1.1 This report examines how and why the availability of communications services varies across the UK, and how it could be improved. We consider the availability of seven communications services: fixed voice, fixed broadband, mobile voice, mobile broadband, digital television, radio and post.
1.2 The availability of communications services matters because of the increasing integration of digital communications within daily life. Communications services provide consumers with access to vital political, educational, cultural and economic resources. They provide businesses with the opportunity to increase efficiency, develop new services, and to reach new markets. And they make possible new and more effective means of providing public services to citizens.
1.3 At the heart of this change is widespread use of the internet. Broadband access to the internet, both fixed and mobile, is critical to ensuring that these benefits can be maximised and enjoyed by as many members of society as possible.
1.4 This report shows that some communications services are widely available across the UK:
1.4.1 Fixed telephony and postal services are subject to universal service obligations and therefore available across almost all the UK.
1.4.2 Digital terrestrial television is also available across almost all the UK, now that digital switchover is complete, thereby ensuring the widespread availability of free-to-air public service broadcasting. Satellite television is also very widely available.
1.5 There are however significant variations in the availability of other communications services:
1.5.1 The availability and speed of fixed broadband internet access is subject to much greater variation. This is partially because of variability in the speed provided by current generation broadband, and partially because the deployment of superfast broadband is still underway, especially in more rural areas
1.5.2 The same is true of mobile services, both voice and data. Even where the outdoor mobile coverage delivered to households is good, there can be particular challenges associated with providing coverage inside buildings, on roads and on rail.
1.5.3 In radio, whilst analogue coverage is near ubiquitous, DAB digital-radio is not.
1.6 The variations are most evident between urban and rural areas, and also between the different nations and regions of the UK
1.7 Perhaps unusurprisingly, most of the variability between nations and regions is essentially due to parts of the UK being more rural than others. Once factors such as population density and the nature of the landscape (hills, valleys and buildings) are taken into account, the probability of good coverage is relatively similar between different parts of the UK.
1.8 Our approach is to promote well functioning, competitive markets as the principle means through which to deliver low prices, choice and quality for consumers and spur innovation among providers. The dynamics of competition can also deliver high levels of availability, particularly in more urban areas, as is illustrated by the recent rapid deployment of superfast broadband to roughly two thirds of the country.
1.9 However, where markets do not deliver optimal outcomes for society as a whole, different public bodies can and do take action. This report looks at several case studies, in order to consider the effectiveness of such interventions.
1.10 This analysis suggests that well designed and delivered interventions can make a very significant difference in a short period of time. The Department of Enterprise, Trade and Investment's (DETI) intervention to deliver super fast broadband in Northern Ireland stands out as a particularly clear example of this. DETI estimated that next generation broadband would only reach 50-60% of businesses in Northern Ireland without intervention. As a result of intervention, 95% superfast broadband coverage has been achieved. This provides an early indication of the potential outcome of the UK-wide programme being managed by BDUK.
1.11 Areas that have not previously benefited from commercial rollout are more likely to experience market shortfalls in the future. Consequently, public bodies that have intervened to extend availability in the past may expect to face the same pressures to do so again in the future. If this can be successfully anticipated, it may be possible to plan interventions at a sufficiently early stage that those areas do not always have to play catch-up with the rest of the UK.
1.12 Where public bodies do intervene the key challenge is to ensure sustainability and value for money. Interventions should be carefully targeted at areas where the market will not deliver availability, without distorting competition in areas where the market functions well. Interventions do not always have to be about spending public funds. Changes to planning laws, for example, can also reduce the costs of building communications networks, improving availability.
1.13 The frameworks for addressing universal availability remain best set by elected representatives. Ofcom's role in this context is to ensure that the necessary information is available to inform the debate, and we recognise the importance of this role.
1.14 Within this framework, the responsibility for acting to improve availability will depend on the nature of the intervention being considered. Where public funds and subsidy are required to extend availability then this is a decision for central, devolved and local government. Similarly universal service obligations (USO) are set by elected officials who must consider what services should be subject to USO in the future and at what level. The planning regime is another area where responsibility lies with elected officials.
1.15 Ofcom does have a duty to secure the availability throughout the UK of a wide range of electronic communications, television, radio and postal services. And whilst we do not have the ability to deliver on this duty through the use of public funds, we have some important levers at our disposal, including for example the ability to impose coverage obligations on mobile licenses.
1.16 There are several significant Government initiatives to improve the availability of mobile and broadband services across the UK.
1.17 The first is the Government's commitment to provide superfast broadband to at least 90% of premises in the UK and universal access to standard broadband with a speed of at least 2 Mbit/s. They have allocated £530m between 2011/12 and 2014/15 to stimulate commercial investment in rollout, with individual projects in this Rural Broadband Programme the responsibility of local authorities and devolved administrations. The Government received state aid clearance in November 2012 for the framework agreements that local authorities can use to award contracts under this scheme, and contracts are now being signed.
1.18 The UK Government is also providing funding of up to £150m to address the 0.3% of premises in the UK that currently have no mobile coverage, under DCMS's mobile infrastructure project (MIP). MIP should ensure that around two thirds of these premises will receive a mobile service from 2015, and is expected to raise total 2G coverage to 99.9% of premises. MIP is also seeking to improve coverage along at least 10 of the busiest roads within the UK that still have poor coverage.
1.19 In order to reduce the costs of rolling out new infrastructure the Government have also announced a number of reforms to planning laws. These include measures to reduce the administrative burdens faced by companies when installing broadband street cabinets and when laying cables on public and private land. The Government is also working with mobile operators, local government and other interested parties to streamline the planning process to speed up the deployment of mobile infrastructure.
1.20 The recent 4G auction is an example of Ofcom using coverage obligations in licences to accelerate and expand roll-out. One of the lots of 800 MHz spectrum - which is particularly well suited to providing high levels of coverage - carried an obligation to provide indoor coverage to 98% of UK premises and 95% of the premises within each nation. This licence was awarded to Telefónica (O2) and we anticipate this will deliver outdoor coverage of around 99.5% of all premises and 98-99% of the premises within each Nation. We expect this obligation will drive improvements in coverage in a number of ways:
1.20.1 Because Vodafone and Telefónica have reached an agreement to share infrastructure, Telefónica's coverage obligation should also improve Vodafone's coverage and thus reduce partial not-spots.
1.20.2 Consumers who care strongly about coverage will know that there is at least one operator that provides particularly good coverage across the UK. Telefónica's coverage advantage is likely to spur other operators to extend their own coverage to broadly similar levels in order to be able to compete effectively for consumers.
1.20.3 There is likely to be an increasing deployment of combined 2G/3G/4Gequipment by the industry. Therefore wherever 4G networks are rolled out, we also expect 2G and 3G equipment to be installed alongside, reducing voice not-spots.
1.21 In combination, we believe these measures will lead to material improvements in coverage and consumer experience for broadband and mobile services over the coming months and years.