Infrastructure Report 2014

08 December 2014

Communications services are critical to the UK’s economic success and social cohesion. They are used by the average UK adult for over half of their waking hours. The coverage, capacity and reliability of the digital infrastructure over which these services are provided are of fundamental importance to both consumers and businesses.

The majority of the investment to build and maintain communications networks is delivered by commercial providers, competing to deliver services to consumers and businesses.

Ofcom is responsible for the regulatory framework that ensures effective competition. It is our role to help create the conditions that will foster efficient investment and innovation, leading to a wide range of high quality communications services throughout the UK.

However, the economics of networks means there are parts of the UK that will not be fully served by the market. There are also some services which may not be provided to all by the market. In these circumstances, Ofcom or the Government may intervene to further consumer and citizen interests.

Who takes action, and how, depends on the levers available. For example, Ofcom has moved to improve mobile coverage by attaching coverage obligations to mobile licences. The Government has intervened to improve the coverage of mobile networks and superfast broadband through public funding to subsidise wider roll-out.

The challenge when designing any intervention is to ensure that it is precisely targeted, so that it is an efficient means of achieving the policy goal, and at the same time minimises the risk of knock-on effects that could reduce competition or private sector investment. Such targeting requires an accurate and up to date understanding of the state of the UK’s infrastructure.

This report is designed to provide this information. It follows the inaugural report in 2011 and a series of smaller annual updates. It considers how networks are adapting to increases in demand and highlights challenges for the future.

Infrastructure Report 2014 PDF, 3.0 MB

In the space of just a few years, the availability of fixed broadband technology has transformed the way we use the internet.

From playing a niche role in the early 2000s, broadband is now regarded as one of life’s essentials by the vast majority of consumers and small businesses.

At home, there are more ways than ever to access it; from laptops and desktops to smartphones and tablets over in-home Wi-Fi.

This chapter considers:

Coverage of broadband services. Although fixed broadband is now available to almost all UK premises, the technology and speeds available vary considerably.

Gaps in superfast broadband coverage. On average, rural areas tend to have lower coverage, and there are also gaps in some urban centres.

Roadmaps for future development of broadband networks. There are several active technological developments which may extend coverage of superfast broadband, or maintain capacity when take-up increases, or increase the maximum speeds available.

Universal service, and demand for broadband speed. The typical UK household may now need a connection offering at least 10 Mbit/s to support its internet activities

Broadband take-up and speeds. Household take-up of fixed broadband now stands at 73%, with take-up of superfast broadband at 22%. The average broadband speed is now 23Mbit/s, up from 18Mbit/s last year.

Speed variation. Speeds vary considerably from household to household, driven partly by availability and partly by take-up.

Broadband performance. The quality of the broadband experience is not just about speed; factors such as in-home wiring and peering arrangements between internet service providers can also be important.

Data use. The UK is now using far more data, as users migrate to faster connections and access data-hungry applications such video streaming.

Businesses rely on telephone and internet services to sell goods and services, connect to customers, deal with suppliers and manage their workforce.

Beyond this, many digital businesses rely on broadband services for the actual delivery of their products and services. Reliable and high quality broadband and mobile connections are becoming ever more important to commerce and to the wider economy.

Good connectivity is important for businesses of all sizes.

The infrastructure used to provide connectivity to many large businesses is mostly dedicated high capacity ‘leased lines’ for voice and data. This is not within in the scope of this report .

Smaller businesses with 249 or fewer employees - referred to as Small and Medium Enterprises (SMEs) - have a range of different connectivity requirements. Large business needs can also vary. For example, large business’ satellite offices may depend on non-dedicated connections.

This chapter considers:

SME connectivity requirements. Research has shown that most SMEs say their needs are well catered for by the communications market.

Coverage of superfast broadband for SMEs. Superfast broadband coverage has not reached all SMEs and our analysis suggests coverage lags behind average coverage, particularly in urban areas.

Connectivity options. Businesses often have multiple connectivity options, although some connection types may not be suitable.

Improving superfast broadband coverage for SMEs. These challenges are broadly similar to the overall challenges of extending superfast broadband roll-out.

Further work on SME connectivity. In September this year we announced a range of work to ensure that the market is delivering for SMEs.

Mobile services now sit at the heart of how most people stay in touch.

They keep consumers connected on the move and, increasingly, enable them to access both voice and the internet.

In the UK, 95% of households have mobile phones and 16% make phone calls with mobile phones only, and have no landline at all.

Growth in demand has been rapid: at the time of our first Infrastructure Report in 2011, only 32% of adults were using their mobile to access the internet. Three years later, 57% of adults do.

This chapter considers:

Coverage of voice and low-speed data services over 2G - 99% of premises are covered by at least one mobile network operator (MNO) and 97% are covered by all three operating 2G networks.

Coverage measurement and validation. We have assessed (and will continue to do so) how accurately these coverage metrics represent the actual experience of consumers.

Coverage of high-speed data services over 3G - all four MNOs cover 84% of UK premises, although this falls to 65% of premises in Wales and 63% in Northern Ireland.

Coverage of very high-speed data services over 4G. The current major development in mobile is the ongoing rollout of fourth generation (4G) networks.

Usage levels on mobile networks. Total data throughput has increased by 53% this year, similar to the increase in 2013. This has been driven to a large degree by the continued growth in smartphones.

Enabling further coverage. There are several live policies and initiatives that aim to improve mobile coverage.

Wi-Fi availability and use. There are now more than 42,000 Wi-Fi hotpots. Those for which we have collected data showed total data throughput of 2.3 million Gigabytes in the month of June this year.

At first glance, fixed and mobile telecommunications have seen more significant developments in recent years than the UK’s broadcast infrastructure.

Most TV and radio continues to be consumed through traditional linear broadcasting platforms.

The number of channels, and the main platforms used to deliver them, (i.e. terrestrial, satellite and cable), are largely the same.

However, this relatively quiet period may now be changing.

This section highlights three underlying trends that are increasingly affecting how consumers access and use TV and radio services. We also consider the future implications for TV delivery infrastructure.

These trends include:

A migration towards increasingly higher-resolution TV. The penetration of high-definition (HD) TV has reached 69% of TV households.

Growth in broadband delivery of TV services. A wide range of IPTV and over-the-top (OTT) services is now available in the UK.

The increasing consumption of TV and video over mobile networks. High-capacity mobile video services are driving much of the increased consumer demand for mobile data capacity.

We also discuss developments in listening to radio and other audio services, and how in some respects this is changing faster than TV viewing.

As we increase our dependence on the nation’s communications infrastructure, the security and resilience of fixed, mobile and broadcast television networks and services become ever more important.

A major failure would have the potential to affect large numbers of people and businesses; it could also have repercussions for the wider UK economy.

At the same time, the interconnected and global nature of communications services brings with it challenging vulnerabilities which we must identify and address.

This section discusses security and resilience in the communications industry. It includes:

  • Ofcom’s framework for engaging with the communications industry on security and resilience matters.
  • An analysis of the security incidents that were reported to Ofcom between September 2013 and August 2014 and which had a significant impact on the operation of public electronic communications networks and services.
  • A study into the impact of the winter floods on fixed and mobile sector networks and services.
  • The measures taken by providers in the fixed, mobile and broadcast sectors to ensure the availability of their networks and services.
  • A summary of the measures being taken by providers to counter the growing threat of cyber-attack.
  • Security and resilience in broadcast networks and services.

Convergence is the growing phenomenon whereby a range of content types (audio, video, text, pictures) and services are distributed over different digital networks (fixed broadband, mobile, satellite, cable, digital terrestrial) to a variety of consumer devices (PCs, tablets, TVs and mobiles).

In a convergent world, a mobile handset can receive voice calls, data, pictures, audio, video and text, all delivered over a mobile network.

Similarly, television and video content is accessed using satellite, cable and digital terrestrial TV, or indeed via a fixed broadband connection or mobile network.

Convergence has been changing the communications landscape for some years and is continuing apace.

Some examples are obvious, such as the increasing use of internet-based TV services. Others are less obvious, particularly where they involve convergence between networks, but their implications for consumers are considerable.

Convergence is making new types of communications network available to consumers, as well as creating wider coverage and more capacity. In this chapter we outline some of the ways this is happening, and cover:

  • Different types of convergence and their implications for infrastructure.
  • Fixed/mobile convergence, which is leading to the continuing and seemingly inexorable decline in use of fixed voice services, as consumers use newer forms of communication such as voice over internet protocol (VoIP) and instant messaging (IM) instead.
  • Broadcast TV convergence. Although the vast majority of viewing is broadcast TV, an increasing share is being consumed over the internet.
  • Seamless connectivity: how this is benefiting consumers and making new services possible, particularly as more devices link to each other using the ‘internet of things’.

Our overall conclusion is that the divisions between different types of communications network, service and device are likely to continue to break down.

Consumers will continue to benefit from new services, particularly over the internet, as the communications infrastructure develops. But these new developments also underline the benefits of wider coverage of fixed and mobile networks.

This chapter considers three topics associated with internet networks and connectivity:

  • Internet service providers’ (ISPs’) management of data use by consumers,
  • ISPs’ interconnection arrangements and,
  • IP addressing.

ISPs use various approaches to manage data use on their networks. They can apply caps to limit the amount of data a customer can use, or apply traffic management to limit customers’ speeds or the applications they can use.

We have found that:

  • Managing consumers’ data use plays an important role in increasing the efficiency of network capacity management.
  • There has been increased pressure on ISPs to be as transparent as possible about their management practices. Broadly speaking, ISPs have simplified their packages and improved the information they provide to their customers, thereby improving transparency.

In order to allow their subscribers to access internet content, ISPs must interconnect with other network operators.

Increasingly, ISPs are also making such internet interconnection arrangements with the content delivery networks (CDNs) and individual content providers which are the source of significant volumes of the data traffic which subscribers consume.

We have found that:

  • Internet service providers are using a variety of different interconnection arrangements to manage the demand for content from their customers.
  • There has been a significant shift of data traffic to content delivery networks and peering interconnections, on both fixed and mobile networks. The proportion of traffic provided by the top four interconnection partners (Google, Netflix, Akamai and Limelight) has also increased.
  • The majority of peering traffic is still exchanged at locations in London, but this varies by the type of connection. For example, CDN traffic is distributed across the country more widely than peering and transit traffic.

Some ISPs’ approaches to managing use and interconnection arrangements may impact on net neutrality. While some approaches are beneficial to the user experience, and contribute to efficient use of the network, inappropriate use of these tools can have a negative impact on consumers.

We also report on the use of IPv4 and IPv6 addresses. The internet relies on these addresses to route data across the globe, but IPv4 addresses are running out.

There are a number of options for continuing to meet the demand for IP addresses.

2G The second generation of mobile telephony systems, 2G coverage is suitable for making calls and sending text messages.

3G The third generation of mobile systems, 3G enables you to watch videos and TV and access the internet through your mobile phone.

4G Fourth generation of mobile systems. Provides even faster data download and upload speeds on mobile networks.

All operators This refers to the four mobile network operators: EE, O2, Three and Vodafone.

Broadband A data service or connection generally defined as being ‘always on’ and providing a bandwidth greater than narrowband connections. Basic broadband is a broadband connection that delivers speeds of at least 2Mbit/s. Superfast broadband is the next generation of faster broadband services, delivering headline download speeds of greater than 30 Mbit/s.

Download speed The speed it takes to download data from the web.

Freeview coverage Coverage of free-to-air digital terrestrial television service. (1-5) refers to the availability of the main public service broadcasting (PSB) channels (BBC One, BBC Two, ITV, Channel 4 and Channel 5). Other channels refers to the availability of the channels on non PSB Multiplexes

Geographic coverage Coverage within the boundaries of a geographic area (i.e. the post code)

Motorway coverage Coverage of M roads (rather than A roads, B roads or other geographic areas)

Public Wi-Fi hotspot  Wi-Fi networks that are purposely made available to members of the public. These can be free, chargeable by time used or available through subscription. The figure for these is based on data provided by BT, Arqiva, Sky, Virgin Media, O2, EE and KCOM (this means that there may be other hotspots provided by different operators that are not captured, so the number should be seen as a reliable minimum.)

Upload speed The speed it takes to upload content such as pictures or videos to the web.