 60,000 premises will cost up to 30 times more to connect, with residents still having to fund the excess and some facing waits of up to 24 months to be connected. In the absence of a facility to spread the cost, this is asking the impossible for what should be the legally obtainable.

Eddisbury residents have also told me of not having had the USO properly explained to them, it not being clear who was responsible, and being told they were not eligible when they in fact were. I know that this was not and is not the intention, and I am very aware of and grateful for the work and commitment of the Minister in trying to resolve these issues, but it would be helpful to hear from him this afternoon how the Government are working, and propose to work, with BT, BT Openreach, the wider industry, Ofcom and others to formulate a new approach that does not penalise the consumer in this way, especially those in more remote areas, in the development and roll-out of digital solutions for every house in the UK.

In that spirit of collective effort, may I propose some ways of doing just that? For instance, it seems a nonsense that each individual household should be treated as a discrete case when surrounding houses could also be eligible or, if not, could significantly benefit from an upgraded broadband connection where costs are more equitably distributed. The irony of all this is that if someone were not to go down the USO route but to band together with their neighbours by way of a community fibre partnership or similar model, while also accessing the gigabit voucher scheme, they may well get their 10 megabits per second download, if not much faster, for nothing, or at least a much more realistic price.

The truth is that broadband is not an optional extra any more in this digital world and rural consumers should not be expected to pay excessive amounts to be connected. Surely the way to go is to allow properties to share the costs under the USO, ultimately to help rural residents, and, depending on how many individuals are involved, to bring the cost below the current cost cap. To that end, it was encouraging to hear from BT that it is developing a way to enable customers to share excess quotes among their neighbours who would also benefit, where there are other nearby households that will share the upgraded infrastructure. Under this, customers would retain the legal right to trigger network build by paying all excess costs, but they would also be given the opportunity to meet the costs together with others. How that is communicated will also be crucial as, at the moment, someone receiving a jaw-dropping quote is only likely to have their confidence eroded in the belief that the system is fair and the market is functioning rather than failing. It may also be worth considering the impact of the obligation to charge VAT at 20% to those who do pay an excess cost on USO work—something that is not generally applied to publicly funded network infrastructure bills.

Will my hon. Friend the Minister update the House on what discussions are taking place and what progress is being made with BT, Ofcom and other key players to ameliorate the problems in the implementation of the USO, break down the financial and logistical barriers getting in the way of better broadband, and deliver a decent, affordable connection for all? Is he able to say more about the not insignificant £5 billion that will be spent to make this achievable and as timely as possible? Above all, can he reassure my constituents and many more across the country that all this is an absolute priority for this Government between now and 2024—and, I hope, beyond?

There is no doubt that our national digital infrastructure has the potential to make or break many of the opportunities and challenges that we as a nation have lying ahead of us. The past seven months have simply magnified and accelerated the necessity for every house in every part of the UK to be able to play its part. It can be done, and I am confident that the Government will ensure it is done, but what my Eddisbury constituents want, whether through the USO or other means, is every support possible to help to make it an affordable reality. If we start getting nostalgic for the analogue age, we have not lived up to that perfectly reasonable request.

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 its 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 that of 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 are therefore likely to 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 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 in 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 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.

House adjourned.