The availability of communications services in the UK James Thickett July 2 - Dumfries

Content Introduction Why availability matters The availability of communications services The role of markets The role of interventions Findings and observations 1

Introduction Why consider this? Scope Population density Data 2 Campaign to Protect Rural England

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Why availability matters Access to the internet is a particular concern –For consumers –For citizens –For the economy Mobile internet availability also matters Internet availability and quality of service are likely to matter even more in the future Other communications services Take-up 5

The availability of communications services Fixed telephony Fixed broadband Mobile (voice and data) Digital television Radio Post 6

Fixed telephony Universal service obligation specifies a fixed telephone line supporting voice, fax and “functional” internet access to any household on request, at prices that are affordable for all end-users and uniform throughout the UK BT reports typically fewer than 0.25% of requests exceed its £3,400 threshold for unreasonable cost –More than 99.9% of requests fulfilled KCom reports it has not turned down any requests 7

Standard broadband (% households) 8

Superfast broadband (% households) 9

Broadband: Scottish local authorities 10 Synch speed (Mbits) Superfast broadband availability (%) Broadband take-up (%) % getting < 2Mbits Dumfries and Galloway %51.7% (SFBB 0.2%) 11.9% Scottish Borders 7.80%52.7%14.1% Infrastructure Report, Ofcom

11 Availability of superfast broadband in the UK Ofcom

12 Point Topic Availability of superfast broadband in Europe

2G mobile (% premises served by at least one operator) 13

3G mobile (% premises served by at least one operator) 14

Mobile (% landmass served by at least one operator) 15

Infrastructure Report, Ofcom Mobile: Scottish local authorities – mobile coverage 2G3G PremisesGeographicPremisesGeographic Dumfries and Galloway 78%38%30%3% Scottish Borders 74%40%12%<1% 16

DTT (% households served by PSB multiplexes) 17

DTT (% households served by all multiplexes) 18

DAB (% households with BBC coverage) 19

DAB (% households with Digital One coverage) 20

DAB (% miles of road with coverage) 21

Post Universal service obligation requires collection and delivery six days per week, at uniform prices throughout the UK Royal Mail was allowed 3,000 delivery exceptions in 2012 –2,165 due to difficulty of access –388 due to long-term health and safety –447 due to short-term health and safety Represents 0.01% of UK addresses 22

The role of markets The benefits of competitive markets Market imperfections –High fixed costs –Externalities –Pricing inflexibility –Market power What drives local availability in practice? –The size of demand in a particular local area –The cost of providing services 23

24 Average number of cell sites by local authority in Great Britain

25 Cumulative population coverage of the UK DTT network

26 Transmitter sites and radio availability in South Wales

27 Transmitter sites and radio availability in Birmingham

The role of intervention Why intervene? Forms of intervention –Subsidy or public procurement –Service obligations on providers –Facilitation of market-based solutions –Community-based solutions Intervention in practice –To increase the pace of rollout to commercial levels –To increase coverage beyond commercial levels –To mimic the effects of competition –For other purposes State aid 28

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Availability of all communications services is good in Urban areas in all four nations of the UK, but Rural locations are less well served –True in England outside Greater London –A generally greater and recurring lack of availability in Scotland and Wales and, even more so, Northern Ireland –Results persist when availability is analysed by rurality 30 Findings

Market-led rollout reflects differences in population size, density, composition and topography, as is to be expected –Regression analysis suggests this does not explain low levels of 3G mobile coverage in Northern Ireland, which instead seem to be associated with a stricter planning regime, community opposition and changing network plans by the mobile network operators themselves Universal service obligations ensure some services are available to all but at the cost of higher prices or taxes 31

Observations Areas that have not previously benefited from commercial rollout are more likely to experience market shortfalls in the future –If successfully anticipated, interventions may be planned at a sufficiently early stage that those areas do not always have to play catch-up with the rest of the UK Such interventions have long featured in communications markets –But pressure to intervene is accelerating, EU state-aid rules and targets can conflict and ensuring sustainability and value for money is increasingly challenging –Needs careful targeting to ensure value for money without distorting competition The frameworks for universal availability remain best set by elected representatives –It is vital to recognise the growing dependency on converged communications services and the increasing disadvantages faced by those who lack availability –Our own roles are important, but our powers do not enable us to secure widespread availability in all circumstances 32

33 Vicki Nash, Director, Scotland