Comment from Dame Patricia Hodgson, Ofcom Chairman. This first appeared in The Daily Telegraph
We are living through a communications revolution. In the space of a few years, millions of people have come to rely on smartphones, broadband, internet radio, Netflix, Facebook and Google.
Our media and telecoms industries are among the most dynamic in the economy. They affect our democracy, our society and our personal lives. So fast is the pace of change, the landscape today is unrecognisable from when I joined Ofcom in 2011.
Back then, 4G mobile was yet to launch. Just 2% of homes and small businesses had superfast broadband, and you were lucky if you could receive the average broadband speed of seven megabits per second.
The digital giants were well established, but no-one could foresee quite how much they would disrupt the businesses of our broadcasters and publishers. Today, there are questions about how these new technologies are used, but no-one doubts their overall importance in all our lives.
4G mobile is now widely available, though coverage and reliability must improve. Nearly half of homes now take up superfast broadband.
What has been the most fundamental change over the last six years? Perhaps the most striking is people’s relationship with media and telecoms services. Many of us simply cannot function without reliable mobile or broadband connections. And in too many parts of the country, service remains sub-standard because companies have not kept up with customers’ needs.
Ofcom’s focus is on helping to ensure that all people and businesses – wherever they are in the UK – have the connections and quality they deserve, while holding companies to account when they fall short. This role is becoming ever-more pressing, as people increasingly rely on data-hungry services – whether it’s watching high-definition video on TVs and tablets around the home, or video-calling loved ones on the other side of the world.
Most agree that, in order to meet these demands, the future is ‘full’ fibre-optic broadband: ultrafast networks offering speeds up to one gigabit per second – 30 times the current average – to futureproof our digital infrastructure. This is not just about speed. Full fibre broadband brings vital improvements in quality and reliability over the UK’s century-old copper networks.
Not everyone is yet behind the business case for investing in full fibre. But the fibre sceptics are in a shrinking minority. I’m encouraged that companies like Virgin Media, CityFibre, Hyperoptic, Gigaclear, and now Vodafone, are investing in ultrafast broadband.
BT has also committed to connecting two million premises to full fibre, mostly new build houses and businesses.
But, if our most established telecoms company sees itself as a national leader, it can afford to make a bold commitment to fibre. That would demonstrate BT is serious about its service to customers, and its contribution to the UK’s competitive digital economy.
The best incentive for BT to invest boldly in full fibre is the growing threat of competition.
Virgin Media, the cable company, is investing £3bn to extend its network to 60% of homes, up from 40%, offering ultrafast broadband speeds of 300 megabits per second.
And a recent deal between CityFibre and Vodafone, which could see five million homes connected to fibre across the UK, sends a clear signal about the potential of fibre, particularly to the investment community.
To ensure healthy competition, we want to see a third, widespread broadband network alongside those of BT and Virgin Media. The Government is backing fibre, putting up funding and tax breaks to support wider investment. And Ofcom is working hard to ensure the economics of fibre are attractive.
At the heart of this is our plan to open up BT’s network of underground tunnels and telegraph poles, which has the potential to halve the upfront costs of laying fibre.
But as a regulator, we understand that competition is not always enough. If we are to protect the most vulnerable in society or those that do not have the luxury of choice, then intervention is required.
That is why BT met our demands to cut monthly line rental prices by £7 for up to a million of its customers who take only a landline telephone. It is also why we have agreed an automatic compensation scheme with broadband and telephone providers so customers will receive money back when let down by their providers – without having to ask.
And the UK Government has committed to ensuring all homes, particularly in harder-to-reach rural communities, receive a decent broadband service so people don’t get left behind.
Good regulation must strike a balance. We need to protect the interests of people and businesses, guarding against unfair price rises, while also promoting investment and strong competition between companies. That way, we can deliver a fibre future and ensure the UK remains among the world’s leading digital economies.