Analysis: Carter’s Next Generation Access

Lord Carter’s final Digital Britain report seeks to clearly differentiate between its Universal Service Commitment (USC) and the future of Next Generation Access (NGA).

“Universal availability of today’s network is a necessary, but not sufficient step in delivering the sort of digital infrastructure we want for the UK. We also need to see tomorrow’s network available widely across the country in the coming years.”

Carter sees much of the UK receiving next generation access by private sector investment. Virgin’s cable network covers about half the population and has the ability to deliver 50 Mbits/s or faster services. BT will be investing in fibre to the cabinet (FTTC) systems to deliver “up to 40 Mbits/s” services to the same and similar high density urban locations. New build developments incorporating Fibre to the Home (FTTH) or apartments sharing a fibre connection to the building (FTTB / FTTP) will also see fast next generation connections in built-up areas.

A “future fibre divide” is forecast where 60-70% of the population will enjoy fast fibre-based services delivered economically by the private sector but the remaining 30-40% will be left out without some intervention. This forecast is based on a steep escalation of costs per property connected once you move into lower density and rural settings.

To address this future divide a “Final Third Project” is proposed, to deliver at least 90% coverage of Next Generation broadband for homes and businesses by 2017. It is hoped that this project will stimulate the private sector to cover two thirds rather than the current 50% from its own resources.

The Final Third Project will use a targetted subsidy to deliver services into areas that would otherwise not be reached. This subsidy will be funded by a fixed line telephony levy of 50p per month per fixed landline phone (cable telephone or Openreach landline including ISDN) which should raise £150-£175m per year for the Next Generation Fund. Social telephone tariffs for the less well off are to be excluded from the levy.

A role for localised or community NGA schemes is foreseen in the report, providing their design allows fro interoperability and standardised services across the country.  A £150,000 grant to support the Independent Networks Co-operative Association (INCA) is provided to facilitate standardisation work.

Management of the Final Third Project would be undertaken by the new Network Design and Procurement Group, following on from their role in the Universal Service Commitment. A reverse auction process would be used to select commercial suppliers to deliver the next generation service to the “Final Third” areas.

It is good to see some concrete proposal for increasing coverage of NGA, but this will still leave 10% “off the map” – probably the same 10% as the current USC is seeking to bring online or up to 2 Mbits/s. The timescale of 2017 is not too exciting either, so we expect to see plenty of criticism of this proposal as too late and not complete. The £6 per year “telephone tax” is unlikely to be well received in the urban areas who will get fast services without it, and it may hasten the migration from landline to mobile telephony in some cases.

Tags: Carter, Digital Britain, FTTH, fttp, levy, Next Generation Access, NGA, Subsidy, tax, telephone