Written evidence submitted by the Northumberland
National Park Authority (NNPA)
1. SUBMISSION
1.1 This submission is provided by the Northumberland
National Park Authority (NNPA).
1.2 NNPA has the responsibility to look after
Northumberland National Park—one of ten national park authorities—special
purpose local authorities established to conserve the landscape,
heritage and wildlife of the area and to provide opportunities
for people to enjoy and understand it. We are also committed to
supporting the local economy in and around our borders to ensure
a thriving, living countryside for future generations. The issues
and suggested solutions NNPA raise for Northumberland National
Park are relevant to the other English National Parks and this
submission is made on behalf of the English National Park Authorities
Association.
1.3 Our concern is specifically focused on the
question of whether the upcoming auction can deliver improved
mobile broadband coverage in rural areas.
1.4 NNPA was advised by GreySky Consulting Ltd
on the specific technical issues involved in this submission.
1.5 Our submission is informed by data on 2G
and 3G mobile service access obtained as a part of our residents'
survey completed as part of our intelligence used to update planning
policies under the local development framework for the Northumberland
National Park. This survey shows that many of the communities
in the National Park suffer from an absence of any mobile phone
coverage (see Map 1 page 4).
1.6 We believe that without changes to the current
proposals the communities of our rural areas are again likely
to miss-out from access to modern communication technology which
is ironically becoming increasingly necessary in these areas as
the cost of providing essential public services in the more traditional
manner becomes less cost effective.
1.7 In addition, England's National Parks offer
recreational and holiday experiences for over 100 million visits
pa. This forms a vital component of the national tourism offer.
This business sector is increasingly competitive and without access
to new generation technology the sector (dominated by private
sector micro-businesses) will undoubtedly suffer and miss growth
opportunities.
1.8 We also believe that with a small number
of modest but important changes the current draft proposals offer
a generational opportunity to enable rural areas to move forward
with the rest of the country and address past inequalities. These
recommendations are summarised on the following page and the rationale
is explained in the body of the main report.
SUMMARY OF
RECOMMENDATIONS
Recommendation
1. Bidders for the A3 frequency block
of the 800 MHz spectrum are required to submit plans as to how
they will achieve the 95% coverage obligation detailed to local
(county) level.
Recommendation
2. Changing the specification of the obligation
to require a minimum signal strength, rather than 90% probability
of indoor reception.
Recommendation
3. The holder of the A3 frequency block
in the 800 MHz spectrum must be required to provide open retail
access to the wholesale services delivered over this frequency.
Recommendation
4. Bidders for the A3 frequency block
of the 800 MHz spectrum should be required to submit details of
how they will deliver open retail access to the wholesale services
they provide over this frequency block, and to allow wholesale
providers of geographically complementary services to access this
open retail market.
Recommendation
5. The geographic coverage obligation
of the A3 block in the 800 MHz spectrum should also have an obligation
to provide wholesale access to these services to all retailers—including
the retail arms of their wholesale competitors.
Recommendation
6. The "90% probability of indoor
reception" element of this specification is not easily verifiable
and should be replaced by a definition as a minimum signal strength
which can be more transparently measured as a 90% probability
of indoor reception for the 800 MHz frequency. This represents
the same level of coverage, but in a more easily verifiable form.
Recommendation
7. There should be a local (county) level
breakdown of the overall national delivery to allow effective
verification at local level.
Recommendation
8. Bidders are required to submit competitive
plans at local (county) levels as a part of the bidding process
for block A3 of the 800 MHz spectrum.
Recommendation
9. Other wholesale providers should be
enabled to have access the full retail market.
Recommendation
10. That provision of 4G services in rural
areas should be significantly enhanced by establishing a central
trading capability to enable all retail providers to access wholesale
services delivered through the A3 block and encourage innovative
solutions
Recommendation
11. To include the requirement to provide
retail access to wholesale services in rural areas with the other
obligations associated with the A3 block.
Recommendation
12. To require bidders for the A3 block
of the 800 MHz spectrum to submit as a part of their bid the technical
and operational details of how they will ensure open retail access
to services delivered over the A3 frequency block, and how they
will allow wholesale providers of geographically complementary
service to access the same retail market.
Map 1
LACK OF MOBILE PHONE USABILITY
IN NORTHUMBERLAND NATIONAL PARK 2010
XXXXXXXXXXX
folio 40.eps
2. SUMMARY
2.1 Ensuring the maximum geographic coverage
of the 800 MHz spectrum is of critical importance to rural communities
and the rural economy.
2.2 We support Ofcom's proposal to include a
geographic coverage obligation with the A3 frequency block of
the 800 MHz spectrum as an effective way of ensuring efficient
investment in infrastructure in the 4G mobile market.
2.3 We support Ofcom's proposal to set the level
of the obligation at 95% of the UK population and 2Mbps downlink
speed.
Recommendation 1
2.4 We suggest that bidders for the A3 frequency
block of the 800 MHz spectrum are required to submit plans as
to how they will achieve the 95% coverage obligation. These should
be detailed to local (county) level to enable more equitable solutions
to be delivered across the whole of the country. The plans for
the winning bidder would form an integral part of the specification
of their obligation.
Recommendation 2
2.5 To improve verifiability of the obligation,
we recommend changing the specification of the obligation to require
a minimum signal strength, rather than 90% probability of indoor
reception.
2.6 We do not support Ofcom's belief that ensuring
four credible national wholesale competitors is sufficient in
itself to ensure retail competition in rural areas.
Recommendation 3
2.7 We believe that the holder of the A3 frequency
block in the 800 MHz spectrum must be required to provide open
retail access to the wholesale services delivered over this frequency.
Recommendation 4
2.8 We suggest that bidders for the A3 frequency
block of the 800 MHz spectrum should be required to submit details
of how they will deliver open retail access to the wholesale services
they provide over this frequency block, and to allow wholesale
providers of geographically complementary services to access this
open retail market.
2.9 It is important that the terms, conditions
and obligations of the licences are effectively enforced. We support
Ofcom's proposals to include effective and proportionate penalties
to ensure their ability to enforce the licence requirements.
3. OVERVIEW
3.1 Our review of the approach proposed by Ofcom
for the upcoming auction of 800 MHz and 2.6 GHz spectrums is focused
on their impact in rural areas, and whether the approach is appropriate
to the specific demands of rural areas.
3.2 Two issues are of paramount concern in our
review—the impact of the approach to maximise geographic
coverage of services to consumers, and the impact of the approach
on competition, particularly retail competition, and specifically
in rural areas. Our comments are principally focused on these
two areas, with additional comments regarding enforceability.
3.3 The 800 MHz spectrum is of greatest significance
in rural areas due to the technical characteristics of the frequency
compared to the 2.6 GHz spectrum. Our comments are restricted
to the auction of the 800 MHz spectrum.
4. COMPETITION
4.1 Retail competition is essential to the provision
of affordable, innovative services to consumers. The consultation
document focuses on the requirement to have four credible national
wholesale competitors as a means to ensure wholesale competition,
and as a result retail competition. We believe this is credible
for urban areas. However, in rural areas we believe this is unlikely
to serve the needs of consumers in the short term, or be sustainable
in the long term.
4.2 We believe it is unlikely, and undesirable
that four credible national wholesale competitors will exist in
rural areas.
4.3 The expectation that four national wholesale
competitors is sufficient to maintain retail competition in rural
areas appears to require the assumption of a single UK-wide market
to be correct. We believe this assumption is already fragile,
and will not be sustained in the medium and long term without
additional measures to those proposed.
4.4 We believe that the approach to ensure widespread
geographic coverage will put direct pressure on the single UK-wide
market at the wholesale level, forcing a split between urban and
rural markets. This position is already beginning to emerge in
the fixed broadband market and we expect 4G mobile services to
follow without further measures to avoid this.
4.5 If the rural provision of wholesale 4G mobile
services becomes a separate market at wholesale level, then the
current proposals appear to have no mechanisms to ensure any retail
competition in this market.
4.6 Since wholesale providers maintain 42% and
retail providers only 17.5% of the overall value in the mobile
communications market, we believe that even if a level of retail
competition is maintained, it may not be sufficient to ensure
competitive pricing in rural areas without an effective UK-wide
market condition.
4.7 The A3 block in the 800 MHz spectrum is critical
to the provision of rural services. The factoring of the geographic
coverage obligation into this frequency block ensures that the
holder will be required to deliver services to many rural areas.
It will be inefficient if competitive forces require other wholesale
operators to replicate this service provision in areas of low
demand capacity. Better to encourage them to provide geographically
complementary service provision.
Recommendation 5
4.8 We believe that the geographic coverage obligation
of the A3 block in the 800 MHz spectrum should also have an obligation
to provide wholesale access to these services to all retailers—including
the retail arms of their wholesale competitors. We believe this
is necessary to maintain a single UK-wide market at retail level,
and central to maintaining effective retail-level competition.
5. GEOGRAPHIC
COVERAGE
5.1 The principal objective in terms of geographic
coverage is to achieve maximum geographic reach for the majority
of consumers.
5.2 We are concerned that the past arrangement
for 2G and 3G failed to address issues of market failure in deep
rural areas—including the 10% of England covered by the
national parks. In Northumberland National Park many of the communities
suffer from an absence of any mobile phone coverage. This information
is from our residents' survey completed as part of our intelligence
used to update planning policies under the local development framework.
In some cases those areas without mobile phone coverage are where
mobile phone masts were granted planning permission but the telecom
companies failed to install the infrastructure—ie clear
evidence of market failure.
5.3 The consultation document suggests that 2G
mobile services have achieved 97% coverage of the UK population.
This is not supported by our research. We believe that this is
the aggregated coverage of all wholesale service providers and
does not represent the coverage achieved by consumers. We suggest
that coverage should be measured in terms of what a normal consumer
with a single retail contract can experience. Our research identified
that in many areas that do have some mobile phone coverage, local
businesses are required to have up to five handsets to ensure
access—this clearly is no way to expect businesses to operate
in the 21 Century.
5.4 2G mobile services are delivered principally
by four national wholesale competitors. These are supplemented
by many more retail competitors. This is very effective in urban
areas, but far less effective in rural areas. Retail choice for
rural consumers is constrained by the coverage profile of wholesale
providers in their area. We suggest that this situation should
be avoided as far as possible in the mechanism for the 4G spectrum
auction and subsequent management.
5.5 We support the proposal for a geographic
coverage obligation on only one frequency block in the 800 MHz
spectrum presents an opportunity for a far more efficient infrastructure
investment model for rural areas than is currently observed in
UK mobile markets. This proposal will also enable government to
focus its "subsidy" incentive to the areas of greatest
market failure.
5.6 To ensure effective bidding for the A3 block,
it is important that the cost and commercial return of satisfying
the geographic coverage obligation is easily evaluated as part
of the bidders' preparations. Ofcom's analysis suggests that 95%
of the UK population can be covered using the 800 MHz spectrum
from existing mobile sites. We support Ofcom's proposal that 95%
coverage of the UK population is an appropriate level for the
obligation.
5.7 For the obligation to be effective, it must
be clearly specified at the outset, verifiable and enforceable.
Ofcom's proposed specification is largely effective:
"An obligation to serve by the end of 2017
an area in which 95% of the UK population lives, while providing
a sustained downlink speed of 2Mbps with a 90% probability of
indoor reception."
Recommendation 6
5.8 However, the "90% probability of indoor
reception" element of this specification is not easily verifiable.
We suggest that this is better defined as a minimum signal strength.
This can be calculated to correspond to 90% probability of indoor
reception for the 800 MHz frequency, and so represent the same
level of coverage, but in a more easily verifiable form.
Recommendation 7
5.9 Although the 95% national coverage is verifiable,
this verification would represent a significant undertaking at
national level. We suggest that a local (county) level breakdown
of the overall national delivery will allow effective verification
at local level. These two changes (recommendation 6 and 7) would
empower local communities and their elected representatives to
hold large multi-national companies to account for their delivery
of vital access services.
5.10 Imposing geographic coverage levels at local
levels will impose different restrictions for different potential
bidders depending on the distribution of their existing sites—essentially
imposing a greater than 95% coverage obligation. This is not considered
appropriate.
Recommendation 8
5.11 We suggest that bidders are required to
submit competitive plans at local (county) levels as a part of
the bidding process for block A3 of the 800 MHz spectrum. This
would seem to be consistent with the government's wider localism
agenda. These plans will present how they will achieve 95% coverage
of the UK population. This flexibility will allow all bidders
to compete on an equal basis, and the submitted plans will form
a part of the specification of the locally verifiable coverage
obligation for the winning bidder.
5.12 Ensuring access by all retail providers
to wholesale services in the A3 frequency block is necessary to
ensure efficient market investment in infrastructure in rural
areas. We believe this will allow further investment in rural
areas to be geographically complementary, though further measures
will be required to encourage this.
5.13 In the UK fixed broadband market, BT is
the dominant operator of infrastructure in rural areas. Because
BT wholesale allows retail access to their infrastructure, strong
retail competition persists and good utilisation is made of their
infrastructure. However, other wholesale providers are not able
to access this retail market. Consequently there is little wholesale
competition in rural areas and differential retail pricing is
emerging between rural and urban areas. It is also difficult for
small-scale infrastructure projects to provide greater geographic
reach because they do not have access to the retail ISPs to sell
services over their networks.
5.14 Obliging the A3 frequency block holder to
provide retail access to its services will ensure that 4G services
match the position of the fixed broadband market by ensuring all
retail service providers have access to good geographic coverage
through a single efficient infrastructure investment.
Recommendation 9
5.15 We believe it is also highly desirable to
encourage other wholesale operators to provide geographically
complementary infrastructure, and selected areas of competitive
infrastructure in rural areas where there is strong capacity demand.
We believe this will be most strongly encouraged if other wholesale
providers can access the full retail market.
5.16 In the fixed broadband market, BT does not
allow other infrastructure providers to use its platform for connecting
ISPs (the retail providers) with its infrastructure.
Recommendation 10
5.17 We believe that provision of 4G services
in rural areas will be significantly enhanced by establishing
a central trading capability. This capability will allow all retail
providers to access wholesale services delivered through the A3
block. It will also allow other wholesale operators to "sell
in" wholesale capacity into the single platform used by retail
providers to obtain services—providing a trading mechanism
to ensure efficient utilisation of geographically complementary
infrastructure investment. We believe this will encourage innovative
solutions to evolve and for them to be commercialised across the
whole of rural England.
Recommendation 11
5.18 We believe it is appropriate to include
all requirements associated with achieving strong geographical
coverage with the A3 block of the 800 MHz frequency. Hence we
believe it is appropriate to include the requirement to provide
retail access to wholesale services in rural areas with the other
obligations associated with this block.
Recommendation 12
5.19 As with achieving the 95% coverage requirements,
we believe it is appropriate to require bidders to submit proposals
as to how they will deliver these obligations. We suggest that
bidders for the A3 block of the 800 MHz spectrum should be required
to submit as a part of their bid the technical and operational
details of how they will ensure open retail access to services
delivered over the A3 frequency block, and how they will allow
wholesale providers of geographically complementary service to
access the same retail market.
6. ENFORCEABILITY
6.1 It is essential that the obligations associated
with the spectrum licences are effectively enforced. We support
Ofcom's proposals to include measures that ensure the achievement
of all obligations are verifiable and enforceable.
6.2 Effective enforcement requires proportionate
penalties to be available. We support proposals to allow spectrum
allocations to be revoked at any time for significant failures
to meet obligations. We also support proposals to allow fines
to be imposed where these represent a more proportionate approach.
June 2011
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