thinkbroadband.com (formerly known as ADSLguide.org.uk) is the UK's largest independent broadband news and information site. We provide independent advice and details on the services offered by Broadband Service Providers so you can make an informed decision as to who to use as your supplier.
The Digital Economy Bill stretches to some 60 pages and continually refers to the earlier Communications Act 2003 making it a hard read for a Friday. Digging into the document reveals that there is provision for sharing of the costs that will arise from the new rules on managing copyright infringement.
15 Sharing of costs
After section 124K of the Communications Act 2003 insert-
"124L Sharing of costs
- The Secretary of State may by order specific provision that must be included in an initial obligations code or a technical obligations code about payment of contributions towards costs incurred under the copyright infringement provisions.
- Provision specified under subsection (1) may relate to, in particular-
- payment by a copyright owner of a contribution towards the costs that an internet service provider incurs;
- payment by a copyright owner or internet service provider of a contribution towards the costs that OFCOM incur.
- Provision specified under subsection (1) may include, in particular-
- provision about costs incurred before the provision is included in an initial obligations code or technical obligations code;
- provision for payment in advance of expected costs (and for reimbursement of overpayments where the costs incurred are less than expected);
- provision about how costs, expected costs or contributions must be calculated;
- other provision about when and how contributions must be paid."
Extract from Digital Economy Bill
The costs of passing on all the infringement letters and maintaining an accurate database of past infringements has been raised by various broadband providers since the original Digital Britain report, the Bill would appear to offer a cost sharing solution, but it seems it is down to the Secretary of State to control whether this sharing takes place. Interestingly Ofcom will be able to have its costs from its involvement paid for by copyright holders and providers.
While reducing copyright infringement is something that must be addressed, there is the danger that the methods used will actually cost more to run than it creates in extra revenue. At this time there is little sign of any extra revenue streams for broadband providers. The largest providers may benefit from partnerships with music labels to bundle a music subscription with their service, but for those providers with less than a million users they do not have the negotiating power to get a good deal from these sorts of deals. Thus, at the end of day we may see the price of broadband creeping up to cover the extra costs, or those people who do buy music and films will see media costs increase to cover what the media industry must pay.
For many people the Digital Economy Bill was thought to be a piece of legislation that would layout who and how the Universal Service Commitment (USC) would work, but to perhaps many peoples surprise the USC is not part of the bill. The funding of the Final Third Project to get Next Generation Broadband to the areas of the UK that the commercial firms will not venture was always going to be part of the Finance Bill due to the need for legislation to introduce a tax raising regime.
So where does the USC stand? Well for one that USC is NOT about giving everyone 2Meg download speeds but rather 'to ensure, through a Universal Service Commitment (USC) that virtually every household in the UK can get access to a line capable of delivering at least 2Mbps'. The word virtually was in the original report but often ignored, it is there so that the difficult areas can be provisioned with something more economically viable. It is important to be aware it is talking of a line that can manage 2Meg, not sustain 2Meg at peak times, or put another way, the many people who complain on our broadband Not-Spot mapping system of slow throughput even though connected at 2Meg or faster will not benefit from the USC. The money to pay for the work required to meet the USC will be from the surplus funds in the Digital Switchover money pot, which is thought to be around £200m. Two hundred million sounds a lot, but if one accepts that there are 166,000 properties unable to get broadband in the UK, which is a figure often mentioned, this works out at just £1200 per property.
Given the spread out nature of many broadband black holes, we think people should be prepared to accept satellite broadband services, or the under trial 'BET' (Broadband Enabling Technology) system from Openreach. Where a cluster of five or six properties exist with no broadband, then more advanced possibly even next generation systems may be possible, particularly if the homeowners/businesses are willing to pay something towards the install fee.
While 2Mbps can be considered fit for online banking and access to e-gov services, the increasing amount of video available for purchase online means people with 2Meg lines will feel like second class broadband citizens. In four years time we may find that operating system updates occupy an hour or two a day on a 2Mbps line (Microsoft Windows service packs can already weigh in at 200 to 400MB in size).
The USC was an opportunity to take the already world leading broadband coverage in the UK, and put the UK in a position that would stop people worrying about the state of broadband access when relocating a home or business. As things stand now, it is impossible for us to say who people will go to to ask questions about the USC, or exactly what the options will be for people. In theory, this information should emerge very soon if the USC is meant to be completed by 2012, but the reality is that we will probably see the mechanisms in place in 2011 ready for 2012 and those with no broadband benefiting possibly in time for the 2012 Olympics.
Today 20th November 2009 sees the content of the Digital Economy Bill announced, with the various sections available and assorted comments by members of the Government on the BIS website (warning some parts of the site appear slow at the time of writing this (10:45am)). We have split the bill out into its constitute parts to make it easier for people to digest, and avoid confusion.
One thing to ensure people are aware of is that while some press coverage has suggested the 50p broadband levy/tax is not happening, and while it is not part of the Digital Economy Bill, it is expected to be detailed in the Finance Bill at a later date.
Copyright infringement and how to make copyright laws fit for a digital age was a corner stone of the Digital Britain report, and by far has been the issue generating the most vocal response from the public and industry. Today clears up some of the confusion, but of course until the Bill has entered the statute books it is open for debate and change.
Compared to what has been covered in the press previously the proposals in the bill seem somewhat more targeted at those who engage in copyright infringement the most, rather than resulting in people who have downloaded one music track getting letters and their broadband cut off. How well the letter warning system will work depends greatly on how good the rights holders are at identifying people; the general public will not take kindly to being accused of sharing content illegally if they really have not. Therefore, the rights holders need to take great care in not abusing the letter system. Additionally, one hopes that the bill on its passage through the house will cover the issue of privacy, i.e. that the tally of bad marks held by the service provider is kept securely and is not used for marketing purposes (e.g. customers with too many bad marks receive a poorer service or are encouraged to move to another provider to reduce a providers costs in handling the letters). In light of the mobile phone company staff selling customer records, the issue of security and privacy for this data should be high on the agenda.
Of course the hope with this legislation is that people will reduce the amount of material they download illegally (i.e. free) and spend more money on buying the content legally. The digital economy is apparently worth some £16bn and copyright infringement is estimated to cost the music industry £180m and the film/TV industry £150m in lost revenue. In the current economic environment it seems unlikely that people will spend more on music and films rather, they will simply decide to live with less digital content or seek free legal means to obtain/view it.
The Sony PS3 Network has now added a movie store, and while not the first console to offer full films it perhaps offers the largest files. The store can be previewed at videostore.uk.playstation.com and carries films in both SD and HD formats from twelve film studios.
The films are around 2GB in size for SD quality, with HD films weighing in at around 9GB. Prices range from £2.49 to £3.49 and whilst the rental allows you to keep a film for 14 days on the console, it will expire within 48 hours from when you first started watching it. Purchases appear to range from £6.99 to £11.99.
The HD service would just not have worked in 2000, when a HD film at the quality level Sony is using would have taken almost 2 days to download over a '0.5 meg' service; even today it will take around five to six hours on a line that can support '4 meg' downloads, and that's ignoring any peak time congestion. In an ideal world you would want to be able to download the film in about the time it would take to drive to the nearest DVD rental store and get back home, making a strong case for '20 meg' and '50 meg' broadband services. Currently in the UK apart from a few apartment blocks with fibre/Ethernet, maybe 5 to 10% of ADSL2+ users, and Virgin Media XL and XXL customers, quick downloads of HD film are fantasy.
To encourage people to try out the new service, Sony is offering the Transformers movie for download to those registering a Playstation Network account on a new Sony PS3 until 30th November. Existing network users, can buy Angels and Demons and get a voucher for The DaVinci Code.
The Christmas period could prove very interesting this year, as with the schools on holiday and probably many firms taking extended holidays there may be lots of people at home playing games, watching movies or using the various free streaming services on the games consoles. At least by using downloads, while it might be frustrating to wait for a download to complete, it does play content as a download rather than streaming it, so buffering is not an issue. (You can enjoy buffering if you want to, by electing to play the video while it is still downloading). Also the PS3 is not tied into only downloading a film; background downloads are supported, but we do not recommend trying any online gaming with a large download underway.
While other areas and the government is talking about what to do, it seems that Swindon Council has taken the bull by the horns and with partners has created a company called Digital City UK to roll-out a Wi-Fi network across the borough.
The website for the service which is to be known as Signal is relatively sparse, but people can register for an update as the service goes live. The first area of Swindon to be connected will be Highworth, with the remaining areas completed by April 2010.
The free service will be limited in terms of usage, but should allow for basic web browsing and email and people will have the option to sign up for a 20Meg service. The price has not been published but it is said to be significantly less than major broadband services, and charging only starts after a three month trial. For non-residents, pay as you go options are planned.
Swindon is unusual in that it has perhaps the highest broadband penetration in the country. Back in 2007 this was running at around 65% of households, but housing estates under construction were known for slow or no broadband access. This problem was largely solved by the rare situation of BT creating a new telephone exchange.
The new Wi-Fi service appears to be aware of the problems of getting a Wi-Fi signal into properties. Older properties often suffer from thick walls, and newer build properties with the emphasis on insulation will have things like a thin metallic foil on windows to prevent heat loss, and foil backed plasterboard. There is talk of the supply of wireless repeaters and it seems these will form a personal firewall for each home. The issue of security is addressed by the use of WPA encryption, with we presume individual keys so that each user's own data is secure.
How much this new network eats into the revenue from the commercial broadband providers will depend on what the various restrictions on the network are, and what peak time speeds are like. If the service is very popular and works well, then firms such as BT may see revenues drop quickly in the area, and this would likely affect any plans for any FTTC roll-out. The lessons from areas that rolled out their own cable TV many years ago need to be learnt to avoid what could be a good network now becoming a folly in a couple of years time. In broadband terms, this means ensuring the network can cope with increasing demands on bandwidth and give consumers speeds of service that will keep pace with the best that is available.
Norfolk Future Conference this week will see a senior BT executive address the audience, and if the content in terms of BT pushing its ADSL2+ product as reported by Evening News 24 is true, then it is a case of not much change for Norfolk.
Why such a glum response to something that should see over 50% of properties on an ADSL2+ enabled exchange connecting at over 9Meg? The exchanges where BT is rolling out ADSL2+ in the UK are the ones with ADSL2+ from alternate providers already. This means Norfolk residents living in Norwich, Kings Lynn and the other large towns will simply see more choice, but places like Swaffham will probably be waiting until 2012 to see ADSL2+ and maybe even longer.
The reality is that BT Wholesale by 2011 will have an ADSL2+ footprint (75%) that covers less households than what TalkTalk does in 2009 (80%), and TalkTalk are planning to extend their LLU footprint even further than the current 80%.
The demographics of Norfolk are such that it has around 375,000 people living in urban areas, another 175,000 in towns and the fringe areas, with a very large 265,000 in villages and hamlets. The problem being that by enabling a service on perhaps a dozen exchanges you can cover almost half of the Norfolk population.
Commercial companies of course are free to sell their services where they want to, but if TalkTalk believes it can make money in so many exchanges, what is different for BT Wholesale? If the rules and pricing imposed upon the BT Group by Ofcom mean that BT is discouraged from enabling ADSL2+ and true next generation services in the market 1 areas where no other wholesale providers are available, then perhaps Ofcom and the rules they follow from government need to be looked at more closely.
Customers using the 3 mobile broadband services from Monday 16th November may start to experience traffic management, although, if the information on The Register is correct it is only P2P applications that will be restricted. How many use P2P on a mobile dongle is unclear, but it seems it is enough to affect the amount of capacity available to be shared with other customers.
The traffic management is meant to only affect those on a congested cell, so we presume this will most likely mean those in the larger cities, airports, train stations and other areas where you find lots of people with mobile broadband congregating.
3 may be the first mobile broadband provider to twitch, but with the rising allowances and falling prices for mobile broadband it was clear that at some point all the mobile broadband providers would have to either adjust their packages, or implement some form of traffic management. Traffic management on landline broadband has been around for almost as long as ADSL has been widely available in the UK. It is implemented in varying ways with some providers being coy about it and others open to the point where it can confuse some customers.
We expect that in time the various cheap bundle deals for mobile broadband will experience higher levels of traffic management, and those willing to pay more will get more capacity during peak times. Mobile broadband has been hailed as something that will over take fixed line broadband, but while it seems likely many consumers will have a mobile broadband dongle, this will invariably be in addition to a fixed line service.
What fixed line broadband and mobile broadband have in common are requirements to get the data traffic from a local aggregation point (cell tower, cabinet or telephone exchange) onto a fibre backbone that links to the Internet. These costs are going to largely be similar for all technologies, however mobile masts may be able to provide an additional solution of using fixed wireless for the local backhaul.
The next few weeks will be interesting as there is a track record of traffic management not performing as expected when broadband providers implement it, for example people using P2P may shift to other ways of getting the files they seek such as usenet newsgroups and file hosting sites. One growing issue for those carrying out traffic management will be a growth in the use of VPNs (Virtual Private Networks) which are invariably used by business users, but there are signs that P2P users are switching to this method to hide their traffic and may be downloading data abroad and then transferring it to their computer across the VPN.
Telefonica, the owner of O2 UK has published its latest figures, and they show that a major milestone has been crossed by O2. The firm now has 527,126 broadband lines in the UK (figures include both O2 and Be customers). While this looks small compared to the big three of TalkTalk, BT Retail and Virgin Media, when you look back at previous figures you can see that just 12 months ago they had 267,090 lines, and the total net additions of 70,244 was higher than the previous quarter, suggesting the services popularity continues to grow.
O2's broadband service has not been without its problems, the 'O2 Access' product which is only sold in areas where they have not unbundled an exchange has seen various congestion problems which tend to go hand in hand with trying to run an unlimited service over the BT Wholesale 20CN and 21CN networks. How large a segment of the customer base are 'O2 Access' customers is unclear, but we suspect it is a small proportion.
Be Broadband may be the small and sometimes quirky partner in the O2 brand, but it was among the first providers to offer ADSL2+ in the UK some years ago, and is now involved in providing wholesale services to other broadband providers.
Maybe in another 12 to 18 months, unless Orange manages to turn around its customer churn, O2 will over take them in the league tables and break the one million customer market.
Point Topic is well known for its analysis of the UK and overseas broadband market, and has issued a press release showing the proportions of people that will have next generation access (NGA) by various dates up until the end of 2012. Interestingly the Virgin Media DOCSIS 3.0 roll-out is not mapped, even though it will have as much fibre in it as the BT Fibre to the cabinet solution. Previous announcements from Openreach stated that the firm is looking at 2.5 million homes having the option of full fibre to the home (FTTH) by 2012.
| Population covered | Coverage as % of UK population | |
|---|---|---|
| Q4 2009 | 843,000 | 1.4% |
| Q4 2010 | 4,529,000 | 7.4% |
| Q4 2011 | 10,000,000 | 16.3% |
| Q4 2012 | 21,350,000 | 34.8% |
The map is a population density map of the UK, showing where most of us live, the red areas representing the BT NGA roll-out and pink various 'altnets'. The altnets are where various other fibre projects are known about. If one accepts the 50Meg product from Virgin Media as being next generation then of course the map will look different, but in reality the Virgin Media footprint will overlay that of the BT NGA, and should exceed it as Virgin Media claim around the 50% of UK homes passed mark.
This data puts out into the public domain the oft quoted figures that 50 to 60% will still not have next generation access by 2012, and in theory is where the pot of 50p per month from telephone lines comes in. The plan as it stands this week is for this money to be used to push next generation access up to something above 90% of UK households. Next week, when the Digital Economy Bill is announced, the current governments plans should become clearer, and we may even see the opposition parties put their plans out into the open, particularly as we are just some six to seven months away from a General Election.
The biggest debate is whether public money (from a specific levy or general tax pot) should be used prior to what is normally deemed as market failure. Certainly if by 2011 Openreach and Virgin Media are seeing strong take-up for the faster products they may commit to further spending. Remember that while we complain about the speed of roll-out from commercial companies, the time-scales for publicly funded projects are even slower, and the perception is that a lot of money is wasted within these schemes.
The BT Group has published its latest quarterly figures for the second quarter ending 30th September 2009, which are useful for keeping track of where the provider is going, and how its various divisions are operating.
BT Retail, with its 'BT Total' brand of broadband products, and the familiar 'blue bill' telephone service saw its revenue decline by 5% to £2,062m. This reduction is apparently mainly due to a decline in call and line rental revenue. Given the rising numbers of lines using Wholesale Line Rental this is no surprise, and the number of bundled call packages sold may also be reducing revenue. The average annual consumer spend with BT Retail is some £296, and is rising as the customers remaining with BT buy more bundled products. The number of net additions in terms of broadband customers was 72,000 in the quarter, giving a total of 4.9 million broadband customers. Whether this means they are bigger than TalkTalk in terms of customers all depends on whether your are talking consumers, or consumers and business users. BT Vision added 18,000 customers to reach a total of 436,000 customers. Some 90% of new sign ups take a subscription package and the service saw 34 million video on demand views in the quarter.
BT Wholesale saw its revenue drop 4%, but managed to reduce operating costs by 6%. One service not mentioned much is their Ethernet services which are now available from around 700 nodes across the UK. Ethernet services offer the chance of higher downstream and upstream speeds with pricing that is generally lower than the traditional leased line market. It does not get much press coverage due to the pricing still being out of reach from the consumer market (the high prices are partially down to the low or uncontended nature of the service).
Openreach is interesting in that while total revenue declined by 1%, the size of the external revenue (i.e. from selling services to people other than the BT Group) increased by 24%. Total revenue was £1,285m, £299m of which was external. Capital expenditure in the quarter was reduced to £200m from £230m, apparently due to lower connection activity and efficiency initiates. The danger for Openreach is that savings now may store up greater costs in the future, or result in phone line performance degrading. Openreach is responsible for the fibre roll-out in the BT Group, which will be available to other communication providers too and this of course is continuing as expected.
Digg this
Add to del.icio.us
