Examination of Witnesses (Questions 134-139)
TUESDAY 8 APRIL 2003
MR DAVID
WILLIAMS, MR
PETER JAGGARD
AND MR
ROGER WALKER
Chairman
134. Good morning, gentlemen. Mr Williams is
Chief Executive of Avanti, Mr Jaggard is the Channel Sales Manager
of Firstnet, and Mr Walker is ISP Manager of Firstnet. In this
situation Firstnet offers wireless broadband services, and Avanti
operate a satellite-based broadens service. In this particular
session we are looking at those sort of broadband services that
are not provided either through the telephone system or through
the cable network system. To what extent do you see your future
business being concentrated in rural areas as against urban areas,
given what we have been hearing about the limited access of broadband
on land-based networks in rural areas?
(Mr Williams) We are a fairly small and lightly capitalised
company and, therefore, we are compelled to focus our efforts
on markets which are most likely to generate the highest returns
in the shortest time frame; and therefore at the moment we are
focussing on the provision of services to companies who have fairly
significant budgets. Satellite technology is unique in its ability
to deliver broadband services regardless of geographical limitations
and therefore, inevitably, one ends up spending a lot of time
with companies which are located outside large urban conurbations,
and it is inevitable that the majority of our business is going
to be transacted outside those conurbations. We are not chasing
business on the basis of geography; we are chasing business on
the basis of what can make us the most money in the shortest time
frame.
(Mr Jaggard) Firstnet have just acquired
a PTO licence from the DTI; it was previously held by Tele2 but,
unfortunately, Tele2 went into receivership so we have had it
for four months now. We have improved the service quite dramatically
and now have about 3,500 wireless users throughout the UK. The
Spectrum Licence is from 3.6-4.2GHz. Code powers were applied
to us from the DTI to ease deployment of the wireless network.
What we have found is that most of our potential and existing
clients are in unenabled exchange areas; that is where the demands
are currently and continuing. We are certainly working with the
Regional Development Agencies, as mentioned by the previous speakers.
We have spent a lot of time with the RDAs because the majority
of the people they are looking at are not covered and have a need
and demand—business need and commerce—in the future.
We are just putting a wireless broadband scheme in for Sleaford
working very closely with the RDAs. Increasingly, however, we
are being asked for wireless capabilities, last mile/first mile,
within urban areas as an alternative, as a resilient solution,
to businesses that use typical DSL services.
135. Are there any advantages to either of your
systems compared with a land-based system? Would an urban-based
business with cable or broadband accessed through the telephone
system choose to use a wireless or satellite-based system as a
matter of choice? Are there advantages with that system?
(Mr Walker) I think in terms of wireless it has the
ability for greater geographic reach from a central point than,
say, traditional DSL. DSL from a land-based system will reach
maybe six kilometres from an exchange area; whereas from a central
point with wireless technology it will reach 11-15 kilometres.
In that respect we have a greater potential to cover a community
or a community area with wireless technology. Also we have the
ability to tie that up into mesh networks and stitch those networks
together to achieve a greater rural focus.
(Mr Williams) In our case we have contracted business
in large towns in some instances where customers regard our solutions
as better than terrestrial alternatives, for one reason or another.
It is often the case even within a franchise area, or an area
which has been equipped with DSL for a switch, the service is
not universally available within that geographical area. However,
there are other reasons why people choose our services—sometimes
it is a matter of quality. I would echo what the previous speaker
from NTL said, in that DSL has hijacked the term Abroadband. Many
people now regard broadband as being one and the same thing as
DSL, and it is not. DSL is one particular technology that can
deliver broadband, and there are some reasons why it is not very
good at doing that in many circumstances. One of the things that
has hampered our ability to sell certain of our satellite products
in very large numbers is price. We do not have the resources of
BT and we are not able to very dramatically subsidise the cost
down in the hope of recovering profit over a period of four or
five years. However, we have recently developed a new technology
which is being beta-tested during the summer months which uses
a combination of very high powered satellite with very short range
wireless technology, which enables us to provide very high grade
broadband services to anyone, anywhere, at a cost which is directly
competitive with a cost that one pays for DSL or cable in an urban
situation. An example which occurred to me this morning is, for
the amount of money that BT has just announced it is spending
on changing its logo, which is £5 million, I could equip
350 rural communities with broadband services.
136. You have answered my next question which
is the extent to which you feel that your technologies have the
potential to become competitive with the telephone or cable networks.
Mr Williams has just touched on that. I do not know if you want
to deal with that?
(Mr Walker) "Competitive" carries a few
different meanings. In terms of generic broadband services provided
by cable companies or BT it tends to be associated with additional
mediums so you will get your telephone line mixed with your broadband
access delivered through the same cable. In mediums such as ours
we deliver the broadband service for the internet, and then look
to provide additional services to enhance that service. In terms
of competition, it is hard to compete in a rural area where we
are trying to balance the revenues from a single source service,
rather than mixing and matching the two services together to get
a breakeven between the cost bases. These are things we are looking
at doing in addition to traditional internet access to take better
advantage of additional revenue streams.
(Mr Williams) In regard to this inquiry particularly
I would reverse the question—can fixed line technology compete
with satellite in rural areas? Satellite, from a price perspective,
is really the only technology that can deliver high-powered broadband
services in very rural areas at the lowest price.
137. In a session last week there was some criticism
made of your technologies in terms of quality and whether they
were reliable or unreliable. For instance, if a tree blows down
or the weather is bad will your broadband access suddenly collapse?
Do you want to respond to that?
(Mr Williams) I actually think both technologies are
incredibly robust compared with terrestrial. Speaking for satellite,
I would simply ask you all to consider: do you have Sky television;
do you make telephone calls over long distances internationally?
Both of those services do and have used satellites for transmission
for the last 30 or 40 years. So satellite technology is incredibly
robust. Comparing it directly with terrestrial technology, we
contract in our service level agreements with customers for minimum
service up-time of 99.75%. I have a contract personally with British
Telecom for a DSL service and there is no guaranteed up-time in
that contract. I am prepared to bet my company on the level of
quality that we can provide. Specifically addressing whether satellite
systems do have varying levels of performance in response to weather
conditions, every single telecoms technology has its own unique
set of challenges which it has to overcome; the same is true of
DSL, possibly more so with factors like the level of aluminium
in the copper cable and factors like the proximity of the cables
to the ground. All technologies have issued they have to overcome.
Weather degradation is not a problem which has ever, in my experience,
caused anyone not to purchased satellite technology, or not to
be happy with its performance.
(Mr Walker) Wireless at this point in time is primarily
delivered with line of site service. We place a transmitter on
a customer's premises and target that from a transmitter in a
central location. So long as the line of site is clear and there
is no obstruction, whether that be trees, bushes, buildings or
whatever, then that service is within the realms of reasonable
SLAs available to 99.9%. We have technology that we are developing
that is in existence now (which is more expensive than traditional
technology) and means we do not have the problems with line of
site. We can place that service wherever within a certain radius
and provide wireless broadband services within that radial distance.
Diana Organ
138. Apologies for being late, and you may have
answered this question already. At the moment many of us in rural
areas are facing a campaign by local residents when they are concerned
about the masts that are being directed or mobile telephony or,
indeed, the tetramasts for the emergency communication. People
do not seem to feel aggrieved, upset or worried about health things
for things they cannot see, ie the telephone wires that are coming
through. How much would you expect that with your system—because
it is using wireless and it is using a microwave band and people
might have concerns about their health in that—you might
come up against a campaign by local residents against this kind
of technology, albeit that it may be unfounded?
(Mr Walker) With wireless services it is something
we are very conscious of. Wireless in the frequencies that we
transmit, even from a transmission point to a wireless receiver
on a customer's house, has far less power output than, say, holding
a mobile phone to your ear. It is something we are very conscious
of in terms of objections when we are placing transmitters in
areas. Something we do with some of our suppliers is hold meetings
with communities, so if there are issues we can have them aired
and addressed and quell any issues raised from that.
139. One of the things with the telephone masts
(and there are mobile telephony masts and the tetramasts) was
that the companies involved in that system often did not bother
to talk to something as fundamental as the parish council. If
you are putting it in rural areas, a lot of rural areas have good
vistas and beautiful countryside, and people want to preserve
that view unfettered by little bits of metal, do you have a company
policy, before you site any of your infrastructure? Whom do you
talk to? Do you talk to elected representatives, such as district
councils and parish councils?
(Mr Walker) It depends where we are looking at deploying
them, and where we are looking at deploying the transmitter, to
be honest. There are two parts to the question. In terms of whom
we talk to, wireless technology tends to have best coverage from
as high a position as possible. Therefore, depending where that
highest position is, we will talk to whoever has an interest in
that geography; and whether it is the church councils depends
who we can talk to, to settle the fears that are raised by that
positioning. The second area is, unfortunately, the ugliness of
the masts. They tend to be oblong and quite unsightly. What we
are doing at the moment is playing with transmitters that are
a lot more easily disguised so they are not as apparent in the
area.[2]
(Mr Williams) We do not have a problem
at the moment. Satellite antennas are fairly small and unobtrusive.
The new technology I referred to a while ago does incorporate
a wireless transmitter for very short areas, but that transmitter
again is very, very small and tends to be quite unobtrusive. The
one problem we do have in our business is typically we are siting
antennas on people's roofs and, very often, if you are siting
an antenna on the roof of a building which is owned by a freeholder
for the use of a person or a company who has a lease on the building,
that leaseholder has to consult his freeholder for permission
to site the dish and typically the freeholder makes very unreasonable
demands for cash to give him the right to install antenna. That
is the most tedious element of our business; but we have no issues
with safety or particularly with unsightly antennas.
2 Note by Witness: We can also colour match
antennae to camouflage them to their placement. Back
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