Broadband and the road to 5G - House of Commons Digital, Culture, Media and Sport Committee - UK Parliament Committees

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Broadband and the road to 5G - House of Commons Digital, Culture, Media and Sport Committee - UK Parliament Committees
House of Commons
Digital, Culture, Media and
Sport Committee

Broadband and the
road to 5G
Fourth Report of Session 2019–21

Report, together with formal minutes relating
to the report

Ordered by the House of Commons
to be printed 17 December 2020

                                                       HC 153
                                  Published on 22 December 2020
                           by authority of the House of Commons
Broadband and the road to 5G - House of Commons Digital, Culture, Media and Sport Committee - UK Parliament Committees
The Digital, Culture, Media and Sport Committee
The Digital, Culture, Media and Sport Committee is appointed by the House
of Commons to examine the expenditure, administration and policy of the
Department for Digital, Culture, Media and Sport and its associated public bodies.

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Julian Knight MP (Conservative, Solihull) (Chair)
Kevin Brennan MP (Labour, Cardiff West)
Steve Brine MP (Conservative, Winchester)
Alex Davies-Jones MP (Labour, Pontypridd)
Clive Efford MP (Labour, Eltham)
Julie Elliott MP (Labour, Sunderland Central)
Rt Hon Damian Green MP (Conservative, Ashford)
Rt Hon Damian Hinds MP (Conservative, East Hampshire)
John Nicolson MP (Scottish National Party, Ochil and South Perthshire)
Giles Watling MP (Conservative, Clacton)
Heather Wheeler MP (Conservative, South Derbyshire)

Philip Davies MP (Conservative, Shipley) was also a member of the committee during this


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Broadband and the road to 5G - House of Commons Digital, Culture, Media and Sport Committee - UK Parliament Committees
Broadband and the road to 5G    1


1   Introduction                                                                        5
    A changing picture                                                                  6
         Fixed broadband connectivity                                                   6
         Mobile connectivity                                                           10
    The impact of COVID-19                                                             11

2   The case for gigabit connectivity                                                  12
    The case for gigabit-capable broadband                                             12
    The case for 5G                                                                    14

3   The Government’s targets and funding for digital connectivity                      16
    Gigabit-capable broadband                                                          16
         Nationwide gigabit-capable broadband by 2025: an unrealistic aim              16
         How much more realistic is 85% coverage by 2025?                              18
         Funding for hardest-to-reach areas                                            22
    Majority 5G coverage by 2027                                                       25
         A continuation of the digital divide?                                         25
    The impact of the Telecoms Supply Chain Review                                     26

4   Demand for gigabit connectivity                                                    28
    The consumer case for gigabit-capable broadband                                    28
         Tackling confusion about gigabit-capable broadband                            29
         Keeping costs down                                                            30
         Tackling digital exclusion                                                    31
    The consumer case for 5G                                                           31
    The business case for gigabit connectivity                                         32
    Connectivity Taskforce                                                             33

5   Delivering gigabit connectivity at pace                                            34
    Procurement for the gigabit programme                                              34
         Challenges for the design of the programme                                    35
    Creating the right competitive and regulatory environment                          39
         Duct and Pole Access                                                          40
         Regulation that incentivises investment                                       40
         Switching off the copper network                                              43
    Legislating to remove barriers to roll-out                                         43
Unresponsive landlords and new build properties           44
    Ensuring an adequate labour supply                             46
    Addressing the business rates regime                           48

Conclusions and recommendations                                    50

Formal minutes                                                     53


Published written evidence                                         55

List of Reports from the Committee during the current Parliament   60
Broadband and the road to 5G      3

The case for making improved connectivity available to every home and business,
irrespective of location, is stronger than ever. We launched our inquiry in the expectation
that, with only five years to deliver the Government’s manifesto commitment of
nationwide gigabit-capable broadband by 2025, 2020 was going to be a year of big
policy and infrastructure announcements. Demand for internet data was growing
steadily and was expected to outstrip Openreach’s copper network capacity by 2040.
With 96% of UK premises able to access superfast broadband, and the Shared Rural
Network planning to extend 4G mobile coverage to 95% of the landmass, focus had
shifted to delivering even faster speeds through full-fibre and 5G. Then the COVID-19
outbreak and national lockdowns made access to quick, reliable and affordable internet
connections more important than ever, highlighting the gulf between those with good
digital connectivity and those without.

Although we recognise that the pandemic also put enormous pressure on public finances,
it was nonetheless a surprise when the Government abandoned its commitment to
nationwide gigabit-capable broadband by 2025 in the National Infrastructure Strategy,
and set out, in the Spending Review, plans to distribute only 25% of the £5 billion it had
committed for gigabit-capable broadband.

Throughout our inquiry we challenged Ministers about the likelihood of achieving
nationwide gigabit-broadband by the middle of the decade. The Government’s decision
to revise the target down to 85%, just weeks after we had been reassured of their
commitment to it, was a belated recognition that it was unrealistic. Even meeting the
revised target will be a challenge, as it still requires industry to roll-out infrastructure
at considerable pace. The Government’s target for majority 5G coverage by 2027 is
equally ambitious, especially following the rulings on the use of equipment by high-
risk vendors. There is a risk that industry’s roll-out of 5G technology will repeat the
legacy of mobile ‘not-spots’. As views differ on the technologies that should be used to
deliver gigabit-capable broadband, the Government must clarify its plans for delivering
its targets, updating us on progress over the coming years, and explain what the severe
reduction in funding for infrastructure will mean and when it expects the remaining
15% of premises to be served with gigabit-capable broadband.

Consumers and businesses also need persuading to upgrade to full-fibre and 5G
technology. The Government has begun to recognise the need to stimulate consumer
and business demand with the formation of the Gigabit Take-Up Advisory Group
(GigaTAG), but it will be important that issues around pricing and the switch-off of
copper services are addressed.

It is clear that the Government and Ofcom need to take bolder, faster action to address
the causes of costs and delays to the infrastructure roll-out. DCMS must finalise and
launch the contracts for delivering infrastructure to hard-to-reach properties as soon
as possible. As it finalises its regulation of the wholesale fixed telecoms market, Ofcom
must also address concerns about competition and Openreach’s market dominance.
The scale of the Government’s legislative measures does not match the scale of its
ambition for gigabit connectivity. The Government must reform the wayleave regime
4       Broadband and the road to 5G

    for telecommunications infrastructure to address issues with unresponsive and/or
    uncooperative landlords and urgently address the lack of sufficient skilled engineers to
    complete this work over the next four years.
Broadband and the road to 5G           5

1 Introduction
1. The UK’s digital infrastructure is undergoing a transformation. New broadband
and mobile technologies are rolling out across the UK, offering faster connections and
their benefits to consumers. New providers are entering the market and new agreements
are being signed in an attempt to address long-standing disparities in coverage. The
UK’s telecoms networks may have held up well during the COVID-19 outbreak but the
changing patterns of usage brought about by the pandemic reflect a wider trend of increase
in demand for data, largely driven by the increase in video streaming.1 In response to this
changing landscape, our inquiry has examined how the UK’s digital connectivity should
be made not only fit for today but fit for the future.

2. We launched our inquiry to examine the Government’s targets, funding and
legislative measures intended to enable industry to deliver next generation connectivity at
a quicker pace. These changed significantly over the course of the inquiry, when the
November 2020 Spending Review set out that only 25% of the Government’s £5 billion for
gigabit broadband would be allocated by 2025, while the long-awaited National
Infrastructure Strategy indicated that the Government had abandoned its targets for
nationwide gigabit connectivity by 2025. We examine the impact of these changes in this
report but first we will provide a brief overview of the broadband and mobile markets and
policy landscapes in the UK.

1   Ofcom, UK Home Broadband Performance, (13 May 2020) p 3 and Online Nation: 2019 Report, (30 May 2019) p
6    Broadband and the road to 5G

A changing picture

Fixed broadband connectivity

3. From 2010, Government policy focused on the roll-out of superfast broadband,
primarily delivered by fibre-to-the-cabinet (FTTC) technology. The superfast broadband
programme,2 the focus of a 2016 Report by our predecessor Committee, delivered
broadband with download speeds of up to 24 Megabits per second (Mbps) to areas that
had not already been served by the private sector: about 5.3 million premises to date.3
More than 96% of UK premises are now able to access Ofcom’s definition of ‘superfast
broadband’ (download speeds of 30 Mbps), and the superfast programme accounts
for roll-out to about 17% of them;4 however, as Table 1 shows, significant variations in
coverage between residential and commercial properties, rural and urban areas, and the
UK’s nations remain.

2   Culture, Media and Sport Committee, Second Report of Session 2016–17, Establishing world-class connectivity
    throughout the UK, HC 147
3   C&AG’s Report, Improving Broadband, Session 2019–121, HC 863, 16 October 2020, p 21
4   Thinkbroadband, ‘UK Superfast and Fibre Coverage’, accessed 2 December 2020
Broadband and the road to 5G              7

Table 1: Access to superfast broadband (30 Mbps or higher)

                                           All Premises           Residential              Commercial Premises
    UK                    Total            95%                    95%                      86%
                          Urban            97%                    98%                      89%
                          Rural            80%                    81%                      69%
    England               Total            95%                    96%                      86%
                          Urban            97%                    98%                      89%
                          Rural            82%                    83%                      70%
    Northern              Total            89%                    89%                      84%
    Ireland               Urban            98%                    99%                      89%
                          Rural            66%                    66%                      68%
    Scotland              Total            93%                    93%                      83%
                          Urban            98%                    98%                      90%
                          Rural            71%                    72%                      59%
    Wales                 Total            94%                    96%                      86%
                          Urban            98%                    98%                      91%
                          Rural            77%                    78%                      69%
Data as of May 2020

Source: Ofcom, Connected Nations update: Summer 2020 dashboard

4. With the publication of the Future Telecoms Infrastructure Review (FTIR) in 2018, the
Government’s policy shifted to prioritising the roll-out of future-proofed, gigabit-capable
broadband.5 Broadband speeds of up to 1,000 Mbps (equivalent to 1 Gigabit per second)
will primarily be delivered through full-fibre (otherwise known as fibre-to-the-premises/
FTTP or fibre-to-the-home/FTTH) technology; however, other technologies such as 5G or
Virgin Media’s upgraded cable are also considered gigabit-capable.6 Availability of gigabit-
capable broadband in the UK lags behind that of other countries: at present, only 18% of
premises have access to full-fibre broadband (up from 14% in May this year, as indicated in
Table 2), while 35% can access gigabit-capable broadband from any technology.7 The UK’s
gigabit-capable network will be mostly built by private investment, with the Government
providing gap funding for roll-out to areas that are not commercially viable. It is estimated
that national roll-out of full-fibre broadband will require a total investment “in the region
of £30 billion”, with approximately £25 billion of that coming from industry.8

5        Department for Digital, Culture, Media and Sport, Future Telecoms Infrastructure Review, (July 2018)
6        In this report, we will use ‘gigabit-capable broadband’ to refer to broadband delivered via any technology
         capable of 1 Gbps speeds. We will use specific terms such as ‘full-fibre’ or ‘cable’, wherever we need to specify
         the type of technology.
7        Thinkbroadband, ‘UK Superfast and Fibre Coverage’, accessed 2 December 2020
8        Department for Digital, Culture, Media and Sport, Future Telecoms Infrastructure Review, (July 2018), p 4
8   Broadband and the road to 5G
Broadband and the road to 5G           9

Table 2: Access to full-fibre broadband

                                          All Premises          Residential              Commercial
                                                                Premises                 Premises
    UK                   Total            14%                   14%                      13%
                         Urban            14%                   14%                      14%
                         Rural            14%                   15%                      11%
    England              Total            13%                   13%                      14%
                         Urban            13%                   13%                      14%
                         Rural            15%                   15%                      13%
    Northern             Total            47%                   49%                      21%
    Ireland              Urban            61%                   64%                      26%
                         Rural            13%                   14%                      6%
    Scotland             Total            13%                   13%                      6%
                         Urban            14%                   14%                      6%
                         Rural            9%                    9%                       4%
    Wales                Total            15%                   15%                      12%
                         Urban            15%                   15%                      11%
                         Rural            17%                   17%                      14%
Data as of May 2020

Source: Ofcom, Connected Nations update: Summer 2020 dashboard

5. Historically, the UK’s telecoms market has consisted of one wholesale copper
network operated by Openreach, which internet service providers such as BT, Sky and
TalkTalk lease to provide broadband to consumers. Alongside this, Virgin Media delivers
its broadband via its own cable network. Now, the Government’s view is that competition
between rival gigabit-capable networks operated by different infrastructure providers
is needed to deliver coverage at pace.9 Competitors to Openreach such as CityFibre,
Hyperoptic and Gigaclear have emerged, building full-fibre networks in different parts
of the UK and signing wholesale agreements with internet service providers or supplying
their own consumer broadband services.

6. While looking ahead to the next generation of telecoms infrastructure, it is important
to recognise that “many smaller or remote rural communities and businesses are still
waiting for more basic levels of connectivity”.10 For those premises without access to
a decent broadband connection, defined as a download speed of 10 Mbps and upload
speed of 1 Mbps, the Universal Service Obligation (USO) is a UK-wide measure to deliver
broadband to residential and business premises.11 It came into effect from March 2020
and Ofcom estimates that around 189,000 premises are potentially eligible for it.12 Any
technology capable of delivering the minimum technical standards could be used to
deliver connections, including mobile broadband. In practice, most connections are likely
to use FTTP or FTTC.

9        Department for Digital, Culture, Media and Sport, ‘Statement of Strategic Priorities for telecommunications, the
         management of radio spectrum, and postal services’, (29 October 2019), p 6
10       Rural Services Network (BRO0014) para 5
11       Ofcom, Connected Nations Update: Summer 2020, (10 September 2020), p 2
12       Ofcom, Connected Nations 2019, (18 March 2020), p 13
10     Broadband and the road to 5G

Mobile connectivity

7. In contrast to the history of state subsidy for the roll-out of fixed broadband, mobile
networks in the UK have largely emerged from private sector investment. Two-thirds
of the UK landmass has good 4G coverage from all four major operators, an area that
includes 97% of the premises in the UK.13 However, the prioritisation of high-density,
predominantly urban, areas has been at the expense of sparsely populated rural ones.
Although 9% of the UK is a geographic ‘not-spot’, where a good 4G service is not available
from any mobile operator, breaking this figure down by nation highlights significant
variation: Table 3 shows that not-spots account for 3% of England and Northern Ireland,
rising to 10% of Wales and 20% of Scotland.14 To address this, the Shared Rural Network
(SRN) agreement between the major mobile network operators and Government will see
a combined investment of £1 billion to deliver 4G coverage to 95% of the UK’s landmass
by 2025.15

Table 3: 4G coverage

                                      Premises              Landmass                Landmass covered by
                                      covered by all        covered by ALL          NO operators
                                      operators             operators
 UK                   Total           81%                   67%                     9%
                      Urban           87%                   97%                     0%
                      Rural           44%                   63%                     10%
 England              Total           82%                   82%                     3%
                      Urban           87%                   97%                     0%
                      Rural           44%                   79%                     3%
 Northern             Total           65%                   77%                     3%
 Ireland              Urban           75%                   92%                     1%
                      Rural           39%                   76%                     4%
 Scotland             Total           81%                   43%                     20%
                      Urban           88%                   96%                     0%
                      Rural           50%                   42%                     20%
 Wales                Total           73%                   58%                     11%
                      Urban           83%                   91%                     1%
                      Rural           40%                   54%                     12%
Data as of May 2020

Source: Ofcom, Connected Nations update: Summer 2020 dashboard

8. The Government and industry are also looking ahead to the next generation of
mobile technology: 5G. To date, 5G is mainly being rolled-out by the mobile operators in
major towns and cities; however, the Government has invested £200 million in testbeds
and trials across the UK to “foster the development of the UK’s 5G ecosystem, build the
business case for 5G and lead the way in 5G research and development to drive the UK’s
5G leadership”.16 Gareth Elliott, Head of Policy and Communications at Mobile UK,
told us that as well as delivering the mobile broadband coverage and quality people need
13    Ofcom, Connected Nations Update: Summer 2020, (10 September 2020), p 3
14    Ofcom, Connected Nations Update: Summer 2020, (10 September 2020), p 3, 7
15    Department for Digital, Culture, Media and Sport, ‘Shared Rural Network’, accessed 27 October 2020
16    Department for Digital, Culture, Media and Sport (BRO0077) para 28
Broadband and the road to 5G   11

now, the SRN would provide a foundation for the UK’s future 5G network.17 As we shall
explore in chapter 3, these infrastructure projects are taking place against the backdrop of
the Government’s decision to exclude Huawei equipment from the 5G network by 2027.18

The impact of COVID-19
9. The outbreak of COVID-19 made interrogation of the Government’s ambitions for
gigabit-capable broadband and 5G and how it will support industry to deliver them even
more timely, as it highlighted the disparity between those with good digital connectivity
and those without. While problems with broadband and patchy mobile coverage long
preceded the pandemic, people’s reliance on digital connectivity for work, leisure and
social interaction during lockdown made tackling it even more urgent. The designation
of the telecoms industry as key workers helped them to continue their important work
upgrading and repairing networks with only a limited impact on build rates; however,
some of the long-term effects of the pandemic remain unclear.19 We are mindful,
for example, of Sky’s observation that COVID-19 could have a detrimental impact on
investment in gigabit-capable networks if “consumers are less willing, or able, to spend
more” on upgrades.20

10. We also recognise that COVID-19 put considerable pressure on the Department for
Digital, Culture, Media and Sport (DCMS), Ofcom and the telecoms sector to maintain
networks and support vulnerable customers. We agree with the CBI that the “pandemic
has shown that the industry, Government and Ofcom can work together quickly and
effectively. This spirit of collaboration must continue as the UK moves past the initial
response phase to longer term recovery”.21 We are grateful to all those who contributed
evidence or supported the inquiry during this period of upheaval.

17   Q66–68
18   HC Deb, 14 July 2020, col 1376 [Commons Chamber]
19   Openreach (BRO0194) para 11, Virgin Media (BRO0176) para 1.10–1.11
20   Sky (BRO0117)
21   CBI supplementary (BRO0182) para 2.2
12    Broadband and the road to 5G

2 The case for gigabit connectivity
The case for gigabit-capable broadband
11. For most households, the internet speeds offered by part-fibre, part-copper superfast
broadband are sufficient for their current needs, enabling them to stream HD video, make
video calls and connect multiple devices. Nevertheless, the rapid shift to home working,
online learning and digital communications during the COVID-19 lockdown highlighted
the challenges faced by the 1.6 million properties still unable to access superfast technology,
the approximately 16 million premises that could access it but have not yet chosen to take
it up, and those who do not get the speeds they expect because of technical factors, such as
their distance from the exchange or the positioning of equipment in the home.22

12. The UK’s broadband network held up well during the COVID-19 lockdown: average
speeds were affected by only 1% to 2% and, despite networks seeing significant increases
in weekday traffic, demand never reached typical evening-peak levels.23 That said, the
COVID-19 outbreak has demonstrated the importance of digital connectedness and placed
a renewed emphasis on the impact of being digitally excluded, including on accessing vital
public services. TechUK told us that although “this pandemic will pass, it is likely to leave
a legacy of new social norms which will include expectations of high-quality online video
interaction, particularly to vulnerable members of society”.24

13. The COVID-19 outbreak, and our ongoing work on public service broadcasting
and misinformation, showed that online connectivity is even more important in times
of national crisis, when access to high quality and authoritative news sources stands in
stark contrast to the spread of misinformation. Yet Dr Greig Paul from the University of
Strathclyde told us:

          As people ‘cord cut’ conventional TV there is a social and cultural imperative
          to improve connectivity—for a cohesive society, people need to have access
          to the same shared cultural experiences. As broadcast TV loses out to
          modern internet-based streaming platforms, and these platforms move to
          produce and show content ‘exclusively’ on their internet–based platforms,
          the cultural exclusion and isolation for communities and individuals with
          poor connectivity will only get worse.25

He observed that poor connectivity could “increase the gap between the high-speed
‘haves’ and ‘have-nots’, as those with better internet are able to access and enjoy Video
on Demand services, and the remainder are left with a significantly reduced output and
selection of content on broadcast TV”.26

22   Ofcom, Connected Nations 2019, (18 March 2020), p 18 and Connected Nations Update: Summer 2020, (10
     September 2020), p 5, C&AG’s Report, Improving Broadband, Session 2019–121, HC 863, 16 October 2020, para
23   Ofcom, UK Home Broadband Performance: The performance of fixed-line broadband delivered to UK residential
     customers, (13 May 2020), p 9
24   techUK (BRO0122)
25   University of Strathclyde (BRO0200)
26   University of Strathclyde (BRO0200)
Broadband and the road to 5G       13

14. Such expectations, combined with long-term trends, mean there is no excuse for
complacency about the future of the UK’s broadband infrastructure. As more people use
more data-intensive devices and applications, the UK’s current digital infrastructure will
not be sufficient for its projected connectivity needs. In 2018, the National Infrastructure
Commission predicted that demand would exceed the capacity of the existing copper
network between 2030 and 2040.27 Even before the COVID-19 outbreak accelerated
demand, Cisco forecasted a “continuing increase in the use of the internet and numbers
of connected devices” in the UK. It estimated that the percentage of regular internet users
in the UK would increase from 89% in 2018 to 93% by 2023, while the number of internet-
connected devices would increase from 415 million to 719 million (30% connected
through mobile networks, and 70% through fixed connections or wi-fi) over the same
period.28 DCMS agreed that “demand for better connectivity will continue to increase”,
and that gigabit-capable broadband will deliver “the speed, resilience and reliability that
consumers want and businesses need in order to grow”.29

15. Openreach estimated that in 2025,                       What is the difference between ‘gigabit-capable’
nationwide full-fibre would boost GVA                       and ‘full-fibre’ broadband?
by £59 billion, with the potential to bring
                                                            Although these terms are often used
significant numbers of people back into
                                                            interchangeably, they refer to two different
the workforce. Even before the pandemic,                    things: internet speed and delivery method.
it estimated that full-fibre would mean
“400,000 additional people could choose to                  ‘Gigabit-capable’ refers to the speed of an internet
work from home, opening up employment                       connection—or the amount of data that can be
                                                            downloaded or uploaded per second. Gigabit-
opportunities outside of cities and                         capable broadband is capable of download
stimulating growth across the country”.30                   speeds of 1 Gbps (or 1000 Megabits per second).
The Internet Association told us that faster                It is primarily delivered through full-fibre, 5G or
broadband would increase productivity                       certain cable services.
and economic growth by reducing the                         ‘Full-fibre’ refers to the physical means of internet
time it took for consumers and workers                      delivery. It is delivered by a fibre optic cable
to complete tasks online, and by enabling                   running from an exchange directly to a premises.
innovation in new business models or                        For this reason it can also be referred to as ‘fibre-
products.31 Likewise, DCMS told us that                     to-the-premises’.
the technology had:

           the potential to transform productivity, and to open up new business
           models, especially in rural and more isolated areas. Better connectivity will
           enable more people to work from home, with less reliance on travelling
           into cities, and lower carbon emissions. The public sector, especially local
           authorities and health services, will be able to operate more efficiently by
           delivering more services online.32

16. This is one of the reasons why no parts of the country can be left behind by the roll-
out of gigabit-capable broadband. The Countryside Alliance told us that because of the
Government’s decision to deliver more public services online:

27   National Infrastructure Commission, National Infrastructure Assessment, (July 2018), p 22
28   Cisco (BRO0118)
29   Department for Digital, Culture, Media and Sport (BRO0077) para 3
30   Openreach (BRO0194) para 15
31   Internet Association (BRO0041)
32   Department for Digital, Culture, Media and Sport (BRO0077) para 4
14    Broadband and the road to 5G

           it is only right and fair that everyone has access to broadband to enable
           them to engage in the digital world. Remote rural communities must not be
           penalised by paying an excessive connection charge to access basic services
           due to the Government policy of digital by default.33

Similarly, Action with Communities in Rural England told us “the value for society as a
whole is only derived if everyone is, and can afford to be, connected”.34 With the Minister
for Digital Infrastructure, Matt Warman MP, telling us that “the provision of better
digital access is a fundamental part of the Government’s levelling-up agenda”, and the
importance of connectivity to our economic recovery following COVID-19, it is clear that
strategies are needed to spread the benefits of gigabit-capable technology to all parts of
the UK.35

17. As well as supporting greater demand for data, the performance of full-fibre broadband
does not decrease with distance, addressing a persistent issue for some premises.36 Its
increased reliability and longevity also brings benefits to industry and consumers. The
Country Land and Business Association told us that “the fundamental point of a full-fibre
network is its anticipated longevity. The infrastructure, and necessary updates, is intended
to be for decades, not years”.37 Because fibre experiences five times fewer faults than
copper networks, the National Infrastructure Commission estimates it could result in
operational savings of £5.1 billion by 2050.38 Cisco makes the case for “ensuring networks
not only deliver higher connection speeds and can carry greater traffic loads but that they
are also highly reliable, offer high quality of service levels and offer UK citizens, businesses
and public services the highest levels of security possible”, especially as “more and more
organisations and individuals put important data, devices and processes online”.39

The case for 5G
18. Although gigabit-capable broadband often refers to full-fibre broadband, it can refer
to other technologies that can deliver 1 Gbps speeds, such as the latest cable broadband
and fixed wireless broadband delivered via future 5G networks. Indeed, in the long-term
the Government expects to see increased convergence between fixed and mobile networks

           Fixed fibre networks and 5G are complementary technologies, and 5G will
           require dense fibre networks. In some places, 5G may provide a more cost-
           effective way of providing ultra-fast connectivity to homes and businesses.40

19. As the fifth generation of mobile technology, 5G offers a range of technical features
that Mobile UK expects “to drive innovation and growth across the economy to an even
greater extent than previous generations”.41 5G provides faster connections with very fast
response times, enabling many more users and devices to access large amounts of data
at the same time. This means it can support a wide range of applications, for example in
33   Countryside Alliance (BRO0034) para 6
34   Action with Communities in Rural England (ACRE) (BRO0184) para 21
35   Q96
36   techUK (BRO0122)
37   CLA (BRO0017), para 21
38   National Infrastructure Commission, National Infrastructure Assessment, (July 2018), p 23
39   Cisco (BRO0118)
40   Department for Digital, Culture, Media and Sport, ‘Future Telecoms Infrastructure Review’, (28 July 2018) p 12
41   Mobile UK (BRO0215) para 10
Broadband and the road to 5G   15

smart cities, transport and manufacturing. Network performance analysts RootMetrics
told us that 85% of mobile users it surveyed “believed 5G will help their business to
generate improved revenues, while 83% believed it would help remote and varied working

42   RootMetrics (BRO0187)
16    Broadband and the road to 5G

3 The Government’s targets and
  funding for digital connectivity
Gigabit-capable broadband
20. The timescales and technological scope of the Government’s targets for gigabit
connectivity have evolved considerably over recent years. In 2018, the Government set out
its ambition for full-fibre broadband to reach 15 million premises by 2025, with nationwide
coverage by 2033.43 However, the Conservative Party’s 2019 manifesto accelerated this
aim stating, “we intend to bring full-fibre and gigabit-capable broadband to every home
and business across the UK by 2025”.44 Since the election, and in its evidence to us, the
Government dropped the manifesto’s explicit mention of full-fibre, pledging instead the
technology-agnostic aim of nationwide gigabit-capable broadband by 2025.45

21. In October, the Secretary of State for Digital, Culture, Media and Sport, the Rt
Hon Oliver Dowden MP, and the Minister for Digital Infrastructure acknowledged, as
the Government had in its manifesto, that delivering nationwide gigabit connectivity by
2025 would be a challenge.46 While neither were willing to give a clear indication of how
likely the target was to be met, the Secretary of State told us that DCMS was “straining
every sinew”, and the Minister said he was “absolutely confident” that the Government
was doing everything it could to reach it.47 Yet despite these assurances, the Government
scrapped the target just six weeks later in the Spending Review. The long-awaited National
Infrastructure Strategy instead outlined that the Government is “working with industry
to target a minimum of 85% gigabit capable coverage by 2025 but will seek to accelerate
roll-out further to get as close to 100% as possible”.48

Nationwide gigabit-capable broadband by 2025: an unrealistic aim

22. This change reflects our inquiry’s findings that there was little confidence that
nationwide gigabit-capable broadband by 2025 could be delivered and “no genuine belief”
within the sector that it was achievable.49 GreySky Consulting told us that, based on the
roll-out of previous fibre-to-the-cabinet technology used to deliver superfast broadband,
replacing the existing copper parts of the network will simply take too long.50 Yet “the
planning, wayleaves and street works management systems and procedures currently in
place struggle to support the current pace of deployment. It is not clear how they can be
changed to support” increased build rates.51 Similarly, the National Audit Office (NAO)
observed that:

           Delivering UK-wide connectivity would require the telecoms industry to
           lay around 500,000 kilometres of new cable to around 31 million premises,
           compared with around 100,000 street cabinets for fibre to the cabinet
43   Department for Digital, Culture, Media and Sport, Future Telecoms Infrastructure Review, (July 2018), p 1
44   The Conservative and Unionist Party, ‘Manifesto 2019’, accessed 4 November 2020
45   Department for Digital, Culture, Media and Sport (BRO0077)
46   Oral evidence taken on 14 October 2020, HC (2019–21) 157, Qq171–175, Qq84–91
47   Oral evidence taken on 14 October 2020, HC (2019–21) 157, Q171, Q75
48   HM Treasury, National Infrastructure Strategy, CP 329, 25 November 2020, p 31
49   GreySky Consulting (BRO0186) para 2.1.1
50   GreySky Consulting (BRO0186) para 2.2.2
51   GreySky Consulting (BRO0186) para 2.2.3
Broadband and the road to 5G   17

           (FTTC). It would need to undertake roadworks on most UK roads. To
           achieve the 2025 timeline, it would need to increase build rates immediately
           from 1.5 million premises per year currently, to around six million.52

23. Striking a more cautiously optimistic tone while arguing that the target was “extremely
challenging to achieve, particularly in the current climate”, the Broadband Stakeholder
Group, which represents the views of the broadband industry to Government, told us that
majority coverage by 2025 could be achieved, but “success is nonetheless contingent upon
industry, Government and the regulator working together, developing and implementing
the right policies and a regulatory framework that encourages investment and innovation”.53
Similarly CityFibre, which plans to deliver full-fibre to eight million homes, told us the
target was “challenging but viable if urgent but deliverable steps [are] taken to adjust the
Government’s policies and Ofcom’s regulatory approach”.54

24. Although the Government had brought forward the 2033 target by eight years, the
policy levers being used to deliver it, such as reforms to wayleaves and street works, were
largely the same as those envisaged back in 2018’s Future Telecoms Infrastructure Review
(FTIR). Rural fibre infrastructure provider Gigaclear told us that to meet the target,
“policy considerations beyond those set out within the FTIR will need to be considered”.55
Virgin Media also said that while the FTIR “was informed by a six-week call for evidence
from industry”, the acceleration of the target “did not follow any formal consultation
process with industry” and therefore “there is an urgent need for an update to the policy
framework to facilitate the accelerated timelines”.56 Likewise, CityFibre told us that “it is
not enough to simply to turn the wheel on existing policies and expect eight years to be
shaved off delivery”.57

25. We asked the Minister for Digital Infrastructure how plans had evolved since the
FTIR to reflect the accelerated timescale. He outlined the importance of setting the right
market conditions for the commercial roll-out and designing the right procurement
for the subsidised roll-out.58 As both of these interventions were envisaged in 2018, we
questioned whether anything had really changed. He responded that “the devil is in the
detail” and that ultimately the Government’s policies and reforms would be different in
the light of the accelerated timescale, stating “the scale of our ambition will be reflected in
the actions that we take”.59 Nonetheless, calls for the Government to publish an updated
plan persist, with the Communication Workers Union stating that “without a far more
detailed, costed and timetabled action plan, [the target] amounts to empty rhetoric”.60

Value of a ‘stretch goal’

26. Yet even if the 2025 target was unrealistic, it was welcome, as it focused minds and
efforts on the challenge ahead. Andrew Glover, Chair of the Internet Service Providers’
Association (ISPA), told us:

52   C&AG’s Report, Improving Broadband, Session 2019–121, HC 863, 16 October 2020, para 2.10
53   Broadband Stakeholder Group (BRO0126)
54   CityFibre Holdings (BRO0112)
55   Gigaclear (BRO0202)
56   Virgin Media (BRO0176) para 1.16
57   CityFibre Holdings (BRO0112) para 8
58   Q72
59   Qq92–93
60   CityFibre supplementary (BRO0213), Communication Workers Union (BRO0025) para 2
18    Broadband and the road to 5G

           It is far better to shoot for 100% and fall slightly short than to set what
           everyone would say they would be very happy with, which would be, say,
           70%, and then achieve only 70%. Are we going to hit the 100%? It is going to
           be incredibly difficult. Is it a worthwhile ambition? Absolutely.61

Similarly, Dame Melanie Dawes, CEO of Ofcom, told us that “the 2025 ambition from
Government is certainly very stretching, there is no question of that. That is a good thing
because it is focusing everybody’s minds, including Ofcom’s”.62 However, not all shared
that view. The NAO observed that other major infrastructure projects, such as the smart
meter roll-out and Crossrail, demonstrate that “attempting to adhere to a fixed timeline,
which later proves unachievable, can contribute to delays and cost overruns”.63

27. Sticking to unachievable targets benefits no-one, and it was inevitable that
the Government would have to abandon its unrealistic manifesto pledge to deliver
nationwide gigabit connectivity by 2025. Ministers should be ready to respond openly,
in answering questions from members of a select committee, accepting that a target
will not be met when they already possess sufficient information to know that it is not
going to be achieved. We welcome the fact it has finally listened to concerns, rethought
the target and taken a more realistic outlook. However, the time it has taken to do
so will have delayed industry, local bodies and consumers receiving the information
they need to plan or build a robust investment case. Moreover, given that the previous
target had been staunchly defended to us makes us question how much of a say DCMS
had in the decision to scrap it, and the extent to which both the new target and its likely
implications have been fully considered in consultation with industry.

How much more realistic is 85% coverage by 2025?

28. The new target of delivering gigabit-capable broadband to 85% of the country by
2025 must also be interrogated. The Government “expects the private sector to deliver
gigabit-capable broadband to around 80% of premises in the UK”.64 The Government
had previously committed £5 billion for supporting delivery to the remaining 20% of
non-commercial properties; however, the Spending Review commits only £1.2 billion (or
roughly 25% of the full amount) over the next four years to 2025.65 Assuming, therefore,
that the Government expects to subsidise roll-out to only a quarter of the 20% hardest-to-
reach premises before 2025, this leads us to conclude that roughly 80% of the target should
be delivered commercially and 5% through state subsidy.66 To meet this, commercial roll-
out will have to happen just as fast as it would have under the previous target.

Is it achievable?

29. The 85% target was announced in the late stages of our inquiry; however, evidence
we received enables us to assess the feasibility of delivering gigabit connectivity to

61   Q2 [Andrew Glover]
62   Oral evidence taken on 23 June 2020, HC (2019–21) 439, Q44
63   C&AG’s Report, Improving Broadband, Session 2019–121, HC 863, 16 October 2020, para 3.15
64   HM Treasury, National Infrastructure Strategy, CP 329, 25 November 2020, p 32
65   HM Treasury, Spending Review 2020, CP 330, November 2020, p 111
66   This conclusion also depends on which properties the Government intends to be covered by the £1.2 billion
     between now and 2025, and the relative costs of delivering infrastructure to them, which can vary significantly
     depending on location and type of technology to be used. Depending on these factors, it is possible that the
     £1.2 billion subsidy could end up covering more or less than 5% of premises.
Broadband and the road to 5G   19

approximately 26 million premises in the next four years. CityFibre told us it was possible
“to have 80–90% […] coverage achieved by 2025 and a credible plan and commitments
in place to complete nationwide full-fibre roll-out by the end of the decade”.67 Openreach
“aims to pass 20 million premises by the mid to late 2020s” with full-fibre, but told us this
“will require significant amounts of private sector investment […] and will need operators
to deploy at pace and scale. Both these elements require Government support”.68

30. Between May 2019 and May 2020, an additional 1.8 million premises gained access to
full-fibre services bringing the total to just over four million.69 To deliver full-fibre to the
remaining c.22 million premises by 2025 would require that build rate to increase three-
fold. Yet Vodafone points out that “even if build rates did improve” the roll-out of multiple
full-fibre networks in the same area, or overbuild, “could reduce the geographic coverage
of the incremental build”.70 CityFibre points out that while Government and Ofcom
policy incentivises overbuild, which “is, after all, infrastructure competition in action”,
there is a risk of “excessive and in some cases targeted overbuild of networks in some
locations at the expense of national coverage and long-term competitive investment”.71
It recommends re-evaluating “whether duplication is the most effective way to achieve
nationwide coverage” while stating:

          This does not mean the market should revert to monopolistic provision,
          but that duplication could be managed for a strictly limited period of time
          whilst the focus is on completion of the coverage ambition.72

31. We must not ignore the fact the revised target also means 15% of the country, most
likely to be rural areas and in the devolved nations, will not receive gigabit-capable
connections by 2025.73 In fact, the National Infrastructure Strategy provides no specific
target for when the rest of the country can expect to benefit from gigabit connectivity.74
Yet the Rural Services Network told us it is imperative “Government does not water down
its commitment made to rural communities and so leave them trailing behind”.75 The
Local Government Association told us it is paramount that the “Government does not
attempt to square the circle” of budget and timescale pressures “by reducing the offer
to rural or more difficult to reach areas”. It holds that “national gigabit provision must,
insofar as possible, be a universal service”.76

32. It would not be acceptable having abandoned one unrealistic target, for the
Government to fail to meet a second, less ambitious, target through lack of effective
planning or inadequate investment. The Government should outline, in its response to
this Report if not before, how it settled on the new gigabit-capable broadband target of
85% coverage by 2025, a full assessment of how likely it considers it to be met, and the
detail of how it plans to deliver it. The Government should also clearly state its target
date by which it expects the remaining 15% of premises to be served with gigabit-capable
67   CityFibre Holdings (BRO0112) para 3.3
68   Openreach (BRO0194) para 2
69   Ofcom, Connected Nations Update: Summer 2020 dashboard, (10 September 2020)
70   Vodafone UK (BRO0093) para 11
71   CityFibre Holdings (BRO0112) para 4.3
72   CityFibre Holdings (BRO0112) para 4.3
73   Welsh Government (BRO0183)
74   HM Treasury, National Infrastructure Strategy, CP 329, 25 November 2020, p 31
75   Rural Services Network (BRO0014) para 7
76   Local Government Association (BRO0075) para 3.2
20                        Broadband and the road to 5G

What difference does a technology-neutral approach make?

33. A major change from the FTIR’s framework has been the shift to a technology-neutral
aim for gigabit-capable, rather than full-fibre, networks. The NAO cautioned that some
consider the shift to this technology-neutral approach “a watering down of the target
because they view fibre as a superior technology”.77 However, the Minister told us that the
Government is “technology-agnostic” in its approach to delivering gigabit connectivity as
people rarely care about how they get their broadband as long as they receive the speeds
and service they expect.78 He told us that for people with 5G coverage it will “almost
certainly” serve their needs and therefore “it would not be commercially sensible or the
best use of public money to be putting fibre connections into all of those properties”.79

34. Malcolm Corbett from the Independent Networks Co-operative Association (INCA)
told us that the shift to a technology-neutral aim makes “a significant difference” to the
likelihood of meeting coverage targets.80 As Graph 1 illustrates, bringing other gigabit-
capable technologies into scope, such as Virgin Media’s upgraded DOCSIS 3.1 cable
network, gives coverage statistics a much-needed boost. Indeed, the Minister told us that
he expects 52% of the UK to have gigabit-capable connectivity “within the next year or
so”,81 which was echoed in Virgin Media’s observation that the upgrade of the more than
15 million premises on its network by the end of 2021 will see it “delivering half of the
Government’s [former] target four years early”.82
                                                           Access to gigabit-capable broadband


 % of UK premises




                         Jan-18      May-18       Sep-18            Jan-19     May-19               Sep-19                Jan-20   May-20   Sep-20

                                                       Full-fibre            Gigabit-capable (DOCSIS 3.1 or full-fibre)

Data source: thinkbroadband, UK Superfast and Fibre Coverage

77                       C&AG’s Report, Improving Broadband, Session 2019–121, HC 863, 16 October 2020, para 3.16
78                       Q117
79                       Q117
80                       Q2 [Malcolm Corbett]
81                       Q73
82                       Virgin Media (BRO0176) para 1.10
Broadband and the road to 5G   21

35. Many in industry support this technology-neutral approach. TechUK argued that
because “there are likely to be some consumers for whom full-fibre could never be cost-
effectively provided […] 5G fixed wireless access (FWA), which is gigabit-capable, should
be clearly within scope” of efforts to roll-out gigabit connectivity.83 Similarly, Vodafone’s
former Global Director of Policy told us that 5G fixed wireless broadband could be a
valuable stopgap “because the infrastructure and associated investments in 5G can later be
repurposed to support other valuable 5G applications once full-fibre becomes available.”
He continued:

           Since many of the more innovative and complex applications for 5G still
           remain underdeveloped and uncertain, fixed wireless services can utilize
           capacity and generate revenues for the operators in the meantime.84

36. However, others told us that full-fibre technology is the “most ‘future-proof’
investment”, as its reliability, longevity and performance is superior to other gigabit-
capable technologies.85 CityFibre told us that while it might be tempting to include cable
and mobile technologies in delivering nationwide gigabit connectivity, “none of these
other ‘gigabit-capable’ technologies provide the reliable, future-proofed capability needed
to support the UK’s long-term digital ambitions”. It warned against a “strategy that
encourages public and private investment in networks which will themselves need to be
replaced with full-fibre by the end of this decade” and argued that nationwide coverage of
full-fibre is the best way “to avoid a long-term digital and economic divide”.86 Similarly,
Dr Paolo Gerli and Professor Jason Whalley from Northumbria University told us the
definition of gigabit-capable broadband is “vague” and:

           If the intention of the Government is to expand the availability of future-
           proof connectivity across the UK, then FTTH would appear to be the
           only option, especially in rural areas where the idiosyncrasies of the
           legacy network (such as the length of copper cables and the high costs of
           maintaining overhead cables) make hybrid solutions unlikely to deliver
           gigabit connectivity.87

37. Furthermore, technical specifications might limit the ability for 5G to provide the
final stretch of gigabit connectivity to premises in rural areas. To deliver the higher speeds
required for gigabit connectivity, 5G must travel at higher frequencies across shorter
distances.88 This requires more masts and so increases costs of deployment.89 Dr Greig
Paul told us that “5G will not solve Government’s problem of getting rural areas connected
to gigabit speeds” and therefore:

           Government should be more precise in its wording, and commit to high-
           quality, fixed-line connectivity, rather than wrongly assuming that wireless
           networks will address the costly and inconvenient “long tail”. Otherwise,
           the program risks going significantly over budget or failing to deliver
           improvements for those in the hardest-to-reach areas.90
83   techUK (BRO0122)
84   Richard Feasey (BRO0158), para 12d
85   Dave Happy (BRO0113)
86   CityFibre Holdings (BRO0112) para 1.1
87   Dr Paolo Gerli and Professor Jason Whalley (BRO0033) para A3
88   University of Strathclyde (BRO0200)
89   Q26 [Andrew Glover]
90   University of Strathclyde (BRO0200)
22    Broadband and the road to 5G

38. Dr Greig Paul also holds that because 5G will also require fibre infrastructure to
connect masts to the rest of network, “5G can and should be used to drive roll-out of
fibre, which can and should be shared with mobile networks and consumers alike”.91 Yet
Vodafone observes that the challenge is that full-fibre networks:

           will often not be built in the same place as fibre to the mast. This is because
           planning law discourages the placement of masts in those areas where
           FTTH fibre will be laid, for example in the middle of housing estates. The
           Government needs to recognise this difference and encourage the build of
           fibre hubs that can also be used by mobile infrastructure.92

Gareth Elliott from Mobile UK summed the situation up when he told us that 5G “is not
quite the silver bullet” as we “are still going to need fibre to fire that gun”.93

39. There are also concerns that too great a reliance on Virgin’s network could undermine
retail and infrastructure competition in the broadband market. For example, CityFibre
stated that as a vertically-integrated company that provides both the physical network
and the internet service, Virgin Media’s network offered “only limited competition” to
Openreach, while TalkTalk observed that Virgin Media’s customers were “unavailable to
potential entrants to the infrastructure network”.94

40. The Government’s technology-agnostic approach to securing a nationwide gigabit-
capable network makes sense in the context of delivering faster connections to as many
premises as possible as quickly as possible. However, the Government must not let it come
with a trade-off in performance or longevity: any technologies used to deliver gigabit
connectivity must be future-proof. Moreover, fibre will be a significant component of
other gigabit-capable technologies, such as 5G, and therefore the challenges of rolling
out a truly nationwide full-fibre network must not be underestimated.

Funding for hardest-to-reach areas

41. Even if half the country does get gigabit connectivity from Virgin Media by the end
of 2021, that does not mean the rest will be served by 2025. While coverage of full-fibre
is accelerating at pace, that growth primarily reflects industry efforts to roll-out to the
easier-to-reach premises. What comes next will be harder, as the Minister acknowledged
when he told us that “the very hardest bits of the country to do will take longer than some
of the most commercially attractive parts that are already in the process of being done”.95

42. Infrastructure providers assess which premises are commercially viable based on the
cost of installing the infrastructure and the projected returns from the level of consumer
demand.96 However, not all areas will deliver the returns required for commercial roll-
out, resulting in an estimated coverage shortfall of 20% to 30%.97 The Government has
committed £5 billion to complement private sector investment and deliver gigabit-capable
infrastructure to the 20% of premises that are most expensive to serve.98 In contrast to the
91   University of Strathclyde (BRO0200)
92   Vodafone UK (BRO0093) para 16
93   Q23
94   CityFibre Holdings (BRO0112) para 2, TalkTalk (BRO0210)
95   Q77
96   Q148
97   CityFibre Holdings (BRO0112) para 1.3, Richard Feasey (BRO0158) para 5
98   Department for Digital, Culture, Media and Sport (BRO0077) para 6
Broadband and the road to 5G         23

roll-out of superfast broadband, where Government intervention to support delivery to
the harder to reach properties came after commercial roll-out, DCMS told us in its written
evidence that it intends to take an ‘outside-in’ approach so that the hardest-to-reach
properties are not left until last but receive upgraded connections in the same timeframe
as commercial roll-out takes place.99

43. Industry expects the Government’s gigabit programme to be split between a voucher
scheme and direct supply side intervention delivering gap funding for infrastructure
providers to roll-out to non-commercial areas.100 But following the latest Spending
Review, only £1.2 billion (25% of the total expected investment) is expected to be spent
over the next four years to 2025, with no clarity about how or when the rest of the money
will be made available.101 Projecting forward, and assuming the current level of spending
is maintained with Government committing £1.2 billion every four years from 2025, the
full £5 billion will not be spent until 2034. While industry has told us it understands the
remaining money will be ringfenced, it lacks confidence that this pledge will stand the
test of time and is unclear about the Government’s conditions for making that money

44. Even before the Spending Review, there were doubts whether £5 billion would be
enough to deliver the Government’s outside-in strategy. The Future Telecoms Infrastructure
Review (FTIR) estimated that delivering full-fibre connections to the final 10% (approx. 3
million) of properties that would not attract commercial investment by 2033 would cost
£3 billion to £5 billion.102 Since then, the number of premises to be covered by public
subsidy has doubled from 10% to 20% with no increase in funding. This is despite Ofcom
and Openreach estimating that costs per premises of roll-out could rise to between £2,500
and £4,000 for the hardest-to-reach places.103

45. We asked the Minister for Digital Infrastructure whether £5 billion would be enough
to deliver gigabit connectivity to the hardest 20% of properties. He told us that the apparent
shortfall between the amount available and the target number of properties “is only half
the picture” as:

            What you also have is a significantly greater investor appetite than there
            was when those ideas were formulated. What you have is a significantly
            improved technology roadmap, both from Virgin Media and from BT
            and from others, that allows them to get their investments to go further. It
            allows us to get our investments to go further, and of course you also have
            5G and fixed wireless and a whole host of other technologies that allow us
            to get to a greater number.104

46. Industry is less optimistic. Andrew Glover from the Internet Service Providers’
Association (ISPA) told us that he suspects “more money will be needed”, as based on
current cost estimates £5 billion “only deals with 10%, not 20%”.105 Indeed, DCMS has
already acknowledged that £5 billion will not be sufficient to cover the final 1% of hard-

99    Department for Digital, Culture, Media and Sport (BRO0077) para 20
100   Q17
101   HM Treasury, Spending Review 2020, CP 330, November 2020, p 111
102   Department for Digital, Culture, Media and Sport, Future Telecoms Infrastructure Review, (July 2018), p 45
103   TalkTalk (BRO0210), Local Government Association (BRO0075) para 4.4
104   Q94
105   Q9
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