Infrastructure Report 2014 Ofcom’s second full analysis of the UK’s communications infrastructure Publication date: 8 December 2014 Infrastructure Report 2014 About this document Every three years, Ofcom is required by the Communications Act 2003 to prepare a report for the Secretary of State for Culture, Media and Sport on the status of electronic communications networks and services in the UK. We are then required to publish the report.1 The UK’s communications infrastructure is a vital enabler, supporting a vast amount of economic and social activity, by both consumers and businesses. This report provides an overview of the state of that infrastructure: its coverage, capacity and reliability. We consider these at a national level and the variation across the UK. The report looks at: • the coverage, performance and capacity of networks and services; • use of spectrum; • infrastructure sharing; and • security and resilience. The main networks considered are the fixed broadband and telephony networks; mobile voice and data networks; Wi-Fi; and broadcast and radio networks. The report includes detailed analysis of operators’ data, external research and an assessment of the main strategic and policy implications. The first Infrastructure Report was published in November 2011. Since then we have issued annual updates, focusing on the areas of the most rapid change such as the coverage and capacity of fixed, mobile and broadcast networks. This second full report will be of interest to those looking to understand the nature, performance and reach of the UK’s communications infrastructure. It will be of direct relevance to policymakers and industry stakeholders and, we hope, will make interesting reading for anyone who wants to explore how our infrastructure is evolving. Alongside this document, we are publishing data from the report in an interactive form on our website, at http://infrastructure.ofcom.org.uk. We are also publishing a number of research reports that we commissioned alongside this document. These are detailed in Annex 4. 1 Sections 134A and 134B of the Communications Act 2003. Infrastructure Report 2014 Contents Section Page 1 Executive summary 1 2 Introduction and background to the report 15 3 Fixed broadband networks 18 4 SME connectivity 57 5 Mobile networks and Wi-Fi 67 6 Broadcast networks 108 7 Security and resilience 124 8 Convergence and seamless connectivity 146 9 Internet networks 153 Annex Page 1 Methodology 176 2 Glossary 180 3 Mobile coverage scenarios 185 4 Research reports 188 Infrastructure Report 2014 Section 1 1 Executive summary Overview 1.1 Communications services are critical to the UK’s economic success and social cohesion. They are used by the average UK adult for over half of their waking hours. The coverage, capacity and reliability of the digital infrastructure over which these services are provided are of fundamental importance to both consumers and businesses. 1.2 The majority of the investment to build and maintain communications networks is delivered by commercial providers, competing to deliver services to consumers and businesses. Ofcom is responsible for the regulatory framework that ensures effective competition. It is our role to help create the conditions that will foster efficient investment and innovation, leading to a wide range of high quality communications services throughout the UK. 1.3 However, the economics of networks means there are parts of the UK that will not be fully served by the market. There are also some services which may not be provided to all by the market. In these circumstances, Ofcom or the Government may intervene to further consumer and citizen interests. 1.4 Who takes action, and how, depends on the levers available. For example, Ofcom has moved to improve mobile coverage by attaching coverage obligations to mobile licences. The Government has intervened to improve the coverage of mobile networks and superfast broadband through public funding to subsidise wider roll-out. 1.5 The challenge when designing any intervention is to ensure that it is precisely targeted, so that it is an efficient means of achieving the policy goal, and at the same time minimises the risk of knock-on effects that could reduce competition or private sector investment. Such targeting requires an accurate and up to date understanding of the state of the UK’s infrastructure. 1.6 This report is designed to provide this information. It follows the inaugural report in 2011 and a series of smaller annual updates. It considers how networks are adapting to increases in demand and highlights challenges for the future. 1.7 We have also created an online map and visualisation tool for much of the report’s data. This allows users to assess the coverage and performance of the infrastructure in their area and compare it to others. The tool is available at http://infrastructure.ofcom.org.uk. Fixed broadband services Availability and take-up of broadband services 1.8 Fixed broadband technology is almost universally available and the average download speed for the entire UK is currently 23Mbit/s. However, broadband speeds available to consumers vary considerably and it is more useful to consider the availability of broadband services in several tiers: 1 Infrastructure Report 2014 • Basic broadband – greater than 2Mbit/s. The Government’s Universal Service Commitment aims for universal availability of at least 2Mbit/s broadband. We estimate that only 3% of UK premises fall below this availability threshold. Although this percentage is small, the lack of even a basic broadband service poses considerable problems for those affected. • Standard broadband – greater than 10Mbit/s. There is emerging evidence that a typical household requires a download speed of around 10Mbit/s. Below this level, demand is likely to be constrained. We estimate that 15% of UK households cannot currently receive 10Mbit/s. • Superfast broadband – greater than 30Mbit/s. The deployment of superfast broadband, delivering download speeds of 30Mbit/s and above, started in 2009. Coverage and take-up have increased rapidly: superfast broadband is now available to 75% of premises in the UK, with take-up of 21%. 1.9 Superfast broadband is being delivered through a combination of commercial roll-out and a publicly-funded programme targeting those areas of the country which commercial providers are unlikely to reach. The Government’s aim is to deliver superfast broadband to 95% of UK premises by 2017. This is an aggressive target and publicly-funded roll-out is currently reaching up to 40,000 new premises a week. 1.10 Finally, we note that 27% of households still do not take a fixed broadband connection of any kind. Some of these will be using mobile data services, such as 3G and 4G connections on their smartphones or tablets. However, around 18% of households have no home access to the internet, fixed or mobile. Challenges for broadband roll-out 1.11 Although the overall availability of broadband services is improving, specific challenges remain for some consumers and businesses. And for those who are affected by poor performance, it is no consolation that the national average is improving. 1.12 We identify four specific sets of concerns: rural availability, city not-spots, the availability of superfast broadband to small and medium sized enterprises (SMEs) and the need for a roadmap from superfast to ‘ultrafast’ broadband. 1.13 Rural roll-out. Reaching the most rural premises in the UK is always a challenge, as it is more expensive to deploy networks in areas of low population density. The Government is looking at the range of technological options which might be used to provide superfast broadband to the ‘final 5%’. 1.14 One specific challenge is that the Fibre to the Cabinet technology commonly used by BT to deliver Next Generation Access (NGA) does not always deliver superfast broadband speeds. This happens when the length of the connection from a customer to a cabinet is too long to support a speed of 30Mbit/s. It is a particular issue in Northern Ireland, where 17% of premises have access to an NGA service which does not deliver superfast speeds. In the UK as a whole the equivalent figure is 3%. 1.15 City not-spots. Availability concerns are not restricted to rural areas. For example, central London also has areas of poor superfast broadband coverage. Such urban 2 Infrastructure Report 2014 not-spots are generally caused when there is no street cabinet to upgrade, because a customer has a direct connection to the local exchange.2 1.16 Work is underway considering how best to take fibre closer to the customer where there is no cabinet. Alternative commercial solutions are already available in a number of urban areas, including wireless solutions from a variety of competing providers. 1.17 Availability of NGA technology for SMEs. Small and medium sized enterprises (SMEs) make a substantial contribution to the UK economy. It is therefore particularly important that they have high quality connectivity. Their needs vary and some use widely available business-grade infrastructure and services such as traditional leased lines. 1.18 However, the improved performance of superfast broadband services compared to previous generations of broadband, coupled with its relatively low price compared to leased line services, means that SMEs will increasingly look to superfast broadband as a primary source of connectivity. 1.19 The current availability of superfast broadband based on BT and Virgin Media NGA technology is lower for SMEs than for residential premises.3 At a national level, 56% of SMEs have access to NGA-based superfast broadband, compared to 75% for UK premises overall. Note however that some SMEs – especially larger ones – will have the option of other high speed connectivity services. We will be investigating the scale of the residual concern, and potential solutions, in the work we have recently announced on the availability and choice of communications services for SMEs.4 Figure 1 - FTTC and/or cable superfast broadband coverage for SMEs UK overall Micro (excl.