News & events
Will the broadband levy bring Britain into disagreement with the EU
In response to Lord Carter’s Digital Britain White Paper published Tuesday 16th June Geo has issued the following commentary, which directly addresses the outstanding issues UK citizens and telecoms providers face.
“Digital Britain leaves the UK in the dark ages” – The Digital Britain report has contradicted its own objectives and condemned the UK to an extended ‘copper age’. It was meant to provide a framework through which ‘to upgrade and modernise the UK’s digital networks’ but instead leaves us still dependent on antiquated copper networks for broadband. This leaves Britain in the dark ages compared to other developed nations that have seen the light and are deploying fibre to the home.
“The 2Mbps broadband USO leaves the UK open to ridicule” – The 2Mbps broadband Universal Service Obligation could make Britain an object of global ridicule. The UK is the world’s sixth largest economy, yet this report says it cannot justify similar investments to those already promised in the USA, Australia, Singapore, Korea and Japan, which are aiming to deliver 100Mbps as standard. By setting the broadband bar too low we risk letting our whole information economy fall behind.
“Will the broadband levy bring Britain into disagreement with the EU?” The 50p per month levy on all fixed lines announced by Digital Britain will make £200 million available to improve Next Generation access. If these funds are used to upgrade existing copper networks, however, the initiative will fail on two counts:
- It will not aid competition, and run counter to European Union recommendations for expanding Next Generation Access, which specify that state-aided infrastructure should be ‘open access’.
- Investing in copper is only a short-term solution, and the taxpayer may be asked to pay for more upgrades to fibre in three to seven years time.
The UK government’s decision to use state aid overcome ‘market failure’ is welcome, but unless it approaches state intervention in a thoughtful and focused way the investment could go to waste.
“The Digital Britain report is anti-fibre (and pro-copper)” – This report removes none of well established and well understood barriers to lighting up Britain. There has been no movement on the inexplicable and unfathomable government rates tax on fibre. Removing these would have been a quick and easy way to promote a fibre future for the UK. The report also remains silent on the issue of mandating access to BT infrastructure to unblock this enduring bottleneck in the UK broadband landscape. Delivering broadband speeds over 8Mbps through copper will still be expensive, requiring ISPs to invest heavily in masts and street cabinets. And it’s widely agreed that 50Mbps is the upper limit of what copper can achieve.
“Digital Britain means broadband will be taxed from both ends” – The new tax outlined in the Digital Britain report means that, far from being liberated by new money, the UK’s communications infrastructure will be taxed at both ends. The tax will only raise around £170m per year from consumers and then be presumably handed straight back to BT and Virgin Media, who will still have the UK’s market in a stranglehold, and then only to deliver fibre to the cabinet. Just as importantly, the government will still levy rates on fibre once it’s in use - perpetuating the problem of cable lying dormant in the ground. This report removes none of the barriers to laying fibre or to true competition in the broadband market.
“The UK broadband landscape has reached the point of market failure” – If the UK wants to stay competitive government funding must be made available to deliver Fibre To The Home – The UK Government has to follow the lead of other developed nations and announce major investment in the core broadband fibre based infrastructure. We have reached the point of market failure when it comes to delivering high speed broadband. Only by intervening to create a ‘national network’ can we ensure that broadband access is truly. A patchwork approach of multiple vendors delivering fibre networks did not work in the days of ntl and Telewest and it will not work now.
“The ‘open access model offers a way of getting a return on public investment” – Once created, this ‘national network’ will not only serve our national interests but could easily be commercialised and provide return on public investment. There is already a proven model for doing so that has been endorsed by the EU. The ‘open access’ model that has worked so successfully in Scandinavia allows state intervention to be pro-competition. Before they can deliver fast broadband for all, ISPs need ‘operator neutral’ access to wider fibre networks. Access to dark fibre has played a critical role in opening up the UK broadband market for competitors to BT and Virgin Media. It has driven down the cost of broadband to consumers and helped successfully deliver bandwidth-hungry services such as BBC iPlayer and YouTube that users demand. We can only achieve them by mandating access to existing incumbents’ duct networks.
“FibreSpeed the only example of truly open access networking in the UK” - The only example of a truly open access network and pro-competition model operating in the UK today is FibreSpeed in North Wales. This joint initiative between the Welsh Assembly Government, European Regional Developments Funds and Geo, with EU funding, addressed the market’s failure to provide North Wales with adequate infrastructure for broadband. FibreSpeed offers a model that can be copied throughout the UK for optimised government investment in superfast broadband. The success of FibreSpeed demonstrates the importance of two factors:
- Contracts to build or extend UK fibre networks using public money must be awarded through open and competitive tenders
- Open access networks are the best method of quickly creating diverse, competitive regional communications markets
“Geo has strongly recommended that the European Commission turns its recommendation of open access networks into a legal requirement.” – state aid to guarantee broadband access for all must be money well-spent.
