Cynulliad Cenedlaethol Cymru

I'd like to welcome Members to committee this morning. I move to item 1 on our agenda. We have an apology from Joyce Watson, and this morning Mike Hedges is substituting for Joyce. If there are any declarations of interest, please say now. Okay. It's also important to note that, under Standing Order 34.19, I've determined that the public are excluded from the meeting in order to protect public health. But this meeting is, of course, broadcast live on Senedd.tv and a transcript of proceedings is available in the normal way. The committee has previously agreed that Suzy Davies would be the stand-in Chair should my broadband drop this morning. That would be an appropriate time, that it should drop, as the other committee members can ask the witnesses what's gone on with my connection in my office this morning. So, there we are. Thank you for that.

With that, I move to item 2, and this morning we have an update on broadband. This session is predominantly to update ourselves and the committee on broadband and connectivity issues. And we've also, I'm aware, got the Ministers coming in in a couple of weeks' time to committee as well, so this session will be helpful in advance of them coming to us as well. So, with that, I'll ask the witnesses to introduce themselves, please, for the public record.

Bore da. Good morning. I'm Elinor Williams, and I'm the principal for regulatory affairs for Ofcom's team in Wales, and I'd like to thank the committee for the invitation this morning. It's a pleasure to be here. Diolch yn fawr.

Hi. I'm Kim Mears, and, again, a pleasure to be here. I'm the managing director for strategic infrastructure development for Openreach.

Hello. I'm Nick Speed. I'm the BT Group Wales director.

It's great to have the opportunity to talk to you this morning.

Diolch yn fawr. Thank you, all, for being with us. So, Members will have various questions, and I'll kick off with a few. I think this first one is to you, Nick. I'm aware that you, as BT, have got a deadline of March 2021—this March coming up, next month—to connect 26,000 premises, and that was before the scheme was extended to include a further 13,000 premises. So, is the March deadline still in place and, if so, are you on track to meet it?

Thanks, Chair. I think this relates to a scheme that was signed by BT but is actually being delivered by Openreach. So, I'm sure that the relationship between BT and Openreach will become apparent to all members of the committee during this session today, but this is one for Kim to answer.

Okay. Absolutely. That's fine. Kim. Have you unmuted? Yes, fine. Great.

Can you hear me?

We can now.

Okay. Yes, definitely one for Openreach. So, a further 26,000 premises. The answer is very, very clear to whether we are on track to meet—the answer is 'yes', and we'll connect 20,000 of the premises that we signed up to by the end of March of this year, March 2021, and, basically, the rest is all to be done by the final broadband milestone, June 2022. And the answer is, 'yes'—definitely on track.

'Yes' doesn't quite match my question, though, because the March 2022 deadline was to connect 26,000 premises, and you said 20,000 premises.

Yes, the contract was extended again to include further premises, so there's a total of, now, 39,000 premises.

Ah, I'm with you.

Yes. So, that's the reason why: there are even more premises now in the pot.

So, effectively, the 20,000 premises—. My understanding is the contract was to deliver 26,000 premises by March 2021, and then there's a further 13,000 premises on top of that. Is that right?

So, we've already built full fibre to 17,000 premises, yes—

No, hang on, my question specifically was: the initial deadline was March 2021 to connect 26,000 premises. That was before the scheme was extended to include a further 13,000 premises—have I got that right? Have I got—? Is that right to start with?

So, the answer is, 'yes'. Some premises were taken out, some premises were added in—[Inaudible.]—was rephrased, but the answer is that we're absolutely on track to meet our contractual commitments.

Okay. Okay. So—

I'm more than happy to drop you some details post the session that shows you that rephrasing, what came in, what came out, and where we are today. But to be really, really clear, we are absolutely on track against our contractual commitments.

That would be really helpful, to understand what's come out, what's gone in, because that will probably my question in more detail.

So, you may have answered this, but how many of those premises have been connected so far, of the 39,000 that you've mentioned?

So, 17—17,000.

Seventeen thousand. And by March 2021, it will be—?

It'll be 20,000.

Twenty thousand. Right. Okay. Lovely. Thank you. And just out of interest, Kim, have the coronavirus restrictions impacted at all, in any way, on the roll-out?

So, as you probably all know, we do have key worker status. Build and also maintaining and provisioning continues throughout the pandemic. And just to give you probably a little bit of a flavour of that, we're still building to over 2,000 premises a week across Wales throughout the pandemic.

And when it comes to the targets that are there—you mentioned the 17,000, and 20,000 by end of March—I'm just thinking about your approach of picking off the easy wins on that, rather than perhaps looking at some of the more difficult, rural areas. Is that fair?

No, no, absolutely not fair. So, what's very different for this part of the contract to what people may have perceived around the original—so, contract 1—is there are designated premises. So, we work really closely with Welsh Government in respect of they identify the premises they want covered. Also, as part of that, it's very much around what we call the levelling-up debate. So, Welsh Government have looked across all of the local authorities and looked at where are the majority of the notspots and how do they target the contract extension to those notspots. So, it's definitely not the easy-to-reach ones; I promise you that.

That's right. Before I just bring Nick in, there is, of course, a frustration often that people are told, 'You will now get that fibre connection', and then they're taken out as well. What's your response to that? How should we, as politicians, respond to our constituents when they bring us their frustrations that, 'We've been told we're going to be in, we are one of the 17,000 or 20,000—we're one of the 39,000—and now we're not'?

Okay. So, obviously, both in respect of the Openreach website and also the Welsh Government website, individuals are able to go on and to find out the status of where they are in relation to build and that contract extension. We know—

But sometimes it changes—sometimes that information changes.

No home or premises or business is taken out lightly; it is a joint decision with Welsh Government. So, what do you say? The answer is, obviously, there is a value for money. Some of these are some of the most hardest-to-reach premises. But we do not make that decision alone.

Yes. I suppose my answer is, 'I'm sorry, Mrs Jones, that you were told that you would be in this by the Welsh Government and Openreach, and now they've changed their mind. This is very disappointing.' That's my answer, and I can't really say much else, if Mrs Jones has been told, 'You're going to be in that 39,000', originally.

So, I think that there are a number of ways in respect of, obviously, addressing the notspots—one in respect of what we're currently doing with Welsh Government. Obviously, there's the opportunity as we go forward, between Welsh Government and Westminster, around the Outside-In programme, where there is the potential of £5 billion for 5 million homes. It's called the Outside-In programme; it's designed to tackle those ones that have been left behind. So, there is more funding to come, and, obviously, there's been a commission report that looks at how that money should be spent in Wales going forward, and I think that's really important—that you look and you review how does Welsh Government want to play in respect of taking their share of that £5 billion and how, as in what technology and where it gets spent.

Over and above that—just one last point—we really genuinely try to never say 'no', and that is absolutely genuine. We have something that's called community fibre partnerships. So, together, we've connected just over 5,000 homes at the moment, 130,000 across the United Kingdom, and this is where we contribute—as in Openreach— and using Gigabit vouchers from Westminster and top-up vouchers from Welsh Government. So, there is another opportunity for those who have not.

Nick, you wanted to come in as well, I think.

Yes, I just briefly wanted to come in, Chair, on the impact of coronavirus on roll-out of broadband. Obviously, the past 11 months or so have not just meant that we've had to deliver against the requirements that have been out there, but there have also been new requests, and I would highlight that the requests that have come to BT—[Inaudible.]—to help our vital public services continue at this time—so, obviously, everything from the initial temporary hospitals that we had to the vaccination centres now. So, there have been a lot of extra demands that have also come in that we've been, obviously, really keen to meet, they've been essential, and that's been really important for BT Group to be able to step up during this period.

Thank you, Nick. I appreciate that. Kim, one last question—or two last questions—to you, but just keep the answer short, if you please, because I'm just conscious we've got quite a few questions to get through. So, two questions from me. It's about communicating to people when there is a superfast broadband connection in their area, because I know previously this committee has suggested that the Superfast Cymru project wasn't communicated well to people initially. So, your view on that, just ever so briefly. And secondly, if you could just briefly touch on any issues that you're encountering in terms of gaining access to land when laying cables. I'd be interested to know that very briefly as well.

Okay. In respect of availability, first of all. So, we're looking at, if I look across the Openreach network, circa 61 per cent take-up. So, there is still more to be done, but that is definitely—. From an Openreach point of view, we're a wholesaler; what sits on top of our network are literally hundreds of retailers, including, obviously, BT, and I believe that there is an active role, for, obviously, our communication providers and Welsh Government to really be clear that it's out there to be consumed.

In respect of barriers, wayleaves are always a particular issue, and two things—one, for example, on MDUs. So, I could literally have multiple dwelling units, I could have fibre sitting outside the property and not be able to take it in without a wayleave, No. 1. Secondly, when it comes to land, when you're looking at very, very rural delivery, it could be that you need to identify circa two, three or even more landowners to get to your endpoint, and it's about actually getting really, really a slick wayleave and access process.

Over and above that, other barriers—fibre, new builds. We should not be building new-build homes today without full fibre connection. So, we've obviously got changes going through in Westminster at the moment, looking to happen circa summertime, that will reinforce and say that full fibre has to be there for all new builds. Welsh Government absolutely in my view needs to follow suit and make sure that we are not building, if you like, a bucket with a hole in, because we carry on building new builds without Gigabit connectivity.

Okay. Thank you, Kim. That's helpful. I'm going to bring Helen Mary in for a supplementary—and if you want to then come on to your questions as well, Helen Mary. 

Thank you, Russell, and they sort of follow on. A question about the 60 per cent take-up and how that could be improved. I've been speaking to some councillors in the Carmarthenshire area who've been involved with some of the community projects, and they tell me that they've got some concerns about data protection legislation and how much they're able to share with their local co-ordinators. Has that come up as an issue at all, and, if so, how has it been addressed?

Sorry, Kim's on mute again. There she is.

So, no, not that I'm aware of. Normally, our community fibre partnership schemes tend to not have those kinds of issues, because everybody is involved and it's then about—. And people are actually committing to actually pledge their voucher from day 1. So, if you're pledging your voucher, you see a much—. We've circa seen close to 100 per cent take-up on those community schemes, which make them absolutely amazing. Because people are out there—you normally have a really active community lead, or one of our regional partnership team, who are out there working with the community, and we see much, much higher levels of take-up. But, no, I've not seen that be an issue so far. 

So, they shouldn't have any concerns. If they know that they've got a constituent, as long as the constituent has given them permission, they can let the local co-ordinator know. 

Absolutely. And if there are any issues at all, just pop me a note: Kim.Mears@openreach.co.uk.

Nick, did you want to come in on that?

Very briefly. I'd just like to extend Kim's offer there, if there are individual circumstances here, because, just listening to what you were saying, Helen, if this is a current problem or a problem that's recently cropped up—

Literally yesterday, Nick, they were telling me about it. 

It could be in relation to the universal service obligation, which is an obligation on BT to deliver. So, let's pick it up between us and, between Openreach and BT, we can sort out any data issues that there are there, because there is a different set of rules applying to the universal service obligation, which is an obligation to provide for individuals at an individual level. 

That's really helpful. Just before I come on to my main questions, I think there's been some confusion in some communities where people have been assuming that, if BT Openreach has put the hard-wiring in, if you like, there'd be an expectation that BT then automatically becomes the retail provider, and that's not the case, from what you've just said, Kim—that network could be used by a range of providers.

Absolutely. So—. Am I off mute? Yes. Absolutely. When it comes to Openreach, we're an open access wholesaler. So, if you look on—. And I'll talk about, for example, our superfast products; we've got over 600 service providers, and they're from the big ones, from your TalkTalk to your Sky to your Vodafone, through to BT and many, many others. And if I look—. When it comes to fibre to the premises, again, opportunities over and above BT in respect of being your retail provider. 

That's helpful clarity, thank you. So, if I can talk a bit about closing that digital divide, then, in 2019, the Welsh Government identified 79,000 premises through the open market review that couldn't receive superfast broadband and that weren't in roll-out plans. Is it your understanding that these are separate to or included within—? So, those 39,000 premises that we were talking about earlier—that still leaves 40,000 premises that are not included, out of that 79,000. Is that right?

So, if I go back—. So, first of all, the open market review data is held by Welsh Government. And the reason for making that point is that it doesn't just look at, for example, Openreach as being a network provider; it looks at all others. So, for example, it could be Virgin, or, just recently, you've got Spectrum Internet or Broadway Broadband. So, they have the data across all providers. Going back to your point there, I'll try to give you my understanding, though. On that 79,000, I believe that that is after the 39,000. 

Right.

So, I think those 39,000, going back to 2019, will have already been declared as being in a plan to be delivered, yes. 

Okay, that's helpful. So, from the committee's point of view, that's a lot of properties where there's not access at present.

Helen Mary, is it just worth asking—? I know Kim said that's her understanding; is that Nick and Elinor's understanding on this?

Yes, I was just wondering that. 

It's probably worthwhile asking Elinor, because Ofcom actually have the 'Connected Nations' report, which is an ongoing update in respect of connectivity. Sorry, Elinor.

No, that's fine. Thank you, Kim. I was just going to mention, in fact, Ofcom's 'Connected Nations' report, which is an annual report, published before Christmas, with separate updates during the year. Our latest Wales report, just before Christmas, estimated that there were around 52,000 homes that do not have access to decent broadband via a fixed connection. By 'decent broadband', we mean a download speed of 10 Mbps and an upload of 1 Mbps per second. When you consider broadband that can be delivered wirelessly to fixed locations, which is enough to meet the needs of most people, then fixed wireless access technology—which is available from a number of small and medium-sized enterprises across Wales, and from most of the mobile network operators by now as well—we think that around 35,000 premises in Wales could have decent broadband from this technology. That leaves 18,000 premises in Wales that Ofcom considers do not have access to decent broadband, and that's access to decent broadband via a fixed line or fixed wireless network. As Nick mentioned earlier, these premises might be able to get a connection via the broadband USO. It will be of no surprise that in that Wales report, the 'Connected Nations' report before Christmas, nine out of the 10 local authorities in Wales with the highest number of premises unable to receive a decent broadband were in rural areas—so, Powys, Ceredigion and Carmarthenshire.

Thank you. Nick, did you want to add anything to that?

I think it's a really important point that Elinor makes there about the potential for the fixed wireless access 4G hubs to be able to transform people's connectivity in large parts of rural Wales. When we've been sharing information about the universal service obligation that was introduced almost a year ago, we've been highlighting that potential for 4G in these communities. Because the important thing, especially over the past year, has been to be able to help people to get the connectivity when they need it. People don't want to be necessarily waiting for full fibre to get to their community, which is going to be the best and the most reliable way of connecting in the future. If they've got a need now to home school, or to be able to do their important job at the moment, then we don't want those people not being able to work at home. We need to be able to connect them now, and that's a large number of people that could be benefiting. Certainly, the people who have been contacting me over the pandemic—that's been a solution for a number of people doing really important jobs in our communities, like running our health service, amongst other things.

I'm taking from what you've all said that there are ways to connect those properties that are not currently connected—there are technologies that could be used. If that's the case, do you believe that the Welsh Government—the next Welsh Government—will need a third phase of its large-scale broadband funding schemes to close that gap and to connect those people who are not currently in the scheme? I don't know who wants to start. Elinor.

I think it's important to bear in mind that many of the properties that are still to be connected are in the most remote and rural areas—the hardest to reach and the most costly to reach. Coupled with the high costs comes the complexity of taking infrastructure to some of these places. As you say, it will ultimately be up to Governments to decide how much they are prepared to spend to extend connectivity to these most remote areas. When talking about this, I always like to make the comparison with digital terrestrial television. Everybody believes that DTT is available to everybody. Well, actually, it isn't. It gets to 98.5 per cent of premises in the UK, but in Wales, it only gets to 97.8 per cent. Clearly, there was a decision made at some point that it was just too costly to build more masts to take digital terrestrial television to those places and those properties had to rely on satellite to get television. At the end of the day, the biggest single barrier to the delivery of a decent fixed broadband service is cost. Coming back to that 'Connected Nations' report before Christmas, we said clearly that there will remain premises in Wales that are in the most isolated and remote areas where maybe taking up a fixed broadband service will be, maybe, prohibitively expensive. Ultimately, I think it's a matter for Governments to decide how much subsidy they're going to make available.

Russ, I can see that Nick and Kim want to come in, but I saw that Suzy wanted to ask something, didn't she?

Yes. Are you happy for Suzy to come in—

Yes, yes. That's what I was suggesting.

So, Nick and Kim, if you want to come in, and then I'll come to Suzy.

You've made mention of the fact that the Minister will be coming to speak to you in a couple of weeks' time. I'm pretty sure that the Minister will tell you that he's been putting his hand in his pocket, when, really, he feels as though it should be the UK Government delivering this as a matter that's reserved. I think it's really important to recognise what Kim has touched on earlier—that this isn't just about money; it's about creating the right policy and regulatory landscape so that the market can deliver where the market can deliver and that the subsidies are available for those very hardest to reach. We're talking about—we're getting down to those low numbers of those properties that still do need to get the most basic level of connectivity. But we also need to make sure that people have got access to the highest speeds, so the best level of connectivity. We don't want our communities to be falling behind other parts of the UK. So, we want to get to that—. Openreach are delivering fibre to the premises. We want that to be available and to be reaching more of our communities so that people have got access to the speeds that don't just allow one person in a house to be taking part in a meeting like this, but speeds that can cope with the demands that we've seen over recent months, where it's not just one person that needs to connect to a meeting, like we're doing, but there are other people needing to do their work, or their children needing to learn or their elderly relatives needing to stay in touch and not get lonely. So, we need to be able improve the connectivity everywhere.

Kim, do you want to come in?

First of all, there's the history, if you think about what we've done already. So, on superfast, we've gone from what was a 44 per cent coverage to where we are today, with 95 per cent coverage. If I look at Wales today on full fibre, fibre to the premises, gigabit connectivity, it's 19 per cent—that's behind Northern Ireland, but ahead of England and Scotland. If I look forward, though, the answer is 'absolutely'.

If you look at Wales, 63 per cent of Wales is what Ofcom would call area 3. That means, basically, it's unlikely to have any competition and it's kind of almost—a lot of it will be outside of a commercial roll-out boundary in respect of the ability to do it for the right price point. That 63 per cent in Wales compares to a much—. Elsewhere, we're in the forties—so it's much, much higher. Will there need to be another round of Government support? The answer, in my view, is 'absolutely, yes'. Because the network that we're building today, or that we need to start building today, is not about when we talk about decent broadband, which is circa 10 Mbps; there's got to be a network that supports Wales going into the next 10, 20, 30, 40 or 50 years. So, the answer is '100 per cent, yes'.

Westminster talked about '5 billion for 5 million', which is their 'outside-in' programme. In the spending review, £1.2 billion was allocated and what it said was, basically, that that is the floor, not the ceiling'. Basically, subject to it being proven that there was a capability to deliver more, they would put more money in. So, very, very clearly from me, the answer is '100 per cent yes', and we need to, from a Welsh Government point of view, sit down with the Department for Digital, Culture, Media and Sport to say what is the share, what do we get, and when do we get it. 

I'm really sorry to all the witnesses—I love your detailed answers, but we're struggling to get through all our questions, so just bear that in mind. I appreciate it. Suzy Davies wanted to come in, and then I'll come back to Helen Mary.

The good news is, Russ, that some of my questions later on have already been answered. So, that will shorten the time.

I have two questions for you. One is—. You've spoken a lot about the white premises being primarily in rural areas. Just under 10 per cent of them are actually in South Wales West, which is highly industrialised and very densely populated. So, the question I had on that is: can you confirm for me that fibre has now gone to all commercial premises? Because I have to say, until fairly recently, I was getting properties on industrial estates saying that Openreach was refusing to connect them on the basis that they thought they might be able to sell to them commercially, rather than as part of a roll-out programme. So, I just need to be sure there's no—how can I say—adverse incentive being used by Openreach at the moment to try and sell more of its commercial offer.

Then the second question was on the—. The home is where we have learners at the moment. I'm particularly worried about this, as it looks like schooling and college work will depend on good broadband in the future as well—this is not just for COVID. We all know about the digital divide for some of our poorer families. What's happening at the moment to target homes with learners in them? And is it better for them to be considering the mobile option that we were talking about earlier? It might be one for Elinor rather than Kim or Nick, to be fair. If that is the case, how come so few of these people know that the mobile option exists?

We've seen, during the pandemic, a complete reliance on communication services, and as things currently stand, I don't see that changing any time soon. But I think it comes back to the communications point right at the very beginning. I think it's important for consumers to understand what technology is out there, what technology fits and suits their needs, and to have clarity in the message on how to go about getting connected, whether that's via the broadband USO or whether it is via a mobile 4G dongle, for example.

Elinor, how are they going to know? Because if they haven't got broadband to Google all this kind of stuff, who's going to tell them?

I think a lot of the communications providers do advertise on television. I know that EE, BT, Virgin and other providers do advertise, but how much communication is enough communication? It's about getting the right message to people to think that, yes, it is a message that's relevant to them. But I think—

To make it easier for you, I suppose my question is: is there a role for the Welsh Government here in promoting the existence of these options?

I think everybody has a role in communicating the availability of communication services. This isn't a one-stop shop; I think there's a role for everybody, including Ofcom.

Okay. You may get more questions on that, I think.

Nick.

Just on the home schooling point, I have a couple of points. Each of the education departments in each of the home nations have obviously come to their own solutions on this. BT has been keen to work with each of the Governments in each of the home nations to address this challenge. In Wales, that has seen us provide 6,000 devices, which were with local authorities by the spring bank holiday, for local authorities to deliver to where they identified the need. It was the Welsh Government working with the local authorities to identify the homes that were at risk of being left behind. Those devices are, obviously, still out there. At the same time, we saw in England the Department for Education wanting to issue vouchers. So, we made sure that—

Nick, sorry—Suzy, did you want to come in? Because we're short of—

Are these those MiFi devices?

Yes.

Okay. Because we've had evidence on a different committee that they're not actually being used particularly. But that's maybe for them to go and do that.

We're trying to make sure that we can have consistency in offers so that unlimited data—. We're working closely with Welsh Government at the moment to make sure that that is available for those children who are learning by their phones.

Thank you, Nick. I appreciate that. I think Kim may have wanted to come in, but we're just pressed for time. Did you have any more questions, Helen Mary?

Sorry, I didn't think we'd answered Suzy's question around—

I'm happy for you to, but we're really struggling for time.

I'll ask my—. The other two I've got are supplementaries to Hefin, if we've got time.

That's fine. Thank you, Helen Mary. Kim, just briefly on Suzy's point.

So, we were talking around industrial estates, yes? If I could put where we are in respect of gigabit connectivity, full fibre roll-out, £12 billion investment between now and mid to late 2020s, also including, which is different, for Openreach—we're a balance builder—£3.2 million of that will be rural. Now, all industrial estates will be able to order, wherever they are in Wales, something that's called an ethernet connection, which is basically a point to point, their own fibre from the exchange to that industrial estate. Anyone could order it today. In respect of ones that are not covered, if there are individual examples you want to send me through, I'll be able to give you some detail around whether they are coming soon or where they are in the schedule. I'm more than happy to do that.

Thank you, Kim. I appreciate that. Mike Hedges.

Diolch, Cadeirydd. Two questions. The first one is about the contract. Does the contract specify minimum upload and download speeds, and does it specify whether you have any fibre to the premises or fibre just to the cabinet?

Kim.

Okay. The contract is really specific. It's gigabit connectivity, which is full fibre to the premises.

I like these short answers.

Yes. I wish my house had it. And the other one is: the Superfast Cymru project included a gainshare clause where the Welsh Government received a portion of profit generated by BT from the new superfast structure. Does the new contract have that?

Yes, it does.

Even better.

Quick answers.

Sorry. The answer is 'yes' and—

That's fine.

Can I come back to one question? You talk about having fibre to the premises. I live in an urban area of Swansea. We certainly don't have fibre to the premises. I mean, when would we expect, in urban Swansea, to have fibre to premises?

Swansea is one of our fibre cities that we have announced. Now, in respect of when it will all get done, I can't give you that answer here, but, again, I'm more than happy, if you want to drop me a note, to tell you what the schedule looks like and what that might mean.

There we are. So, Mike, we'll drop Kim a note with particular postcodes. Nick wanted to come in as well, I think, on Mike's point.

I'd just briefly refer to the written evidence that we've submitted from BT Group, where we do set out what needs to happen for all premises to get to 100 per cent, full fibre to premises, roughly just after the next Senedd elections, and what the conditions are that you would need to be able to deliver that, looking at the planning and the policy landscape.

Thanks for you evidence as well yesterday. I know some Members may not have had a chance to see that yet, Nick, but I appreciate that being sent to us as well. Any further questions, Mike? If not, Vikki Howells.

Thank you, Chair. My questions are on futureproofing. So, the Welsh Government's large-scale broadband programmes have focused on connecting premises to superfast broadband of at least 30 Mbps. How long do you anticipate that that will actually provide people with a good broadband experience?

Who's that one for? Go on, Kim, by all means, and then Elinor can come in.

So, for the average home, for some considerable time. But the important thing is that what we need to do now is build the network that we can see out for 10 years' time, 20 years' time. If I look, just from an Openreach point of view, BT, our parent, is investing £12 billion between the mid and late 2020s. What we need to do is be actually looking at Wales and to say, 'If I go to mid to late 2020s, how do I get to the place that I'm literally futureproofing?' Because what we have seen from the pandemic, whatever the new normal is going to be, it will not be, in my view, what is was before, in respect of increased homeworking, and it's about what do you actually exploit the technology with. So, for example, healthcare, home care, schooling—everything, I believe, will be different, so we need to start futureproofing for years right here and now.

And just going back to a point that Nick made, when you look at some of the evidence that we sent through prior to the committee, this is a team game. So, it's not just around, for example, investment from either us or any other network builders; it is also around making sure that the environment supports that, and also what we need to do in respect of co-funding through both Welsh Government and Westminster around going further and faster. But the conditions have got to be right. I'll just give you one example—sorry to be a pain. At the moment, when we lay down full fibre, there is something called cumulo, which is business rates. So, even though, for example, my business case for full fibre is a case that is circa 20 years, I start paying business rates on the fibre that I lay down straight away. So, there are things that can be done—not just for Openreach, but for all other providers—that would encourage us to go further and faster.

Okay, thank you. There are a few points that I'd like to pick up on there from your answer. So, firstly, what would be the cost and benefits if the Welsh Government moved to invest more in fibre to the premises broadband across Wales?

There is a document, which I would love to share with the committee, from the CEBR, and that's the Centre for Economics and Business Research. And, basically, the one that I've got at the moment—the document I've got at the moment—talks about significant improvements in productivity, really enabling the future around homeworking. And I know Welsh Government has got an ambition around 30 per cent homeworking. It documents all of that and much more in respect of sustainability. The document is just being updated to reflect, obviously, if you like, the new world post pandemic, and that should be out literally within weeks. I would love to share it with you all as soon as it's ready.

Thank you. My next question—. Oh, go on, Nick, did you want to come in?

Just to echo Kim there. I think this report that we've highlighted in the written evidence—an independent report that looks at what the road map to full fibre is for everyone—does give you some of those headline benefits. But it's believed that the increase in productivity would be an estimated £59 billion across the UK, and, of course, the tax revenue that we could gain from that should mean that any upfront investment we gained over the long run could be supporting the rest of the roll-out. So, there's a reason to get on with doing this. And the question for Wales is whether it wants to bring these benefits forward by augmenting what is currently a delayed investment from the UK Government, as we've heard already on the £5 billion over the Parliament being downgraded to a commitment of £1.2 billion, and that's where we've got this interplay between Westminster and your ambitions from the Welsh Government. 

You've anticipated my next question there, Nick, and I'll be happy to take quick-fire answers from all of you on this one. So, the UK Government aims for all UK premises to have access to full fibre broadband by 2025, and had pledged that £5 billion will be available in Wales to support this effort. But do you think Wales will get its full share of this funding, and will the funding that Wales gets be sufficient to allow all who want it to actually get full fibre? I'm interested in all of your views on that. So, Nick, did you want to round up what you were saying on that first?

Yes, I can go first on that one. We're disappointed at the announcement of the spending review at BT. We understand that that decision was made because there were doubts about whether the industry could move quickly enough to be able to deliver on what was the target at the general election, but we believe that we can. You've heard from Kim about  the numbers of properties that Openreach is able to reach on a weekly basis, so we are disappointed that the ambition is being dropped, and that's why we've come forward with our suggestions as to what could be done to put this back on track and what's the policy and regulatory landscape that means that we can crack on with this.

Kim, did you want to come in there?

Yes, absolutely. The £5 billion is absolutely needed. Let me just talk from Openreach, and I'm actively engaged with DCMS in respect of the Outside-In programme. I don't believe that we're talking now about nationwide coverage by the mid 2020s. I think that that is probably—. It has been extended. I think the £1.2 billion is in the spending review. They've assured me that that is the floor and not the ceiling, and that, subject to a demonstration of the capability, there's more money to be pulled down.

Let me just give you an example of that capability and what I'm talking to Westminster about. We're building over 40,000 homes every week throughout the pandemic—circa one every 15 seconds. This year, I am absolutely on target to build circa 2 million homes, and next year I will do more. By March 2021, our first big ambition as part of that 20 million build was to get to 4.5 million homes. I'm absolutely confident I'm going to get there. So, what I'm saying is, to be really clear, we have got a machine that is up and running and is delivering full fibre across both urban and rural. It is capable of doing more, and my plan at the moment is to convince Government that we can do more. We can call down the funding and get on with them.

Thank you. Elinor.

I pick one particular point out of the UK Government's consultation document, which they published before Christmas, and the procurement strategy, and that is that they've said they're going to maximise coverage in the hardest to reach 20 per cent of the UK by 2025. They've said that homes and businesses that do not have access to superfast broadband will be prioritised, and I think that that must be the right thing to do. I think the priority must be those premises without decent broadband or with comparatively low speeds at the moment, and the priority has to be those in genuine need of fast, reliable and affordable services.

Thank you very much. My final question, then, is on the National Infrastructure Commission report that some of you have alluded to. It argued that too much attention had been paid by policy makers to promoting fibre to the home technology in the UK and not enough to improving mobile broadband provision. Do you agree with that and how effective do you think Welsh Government interventions have been in improving mobile infrastructure? I don't know who wants to start there. Nick.

I'll ask Kim to—. Oh go on, Nick, you go first.

I'll go first—

Everybody is eager to answer this one.

I'll go first on this one because, obviously, BT Group does include EE and our own BT Mobile. So, we span both the technologies that you mentioned there, Vikki. So, there are some really useful recommendations in this report, and we really welcome the attention that the infrastructure commission is giving to digital connectivity. It's really timely, obviously. The recommendations that are useful include recommending the barrier-busting taskforce—I think we've spoken at length this morning about some of the barriers that remain in place—and also calling for the planning regime for telecoms in Wales to be brought in line with what we see in England and in the other parts of the UK. But we do take the view that fibre to the premises should be seen as the gold standard for connectivity in the home and what we are aiming for.

That said, mobile is incredibly important. It can play a role where costs for fixed deployment are currently prohibitive, as we've discussed already. So, we do think that equal attention needs to be given to all forms of digital infrastructure, and what you focus on will depend on what your current connectivity objectives are. Do you really want to adjust to this short-term need of just making sure that people have got their 4G fixed wireless activity, or are you looking to the longer term and making sure that we've got the futureproofing that we've already discussed? So, it's not an either/or, it's a both, but fibre to the premises is gold standard. 

Okay. So, Nick doesn't agree with the National Infrastructure Commission. Elinor, do you agree with the National Infrastructure Commission?

Well, I'm—

I should come to Kim, really, but—[Inaudible.] Go on, Elinor. Sorry, I interrupted. You carry on. 

No, no; it's fine. Well, I'm with Nick, I think. I don't agree with what the infrastructure commission says in its report and, as Nick says, the technologies, they need to complement each other. We need both. Nick has mentioned futureproofing and making sure that consumers have ultra-reliable connectivity, and I think—. One of the things that is not mentioned in the report is Ofcom's wholesale fixed telecoms market review. This isn't considered at all, and I think the way that Ofcom is going to regulate the market as of later this year up until 2026 will—I think it's going to greatly change the level of commercial viability. So, I think, when you've got higher commercial coverage, it's going to mean less public subsidy. And the report makes no mention of that at all. And I think, on mobile, when you look at where we are with 5G and take it back a step to 4G coverage, 4G coverage from all operators in Wales is currently at 60 per cent. Now, the shared rural network is going to have a transformative effect on coverage in Wales, but it is going to take a bit of time. But, at the end of the day, we need both. Both technologies need to complement each other and it's not an either/or approach, I'm afraid.  

So, Kim, I'll come to you, but just to point out Vikki's question is asking do you agree—. In fairness, the National Infrastructure Commission isn't saying it's one or the other, they're just saying there's too much policy, maybe, they're putting too much attention on fibre to the home. So, do you agree?

So, no, I don't agree. I think, as I said before, what we're thinking about now, what we're building now, is network that will last us for decades, going forward. I'm not saying there shouldn't be upgrades and further extensions of mobile, but I'm absolutely saying that we need to lay down a fixed network. What we also have to remember is that, actually, to support most mobile, it requires full fibre to be delivered to the mobile site. So, it's never a case of either/or. So, what I don't agree is—. The commission—and Elinor described it really well—some of its data points tend to go back to, probably, 2018. A lot has happened since, from the work with, obviously, Ofcom and the WFTMR, which would encourage and incentivise full fibre deployment, not just by us but also by other operators. For example—. So, physical infrastructure access—so, this is access to Openreach's ducts and poles at regulated prices—again incentivises other alternative providers to build networks. So, for me, the answer is 'no'. I absolutely believe that we need to invest, both in respect of commercially and co-funded, in a full fibre network for Wales, going forward. 

One last point: it kind of suggested that, if you used the pot of money—on the £5 billion, and Wales's share—in respect of rolling out mobile deployment now, there would be another pot of money at some stage in the future where you could go full fibre. I don't know whether that's true or not; I'm leaving the question open. Do we think that that might happen?  

Thanks, Kim. Anything to come back on, Vikki, or have you finished your questions?

No, that's great. Thank you. 

Thank you. Just out of interest—you've all disagreed with what the National Infrastructure Commission have argued—anyone care to speculate why the National Infrastructure Commission have argued the point that they have? You don't want to.

No comment. 

Just to be fair, I think that there are absolutely elements within the report that I think we can all support, which are around the barrier busting, the supporting activities around getting the job done in respect of the outcome, as in what is the job—fibre versus mobile, you know.

Yes. Perhaps I'll ask Elinor. From your perspective, the—. I'm assuming that mobile operators would agree with the infrastructure commission. Am I—? Would that be fair?

I'm not sure they would, to be perfectly honest, because, as I think Kim mentioned, with mobile coverage, you need fibre to provide backhaul from the masts, so I think the MNOs would say, as we've all said, that you would need both.

Interesting. Thank you. Suzy Davies. Oh, sorry, Nick wanted to come in.

I think we're going to come on to mobile, aren't we? But, bear in mind as well that there are developments happening with mobile. So, as has already been mentioned, we've got the shared rural network, which is going to improve coverage. EE already is the leader in terms of coverage across Wales—it's got the greatest share—but the others, through the shared rural network, will be starting to reach the same level of coverage. And remember too—and we've discussed this, Chair, at some length—you've got the emergency services network that is being built in Wales, and there are some sites in that, in those very hardest-to-reach places, parts of Wales, that we believe will have a potentially transformative impact, particularly in rural Powys, Ceredigion, Gwynedd. 

No problem. We've got two sets of questions left, so we've got five minutes for Suzy Davies, five minutes for Hefin, and, if we've got a little bit of time, I'll bring back in Helen Mary. Suzy Davies.

Okay, thank you. Thank you, everyone. I just want to talk about competition a little bit. I'll have a question for Elinor in a minute, but for Nick and Kim first. Kim, you mentioned that Wales, as compared to England, basically has got about 60 per cent of not low-hanging fruit. Why isn't Openreach more active in Wales, then, if it's obviously got a bigger gap to fill? Is it because you don't have a lot of competition, as we've discussed, or Nick mentioned earlier?

So, I think—. So, historically, I think, if I look in Wales, it would be either Openreach, or, in the main, on fixed, Virgin network. What we are seeing—which is brilliant news, because, when it comes to getting the job done, we firmly believe there is room for Openreach and others—. So, just recently, we're beginning to see Broadway, Spectrum, all announcing plans in respect of deployment of full fibre across Wales, which is fantastic news for Wales. If you go back to the previous co-funded projects that we've had, where we've funded alongside Welsh Government, there hasn't been a massive competition, certainly in relation to fixed, but I see that that's changing and that is good news.

Is that because of public subsidy, or is there just something else that's making it easier to become players in the market now—[Inaudible.]?

I just think—. I think it's—. I don't think you should ever underestimate how tough it is to build networks, and it's, when it comes to Wales, as I said before, 63 per cent area 3, which just means it's pretty rural, yes. It is tough building networks, and one thing I would say, from an Openreach perspective: there is probably no-one like us that is able to build those networks at that scale. So, we are now starting to see others coming forward—as I said, the Spectrums, et cetera—but, up to now, there's not been a lot of competition out there. It is tough.

Could I just have your opinion, then, on some of the new entrants into the market, about how, once they realise how tough it is, because you already know it's tough—? Do you think there's longevity in their interest, without public subsidy?

To be honest, I don't want to put—. I think that they've obviously got—. Without understanding, and I genuinely do not understand their plans—. We've certainly seen, if I look, probably, outside of Wales, a number of alt nets starting to build. They're starting to build at volume. I don't know their plans.

Fair enough. It was probably a bit of a cheeky question to ask you. It's just that Openreach has been here a long time and knows those difficulties really well. So, what can we do to persuade you to do more with less Government subsidy, then?

To do more with—?

With less Government subsidy.

So, I think that that's already happening. So, if you look at Openreach, I mentioned it earlier on—one thing that absolutely makes us different is that we're going to be a balanced builder. So, we've said 20 million homes. Of those 20 million homes, we've said 3.2 million of them are going to be commercially rural funded. If you look in Wales today, we've already announced our first 100 locations—rural locations—where we're going to be building commercially with no public subsidy.

Okay. So, I'm tempted to ask: what's changed, then? Is that a question I'm allowed to ask?

So, going back to that commission report, some of the things that have changed are certainly going back to the WFTMR and the work with Ofcom that says where do they and how do they incentive us to build more, if you like, in the non-commercial areas going forward.

Well, thank you for the reminder on that. Nick.

We've included—. Very briefly, because I think we've included this in the written evidence as well, it's useful for the committee to consider differences across the UK. So, for example, in England we have seen DCMS issue formal guidance to local authorities there that they should permit some of the innovative techniques for laying new fibre that would allow it to go faster quicker. We'd like Welsh Government to follow that approach. The Minister local government and planning here has indicated that Welsh Government will require fibre to be included in all new homes; we want to see that happen. And then business rates as well, which is another one of our asks—in Scotland you've got a lower pay-back time for relief on business rates; it's seven years. So, that's something that committee might want to consider going forward as well.

Thanks for that, Nick. As Russ said earlier, some of us haven't had a chance to read your report yet, so that's really helpful. Just two final ones from me. On this point of new builds being connected from the very beginning—Kim was talking about it earlier—this is my question for Elinor, actually. What's the position from Ofcom's point of view about buyers of houses being tied into not fibre to the house and all the rest of it, but the actual providers? I'm certainly coming across that where we've got new builds, where part of the contract is you must take your broadband out with X, and X is not always the cheapest broadband provider, either.

You're just on mute.

Can you hear me now?

We can, yes.

I think on this—and Kim can probably come in on this as well—Ofcom has made Openreach's ducts and poles accessible to other communications providers for a long time now, and, over the last few years, we've shifted the emphasis, if you like, of wholesale regulation to be more supportive of investment simply by providing incentives for competitors to Openreach to invest in new fibre networks. We do this by taking different approaches to regulation in different parts of the country. Kim mentioned earlier about 60-odd percent of Wales being in area 3, and this is where there's hardly any competition at the infrastructure level at all. So, we've consulted extensively on this over the past year, and we're looking at making a statement on it over the next few weeks. But, as I think I mentioned earlier, that will incentivise competition, it will make sure that more competitors do enter the market—Kim mentioned Spectrum Internet earlier—and it's good to see new entrants. But—

I'm not talking about the infrastructure; I'm talking about the broadband providers using the Openreach. So, it's not the connection that I'm talking about—it's your Persimmon Homes saying, 'It's great that Openreach have laid this stuff, but you're only allowed to have your broadband through', I don't know, 'Persimmon R Us Broadband'.

Elinor, do you want to come in first and I'll bring in Kim?

Well, I was just going to say, I'm not aware of any of the homebuilders actually specifying that. I don't know whether Kim wants to come in on that.

Ever so briefly please. Sorry.

So, specifically for new build, we work with the majority of all of the largest developers. Anything over 20 premises and above, it's fibre to the premises free from Openreach when we build it, and below 20 there's a rate card that really encourages the developer to pop in full fibre. And remember, going back, you've got the legislation that's coming through in the summer that will mandate that it all has to be full fibre. 

Now, of the developers that we work with, once the Openreach network is there, alongside it could be another, so there might be a Virgin network on the same site. Obviously, on top of those networks from the Openreach network, you've got all of our communication providers, which gives you consumer choice. Now, some developers use a network provider to create the onsite infrastructure, which does not allow Openreach in, and in those cases it means that the consumer has very little choice in respect of the communication providers that sit on top of their network. 

That's what I'm talking about. 

So, what you were describing, yes? 

I may have to press you for time. Really, really sorry. We've got more questions, I'm ever so sorry. Can we take this up perhaps—

Yes, that's fine. Thank you, Russ. My question on planning has been answered by Nick, so that's fine. 

Thank you, Suzy. Apologies for having to restrict the end questions a bit. Hefin David. 

Are BT Openreach involved in providing infrastructure for any other public sector broadband initiatives? 

Nick.

On this one, I would mention BT's involvement through the public sector broadband aggregation network in improving connectivity through the local full fibre networks. So, securing funding from the Department for Digital, Culture, Media & Sport to be able to improve infrastructure. We're doing that in north Wales, so improving connectivity to get up to faster speeds around GP surgeries and schools, and we are getting work under way in the Cardiff capital region, so in your area, Hefin, and also in Pembrokeshire. So, that's DCMS funding that is going into supporting improved connectivity around public services. 

Hefin, Kim wanted to come in. Kim.

Just to add to that, obviously, the local full fibre networks, as Nick's just described, are part of the DCMS hubs programme, and the rural gigabit connectivity scheme. So, again, Openreach are actively involved in LFFN and also the rural gigabit vouchers as part of that scheme for our community fibre partnerships. 

Are these schemes as effective as they should be? 

Who wants to take that? Kim. 

So, if I look at community fibre partnerships, I 100 per cent believe it goes back to our earlier conversations on some of those that really had none. We've got a pipeline in Wales at the moment of over 230 schemes, communities that we're looking to co-fund with vouchers. And so far, just over the last two years—because a lot of people were waiting because they saw what the Welsh Government contract was doing with us—but over the last two years we've connected about 5,000 homes through those community fibre partnerships. So, absolutely yes. 

Nick. 

Just briefly, it's another tool in the box to help close the urban-rural divide, to help more public sector staff work remotely and efficiently between sites.

Thanks, Chair. That's about as good as my broadband is allowing me to contribute now. I'm going to sign out. 

Can I just ask about how effective the universal service obligations have been? Can I ask that question perhaps to Kim? 

So, I'm going to pass over to Nick first of all. The universal service obligation is an obligation that sits with BT, which is the parent. So, I'll pass to Nick to take you through that one. 

Nick. 

Thanks, Kim. So, universal service obligation introduced—you're coming up for a year now—. You know, Ofcom, we have a duty to report to Ofcom what are the figures for what we've delivered through the USO, so we do that at six-monthly intervals. So, there'll be another one of those next month. I think Elinor might want to pick up on some of the specifics about what's been delivered to date. There's a number of properties that have been connected. Both Kim and myself, we're copied in on an e-mail from someone in one of the hardest-to-reach communities in the Wrexham area recently. So, it is making a difference, but it's—

I'm really sorry, we're a little bit out of time. I do apologise for interrupting, Nick. Can I just ask how many homes has BT connected through the scheme? 

We report to Ofcom, so they report on the figures for us—

[Inaudible.]

In the 'Connected Nations 2020' report, it says that 420 properties in Wales were connected by 7 September, so that's in the first six months. It's a partial story, though, because, remember that at the same time that people connect to us, they might be wondering about the 4G fixed wireless access, or they might be deciding to actually go with the community fibre partnership as an alternative, when they might want to group together as a community. So, those elements wouldn't be included in the reporting. But at the end of the day, it means better connectivity for people. 

We know that we're not there yet with that; we know that there are improvements that need to be made and there are some changes being made to the universal service obligation delivery. There have been some challenges, which I know that you're well aware of from your own constituents, around communication issues and people being landed with bigger bills than they expected. So, within its first year, this is a scheme that we've needed to constantly go back to and we're learning from it all the time to try and make it better.

Thank you, Nick. Absolutely. Is there anything you wanted to add, Elinor, or not, on that point?

Only to add to what Nick said, really. I think it is early days and there have been teething problems with the initiative. But I think, two things: clarity of information being provided to customers—I know that BT is working on this—and customers receiving high quotes, and that's not a Wales-specific issue, it's been an issue that we've had raised with us by consumers across the UK. Ofcom has opened an investigation into this. We did that before Christmas, and that investigation is ongoing. And in the long term, I think the broadband USO will have an effect on availability in a positive way.

Thank you, Elinor. Can I apologise to the witnesses, as well? Sorry if I've been bossy or interruptive, but I'm conscious that we have to finish on time today, because Plenary is starting earlier as well, so we're rushing to get through all of our questions. So, apologies for that.

There are, perhaps, one or two questions that we didn't get around to answering and I know Helen Mary had a couple she wanted to raise as well, but they may have been addressed, actually. Do you mind if we take up some questions with you over e-mail at the end of this session? That would be helpful. 

Absolutely.

Absolutely. Or more than happy to do one-to-one sessions—whatever you prefer. So, happy to set something up offline, we really are.

Thank you. We appreciate that.

Yes, likewise. Ditto.

Thank you very much, Nick, and Elinor. Thanks ever so much. Diolch yn fawr. That brings this item to an end. We'll take a five-minute break and be back in five minutes. Goodbye, all.

Welcome back to the Economy, Infrastructure and Skills Committee. I should say that our next session is a private session in regard to remote working, where we will have a couple of academics before us. The following week—next week—is half term, so we won't be meeting. The following week after that, on 3 March, we have city and growth deal witnesses coming before us. So, that's just to let our stakeholders know what we've got coming up in terms of our work schedule.

With that, we move to item 3. Under Standing Order 17.42, I resolve to exclude members of the public from the remainder of today's meeting, if Members are content. 

Content.

Thank you.