DCMS over-reliance on commercial providers for national broadband perpetuating UK’s “great digital divide”

The Public Accounts Committee today reports it is not convinced the Department for Digital, Culture, Media and Sport (DCMS) will meet even its downgraded targets for the increasingly critical rollout of super-fast, “gigabit” broadband, and is relying too heavily on commercial contractors for the progress that has been made.

Driven by the COVID-19 pandemic, good internet connectivity is now crucial to more than economic growth and the UK’s position in the global marketplace: it is essential to almost every aspect of everyday life, from work and education to accessing public services and benefits and personal lives and family connections. This makes the rapid roll out of Project Gigabit more vital than ever.

In 2020, DCMS accepted that its original plan for delivering nationwide gigabit broadband across the country by 2025 was unachievable and revised that target down to 85% coverage by 2025. 

DCMS reports that the proportion of premises in the United Kingdom with access to gigabit broadband leapt from 40% to 57% between May and October 2021 but this is largely due to Virgin Media O2 upgrading its cable network and the Committee says DCMS “has made little tangible progress in delivering internet connectivity beyond that achieved by the private sector”.

DCMS’ goal of full coverage by 2030 “does not cover the very hardest to reach areas, which include around 134,000 premises” and it has no detailed plan in place for reaching communities where it is not commercially viable to do so.

The Committee had already warned earlier this year that “failures with the rollout of superfast broadband across the UK risked exacerbating digital and economic inequality” and while “commercial investment plans by existing and new providers are welcome, reducing the potential need for taxpayer funded rollout”, the Committee remains concerned that DCMS’ focus on “accelerating coverage through rollout by commercial operators rather than by prioritising those areas it knows are hardest to reach risks some of the areas that need improved connectivity most, being once again left behind”.  

Dame Meg Hillier MP, Chair of the Public Accounts Committee said: “DCMS’ planning and project management here show all the signs of the previous rollout – that the focus will continue to be on the easier to reach areas and there is still no clear plan for the hardest to reach communities. DCMS couldn’t really explain how broadband has got as far as it has in this critical national strategy, beyond “thanks to Virgin Media”, and incredibly it still doesn’t have a real plan for getting the rest of the way to its own downgraded targets.

“What DCMS does know full well is it can’t rely on the private sector to get fast broadband to the hardest to reach, excluded and rural areas, and despite its repeated promises to do exactly that we are apparently little nearer to closing “the great digital divide” developing across the UK nor addressing the social and economic inequality it brings with it.”

PAC conclusions and recommendations

1. The Department’s reporting still lacks the consistency and detail needed to enable Parliament and the public to tell what progress it is making in rolling out gigabit-capable broadband across the UK. The Department’s target was initially for nationwide full-fibre network coverage by 2033. In 2019, it revised this to nationwide gigabit-capable broadband by 2025. This was then revised again in November 2020, following our last evidence session, to a minimum of 85% gigabit capable coverage by 2025, with the Department also seeking to get as close to 100% as possible within this timeframe. We previously recommended that the Department needed to clearly set out its key milestones for delivering its target and publish yearly updates on its progress. The Department is unable to fully explain the breakdown of the progress it is reporting in achieving its targets. In October 2021, for example, it reported that there was 57% coverage national gigabit coverage. This represented a rapid increase on the figure of 40% coverage in May 2021 reported by Ofcom. The Department told us this was largely as a result of Virgin Media O2’s upgrade of its cable network but it was unable to inform us of exactly how much of this increase was due to that upgrade.  

Recommendation: Given the critical nature of this issue and our concern about the Department’s grip on it, we recommend that the Department should: 

• work with the National Audit Office to determine the most appropriate metrics and frequency for reporting progress with the scheme; and 
• by the end of March 2022, write to us with the results of this work and outline how and when it will provide us with regular and transparent updates on the programme.  

1. The Department has so far been overly reliant on the contributions of commercial suppliers in improving gigabit coverage. The Department is reliant on suppliers to deliver gigabit coverage to 80% of UK premises without subsidy. Between May and October 2021, national gigabit coverage increased from 40% to 57%. The Department acknowledges that Virgin Media O2’s upgrade of its cable network contributed significantly to the increase in gigabit availability during this period, although it is unable to provide a figure for this. The Virgin Media O2 upgrade provides gigabit availability, but this is not achieved through full fibre technology, which is more future proof but requires new infrastructure. While companies such as Virgin Media O2 have set out their intention to further future proof their networks over time, once the current upgrade of existing cables has been completed there will remain a gap in coverage if the Department does not put in place further contracts to build the gigabit infrastructure. The Department told us it has extended some of the contracts it had in place for the delivery of superfast broadband to now enable gigabit-capable connections. In some areas it is also supplying gigabit vouchers to communities to pay for gigabit-capable connections in areas where it is not commercially viable to do so. However, it has not yet signed any new gigabit infrastructure contracts of its own.   

Recommendation: In line with its Treasury Minute response, the Department should set out what progress it has made towards its coverage target of 85% by 2025. This should be broken down by how much coverage is being achieved by:  

• individual commercial suppliers, such as Openreach, Virgin Media O2 and smaller suppliers know as alternative networks or “alt-nets” etc., and the extent to which it is through full fibre technology; and   

• the gigabit voucher scheme. 

1. We are not convinced by the Department’s assertion that it will meet its target delivery of a minimum of 85% by 2025 despite having signed no new infrastructure subsidy contracts for Project Gigabit. The Department’s previous target proved to be unachievable. Despite revising the overall target, the Department’s target dates for signing contracts with gigabit suppliers to begin laying gigabit infrastructure have continually slipped. At our last evidence session, in November 2020, we called for the Department to provide a broad timetable or indicative dates for the essential steps towards achieving its targets, which the Department repeatedly declined owing to it awaiting Ministerial approvals. The Department is still unable to provide detailed information about how long it expects the contracting process to take. The Department previously informed us that contracts would be operating by the fourth quarter of 2021. It has since moved this to May 2022 in the Project Gigabit Summer update. This changed again to June to August 2022 in the Autumn update. The Department contends that the delay is positive, as it is the result of unprecedented levels of interest and activity from commercial providers. As a result, it is re-planning which areas it will need to deliver gigabit coverage through infrastructure subsidy contracts but stated in evidence that that it did not expect in future to have to replan to the degree that we have in the past 12 months.

Recommendation: In line with its Treasury Minute response, the Department should write to us setting out in detail how it will deliver 85% coverage by 2025, including: 

• the baselines it is using, and overall progress against these; and 
• what new infrastructure contracts it has signed and how many more contracts it requires to be in place and by when in order to meet its overall target. 

The Department should also adopt a flexible procurement approach which allows it to respond to market developments without endlessly delaying the signing of contracts for commercially unviable areas. 

1. We are disappointed that the Department has still not taken significant action to remove barriers to rolling out Project Gigabit. Despite our recommendation earlier this year, the Department has yet to secure the legislative and policy changes that industry deems necessary to address major barriers to delivering gigabit infrastructure at pace. The Department has initiated the Telecommunications Infrastructure Act, designed to ensure that the UK has sufficiently robust electronic communications networks to deliver the coverage and connectivity consumers and businesses need. However, it has not yet followed this up with the necessary secondary legislation. We are concerned that without addressing legislative barriers the Department will be unable to meet its target for roll-out. The Department has also run consultations on removing barriers to gigabit rollout but has yet to publish the findings of these. In one case, this is eight months after the consultation closed. While stakeholders welcome these interventions, they call for the Department to take more decisive action, particularly regarding wayleaves (land access agreements). Furthermore, the removal of high-risk vendors’ equipment from the network is estimated to cause a delay in the full fibre roll-out of up to a year, and for 5G by two to three years. Despite its apparent lack of significant progress in tackling barriers, the Department asserts that it is confident that the pace of rollout means that it is still on track to hit its targets. 

Recommendation: In line with its Treasury Minute response, the Department should write to us setting out what progress it has made:  

• to remove barriers to deployment, including details of the findings from its consultations and its response in the four priority areas of: 
• access to land 
• street works 
• new build connectivity; and  
• supporting mobile deployment.  
• to remove equipment from high-risk vendors from the relevant networks. 

1. The Department’s approach to rolling out gigabit risks perpetuating digital inequality across the UK. The Department contends that it is taking an “Outside-In” approach to gigabit infrastructure procurement. As part of this approach, the Department identifies areas which it does not expect it to be viable for commercial providers to operate in. It then commissions internet infrastructure connecting these areas in parallel with work being undertaken by commercial providers. This is designed to ensure that no areas are systematically left behind. However, the Department is unable to demonstrate that it is still following its “Outside-In” approach. In addition, the Department’s one-size-fits-all approach to what it considers urban areas, especially in London and the West Midlands, does not take into account the very different needs within those areas. Those areas that currently have sub-superfast broadband speeds are more likely to be in the 20% of premises that the Department thinks will be unviable for commercial providers. Rural areas, such as the Cotswolds in England, and areas of economic deprivation that were previously provided with government support to deliver superfast broadband, such as Blaenau Gwent in Wales, have some of the lowest levels of gigabit coverage. If the 2025 target is going to be met it is essential that rural and remote areas, especially those who currently lack superfast broadband, receive significantly increased investment on the basis that the commercial sector will unlikely be able fill the gap. 

Recommendation: The Department should, from the start of April 2022, publish statistics every 3 months showing its regional and national breakdown of progress against its gigabit coverage target.  

1. The Department does not have a detailed plan to ensure that those in the very hardest to reach areas are not being left behind. The Department’s commitment to delivering 85% coverage by 2025 and full coverage by 2030 does not include those premises it has identified as the very hardest to reach. It estimates that fibre-based approaches are unlikely to work for around 134,000 or 0.3% of premises. In these hardest to reach areas, the potentially prohibitively high cost of rolling out full fibre broadband means that the Department is likely to need to use other technologies, such as satellite. At our last evidence session, in November 2020, the Department told us that it was assessing the value for money of alternative technologies for delivering the fastest speeds possible to hard-to-reach premises. However, a year later it is unable to offer any details or update on what new technologies are under consideration.  

Recommendation: In line with its Treasury Minute response, the Department should write to us setting out how it will reach the remaining 15% left out of the 2025 target, as well as the very hardest to reach 0.3%. This should include what progress it has made in developing and procuring new technologies. /ENDS

Full inquiry details including evidence received https://committees.parliament.uk/work/1520/dcms-recall-broadband/