The Universal Service Obligation – part of the answer to the digital divide

The UK is in the middle of a huge digital upgrade. BT and Openreach are busy digging trenches and constructing masts to deliver the country’s widest and fastest fibre, 4G and 5G networks: the underpinning of our future economy.

It’s a plan that represents many billions of pounds of commercial investment. At the same time, however, commercial plans do not extend to every corner of the country. In the most remote parts of the UK the business case for traditional, commercial deployments will not work.

The Government’s Universal Service Obligation is one response to that problem. It means that customers have the right to request a broadband connection in excess of 10mbps, if one didn’t already exist.

BT (and in Hull, KCom) are the designated providers of this service, and there is some encouraging news in our latest progress update published today. We’re now building connections to around 6,000 homes under the USO. We’re also making it easier for others to join in. The terms of the scheme require customers to fund any connection costs that exceed the £3,400-per-household that BT will contribute. Rather than requiring the full build costs to be raised up front, we will now start the work as soon as a single household is willing to pay a share of those costs. We think that should see more fibre reach more people more quickly (although importantly, additional customers will still be expected to contribute their share of the costs before they are connected).

We hope the USO can also have a wider benefit – making more people aware of the connectivity they already have and could benefit from. Over time, new technology is creating more options. Ofcom had originally calculated that around 610,000 premises lacked a decent fixed broadband connection. Now, EE’s 4G network can provide a USO-level service to around two thirds of those households. The growing availability of Fixed Wireless Access broadband across all providers (using mobile networks to create home WiFi) means Ofcom believes there are now fewer than 135,000 premises with speeds below 10Mbs.

All of this means that, for hundreds of thousands of families who have been without great service, things have got a lot better in the past five years. At the same time, we still cannot deliver a good connection to everyone, and the USO – which requires funding contributions from customers – will never be a solution for those communities in the final fraction of the population where build costs can exceed £100,000.

We remain legally obliged to send out quotes to customers, even when the costs are, frankly, ridiculous. Those costs reflect the economic realities of carrying out complex civil engineering works in remote parts of the country, but it’s no surprise that customers can’t or won’t pay such sizeable amounts.

The Government also recognises this. In a recent call for evidence DCMS said that “it could be prohibitively expensive for the Government to fund fixed line ‘gigabit capable’ infrastructure up to the final 1% of UK premises.” Fresh thinking is required to think through how to connect those for whom even the USO won’t help.

Photo by Denny Müller on Unsplash

About BT

BT Group is the UK’s leading telecommunications and network provider and a leading provider of global communications services and solutions, serving customers in 180 countries. Its principal activities in the UK include the provision of fixed voice, mobile, broadband and TV (including Sport) and a range of products and services over converged fixed and mobile networks to consumer, business and public sector customers. For its global customers, BT provides managed services, security and network and IT infrastructure services to support their operations all over the world. BT consists of four customer-facing units: Consumer, Enterprise, Global and its wholly-owned subsidiary, Openreach, which provides access network services to over 650 communications provider customers who sell phone, broadband and Ethernet services to homes and businesses across the UK.

For the year ended 31 March 2021, BT Group’s reported revenue was £21,331m with reported profit before taxation of £1,804m.

British Telecommunications plc is a wholly-owned subsidiary of BT Group plc and encompasses virtually all businesses and assets of the BT Group. BT Group plc is listed on the London Stock Exchange.

For more information, visit www.bt.com/about