The UK fixed telecoms sector has developed positively since the last SSP in 2019, with expanded full fibre coverage, significant network investment and various interventions to protect consumers. Here we share views on what the Government should consider including in the new SSP.
Despite progress in implementing several of the recommendations from the 2018 FTIR, a number of challenges remain, particularly the low take-up of full fibre services and poor awareness among consumers of upcoming legacy network switch-offs.
While full fibre availability has increased from 7% to 62% since the last SSP, the Government must maintain its focus on expanding access to fast and reliable broadband. An increasingly pressing issue in this context will be connecting unserved communities – potentially through alternatives such as mobile and LEO satellite.
The new SSP ought to consider interventions to encourage take-up of full fibre services. This includes promoting digital inclusion, as well as supporting industry’s migration of consumers from copper and the PSTN while helping to protect them from harm. Communication will be key.
The Government should continue to prioritise network competition, while seeking to make sure competition is sustainable for the long-term. Amid concerns that some fibre providers could fail, it should renew conversations with Ofcom and industry about implementing a regulatory backstop in the event of failure, to avoid problems experienced in other sectors such as energy.
Continuing to further the interests of telecoms customers should remain central to the SSP for fixed telecoms. While there have been new interventions to protect consumers, some issues (e.g. switching) will remain live, while tackling fraud and scams is a problem on which industry would welcome government support.
The UK fixed telecoms market has seen positive developments, although a number of challenges remain
The UK Government is preparing a new Statement of Strategic Priorities (SSP) for Ofcom relating to telecoms, spectrum management and postal services. The current SSP, from 2019, came shortly after the Future Telecoms Infrastructure Review (FTIR), which set out the changes the Government considered needed to be made to the UK market and its policy framework in order to deliver world-class digital infrastructure across the UK. The FTIR’s recommendations formed the basis of the current SSP, with its focus on expanding coverage of gigabit-capable broadband and ensuring stable and long-term regulation to incentivise network investment and competition. In addition, the SSP prioritises consumer protection, outlining the Government’s intention to tackle harmful business practices and help end users better navigate the market through improved access to data and to switch providers more easily.
Since 2019, the UK’s fixed telecoms market has evolved significantly, epitomised by the strong and consistent growth in full fibre coverage underpinned by investment from incumbent operators and dozens of altnets. The period has seen initiatives aimed at furthering the interests of consumers, with Ofcom introducing rules for a ‘One Touch Switch’ (OTS) process for broadband and landline customers, and prohibiting inflation-linked mid-contract price rises. While these developments may indicate that the FTIR-inspired SSP has delivered against its ambitions (see Table 1), challenges remain, including low fibre adoption rates, a tough commercial environment and lack of awareness around upcoming legacy network switch-offs.
Under section 2A of the Digital Economy Act 2017, the Secretary of State – in this case Peter Kyle MP – may designate a new SSP following a general election. The UK has a new government in place after the July 2024 election that saw the Labour Party return to power after a 14-year absence. Under section 2B of the Act, Ofcom must have regard to the Statement when exercising its regulatory functions. Under section 2C, before designating a Statement, the Secretary of State must consult on a draft version for at least 40 days. As such, the Department for Science, Innovation and Technology (DSIT) expects to issue a formal consultation on a draft SSP by the end of 2024. Ahead of that consultation, in this note, we outline some suggested priorities relating to the fixed telecoms sector that DSIT should be minded to consider – see Figure 1.
Maintaining a focus on supporting access to high-capacity digital infrastructure, with a greater emphasis on unserved communities
Coverage of gigabit-capable networks has risen significantly in a fairly short space of time; from 37% in January 2021 to 80% as of January 2024, according to Ofcom. Meanwhile, full fibre services were available to 62% of households as of January 2024, up from 21% three years earlier and from just 7% in January 2019. By 2030, the aim is to ensure gigabit broadband is accessible “nationwide” (i.e. by at least 99% of premises) – a target set in 2022 that the new Government appears committed to. Despite the considerable progress made against this goal, expanding gigabit broadband coverage should remain top of mind and therefore a central pillar of an updated SSP. This is poignant given Ofcom reports that providers have recently revised their 2024-2026 deployment plans downwards by around three percentage points across the UK.
As access further expands, an increasingly pressing matter will be how to connect hard-to-reach areas where deployment costs can be high, if not prohibitive, compared to densely-populated urban centres. While certain providers advocate the rollout of fibre to all corners of the UK, others are keen to explore the use of alternative options (e.g. satellite and fixed wireless access (FWA)). Placing a greater emphasis on rural areas and urban not-spots, the Government should consider whether a first-first, or fibre-only, approach as promoted by the FTIR remains appropriate, or if a balance of technologies is needed to ensure all citizens have access to fast and reliable connectivity, and to meet overarching public policy objectives.
Inevitably, however, there will be a small proportion of premises in specific locations that fall outside of commercial deployment plans where measures such as the Universal Service Obligation (USO) may be needed to guarantee the availability of decent broadband services. In October 2023, the Government consulted on whether the current 10/1Mbps requirement should be adjusted; however, no subsequent publications have been made. The new SSP should signpost plans to take forward an update of the USO to ensure the provision of a standard of telecoms services that reflect the changing and growing needs of society, which have reshaped post-pandemic, while ensuring effective alignment between the USO programme and wider connectivity ambitions.
At the same time as ensuring broadband is delivered at sufficient quality, it is paramount to ensure telecoms networks are equipped to withstand and respond to different geopolitical and and climate-related risks. As such, security and resilience of telecoms infrastructure should arguably feature more prominently in a new SSP. On security, the Government’s focus for Ofcom should be monitoring compliance with the framework established by the Telecoms Security Act, while preparing for the implications of a new Cyber Security and Resilience Bill once introduced in Parliament. In terms of resilience, the Government is uniquely positioned to coordinate the work of critical infrastructure providers in responding to growing threats of extreme weather throughout the UK. Also, with the impending transition to VoIP and the dependencies between telecoms networks and the power grid, the Government can act as a convener of sectoral interests among Ofcom and Ofgem to proactively identify vulnerabilities and plan comprehensive mitigation and responses to major, but inevitable, outages well in advance.
Driving demand for, and the adoption of, advanced telecoms services, paying specific attention to vulnerable groups
In the current SSP, the Government states that maximising the number of people using fibre will secure the benefits of the technology as it is rolled out across the country. However, Ofcom’s Connected Nations 2023 report estimates that take-up of fibre services has reached only 28%, although it is noticeably higher in rural areas than urban ones. Operators, especially altnets, have become increasingly vocal about the need to drive adoption, with few of them currently profitable and many facing pressure from investors that want to see returns. The SSP makes only a passing reference to take-up, placing the onus on industry to promote fibre to consumers. Ofcom’s work to date has also focused squarely on boosting access rather than adoption.
At this juncture, it feels vital that the Government reflects on its role in encouraging the take-up of fibre services by consumers (and businesses). Should it look to play a more hands-on part, incorporating adoption into the SSP, there are several actions the Government might pursue. First and foremost, it could set targets, which may look similar to those it has long had in place on the supply side. While these would be political in nature (like the EC’s Digital Decade targets, for example), they could provide a north star for industry and demonstrate a signal of intent. More material interventions the Government could consider include public subsidies, digital literacy programmes and collaboration with local authorities, all of which could have short-run or long-run impacts on end user incentives to make the shift to fibre.
In this context, it is also relevant for the Government to consider how it can promote digital inclusion so that no groups – such as vulnerable consumers – are left behind. Digital inclusion remains an unfulfilled ambition for the UK, with the most recent national strategy published a decade ago. The SSP should include this issue as a priority, with a focus on access, affordability, skills and trust. Improving end users’ ability to interact with internet-based applications and services, and their confidence in navigating the online world safely could be supported by the concerted action of the public, private and third sectors. Affordability may be better addressed through direct interventions, e.g. voucher schemes, building on charitable efforts to increase the availability of data and devices for the unconnected. However, measures such as introducing regulated social tariffs – even without VAT – would not be a silver bullet to solving the affordability question for those on lower incomes, and they would likely see the same low adoption experienced by operators’ voluntary discount plans.
Ultimately, the extent to which the Government seeks to boost the demand side of the equation will depend on how comfortable it feels intervening in the commercial market if the result would be in the ‘greater good’ of the country. The UK is moving closer day by day to the switch-off of the PSTN and copper networks. Ensuring these processes run smoothly should be a first-order concern for the Government and Ofcom, with both parties working individually and collectively to help migrate end users (including those ‘never-switchers’ that would not be inclined to transition themselves) on to future-proof networks without inconvenience or harm. Industry is playing its part but awareness remains a problem, which will only ramp up as time goes on. With the UK stuck in an uneasy limbo in the path forward for migrating disengaged consumers from legacy services, the SSP represents a chance for the Government to outline how it will work with Ofcom, local authorities and industry to resolve the matter and support the evolution of the country’s fixed telecoms infrastructure. Calls are growing louder for an awareness campaign similar to the analogue TV switch-off. This could be a potential solution, although responsibilities and liability (e.g. on the cost of the campaign) would need to be determined.
Enabling sustainable network competition, while implementing a regulatory backstop in the event of commercial failure
In light of the sharpened focus of operators on accelerating adoption rates, it is perhaps unsurprising that the expectations of many stakeholders, including Ofcom, is that the next five years will see less fibre build overall compared to the 2019-2024 period. That said, it is critical that the Government (through the new SSP) continues to aim to support investment and to encourage network competition that, in turn, benefits end users through better coverage and choice. A good degree of consistency and certainty in the UK’s regulatory regime could be important in this regard, although there may be scope – or a need – for specific policy interventions to address emerging issues.
The current SSP states that the Government regards effective access to Openreach’s national network of ducts and poles as a key enabler of competitive network deployment. Since 2019, the physical infrastructure access (PIA) remedy imposed on Openreach by Ofcom has largely functioned well, with ducts and poles utilised at scale, facilitating fibre rollouts by multiple providers. With workable PIA rules essential to a comprehensive regulatory framework, this should remain a priority issue for the Government, not least to try to broker a compromise between the recent public backlash against the building of new telegraph poles and calls from industry to ease planning rules around their installation. Reducing obstacles to fibre deployment generally should also continue to feature in the SSP despite a number of successes by the Government’s Barrier Busting Task Force on this front. Adoption of a national flexi-permit system could improve the speed and efficiency of operators’ rollouts if local authority opposition can be overcome. More straightforward access to multi-dwelling units (MDUs) could be a development that helps accelerate access to fibre for tenants in block of flats, but should be pursued in a way that does not favour certain providers over any others.
To that end, establishing a level playing field with respect to regulation should remain a core principle of the new SSP. This priority should be explicitly referenced as it will be key to supporting the long-term viability of altnets. However, at this stage, it is important to not only prioritise network competition, but also to aim to make that competition sustainable well into the future. The UK has witnessed the emergence of a range of new fibre broadband providers – often backed by plentiful funding – looking to take on the established operators by rolling out their own networks. But with many altnets now facing economic and operational challenges, including intense competition and increasing overbuild, the Government should be prepared for the prospect that competition in some parts of the country will not be sustainable, and that a number of smaller players could fail. According to Ofcom, fibre take-up in the UK varies significantly by operator, with some operators achieving 30%+ take-up, while others have an adoption rate below 10%.
The regulator has previously stated customers tend not to experience a loss of service when a “network company” fails because they are typically sold as a going concern. In the rare case that a network suddenly fails and ceases to provide services, Ofcom has said that it would work with alternative (upstream) suppliers, e.g. Openreach and others, to help reconnect customers as soon as possible. While it was reported in 2022 that Ofcom and BT were in talks over a contingency plan in case of numerous altnet bankruptcies, nothing ever came to light publicly. But that does not mean that a potential problem has gone away. Unlike the business market, consumer telecoms does not have a Supplier of Last Resorts (SoLR) process in place, which would otherwise establish a safety net for the customers of struggling providers. Should other altnets encounter financial difficulties but are not snapped up by a rival, the consequences are currently somewhat unclear – including the implications for their retail customers. There is a clear opportunity for the SSP to lead to a new SoLR process to manage the fallout from such a worst-case scenario, and to kick-start engagement with industry on the steps to take in response.
A shift in consumer protection efforts to monitoring the impact of recent regulatory interventions, with few additional measures
Furthering the interests of consumers in the telecoms sector should remain part of the SSP for fixed telecoms. Creating a fair environment for consumers where they are protected from harm and feel confident to engage with the market is critical, particularly as connectivity becomes more ingrained into daily life. Encouragingly, aspects of the 2019 SSP have been (at least partially) delivered, with Ofcom introducing rules to: reduce confusion around different broadband technologies (albeit 15 years since the problem emerged); help tackle the loyalty penalty through end-of-contract notifications (ECNs); and ban mid-contract inflation-linked price rises. Under the current SSP, Ofcom has also taken action to reduce barriers to switching between fixed-line operators or networks via a gaining provider-led process. A revised OTS go-live date is approaching, although persuading consumers to switch will likely remain a tough ask given their notorious stickiness – i.e. the tendency to stay with an operator for many years. The current SSP’s goal to improve consumer switching should therefore not be seen as ‘job done’ and should be an ongoing priority of the Government and Ofcom, especially in regards to ‘cross-platform’ switching that would offer the biggest boost to competition at the retail level.
Over the coming years, the SSP may therefore not need to focus as extensively on addressing consumer protection failures and harmful business practices, but rather on supporting the effective implementation of existing interventions (such as OTS). Ofcom has stated that it does not intend to introduce substantial new consumer-oriented regulation and will instead be watching closely how its recent interventions play out. Acting in the interests of consumers is already reflected in Ofcom’s primary duties under the Communications Act 2003 and it is typically front and centre within its annual work plan. This will include safeguarding vulnerable end users, helping them best navigate the market and providers’ offers, and make informed choices. Ensuring effective monitoring of the customer experience and the success of Ofcom’s measures may be a proportionate objective for the updated SSP, which could be underpinned by enhanced reporting to improve transparency for stakeholders.
Smart data is one aspect of the 2019 SSP that could remain a feature of the revised Statement. DSIT has consulted on the introduction of an 'Open Communications' scheme into the UK’s telecoms market, which would require operators to provide their customers (on request) with data about their broadband or mobile service. While Open Communications could complement existing interventions such as ECNs and OTS, DSIT is yet to set out the next steps for the policy (despite this being promised by the Smart Data Roadmap published in April 2024). With potential benefits for consumers and competition, a smart data scheme is still worth considering. However, this will require some careful thinking and would need to be developed without adding to the regulatory burden for industry – something the current phase of Ofcom’s consumer protection work is intending to avoid.
Tackling fraud and scams could be well-placed as a priority in the new SSP. This was not mentioned in 2019 but it has become a growing problem – and, in contrast, would likely have the backing of industry. Often seen as a mobile telecoms issue, it is also relevant for fixed, not least given gaps in regulation around numbering sub-allocation that could be facilitating scam calls. Ofcom published best practice guidance for providers in November 2022, although there may be room to go further. In line with the Government’s manifesto commitment to introduce an expanded fraud strategy, there is an opportunity for the SSP to both drive cross-sector collaboration to address the issue at source and to target a tightening of the rules (such as requiring a direct relationship between the regulator and assignee), building on other anti-scam initiatives like strengthened spoofing guidance for operators.
