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Analysis: Carter's Universal Service Commitment
17 Jun 2009 | 08.52 Europe/London
Lord Carter's final report on Digital Britain includes the commitment to a broadband Universal Service (USC) as previously announced in the Budget “... the Government will pursue Universal Service in broadband, at a speed of 2 Megabits per second, by no later than 2012. "
The precise definition of the USC service is not contained in the report, so we assume this will be left to the new "Network Design and Procurement Group". An increased need for higher data rates, increased symmetry and resilience and lower latency is acknowledged but no parameters on upstream speed, latency or minimum throughput / contention are mentioned for the USC. There is also no mention of retail price of the USC service, cost sharing for expensive locations nor a precise definition of "Universal".
The "middle mile" or backhaul is noted as a potential bottleneck but left to network operators to resolve by investment or traffic management. This is the constraint that often means a 2M link runs at 1/10 of line speed in the evening because many users are sharing a 10M connection from the exchange.
Funding of the USC is to come from £200m of Digital Switchover underspend plus a contribution from the Strategic Investment Fund. The much debated "landline tax" is not to fund the USC at all, contrary to popular belief. Other elements of contribution to the USC are listed as "competitive commercial pricing", contribution in kind from private partners, other public sector organisations and universal coverage of mobile broadband (see below).
It does seem to us that there is no clear responsibility to deliver the USC placed on an individual body, nor is there a commitment to pay the cost. Instead we see a range of measures that "should" deliver the USC including :-
The first group of 800,000 homes are in essence to be told to pull their finger out and sort out their wiring, or pay someone to do it for them. We would say that fitting filtered faceplates on master sockets and putting a router at that location is "best practice" and this message needs to be disseminated to the masses.
For the next group of 1.1m we would foresee a competitively tendered process to send in a technician to resolve problems, with BT Openreach hoping to get the job. The "special investigation" category will be down to Openreach to deliver, as it's their network sufferring from "random effects".
The winners in the USC process will be those that receive a fibre to the cabinet (FTTC) service to bring them broadband for the first time or to get them up to 2M. The reality is that many of them will get a lot more than 2M with FTTC and hence they will go from broadband outcasts to the fastest available copper wire service.
A rump of 330k homes can look forward to satellite or mobile provision but there is no mention of installation subsidy for satellite or price capping / subsidy on the running cost.
Mobile's contribution to the USC is somewhat played down in the report, reflecting the reality of the technology - "It is clear though that in the near term mobile services may not be able to deliver a 2Mbps service and it may well be that 1 to 1.5Mbps is a more likely deliverable up to 2012. However for those households in not spots or not a lot spots, this would represent a welcome upgrade." The mobile operators are given a carrot with the Governement planning to convert existing 3G licences to indefinite (rather than time limited) but the quid pro quo is that they want to see 99% coverage of mobile broadband (matching current GSM coverage) in return. This 99% coverage is then relied on to prop up the USC for the rump of hard to connect users.
Mobile broadband is covered in depth in the report, including the as yet unresolved issues of spectrum allocation and use of 900 MHz for 3G or 4G data services. Future auctions will include obligations to deliver a service, a useful improvement on previous wireless broadband spectrum allocations - "delivering near-universal access to Next Generation Mobile services by imposing regional coverage and access obligations on all three 2 x 10MHz blocks of the 800MHz. Each block would carry a basic national coverage obligation at a specified speed (say 2 Mbps) to be achieved by a specific date."
The long term promise of 4G LTE mobile technology is perhaps overstated in the report by use of headline technology speeds. We have previously observed that Motorola expect to see a sector capacity of 24 Mbits/s downstream and 6.35 Mbits/s upstream from 2 x 10 MHz allocations, which means that all of the users covered by a base station from one network have a share of 24M total downstream capacity. With longer range at the lower frequency there could be a lot of users on a base station, so mobile broadband to us is never going to be a sustained high rate service.
The precise definition of the USC service is not contained in the report, so we assume this will be left to the new "Network Design and Procurement Group". An increased need for higher data rates, increased symmetry and resilience and lower latency is acknowledged but no parameters on upstream speed, latency or minimum throughput / contention are mentioned for the USC. There is also no mention of retail price of the USC service, cost sharing for expensive locations nor a precise definition of "Universal".
The "middle mile" or backhaul is noted as a potential bottleneck but left to network operators to resolve by investment or traffic management. This is the constraint that often means a 2M link runs at 1/10 of line speed in the evening because many users are sharing a 10M connection from the exchange.
Funding of the USC is to come from £200m of Digital Switchover underspend plus a contribution from the Strategic Investment Fund. The much debated "landline tax" is not to fund the USC at all, contrary to popular belief. Other elements of contribution to the USC are listed as "competitive commercial pricing", contribution in kind from private partners, other public sector organisations and universal coverage of mobile broadband (see below).
It does seem to us that there is no clear responsibility to deliver the USC placed on an individual body, nor is there a commitment to pay the cost. Instead we see a range of measures that "should" deliver the USC including :-
- Home wiring problems resolved by market/self help (c.800k homes);
- Home wiring problems resolved under USC (c.1.1m homes);
- Random network effects resolved by special investigation (c.100k homes);
- Long telephone line resolved by FTTC upgrade (c.420k homes); and
- Residual random network effects and long lines resolved by wireless/satellite (c.330k homes).
The first group of 800,000 homes are in essence to be told to pull their finger out and sort out their wiring, or pay someone to do it for them. We would say that fitting filtered faceplates on master sockets and putting a router at that location is "best practice" and this message needs to be disseminated to the masses.
For the next group of 1.1m we would foresee a competitively tendered process to send in a technician to resolve problems, with BT Openreach hoping to get the job. The "special investigation" category will be down to Openreach to deliver, as it's their network sufferring from "random effects".
The winners in the USC process will be those that receive a fibre to the cabinet (FTTC) service to bring them broadband for the first time or to get them up to 2M. The reality is that many of them will get a lot more than 2M with FTTC and hence they will go from broadband outcasts to the fastest available copper wire service.
A rump of 330k homes can look forward to satellite or mobile provision but there is no mention of installation subsidy for satellite or price capping / subsidy on the running cost.
Mobile's contribution to the USC is somewhat played down in the report, reflecting the reality of the technology - "It is clear though that in the near term mobile services may not be able to deliver a 2Mbps service and it may well be that 1 to 1.5Mbps is a more likely deliverable up to 2012. However for those households in not spots or not a lot spots, this would represent a welcome upgrade." The mobile operators are given a carrot with the Governement planning to convert existing 3G licences to indefinite (rather than time limited) but the quid pro quo is that they want to see 99% coverage of mobile broadband (matching current GSM coverage) in return. This 99% coverage is then relied on to prop up the USC for the rump of hard to connect users.
Mobile broadband is covered in depth in the report, including the as yet unresolved issues of spectrum allocation and use of 900 MHz for 3G or 4G data services. Future auctions will include obligations to deliver a service, a useful improvement on previous wireless broadband spectrum allocations - "delivering near-universal access to Next Generation Mobile services by imposing regional coverage and access obligations on all three 2 x 10MHz blocks of the 800MHz. Each block would carry a basic national coverage obligation at a specified speed (say 2 Mbps) to be achieved by a specific date."
The long term promise of 4G LTE mobile technology is perhaps overstated in the report by use of headline technology speeds. We have previously observed that Motorola expect to see a sector capacity of 24 Mbits/s downstream and 6.35 Mbits/s upstream from 2 x 10 MHz allocations, which means that all of the users covered by a base station from one network have a share of 24M total downstream capacity. With longer range at the lower frequency there could be a lot of users on a base station, so mobile broadband to us is never going to be a sustained high rate service.
What do Lords and politicians know about communications? They seem to know a lot about avoiding taxes and capital gains taxes in particular, and spend a lot of time on these subjects. But, I suspect they know little and care less about broadband access.
Why was BT privatised? Has it done more than replace call charges with line rental charges in the last 30 years? Has it striven to become a global leader in anything apart from executive pensions? It is now building a windmill. What a great leap forward. Bring back hanging.
17 Jun 2009 | 22.48 Europe/London
BT was privatised to give it access to the capital it needed at the time in order to modernise, and to give the Treasury the sale proceeds. Call and rental costs in real terms are way lower now than they were then.
20 Jun 2009 | 10.30 Europe/London