Broadband as a universal service: a (dumb) pipe dream?

Posted by Giles Cottle Monday, January 19th, 2009

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Lord Carter, the UK government’s new communications minister, has wasted little time in creating a splash in his new role. At a Westminster eForum event earlier this week, he hinted heavily that the government was to make broadband a universal service obligation.

Broadband USOs are a hot political topic, both at home and abroad, and is also something that the Labour government has been trying to tackle for several years

Ofcom also consulted on the issue of including broadband in the USO in 2005, while Carter was still at its helm. It came to the conclusion that doing so would not be economically beneficial and that instead, the shortfall should be addressed through public sector infrastructure schemes. Several of these schemes were established, the majority coming from regional development agencies (RDAs). But the money quickly ran out and, with only a few exceptions, most schemes aimed at bridging the digital divide in the UK have not made a huge difference.

The government’s latest plan to bring broadband to rural areas at the expense of the operators is equally littered with flaws and impracticalities. The cost of extending BT’s fixed network to provide services such would be so high that even the government’s most ardent rural lobbyist would surely not back it. Attention therefore turns to mobile, but this too is not without its problems. It is difficult, for example, for operators to build masts or base stations within national parks, which make up many of the areas being targeted by the new scheme.

Even if it were possible to provide 100% coverage, it is difficult to justify the government doing so in this manner. It is a project that will cost a huge amount of money, yet benefit only a tiny proportion of the population. Supporters of the proposal say that it will bolster broadband penetration, but this argument is flawed. Today around six out of ten households in the UK subscribe to fixed-broadband, leaving around 40% without it. The number of non-subscribing households that do not have access to speeds of 2 Mbps make up a very small fraction of 40%. Those that want to subscribe to broadband but cannot are far outnumbered by those that could do but, for various reasons, have chosen not to. Government subsidies, innovative packaging and pricing of tariffs and services and consumer education can all play a greater role in driving penetration than including broadband in the USO.

The specification of 2 Mbps as a minimum speed also seems rather arbitrary, and justifications for it are dubious at best. While fast broadband can stimulate an area economically, many of the areas without broadband are so remote that businesses would never invest there anyway. On top of this, 2 Mbps is inadequate for enterprise users. The North Yorkshire digital region successfully applied for EU for state aid to build a fibre network based partly on the fact that the 2 Mbps speeds available in the region were not fast enough to attract new businesses and investors

That fast broadband can improve a person’s quality of life and transform an area is not up for debate, but bringing it to 100% of the UK’s population is simply not feasible without spending huge amounts of money without any guarantee of a tangible return. Final judgment should be reserved until after further details of the proposal are released, which may happen as soon as later this month. But at first glance, it appears to be little more than an attempt to woo the UK’s rural vote.