BIS have issued their conclusions on the consultation on the spectrum auctions, the outcome of which will dictate the shape of our connectivity when mobile for the next 20 years.
This note examines the conclusions from the perspective of an end user seeking world class 24x7 connectivity, where the notions of fixed, mobile or wireless have little significance.
The whole process has been dominated by how the value of Vodaphone and O2's original 900Mhtz spectrum, seen as a gift by others, would be managed as existing spectrum was re-farmed and new spectrum added so more capacity and possibly more entrants could be accommodated.
The industry working with an Independent Spectrum Broker concluded on a complex package of spectrum caps, spectrum relinquishment, measures to prevent spectrum hoarding, and proposals for reserve prices for spectrum. In the consultation documentation plenty references were made to spectrum sharing to achieve coverage.
The consultation had 35 respondees, 28 of which are available online for study. Of the existing mobile network operators, only 3 (UK)'s response is available for review. It provides a good history of why we are where we are and makes it clear that while unhappy with elements of the spectrum modernisation plan, they, like other Mobile operators will accept it as a package, but only as a complete package. As the smallest of the now 4 operators, they can defend and grow their business with this settlement!. BT, a non mobile network operators also made a substantial submission crying unfair, making the case that the settlement is structured to favour the existing operators who paid billions in the 2000 auction for oligopoly rights and are working very hard to preserve that status. BT Group's call to re-auction everything to optimise value for the 'tax payer' while music to some economic purists suggests few of their radio engineers were asked their opinion. Surely it would have been better for BT if Openreach responded and made a more constructive case espousing the benefits of a clear separation between facilities to be managed and the delivery of retail services. This was the theme of many respondents puzzled at efforts to sustain the vertical integration of a network and service which no longer needs to be so, nor should it be designed in such a way for the next 15years.
While the existing spectrum holders may be content, what of Digital Britain? There is no mention of convergence between fixed and mobile. The plan for Universal Service Commitment got marginalised on three fronts. The notion of a 1.5Mbps service was quietly relegated and coverage obligations were reduced in two dimensions. The 800Mhtz of spectrum carrying the 99% coverage obligation is reduced to 2, 2x5Mhtz blocks of the 2x30Mhtz available. All the best technical advice suggests the nations connectivity would be best served by creating services using blocks of 2x20Mhtz of spectrum. Industry also challenged the notion of building sufficient capacity to support .1% of the population in a cell. Apparently the combined bit carrying capacity in place for all Mobile Broadband users today is a peak hour equivalent of 11.5Gbps. The lack of existing capacity is used as a rationale to suggest it would be impolite and unreasonable to ask for more.
The UK mobile network operators currently hold a total of 352 Mhtz of capacity nearly 4 times per citizen as available in the US and or more than twice that in Japan, but less than in France. The auction will release a further 250Mhtz. There are 50,000 Mobile masts in the UK, 29,000 supporting 3G services. Each costs about £100k to set up but the 2000 auction fees paid amounted to £776k per 3G supporting mast. Even divided over 20 years, there is more spent on licence fees per mast that on bandwidth to those masts.
BIS acknowledged and then ignored the possible role of home cells or small cells which amount to multi-vendor femto cells, where users contribute some of their own bandwidth to improve mobile services in and around their homes and offices. There is less benefit in promoting efficient use of spectrum, when the job in hand is to extract as much as possible in an auction process.
A number of respondents including equipment vendors agreed with the sentiments of Stephen Temple who pleaded for a little more radio engineering and a little less competition engineering.
Here the cost of competition engineering is high and increasing. The notion that Mobile Operators can use 600 Mhz (2x300Mhtz) efficiently from circa 30k macrocells is pretty daft. To meet the taxpayers mobile data needs they will need a million femto cells. They will probbaly attempt to place these on lamposts rather than give users the option to contribute their own bandwidth using their own fixed line resource. Spending hundreds and hundreds of millions of pounds to prevent convergence taking place is a peculiar form of competition engineering.
This spectrum auction and bandwidth rationing process is conducted all in the name of the taxpayer. If only they knew!
All the political parties agree to the premise that investment in universal broadband is now needed. The Digital Britain report allocated £200m out of the Digital Switchover budget to remove not spots and thus it is hoped deliver a baseline service of 2Mbps. In addition Labour in the Finance Bill due March 24th are arranging a 50p levy on phones lines per month, so circa £1-£1.5bn can be invested in delivering next generation broadband to areas the 'market' is unlikely to serve.
The £1-£1.5bn could bring fibre to within 1 km of most premises in the so called final third of the country. Precisely how this exercise is executed is not clear but running cables capable of carrying fibres to 3,700 rural exchanges and onward to circa 20,000 new road side cabinets all of which need powering can be specified. Given these are rural areas, then BT is likely to make available its ducts and poles on a reciprocal basis. That and a quick re-write of how bandwidth is priced and aggregated for all rural users ready for re-sale and the job is done! The projects complexity is not the cable laying or specifying the outcomes, but to ensure the full potential of the connectivity is released, in a manner which changes an entire industry hooked on preserving legacy services. The more immediate issue is how best to fix the not spots using the £200m available.
Upgrading copper looks to be poor value, given the £1,000-£3,000 cost per loop, especially if the Next Generation Fund should deliver fiber to a roadside cabinet reducing the loop length. It suggests a greater role for wifi and self build fibre especially if the Next Generation Fund uses its bargaining strength to assist with sorting the backhaul connectivity while upgrades are in progress.
The USC projects will work from the edge inwards, while the Next Generation fund will work from the nominated high capacity points of handover out to where the 'market' will never reach as far the newly formed Broadband UK can arrange.
The project being created by Broadband UK can be described reasonably succinctly, but how much industry baggage can it tackle along the way? Delivering connectivity to road side cabinets means exchanges can be closed and cost savings released. Pushing fibre to rural areas means the cost of peak hour capacity can drop from £80 per Mbitps to £5 per Mbitps including peering. Mobile companies private circuit bill should drop dramatically. It also means there is room to support commercial projects that need dark fibre. The whole notion of how bandwidth is provisioned for rural users can be challenged. The quality of the underlying bit transport can also be specified to support the objectives of quality home working, advanced home care and delivery of educational content. This is very challenging for a communications industry who decide amongst themselves that such applications are value added services and then call it a competitive market.
It is concerning that folk worry that this public intervention will distort a market . There is no market in rural areas for high speed connectivity because it does not and will not exist unless public intervention occurs. The connectivity that can be created will and should challenge the 'market' to embrace the changes needed to keep UK connectivity competitive.
My hope is that the Final Third First campaign will bring sufficient pressure on rural Tory candidate MPs to force a change in policy, so their constituents can get the connectivity they need to do business and create business.