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Executive summary

1.1 The communications sector has undergone a revolution over recent years. The way that many consumers engage with technology has changed dramatically in a relatively short space of time. Just 15 years ago, most UK households would have only had access to a basic landline, a television service with four channels, and an analogue radio service. Today a majority of households have multi-channel television, mobile phones and broadband services. As a result, they can communicate with the outside world in new ways, whether for entertainment, for information, for domestic tasks, for work and as citizens. This represents a social transformation of enormous significance which can benefit everyone and, for many, digital communications are now an essential part of life.

1.2 Many aspects of that transformation have been delivered by competition, which has enabled high availability and take-up of communications services. Regulation has helped, especially in fixed telephony and broadband, by incentivising providers to offer lower prices, develop attractive new services, and invest in network roll out. But there are limits to what the market can deliver through competition alone.

1.3 This may be because it is commercially unattractive to build new networks in remote areas or to provide tailored services or equipment for disadvantaged groups. It may also be because those on low incomes are unable to make the financial commitments to take up the services they want. In addition, parts of the population, such as many older people, may not take up new services because they are unaware or unconvinced that those services might be important to them.

1.4 Ofcoms primary duty is to further the interests of citizens and consumers in communications matters. The widespread availability, take-up and effective use of key digital communications is important for society as a whole: for children to learn in the most effective way; for people to know about what is going on in their locality or in the wider world and do something about it; for people to access public services or job markets effectively; or just to buy things at the most competitive prices. So questions of access and inclusion in digital communications need to be taken seriously, particularly where they involve the most disadvantaged sections of society.

1.5 This issue is not new. Lack of access to a fixed telephone service or public service broadcasting has been a matter of public concern for decades because the market alone may not be able to deliver these services to a sufficient proportion of the population. Therefore there are already policy interventions in place aimed at increasing availability and take-up of these essential services.

1.6 For landline services, the Universal Service Obligation (USO) administered by Ofcom requires BT (and Kingston Communications in Hull) to offer a connection to all UK households on reasonable request at a uniform price. It also requires BT and Kingston to provide a special tariff to ensure that those on low incomes can access the service, and a relay service for people with hearing and speech impairments so that they can also use the telephone. Finally, the USO ensures that there continues to be a network of payphones even where it may not be economic for individual phone boxes to be maintained.

1.7 Furthermore, we have a duty to ensure the widespread availability of television services: analogue terrestrial television services have been transmitted to 98.5% of households, and digital switchover will ensure the same coverage for digital terrestrial services. We also guarantee the provision of television access services so that people who would not otherwise be able to enjoy television, such as the hearing and visually impaired, can do so through audio description, subtitling and sign language. In 2009 we will review the Television Access Services Code to see whether it needs changing in light of economic and technical developments in order to ensure that access services continue to be delivered in an effective and appropriate way.

1.8 An important strand of Ofcoms work in this area is media literacy. We are actively engaged in promoting media literacy to help people develop the competence and confidence to use - and manage their use of - digital communication services. Ofcom has no specific powers to compel action in this area, but we can act as a catalyst by providing leadership, generating a robust evidence base and influencing other organisations to improve outcomes. With others, we have secured the introduction of a BSI Standard for internet content control, and established an International Media Literacy Research Forum to raise awareness of the latest research and key issues facing policy makers across the globe. We have also developed an online resource to keep stakeholders informed of initiatives that are being undertaken across the UK.

1.9 Despite this existing work, changing technology and markets mean that new services without safety nets have become increasingly important. Almost three million households now have mobiles as their only phone, and broadband is regarded as an essential service by many. This changing context therefore means we should review our approach to access and inclusion issues to ensure it remains appropriate and relevant.

1.10 As a result, we have considered four questions in this document:

• For which communications services would a lack of widespread availability and take-up raise concerns from an access and inclusion perspective?
• What are the significant gaps in the geographic availability of these services?
• Are there issues preventing widespread take-up of these services?
• Are there significant impediments to the effective use of these services?

1.11 Understanding the key issues and how Ofcom can help address them is a central part of our overarching duty to further the interest of both citizens and consumers. We seek to make effective use of the powers given to us under the existing statutory framework. But our duties require us to do more: to inform, disseminate best practice and facilitate change as, for example, in our promotion of media literacy. Our work both complements and reinforces that of Government, as well as the voluntary and private sectors, using our evidence and analysis to help shape the future regulatory framework, both in the UK and the EU.

1.12 The table below summarises where todays gaps in the delivery of key communications services arise.

Table 1 - Gaps in the delivery of key communications services

Service	Important from an access and inclusion perspective?	Availability, take-up and effective use of the service
Fixed voice	Yes, access enshrined in law.	USO helps ensure widespread availability and take-up. However, market and technical developments may mean that we need to revise the services made available as well as the funding and procurement framework within which they are provided.
Mobile 999 roaming	Access to emergency services on the move is particularly important.	When mobile customers are out of range of their own network they cannot use other available mobile networks to call emergency services.
Mobile voice	Gaps in mobile voice coverage seen by many as important. We are considering coverage issues further, including the need for further research, as part of our Mobile Sector Assessment.	Available data suggests near 100% availability of 2G networks, but this masks not-spots and areas of poor quality coverage. Overall take-up is good: 91% of households have a mobile phone, though levels are lower for elderly and disabled people and low income households. Effective use is hampered to some extent by concerns about access to inappropriate content, particularly for children (media literacy); and older and disabled people may face difficulties using mobile phones.
Mobile broadband	May be important in the future.	Availability of 3G networks is at 90% but the HSPA coverage required for broadband is more limited. Furthermore existing coverage is focused on areas with high population density; there are not-spots as well as areas of poor quality coverage.
Current generation broadband	Of growing importance and Government now considers it needs to be universally available by 2012.	Availability over existing telephone lines is very widespread at basic speeds of 512kbps, but falls by up to 15% if services such as video are a requirement. Cable and wireless networks offer alternatives, though the ability of wireless to deliver high and sustained bandwidths to large numbers of customers is limited by available spectrum. Not-spots in relation to speeds over 512kbps are unlikely to be fully filled by market delivery. Overall take-up is just less than 60% and appears to be reaching a plateau, with significantly lower rates amongst groups such as older people, people on low incomes, mobile-only households and disabled people There are concerns about a lack of media literacy skills. SMEs may also lack skills to use internet effectively. Elderly and disabled people may face particular usability issues.
Super-fast broadband	May be important in the future.	Network rollout already announced is likely to cover approximately half of households but seems likely to leave significant not-spots Nature of services requiring super-fast broadband unclear at this early stage but likely to bring individual, social and economic benefits.
Digital Television	Yes, access enshrined in law.	Digital Switchover (DSO) will ensure 98.5% coverage of DTT. Almost all those without DTT coverage have access to digital satellite television. Take-up is at 85% and increasing. Potential for low take-up and use by older and disabled people is being addressed by the DSO Help Scheme.
Digital Radio	Analogue radio important, digital radio may be important in the future.	Virtually universal analogue AM and FM coverage and take-up. DAB coverage is at 90% and almost 30% of people now live in a DAB household. The proposed Digital Radio Delivery Group will be working to increase availability, attractiveness and affordability of digital radio.

1.13 In light of this analysis, we propose to target our access and inclusion work in the coming months in the following five areas: broadband availability and take-up; 999 mobile roaming; services for disabled people; Universal Service Obligation and media literacy.

1.14 Broadband availability and take-up: While the vast majority of people and businesses can already get broadband at a basic speed of 512kbps, this proportion starts to fall as higher speeds are considered. For example, currently around 15% of households are unable to get speeds of 2Mbps. 2Mbps is significant as it has been mentioned by the Government for a possible Universal Service Commitment (USC) to be effective by 2012 in its Digital Britain interim report.^(-1-)

1.15 Ofcom welcomes the Governments proposal. Its delivery will depend on the types of services that people need to be able to access via the internet, how much money is available to fulfil the commitment and the resolution of a range of technical issues. For example, we need to understand the range of technical designs that could be used to increase the availability of broadband to premises that currently cannot receive a service of 2Mbps. There are five possible sets of technologies and it is likely that a USC would need to comprise a combination of these. A variety of technical solutions are available, both wireline and wireless, and the most efficient implementation of a USC is likely to be via a combination of these. For example, not-spot clusters might be served via fixed-line solutions based on new cabinets, whilst more isolated not-spots might be served either via upgrades to individual lines, or by wireless solutions delivered using existing mobile infrastructure. The most isolated not-spots might be served via satellite wireless. In practice we expect that the optimum mix of technologies would be determined via some form of competitive tender. We have already started working with Government, industry and others to determine how the proposal for a broadband USC should be implemented.

1.16 Furthermore, despite the already widespread availability of broadband at basic speeds, take-up remains at just less than 60% and appears to have reached a plateau. Take-up is significantly lower for disadvantaged groups, specifically older people (13% for people aged over 75 years old), people on low incomes (28% for people in households with income of up to 11,500 p.a.) and disabled people. Our analysis suggests that there are four broad categories of people who currently do not have internet access at home:

• The self-excluded: these are people who could afford to have internet access at home but do not want it. This is likely to be the largest group of people without internet access.
• The financially excluded: people who would like to have internet access but cannot afford it (including any training they would need to be able to use it).
• The dual excluded: people who are not interested in having internet access at home and, even if they were, could not afford it.
• The geographically excluded: people who would like to have access at home and could afford it but cannot get a reliable service where they live. This is likely to be the smallest category of people without internet access at home.

1.17 Without additional public initiatives in this area, barriers such as a lack of perceived need and cost may prevent a significant minority from reaping the benefits that broadband internet can bring. Ofcom is carrying out detailed research into the groups of people who do not have broadband at home to better understand why this is the case and the policy implications, as a further contribution to the Digital Britain and Digital Inclusion Action Plan processes. This will be published in spring 2009.

1.18 999 mobile roaming: in the UK, geographic mobile coverage varies by network but it is not currently possible to make an emergency 999 / 112 call over any available mobile network when out of range of your home network. This service was available in the UK up until the mid-90s when it was switched off in response to the emergency authorities concerns about the high number of hoax and nuisance calls. This service is now available in most other EU countries and Ofcom believes that enabling it to happen in the UK would enhance public safety. We are working with mobile network operators (MNOs), emergency authorities and call handling agents to develop a technical solution for doing so. Subject to successful testing, this will be introduced late this year.

1.19 Services for disabled people. Communications services are important for all citizens, including disabled people who can face particular difficulties when using them. We are firmly committed to ensuring that disabled people can access communications services on an equivalent basis to others, so that they are able to take full advantage of the benefits such services can bring. We propose to tackle the most critical issues that they face. Our review will commence by looking at the text relay service, which gives hearing impaired people access to the telephone. This service remains important for users, but relies on technology that is 30 years old and suffers from a number of drawbacks compared to alternative services. In particular, conversations are stilted due to the time delay required for the relay assistant to type the hearing persons contribution and the need to take turns, in addition it is not possible to use the service for conference calls.

1.20 Universal Service Obligation: The existing Universal Service Obligation (USO) provides a safety net for basic voice telephony services. Changes to markets and use of services mean that it is appropriate to undertake a review of the current USO implementation. For example, call volumes from payphones have declined significantly, in part because of the growing use of mobile phones. We intend to review the existing implementation of the USO and consider whether changes to it are required. It will include an assessment of the extent to which the USO results in a significant net burden upon BT and Kingston Communications, the current universal service providers, and will consider the case for alternative funding and procurement models to ensure that USO provision is both effective and proportionate. This will be the most significant review we have carried out since 1997. This will be It will also be necessary to consider, in this context, any changes to the USO that arise from the Governments Digital Britain review and how issues such as its proposed Broadband Universal Service Commitment might impact the scope or implementation of the Universal Service Order.

1.21 Media literacy: Government, in its recent Digital Britain interim report, has asked us to assess our current statutory responsibilities in relation to media literacy and, with the BBC and others, to work to recommend a new definition and ambition for a National Media Literacy Plan. This is in light of the significant market changes in the availability of digital technologies and how they are used. A media literacy working group has been formed, chaired by Ofcom and including stakeholders in government, industry and consumer groups to take forward the development of the Plan.

1.22 In addition, we plan to initiate a programme of work to help us understand the experiences of business users of telecommunications services. As part of this we will undertake a research programme to identify whether the needs of business consumers are being met and assess the extent to which Ofcoms policies are adequately targeted at addressing any concerns.

1.23 We are keen to seek views from a wide range of stakeholders on these issues. We have included a number of questions on the proposed priority areas and on the analysis that underlies them, which are summarised at Annex 4. The consultation period closes on 3 June 2009.

Footnote:

  1.- Available at http://www.culture.gov.uk/what_we_do/broadcasting/5631.aspx

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