We would therefore suggest that the term “unphoned” is misleading and should be substituted by the generally accepted phrase of “socially disenfranchised”.

However, the fact that the vast majority of the population has access to a telephone line does not mean that they are able to use it to the fullest extent as they will probably be worried about the variability of bills. For most people in truly disadvantaged groups, there is little point in installing a line if they cannot afford to make effective use of it.

Has pre-paid mobile telephony had an impact on the provision of telephony for the “unphoned”?

Although, initially, pre-paid mobile telephone schemes appear to have met with a certain degree of success, closer inspection of the costs of pre-paid mobile telephony has proved a major disincentive to those most in need of affordable telephony access and, for many people, such schemes have proved to be little more than an expensive experiment. As a result, for the disadvantaged, access to telephone networks remains largely by way of fixed-line payphones.

At what point should OFTEL accept that no further measures are needed to increase the penetration rate of basic telephony?

What more should be done to encourage and develop the Residential Limited Service Scheme?

It would be interesting to know why the Kingston Communications scheme has failed to an even greater extent, and what proportion of KC customers default on normal bills, thus requiring the protection afforded by the RLSS.

We agree with Oftel that, in isolation, the RLSS is not very useful without a range of other products to supplement it. The Light User Scheme (LUS) as defined in the Consultation Document would appear to be far more useful to those unable to afford to make fuller use of their telephone under present tariffing options and more effort should be made to encourage take-up of this service. If users cannot make the outgoing calls of most benefit to them, the value of having a phone is vastly reduced.

Oftel mentions the costs and benefits to BT of providing these options and, in view of the various cost analyses Oftel makes available outside the scope of the current Consultation, it would appear that the LUS would be more economical to run.

We would add that the main beneficiaries of the RLSS or the LUS are those with a telephone line already installed. The tenor of the present Consultation would indicate, however, that its aim is to address the needs of those without a telephone line at all. The main barrier to take-up is, as Oftel suggests, the price of installation. Even at a geographically-averaged £99.99 (plus VAT), BT’s installation fee is well beyond the means of those most in need and some form of subsidy must be found to reduce this fee substantially. Cable companies’ installation charges are typically half, or even a third, of BT’s, and those within reach of these networks should perhaps be given more incentive to take up such offers. The fact remains, however, that cable companies are notorious for poor levels of customer service and, having no obligation to provide telephony services, they may offer a poor substitute for BT services.

Should the Light User Scheme be retained?

Of particular concern are two sub-groups of the list of “disadvantaged” groups listed above: the unemployed and the housebound. The telephone is now a prerequisite in the search for employment, and for the housebound it is often their only contact with the outside world and their access to necessary services such as medical support. The telephone is primarily of use to such individuals during business hours, which means that, although most such calls are local, they are all charged at peak rate. Those most in need of peak-rate telephone access from home are least able to afford it and, in our view, the single most effective change to the USO would be the abolition of differentiated peak/off-peak/weekend charging bands for local calls. This would have a negligible impact on other residential users as they would not be at home to make calls!

Another inclusion in the USO should be provision of an optional tariff for unmetered local calls, either capped at a certain level or included in the fee paid for line rental. It has long been BT’s contention that line rental is charged at below cost, subsidised by per-minute charges and, if it is determined that this is in fact the case (which we dispute), re-balancing must be effected where desirable.

Unmetered or flat-rate local calls are a part of USO provisions in other parts of the world (e.g. New Zealand or most States in the US). Not worrying about the length of a conversation has several effects; it encourages more use of the telephone, encourages social interaction and maintains community ties. The aim of USO is not merely to provide that which is technically feasible but also that which is socially desirable. In the current climate, apart from being what increasing numbers of customers want, unmetered access is also becoming part of the fabric of society. When searching for employment or keeping in touch with the world beyond the confining bedroom, having to worry about the number or duration of calls nullifies most of the benefits of current schemes.

Should BT go ahead with the introduction of the Limited Outgoing Calls scheme?

Is the reduction in BT’s gross disconnections adequate?
Is the increase in BT’s net disconnections acceptable?
Is BT’s disconnections policy appropriate?

The main distinguishing factor, we suggest, is whether people are finding it difficult to pay line rental fees or ongoing call charges. We would suggest that call charges are the root cause of more disconnections than the ability to pay line rental, and thus a reduction in call charges incurred would appear to be a way to dismiss these concerns. Either customers should have a cap on the call charges they are permitted to make or the charges themselves should be capped.

Should the ‘100 man-hour rule’ be removed?

However, we suggest that, if this route is chosen, OFTEL implements safeguards to ensure that the cost to the consumer of these “USO alternative” services is no more than what they would pay if they were provided with a connection to the fixed network.

However, we argue that, at present, the USO should not be increased to cover services such as ADSL or any other form of broadband access. Furthermore, we suggest it is inappropriate to consider adding any such condition until at least the end of the current regulatory cycle. Although there is already effective, though unmet, demand for affordably priced broadband services in the UK, it would be wrong to favour one technology over another, particularly at this relatively early stage in the introduction of broadband services in this country. Under current USO regulations, universal provision of broadband access would have to be made at geographically-averaged prices, and this could stifle consumer take up due to increased costs in areas where such access is already economically viable and easily implemented from a technical point of view.

It is plausible and indeed inevitable that, given the increasing importance of the Internet and other services, broadband access will eventually become part of the USO to avert a division in society between information “haves” and “have-nots”. As Oftel states, the purpose of USO is to ‘ensure that nobody lacks access to a basic and essential technology’ and, in due course, broadband access will be considered essential. It is impossible to foresee when this will happen but Oftel must be ready to act quickly and decisively when that moment arrives.

We would, however, like to see every means available applied to telecommunications companies now to encourage them to introduce broadband access - regardless of technology - in “economically viable” areas as quickly as possible.

Oftel suggests changing the social role of USO to try to pre-empt new technologies and services and make them available to all sooner rather than later. Whilst we support this view it must be ensured that the cost to the few (existing users of a service) does not outweigh the cost to the many (potential users) in the short term.

Whilst we do not have the same near-religious faith in market forces exhibited by Oftel and some telecommunications operators we believe that the inclusion of a tariff option for unmetered or capped local calls in USO provisions would do more than any other measure to encourage widespread, effective use of modern technologies. Such an option would drive not only the demand for broadband access from customers but encourage operators to investigate more efficient methods of using their current infrastructure and bring to market innovative technologies more quickly than they would otherwise wish. Furthermore, we suggest that explicitly including any current narrowband or broadband solutions in the USO may ultimately prove counter-productive.

For instance, current technology suggests that the implementation of packet switching throughout the local loop (not only from exchanges, as currently practiced) would improve efficiency and facilitate narrowband and broadband data connections. However, within the near future it may prove more cost-effective to offer “to-the-door” fibre-optic cables.

We welcome Oftel's proposal to take advantage of the review of European communications legislation later this year to lobby the EU to change the rules on USO provision which appear to outlaw any member State unilaterally making changes to its USO provision. Success would give OFTEL the freedom, when it is decided to include broadband provision in the UK’s USO, to introduce the changes suggested here relatively quickly.

The growth of the Internet and other broadband services is at a rate far greater than that of previous technological advances such as television, radio or voice telephony. It is therefore futile to make predictions based on previous timescales so a degree of forward planning by OFTEL and other parties to be able to act very quickly and decisively is imperative.

Is it appropriate to include mobile or narrowband ISDN in the universal service obligation?

Our understanding is that “low speed data and fax transmission” is defined at a minimum of 2.4Kb/sec. Given the relatively high quality of the UK’s fixed line network and the increasing use of data transmissions on the PSTN we suggest that this minimum is raised immediately to at least 14.4Kb/sec and preferably 28.8Kb/sec. The vast majority of consumers can already be guaranteed such levels of access and, even without changes to the purpose of USO, this provision deserves to be included.

We recommend that the USO remains as technologically neutral as possible so as not to stifle innovation and technical progress. Including narrowband ISDN may be desirable in that the technical limitations on its installation are similar to those of xDSL technologies but, as stated above, we suggest that unmetered tariff options (for the purpose of analogue modems) are of far more importance at this stage. As stated above, dispelling the fear of variable and unpredictable connection charges far outweighs benefits from the meagre superiority of narrowband ISDN over analogue modems (64Kb/sec downstream as compared to 56Kb/sec). This technological neutrality also encourages telecommunications operators to innovate without the need for regulations and edicts.

Regarding mobile telephony, we suggest that the market is very different from landline telephony in one very important respect: there was no incumbent monopoly operator when mobile services were introduced. As a result, all mobile operators are expanding their services and provision in order to maintain a competitive edge far more quickly than the Regulator can act. The only factors requiring any kind of regulation are safety and price controls, as have been demonstrated over the past two years. As USO is not the best method of maintaining standards in these areas, we recommend that it would be inappropriate to include mobile services in the USO.

We add only one proviso, related to the issue raised above of the ‘100 man-hour rule’, namely that there may be cases where the provision of mobile technology proves more cost-effective than a fixed line connection, in which case customers should be presented with such an option within the provisions of USO.