Source · Select Committees · Public Accounts Committee
Recommendation 6
6
The Department cannot provide certainty to consumers that they will have a choice of internet...
Recommendation
The Department cannot provide certainty to consumers that they will have a choice of internet provider or be protected from overcharging should they become tied to the sole supplier in an area. The Department wants to encourage greater competition in the telecommunications infrastructure market, but in areas that need subsidy, smaller alternative suppliers may gain dominant positions by default through lack of wider commercial interest. The Department believes that provisions for wholesale access in the gigabit programme contracts should ensure that all internet service providers have access to subsidised networks. However, such access may not be taken up if the most popular internet providers find it commercially unattractive to offer their services over a patchwork of different networks each serving a low number of premises. Some consumers, particularly in rural areas, may not be able to sign up with their service provider of choice and may end up paying more for their services. The Department claims price control provisions should ensure that providers cannot price beyond what is reasonably comparable in a given area, but it is not clear how it will define an area nor how price controls will work. Recommendation: In its Treasury Minute response to this report, the Department should set out how it plans to work with Ofcom, suppliers and industry bodies to ensure that all consumers will have a choice of service providers and are protected from overcharging, in particular where they become tied to a monopoly supplier. 8 Improving Broadband 1 Delivering the future programme
Government Response
Acknowledged
HM Government
Acknowledged
6.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 6.2 The department’s proposed contracts include an annual wholesale access price benchmarking requirement. Pricing is compared to the Ofcom regulated price and benchmarked against the department’s pricing database with only reasonable justifications allowed. Where pricing is deemed too high against market benchmarks, the department will require suppliers to revise pricing, ensuring consumers in areas benefiting from public subsidy will be protected from overcharging. 6.3 When scoring bids from suppliers for projects with support from public funding, there will be an evaluation of the quality of their Retail Service Providers (RSP), including the number of RSPs that will use the infrastructure built, product offering and pricing to end customers. In most commercial areas, there is significant competition at the retail level with a number of Internet Service Providers offering broadband services to consumers. 6.4 The government is also working with Ofcom to increase network competition and commercial investment in gigabit capable broadband. The Government’s analysis is that up to 80% of premises in the country are likely to be able to support two gigabit capable networks and that around a third of premises will be able to support three gigabit capable networks. If network monopolies do emerge in these more commercial areas, Ofcom has the regulatory powers to address them. 6.5 In addition, to help support retail competition over smaller networks, government is working with industry to facilitate standardisation and aggregation of operators’ wholesale networks to make them more attractive for retail internet service providers to offer their services on top of them.