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Ofcom: Broadband firms have 'limited appetite' to be USO provider

Thursday, August 18th 2016 by Phil Wilkinson-Jones

Few broadband companies have shown an interest in becoming a designated provider for the government’s new Universal Service Obligation (USO), an Ofcom report has revealed.

Plans for a USO were revealed by then Prime Minister David Cameron last year and set out in the Queen’s Speech in May.

The idea behind a USO is to give every household in the country the right to a decent broadband connection “on reasonable request” but it has been left to Ofcom to decide how that will work in practice.

In April, the communications regulator asked consumers and the broadband industry to say what they think the USO should look like. It published a summary of the responses earlier this week.

The summary admits there is “limited appetite” to become a designated USO provider among broadband firms.

BT said it was difficult to identify how to designate a USO provider while the specification and scope of the USO is still to be determined.

Virgin Media said the case for a broadband USO has “not yet been adequately made” but suggested that if it was deemed necessary, BT should get the job.

According to the summary, the majority of the 115 responses can be categorised broadly within two visions of how to extend broadband coverage.

Ofcom said many public sector respondents and consumer groups favoured what it calls a “more expansive vision” of a highly specified universal service for all, with the cost of providing such a service a secondary consideration.

It said respondents from the broadband industry lent towards the more conservative vision of a “safety net” for people not covered by existing rollouts.

Social tariff

Respondents were also divided on how the USO should be funded.

Perhaps unsurprisingly, the majority of public sector stakeholders favour a levy on industry while industry figures and business groups say public funding would be more appropriate.

The government has always said its ambition is to set the minimum speed for a USO at 10Mbps but some respondents told Ofcom that service speeds should be more in line with the EU Digital Agenda target of 30Mbps.

They also suggested the introduction of a social tariff, offering a lower priced service to those on low incomes, and argued against placing a ceiling on the price its reasonable to incur to upgrade individual premises.

Former digital minister Ed Vaizey said earlier this year that such a cap could be introduced as the cost of a single connection could be “many, many thousands of pounds”.

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