Written evidence submitted by the Federation
of Communication Services
SUMMARY
The FCS understands the objective of releasing the
800 MHz and 2.6 GHz spectrum is to ensure rapid and maximum deployment
of mobile broadband.
— The
FCS is concerned that there will continue to be barriers to entry
into the UK mobile broadband market.
— The
spectrum packages should contain adequate spectrum for each national
licensee and a minimum of 2x10 MHz of 800MHz spectrum to enable
a healthy fourth operator to compete effectively.
— There
is concern that the proposed coverage obligations do not appear
to guarantee better geographic coverage than currently achieved
for voice services. We propose that the obligations are extended
to include geographic coverage of important public transport routes.
— The
licences should include an obligation to support roaming between
providers. This may help to improve the service coverage available
to consumers.
— Rapid
delivery of services requires regulatory oversight and FCS suggests
wholesale access obligations on the licensees and national roaming
between the networks.
— FCS
supports an allocation for sub-national RANs to encourage niche
services and argues that there may be a role for setting aside
sufficient spectrum to ensure that the Critical National Infrastructure
has broadband spectrum for the future, following the example of
the USA.
— The
use of auctions for spectrum assignment may not be appropriate
in cases of services of public interest such as the Critical National
Infrastructure.
— The
band 821-832MHz is not included in the current award. This is
clearly a potentially important future opportunity into which
other types of services could be deployed. We would expect that
a full analysis of other uses, particularly services of public
interest, will be necessary prior to any policy of a future auction
of this spectrum being established.
INTRODUCTION
The Federation of Communication Services, FCS, is
the trade association for the communications services industry
representing 320 member companies who deliver products and services
by means of wireless, copper and fibre. The majority of FCS members
are affected in some way by this consultation and we are pleased
to have the opportunity of offering this response.
The views that we put forward are from FCS members
who are:
— Existing
and potential new entrant mobile licensees.
— Mobile
service providers and resellers of mobile services who wish to
deliver mobile broadband to their customers.
— Providers
of services to the critical national infrastructure and business
radio.
Each of these companies is able to support the government's
growth agenda by delivering service either to business customers
or the general public or both.
KEY ISSUES
In its recent consultation, Ofcom has carefully set
out its objectives and stresses the importance of promoting competition
and delivering wide coverage of services, which we applaud. These
objectives combine to deliver both UK Government and European
requirements for mobile broadband. However it is unclear when
full mobile broadband service will be delivered. Once the spectrum
is released and network operation is started commercial delivery
is probably up to five years away and the challenge is to ensure
rapid deployment.
SPECTRUM PACKAGES
Ofcom's own research in The Measuring Mobile Broadband
in the UK report [May 2011]: http://stakeholders.ofcom.org.uk/market-data-research/telecoms-research/broadband-speeds/main/mobile-bb-10
demonstrates that dongles and data cards have limitations when
delivering data over 3G and that, even though network optimisation
can maximise service, there is increasing customer demand. The
spectrum released by the proposed auction should support projected
demands into the next decade.
Ofcom has proposed that in line with the current
public mobile market there should be a minimum of four national
wholesale licensees and up to 10 shared low power licensees,[15]
which maintains Ofcom's infrastructure competition policy.
In this scenario, Ofcom's high level rules for spectrum
floors, safeguard caps and spectrum set aside for sub-national
operators appear reasonable.
The spectrum packages proposed in this award could
be combined with existing spectrum holdings of the four current
national wholesalers and/or those released by the Everything Everywhere
entity. All providers would need to be able to support an equivalent
service to maintain the fair infrastructure competition principle.
A healthy fourth operator will require a minimum of 2x10 MHz of
low frequency spectrum to be able to compete effectively as Ofcom
says it wishes.
MOBILE COMPETITION
AT THE
RETAIL LEVEL
The FCS believes it is crucial to ensure a healthy
competitive retail market so that customers across the UK can
easily access current and new services and applications. The FCS
retains the view that there continue to be barriers to retail
competition in the mobile sector that are not experienced in the
fixed broadband market.
WHOLESALE ACCESS
OBLIGATIONS TO
ENSURE RAPID
DDELIVERY
Ofcom and Government are clear that this award is
critical to the delivery of mobile broadband, but receipt of services
by customers is not certain. The FCS is inclined to favour fair
and equivalent regulated access to national wholesalers either
as a spectrum licence condition or as a consequential regulatory
measure in the event that wholesale access is not forthcoming
for the scenario of competing national licensees.
NATIONAL ROAMING
A national roaming obligation among competing licensees
would ensure that mobile broadband is delivered where needed.
There are already roaming obligations for access to 999 and 112
calls, which demonstrates that this is technically possible. Ofcom
would need to ensure that fair termination rates are set without
any delays due to reference to the Competition Appeals Tribunal,
but this approach would help to satisfy "not spots"
and "patchy access". Mandatory national roaming would
avoid consumers having to purchase mobile services from a particular
carrier on the basis of coverage; it would also reduce the problem
of consumers being sometimes reluctant to port away from one network
operator to take advantage of new services on a different network
in case the coverage of the new operator is not as good.
ROLE OF
AUCTIONS
While auctions will be suitable for the national
commercial wholesale operators, as in this case to encourage roll
out and use of mobile broadband, we do not support allocation
of spectrum by auction for every type of licence and noted that
in Ofcom's draft annual plan 2011-12 section 3.8 et al, Ofcom
now recognise "The market alone is unlikely to secure efficient
allocation and use of public assets like spectrum and numbering
in all cases".
Once spectrum is released by auction into the market
place it is difficult to recover unless rules on "hoarding
without use" are brought into play.
OTHER LICENSEES
Ofcom accepts that national wholesalers may act to
constrain entry by sub national RANS and as the competition regulator
should act to negate this tendency.
We believe that there is demand for sub national
RAQNS/low power licences. DECT guard band licences acquired by
auction in May 2006 are in use and providing useful services to
consumers and business customers in niche markets. The proposal
for 10 licences (although this number is not clearly justified)
would be supported by existing and potential new licensees. The
FCS Mobile 200 group of DECT guard band licensees has demonstrated
that competing licensees can work together to develop an engineering
co-ordination code of practice which currently operates effectively
for the licensees. This template could be brought into play for
the new low power spectrum licensees.
Ofcom has not considered the requirements of other
potential licensees that require national coverage but for whom
the service levels of public mobile telephony services are inadequate
for some of their functions. The Critical National Infrastructure
community including the utilities, transport and emergency services
require certain access to spectrum to fulfil their primary legal
obligations. Each of these sectors has time limited obligations
set by government and European policy, where communications that
are both self provided and publicly available are required.
The railways are one example and quoting from the
submission to Ofcom's consultation by Network Rail:
"The railway, in common with other critical
national infrastructure, relies on high-quality, highly reliable
telecommunications. The quantity and quality of information needed
to run the network safely and efficiently is set to continue to
grow as signalling, passenger information and train management
become increasingly sophisticated to deliver the railway Britain's
economy needs.
Currently, GB mainland railway operational communications,
to train drivers and key staff, is delivered using legacy analogue
radio systems, which are gradually being replaced by GSM-R. All
of these systems are built upon a common foundation of good quality,
dedicated radio spectrum. This is however just one system element
required to deliver a mobile communication system fit for purpose.
The next generation of operational mobile communications, such
as Automatic Train Operation and In-Cab CCTV, will require even
more intensive data flows.
Auctioning spectrum to commercial users makes
sense if we want to maximise government's revenues. However, requiring
providers of critical national infrastructure to compete with
mobile telephone operators risks either under-providing essential
spectrum, or over-paying for it.
Maximising income from the auction must be set
against the cost to essential public services of doing so. Network
Rail's income is made up of direct grant from government and income
from train operators, many of whom are in receipt of public subsidy.
Most other critical national infrastructure is publically funded;
forcing competition between essential public services and commercial
operators is unlikely to deliver value for money.
One way to proceed would be to reserve sufficient
spectrum for critical national infrastructure. This approach has
been followed in the United States and ensures that revenue from
commercial operations is maximised and the public interest protected.
If this approach is not followed, in favour of
a conventional price-led auction, it is likely that critical national
infrastructures may have to buy mobile data services from commercial
operators. This would be problematic, because the specifications
of the two types of use are quite different. The railway requires
extremely reliable and high-quality communications, well beyond
what is required for mobile telephone networks. If a mobile telephone
signal is weak it is an irritation; if a train with in-cab signalling
loses contact with the control centre it would cause significant
delays to multiple trains; in the worst-case scenario it could
become a safety risk.
In summary, we believe that auctioning spectrum
is appropriate for commercial users but not critical national
infrastructure or emergency services users. The different specifications
required, as well as value for money for taxpayers, mean that
to require Network Rail and others in a similar position to compete
with mobile telephone services risks under-specifying or over-paying,
or both. Reserving a proportion of the spectrum for critical national
infrastructure would enable the government to maximise revenue
from commercial operators without denying essential public services'
rather different telecommunications needs. This approach could
either be achieved through direct access to suitable spectrum,
or by applying public service commitments to some of the auctioned
spectrum"
ANSWERS TO
SPECIFIC QUESTIONS
1. Whether the proposed method of spectrum
allocation promotes, or hinders, competition in the provision
of mobile broadband services;
The FCS stresses the importance of competition at
the retail level.
For either of the spectrum package scenarios set
in Ofcom's consultation the crucial means of delivering mobile
service to customers is to ensure a healthy competitive retail
market so that customers across the UK can easily access current
and new services and applications. The FCS retains the view that
there continue to be barriers to retail competition in the mobile
sector that are not experienced in the fixed broadband market.
The FCS notes that the assignment of spectrum through
an auction process may be efficient in economic terms for commercial
uses such as public mobile telephony however, it is not the only
way to assign spectrum. Were any part of the spectrum to be considered
to be valuable for other services the FCS would recommend that
other assignment processes be used for that part. In the particular
case of spectrum to be used for services of public interest the
FCS believes that auctions are inappropriate and a more "directed
approach" to satisfying these needs be taken.
2. Whether the upcoming auction can provide
value for money for tax payers and how that should be balanced
with benefits for consumers;
The Ofcom approach appears to only consider assignment
by means of an auction process. There appears no substantive wider
consideration of the total value to the UK that might be achieved
by this spectrum were some of it to be used for other purposes.
This approach may be in danger of failing to identify other uses
that might provide better value for tax payers.
The use of some of the spectrum to provide services
of public interest that UK citizens will need for the foreseeable
future and which may be very difficult to support by other means
is a case in point. The 800MHz spectrum bands could provide excellent
geographical coverage opportunities for these services at modest
cost. Whereas, the auction appears to seek to place these frequencies
into the same class of use as the 900MHz band which today does
not provide total geographical coverage. The coverage obligations
within the Ofcom consultation proposals will not (and are not
intended to) guarantee good coverage on a geographical basis.
Therefore it is not clear why improved geographical coverage should
be expected as a result of this auction, especially for broadband
services which will require even higher levels of infrastructure
investment.
In addition to the points relating to operational
efficiency in Network Rail's response to the Ofcom consultation
(noted above), the needs of rail passengers to use broadband services
while travelling are important. There is likely to be strong economic
advantages to the UK to having the rail passengers to work efficiently
while travelling. This will require good coverage along the railway
lines which include rural geographies. The specification of coverage
in terms of population density may not align well with the UK
Government's growth agenda. The use of mobile communications and
especially mobile broadband communications may be extensive while
travelling on trains (for example). Coverage for on-train communications
is already acknowledged to be inadequate (see section 6.7 of Ofcom's
consultation) and the proposed coverage specification appears
to not address this.
To alleviate this potential shortfall it may be preferable
to examine a coverage obligation that seeks a high level of population
to be addressed while at the same time specifically providing
adequate broadband service to the railway and other critical transport
routes throughout the UK. Thus the 800MHz licensee may be obligated
to meet the population coverage requirement with specific geographical
obligations also (perhaps along transport route lines). As an
incentive they may be offered more radio spectrum.
3. The potential for next generation mobile
internet services offered by the forthcoming availability of spectrum;
The FCS wishes to highlight the opportunity presented
by having low-power assignments included in the available packaging.
Shared access could be arranged in similar to the DECT guard band
licensees through the development of an engineering code of practice
co-ordinated by their trade association and in addition would
benefit from mandated roaming.
It is not clear how Ofcom settled on the total of
10 low power licences and we suggest that there is no limit on
the number of low power licence holders if they are to be allocated
by auction. However Ofcom's policies to encourage competition
and maximum spectrum use should not be restricted by limiting
leasing and trading among the low power licensees.
We question whether 2Mbps is sufficient and whether
6Mbps would be a more suitable threshold
4. Whether the upcoming auction can deliver
improved mobile broadband coverage in rural areas, as well as
cities;
The FCS notes that the proposed packaging of the
spectrum is rather small for some of the options in the 800MHz
band. This will severely curtail the extent to which good mobile
broadband services can be delivered to many users outside the
reach of the 2.6GHz network. In other words, the FCS is concerned
that the proposed packaging arrangement will make a two-tier society
quite likely in the UK. The urban-based group would have access
to mobile broadband where they live but the other group would
not able to take advantage of those same service levels. Taking
in to account that these same people may remain similarly challenged
in getting quality broadband access through wired means for the
foreseeable future, this is a very serious impediment for the
realisation of the UK Growth Agenda.
The FCS notes it may very well be possible to deliver
services at a relatively slow data rate to many places using this
spectrum. But, this slow rate will restrict the available services
and consequently the uptake. The operators having licences for
these smaller 800MHz packages will thus be placed in a difficult
commercial position and their customers will remain largely poorly
served if that spectrum is all they have to rely upon.
The FCS urges that the smallest 800MHz package sizes
are reconsidered and a minimum of 2x10MHz introduced (as suggested
under Option 2 noted in table 5.1 the Ofcom Consultation).
5. Whether licence fees for mobile operators
have previously been set at appropriate levels, and how this should
be assessed;
The FCS makes no comment on this.
6 How the position of the UK compares with
other countries, with regards to the allocation and utilisation
of mobile broadband spectrum;
The FCS makes no comment on this.
7. The possible impact on alternative uses
for spectrum.
Ofcom has not considered the requirements of other
potential licensees that require national coverage but for whom
the service levels of public telephony services are inadequate
for some of their functions. The Critical National Infrastructure
community including the utilities, transport and emergency services
require certain access to spectrum to fulfil their primary legal
obligations. Each of these sectors has time limited obligations
set by government and European policy, where communications that
are both self provided and publicly available are required.
It is also noted that the specification of coverage
by population significantly reduces the likelihood that the public
networks resulting from this award will be usable for mission-critical
communications by the emergency services (and others). Whilst
these users will no doubt continue to use public services on a
best-efforts basis, the coverage specification proposed within
the award appears to confirm that a further series of spectrum
arrangements will be necessary to meet the future needs of the
emergency services.
In relation to indoor reception, the current rules
restricting the use of cell enhancers etc. imply that the mobile
network operator must make provision for indoor coverage. This
may prove challenging at 2.6GHz due to the high frequency and
the absorption of the signal by modern building materials.
In this context it is important to note that measures
taken under the carbon agenda to improve temperature control by
shielding the glass (for example in railway carriages and commercial
and domestic buildings) have the unfortunate side effect of reducing
the likelihood of adequate signal reception. Broadband connectivity
has been achieved within carriages by some Train Operators through
the use of access equipment but this has been done with WiFi technologies
and not mobile technology. Mobile radio network reception has
been left unaddressed due to the regulations banning enhancers.
The band 821-832MHz is not included in the current
award. This is clearly a potentially important future opportunity
into which other types of services could be deployed. We would
expect that a full analysis of other uses, particularly services
of public interest, will be necessary prior to any policy of a
future auction of this spectrum being established.
June 2011
15 It is not clear how the number of 10 low-power licences
was determined. Back
| 
