Global economic turmoil has permeated many different industries and of course, telecoms has not been the exception. Social tariffs offer qualifying customers discounted deals for broadband access, acting as a safety net for those who may be struggling to otherwise afford it. Yet cheaper tariffs are still widely inaccessible to those who need them most, highlighting a serious threat to digital inclusion, says Maria Lema, co-founder of Weaver Labs.
- The problem doesn’t start with affordability
According to Inside Housing around 11 million people in the UK are digitally excluded, and around a third of those are living in social housing. When the pandemic hit, only 51% of households earning between £6,000 to £10,000 had home internet access, compared with 99% of households with an income over £40,000. This clearly shows a need for internet access that is cheaper and faster.
Low-income families can access social tariffs, which provide a discount on network plans, however, uptake for this is just 3% of all eligible households, this is mainly due to poor communication about the existence of such plans with limited advertising. However, the biggest issue is not affordability, it’s instead the lack of reliable infrastructure to provide adequate connection in low-income areas, with 8% of UK households’s average speeds over 24 hours being less than 10MB. Further research has also seen that while less than 1% of lines had an advertised speed of less than 10 Mbit/s, 8% of lines provided an average 24-hour actual speed of under 10 Mbit/s. This is the lowest download speed required for a decent broadband connection, as defined by the Government for the broadband universal service.
- Build networks that can cope with the current demand
Service providers often avoid investment in certain areas due to the negative cost-benefit and roll-out challenges to provide ubiquitous connectivity. There is a high correlation between access to reliable connectivity and income: 20% of the most deprived areas have community needs that are almost three times as high as the national average. This leads to market failure and requires public sector intervention.
Fibre-To-The-Premises is used to roll out connectivity in the UK. However, many rural areas and low-income urban areas are not profitable for such deployments as there are no short-term commercial incentives. There is a clear need for more diversification of telecoms infrastructure ownership and new deployment models, which aim at prioritising a more competitive telecommunications market with stronger public sector intervention.
The most commonly used public sector investment model for network rollouts is gap funding procuring a private sector partner who will finance, design, build, own and operate the infrastructure. This model has failed to deliver in key areas such as digital inclusion, integrated connectivity, and cross-sector innovation. An example is the UK Levelling Up Plan aiming to provide nationwide broadband and 4G coverage for the majority of the population. A recent report by the public accounts committee found that the government is still relying heavily on incumbents who are focused on less costly urban areas.
- Investment has to be incentivised
The failure lies in the fact that the existing model for telecoms infrastructure investment model is based on functionally-oriented networks. These operate as un-connected vertical silos, oftentimes not built around user needs. Under this model, digital programs such as fibre, smart cities or digital inclusion are usually not integrated, such that an operational decision made within each program will most likely involve replicating a decision that has already been made by another program thus, wasting valuable resources, time, and money.
Due to the challenges around integrated infrastructure and the siloed approach of networks, the telecommunications market is currently very closed. Further advancements are required to incentivise market expansion and provide a cheaper alternative to existing deployment models that motivate the public sector to expand their existing connectivity assets.
A solution to these shortcomings is proposing a new model based on Open Access and Infrastructure Sharing. This model gives the public sector more control and power to implement a coherent cross-sector infrastructure strategy that can unlock economic, environmental and social benefits, which works collaboratively not in siloes. However, internationally, we have seen this incentive come to fruition. Projects like the East African Submarine Cable System (ESSAy) which is a consortium of several telecom operators that jointly invested in and shared the first high-capacity submarine cable that connects several African countries. With operators employing various forms of infrastructure sharing, with different implications in terms of risk sharing, access, ownership, and funding it’s a positive example of the industry moving in a more democratic direction.
The bottom line
It is clear that these failures in being digitally inclusive stem from a more fundamental issue within the telecoms industry. There is a critical need for investment to build networks able to cope with the growing demand for delivering universal connectivity. Therefore, to solve persisting problems of affordability, the primary action that must be taken is incentivising investment.’
The author is Maria Lema, co-founder of Weaver Labs.
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