Saturday, 25 May 2019

Can we really expect telcos to foot the bill for boosting rural connectivity?

By Chris Kelly, Total Telecom
Friday 17 May 19

The UK's big four MNOs have announced plans for a new scheme to help meet the government's 95% geographical mobile network coverage obligation by 2021

Earlier this week, the UK's mobile network operators (MNOs) announced that they had agreed an alternative deal with the UK government to boost rural connectivity and eliminate Britain's notorious connectivity notspots. Yes, just 72 hours after I published last week's Friday Review calling for the UK's MNOs to get their act together on rural connectivity, the announcement came that a solution had been reached. Who ever would have guessed that our #BringingBritainTogether campaign would make such a quick impact! On a serious note, the announcement reiterated something that we already knew – that UK telcos can't afford to deliver on the government's current plans…

Earlier this week, the UK's mobile network operators (MNOs) announced that they had agreed an alternative deal with the UK government to boost rural connectivity and eliminate Britain's notorious connectivity notspots.

Yes, just 72 hours after I published last week's Friday Review calling for the UK's MNOs to get their act together on rural connectivity, the announcement came that a solution had been reached. Who ever would have guessed that our #BringingBritainTogether campaign would make such a quick impact!

On a serious note, the announcement reiterated something that we already knew – that UK telcos can't afford to deliver on the government's current plans. In a year where 5G launches are demanding billions of pounds of capex investment, it is perhaps understandable that connecting Britain's sparsely populated rural communities is not at the top of most telcos to-do list.

To be fair, the UK government has tried to mitigate this fact by offering discounts of between £300-£400m at its forthcoming 5G spectrum auction. However, this has done little to enthuse operators, who feel that by attaching minimum service obligations to 5G spectrum sales, they are having their hands forced in an inefficient and irksome manner.

This week, I spoke to Vodafone's CEO, Nick Read, to get his take on the situation and to find out how the new deal will enable operators to make a better go of eliminating connectivity notspots.

"The current construct of the UK spectrum auction is that they are linking the 700MHz and the 3.7GHz together," he said.  

"There was an auction of 3.7GHz spectrum a while back and we were awarded 50GHz of spectrum with which to launch 5G. We were one of the larger winners of that auction and we did that because we wanted to launch a really good network straight out of the blocks – we didn't want to rely on this [upcoming] spectrum auction because it could end up getting legally challenged.

Speaking to Total Telecom at Vodafone's press event in London on Tuesday, Read said that the UK should heed the lessons learned in Germany's auction, where prices were driven up by needless bundling of spectrum.

"You look at this auction, where they are linking the 700MHz and 3.7GHz spectrum together and are putting coverage obligations on top. Those coverage obligations are a little bit like the ones we saw in the German auction – they are a bit onerous in their commitment," he explained.  

"What we've said, as an industry, is that actually there could be a better model. We have engaged as an industry, proactively with the government, what we are suggesting is this: Why don't we take geographical coverage to 95 per cent as an industry, covering those notspots that were the area of concern.

"We'll accomplish that for you [for the government] If we do that, what we think is a better utilisation of that spectrum asset is to separate the 700MHz and the 3.7GHz spectrum [at auction], so you don't have to buy both. That allows the operators to optimise their networks depending on their requirements.

"So, my suggestion is, I think this is great that the industry is being proactive and has put a great suggestion forward. It addresses the concerns, therefore let's drop the coverage obligations and separate the 700MHz from the 3.7GHz spectrum at auction," he said.

The UK's big four MNOs are continuing their negotiations with the UK government over the fine details of the new deal, which would see the operators granting access to each other's towers and masts on a reciprocal basis.  Read said that it was important that the 4 MNOs continued to work together to present the government with a viable alternative to their current plan.

"This construct that is currently on the table [the government's former plan] favours BT and EE because they have got the emergency services network and therefore the coverage obligations are less impactful for them. Basically, [under the current proposal], the government is not optimising the financial resources.

"I'd like to acknowledge the fact that BT and EE have joined this consortium, which I think is really good leadership from them. It shows a desire to do the right thing for the country," he added.

Later in the day, members of Vodafone's press team told me that they were hopeful of releasing more details of the proposed new deal in June. Until then, it’s a case of watch this space – but it looks as though Britain's notorious connectivity notspots could be living on borrowed time.

Also in the news:

Ofcom forces UK telcos and ISPs to stop ripping off their customers 

Three UK asks Ofcom to drop its costly minimum coverage obligations 

Ofcom names and shames Britain's worst performing telcos

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