CA broadband brief for Parliamentarians

The Countryside Alliance briefed ahead of a debate on the House of Lords Communications Committee report into broadband. We welcome many of the recommendations put forward and are keen to see broadband, which is essential to rural communities, rolled out quickly for the good of rural communities and businesses.

COMMUNICATIONS COMMITTEE REPORT ON BROADBAND

HOUSE OF LORDS

18 MARCH 2013

LORD INGLEWOOD

BACKGROUND

• The Countryside Alliance welcomes this debate on the House of Lords Communications Committee report into broadband. The Alliance supports many of the recommendations put forward by the Communications Committee report.

• The Alliance is concerned that the lack of broadband provision in rural areas is holding back the countryside both economically and socially.

• There is clearly high demand for broadband in rural areas. However, rural towns and villages do not benefit from the level of competition common in urban areas due to low consumer density and poor existing infrastructure. Therefore broadband service in rural areas is often poor.

• The National Farmers Union ran a poll in 2010 regarding broadband access in rural areas and results indicated around 40% of respondents reporting that they couldn't get broadband at all, while 90% who could access broadband didn't get a reliable connection.

• The Countryside Alliance believes it is important that there is competitive roll out of broadband services if the current problems of high prices and poor service in rural areas are to be overcome. There should not be one single technology to deliver broadband, but competition between technologies.

COUNTRYSIDE ALLIANCE POSITION

1. Why broadband is essential to rural communities

• It is vital that rural communities and businesses have access to effective and affordable broadband if the digital divide is not to grow even wider and rural economies are to grow and prosper.

• Reliable broadband is imperative for competitive and successful enterprises in a growing digital economy.

• Rural broadband opens up new ways of conducting business. More people will be able to work remotely from rural locations, which will ease congestion on the transportation network and contribute to reduction in emissions. It will also lead to growing daytime populations in rural areas, aiding other rural businesses and service providers.

• A key government policy is to increase the use of online resources for public services – which could save at least £1billion a year. However, online access to public services will only work if they are accessible to all and do not exclude those in remoter areas, who already struggle to access many public services. Rural and farm businesses are often excluded as they are unable to access and return data online due to the lack of suitable broadband connection. For example, HMRC expect tax returns and PAYE to be completed online. If you do not have broadband then you are expected to use an agent, which is a significant additional cost for rural businesses.

2. Coalition Government's current plans - Broadband Delivery UK (BDUK)

• "Britain's Superfast Broadband Future" published in December 2010 set out the Government's vision for superfast broadband across the UK. Part of this strategy saw £530 million (plus an additional £300 million after 2015) made available to meet the Government's two objectives:

1. To put in place a universal service commitment (USC) of at least 2Mbps for everyone by 2015.

2. To put in place a superfast broadband network with a minimum speed of 24Mbps by 2015 across 90% of the UK.

• The Alliance believes it is very unlikely the USC will be met by 2015 and is concerned it may prove too low to bridge the growing rural-urban connectivity gap. By 2015 areas with best connectivity will likely be enjoying broadband speeds far in excess of 2 Mbps.

• There are concerns, both at home and from the European Commission that the BDUK project will only serve to exacerbate BT's dominance in the market.

• For a while the Countryside Alliance has been concerned that the Government is saying the right things but not delivering and the BDUK money is not making much headway in delivering superfast broadband to rural areas.

• The Alliance sent a freedom of information request in October 2011 to each of the four areas named by the Chancellor George Osborne in his Pre-Budget Report of 20 October 2010 (Highlands and Islands, North Yorkshire, Cumbria and Herefordshire) as launching pilot superfast broadband areas. These areas were billed as 'models for how the public and private sectors should collaborate to build high-speed broadband networks in rural Britain'. We asked how much each had received from the government and what they had done in the past year to deliver their rural broadband network.

• The results showed that a couple of the councils have not spent a penny and the others were just moving towards finding local suppliers to get working on a process of getting the projects started.

• So, the first four areas, which are supposed to be the pioneers, were still not much further forward over a year after being named by the Chancellor as the front runners.

• The Countryside Alliance has frequently praised this Government's commitment to improving rural broadband coverage and the funds they have put aside for councils are very welcome. However, as the responses from the pilot councils showed, local authorities are struggling to turn Whitehall's promises into reality. It has been nearly two years since these pilots were set up and the people who live in areas with no or unreliable broadband coverage haven't seen any real improvement yet.

• Unless more is done to simplify the process of acquiring and implementing rural broadband projects, the digital divide will continue to grow and the money pledged by the Coalition will remain all but worthless. For rural people still struggling with no or an unreliable internet connection, this is simply not good enough.

• The Alliance welcomed the Government's response to our FOI by giving Local Authorities until February 2012 to set out draft plans for rolling out superfast broadband. A clear timetable of delivery will not only enable the Government to understand the timescale for delivery, but will ensure Local Authorities can be held to account.

Problems:

• The Government's strategy is not making the inroads it needs to make in order to meet its objective of ensuring that the UK has the best superfast broadband network in Europe by 2015.

• Policy is too fragmented and we are concerned that the contracts will only be awarded to the biggest and most powerful players in the market – BT and Fujitsu.

• The whole project has been badly skewed by the nature of the procurement process and the processes used by local authorities.

• Is the £530 million enough to deliver on the Government's commitment? Government and industry studies agree that the costs of putting together a superfast broadband network are closer to £15bn.

• Too much pressure is being placed on the private sector to finance a superfast broadband network - when broadband needs to be regarded as a benefit to all in society and a key utility.

Countryside Alliance asks:

• Broadband connectivity is a key component of national infrastructure and should be treated as such.

• Government policy should concentrate on a high spec infrastructure and coverage not speed. This will ensure rural communities are included as part of the national infrastructure.

• Given Small Medium Enterprises (SMEs) track record in job creation, policies to encourage more of these companies to develop an online presence could help address the lingering unemployment which is characteristic of many recovering economies.

• Universal Service Obligation is vital as Universal Service Coverage is only a vague commitment and the Government cannot be held to account. We would like to see an obligation that is legally binding.

• The digital divide needs to be addressed between urban and rural communities and it must be mandated that there is open access to optical fibre from the cabinet to the exchange.

• The use of public money for open access fibre-optic hubs should be dependent on installing fibre to a local level rather than to the cabinet.

• We support the European Commission's suggestion that open access to dark fibre at the cabinet-level should be introduced as a condition of BDUK's umbrella state aid permission.

• There should be national planning for a communications network of local, regional, national and internet exchanges, where different operators can site equipment and exchange traffic that is open to use by competing providers.

• Broadband projects should be able to piggy back on public sector broadband to deliver connectivity in rural areas. E.g. the NHS or academic networks.

KEY RURAL BROADBAND FACTS

• In 2005, England's rural areas hosted at least 476,000 VAT or PAYE registered enterprises. They earned £304 billion and employed 2.96 million people. This represents at least 27% of England's enterprises; 13% of employment, but only 9% of the country's business revenue or turnover. In some rural areas businesses are contributing proportionally less economic output than would be expected thus showing the existence of unfulfilled potential from firms and workforce in rural areas.

• The main reasons given for broadband dissatisfaction in rural areas tend to focus on speed, reliability and value. Those living in rural areas are significantly more likely to mention speed as the main reason for their dissatisfaction - 42% of rural user's state speed as the main reason for dissatisfaction, compared to 22% of urban users.

• Rural homes and businesses have fewer choices than their urban counterparts. Cable services are almost exclusively an urban offering with almost 60% of urban areas able to receive a cable-based broadband service of up to 50Mbps (with trials for 200 Mbps just beginning), while in villages and hamlets this drops to just 1.5%.

BROADBAND FACTS

• 8% of our GDP or £120 billion is generated through the Internet.

• SMEs utilising the internet have reported more than double the total export revenue as other SMEs.

• The internet is responsible for creating 2.6 jobs for every one made obsolete.

• Businesses with a strong online presence are growing more than twice as fast as those with no, or minimal, presence.

• Businesses with a high online profile had sales 6 times higher than those with little or no web presence.

• In 2010, 23% of households in rural areas but only 5% in urban areas had broadband speeds less than 2 Mbit/s.

• Average broadband speeds were slower in rural areas than in urban areas and a higher proportion of rural households have slow, or no, broadband.

• 8% of households in England have access to no, or slow, broadband. Sparse hamlets and isolated dwellings had the highest proportion of households with no, or slow, broadband in 2010 at 47%.

• Almost a quarter of households in rural areas have access to no, or only slow, broadband.

• The average broadband speeds in rural areas are considerably slower than speeds in urban area. The average broadband speed in less sparse urban areas was 12 Mbit/s and in less sparse villages 4 Mbit/s.

• According to Ofcom's figures the broadband market is currently split between four key players BT (29.3%), Virgin Media (20.2%), TalkTalk (18.5%), Sky (17.9%) and the rest split up between smaller providers (14.2%).

• Around 15%-20% of those who live in rural areas are unable to receive anywhere near the Governments stated benchmark of two Mbps.