79.Mobile phones play an increasingly important role in daily life: adults are now more likely to use a smartphone than a computer to go online. High quality and reliable mobile phone coverage is now expected by consumers no matter their location, and many businesses rely on it to work on the move. This trend is likely to increase with mobile data traffic growing at a rate of around 60% a year, enabled by technology development allowing consumers to carry out more activities wirelessly. However, mobile coverage is still inconsistent across Scotland, and the rest of the UK. Brendan Gill, CEO of OpenSignal, told us that “there is still a lot to be done to improve the access to mobile coverage” and that while universal coverage is “now talked about as if we were virtually there, […] when we look at the evidence, there is still a gap.”
80.Whilst improving basic coverage was a key focus for the inquiry, we also heard about the drive towards preparing the mobile sector for 5G technology. 5G is the fifth generation of mobile connectivity which offers faster download speeds, greater capacity and a better user experience. Ofcom has said that deployment of 5G could be available in the UK sometime in 2020 with initial pre-commercial deployments expected to start from 2018.
81.Scotland’s rural geography means that it faces similar issues with mobile coverage as it does with broadband. There is less of an incentive for providers to invest in areas that have a low population density (and therefore potential customer base) and difficult geographical challenges increase the cost of deployment. While Ofcom’s Spring 2018 Connected Nations Update found that mobile coverage in Scotland has improved, and there are now 1.6 million fewer hectares of 4G not-spots than in June 2017, there are still large areas of Scotland’s landmass where it is not possible to receive a mobile voice (17%) or data (18%) signal. Witnesses told us that not-spots can exclude rural communities, for example Ettrick and Yarrow Community Council said:
Mobile ‘phone “not spots” coupled with poor broadband can lead to social exclusion and to a risk to personal safety if residents are unable to contact emergency services, and are a barrier to business development and working from home.
82.Ofcom’s figures show that mobile coverage in Scotland lags behind the rest of the UK with only 30% Scotland’s land mass covered by 4G services from all operators, compared to 73% in England (see Table 3). Mobile providers pointed out that this figure rises when coverage from at least one operator (“partial not-spots”) is considered. Although this does not help consumers who can only use the service provided by their carrier. Andrew Ferguson, ThinkBroadband, said that some people in rural areas had resorted to having “two mobile phones with two different networks”, to maximise their chance of getting coverage on the move but sometimes still get nothing.
Table 3: Geographic area covered by all operators - 4G
Source: Ofcom Connected Nations – Spring 2018 Update
83.The Secretary of State noted that the mobile coverage challenges that Scotland faces are “entirely due to topography and the huge swathes of Scotland with very, very few premises.” He highlighted the UK Government’s commitment to “getting good quality mobile coverage where people live and travel.” In this chapter we consider the main methods the Government is using to get mobile network operators (MNOs) to improve coverage: imposing coverage obligations and incentivising MNOs to share their network.
84.We recognise the huge improvement to Scotland’s mobile coverage in recent months, particularly considering its challenging geography. However, the ambition must be to achieve universal access to mobile coverage—communities in remote and rural areas must not be forgotten.
85.One of the main tools Ofcom have to improve coverage is imposing coverage obligations on mobile phone providers as part of the auction process for the spectrum MNOs use to provide mobile phone service. These obligations require the successful bidder to provide coverage to a certain percentage of the UK’s landmass, but leave it open to the provider to decide how best to achieve that outcome.
86.In 2014 all four main MNOs—EE, Orange, Three UK and Vodafone—agreed to provide coverage to at least 90% of UK landmass by the end of 2017, a commitment which they all met. As part of the consultation for the next round of spectrum auctions, Ofcom have proposed establishing new obligations to build on this progress:
a)A premises obligation which requires an operator to provide indoor coverage to 60% of premises, in each of the UK’s four nations, that currently have no signal.
b)Geographic obligations which require the operator to provide good coverage across at least 92% of the total UK landmass. This would include specific targets for coverage in each UK nation: 92% in England, 92% in Northern Ireland, 83% in Wales and 76% in Scotland.
87.Witnesses broadly welcomed Ofcom’s move to introduce geographical coverage obligations. The Federation of Small Businesses said that nation-specific coverage obligations would address the current gap between Scotland and England, although they have also called for the Scottish target to be higher than the proposed 76%. Ewan Sutherland, an independent telecommunications expert, said the proposals were a clear attempt to improve rural coverage but questioned whether Ofcom has properly assessed the alternatives and considered a more targeted approach, such as different coverage obligations for rural and urban areas.
88.Similarly, Which? said that specifying the obligations as a “simple proportion of landmass” means they are “too general and loosely defined”. They are concerned that providers will “opt for easier ways to meet the obligation by covering areas which are most easily served”. They argued that coverage obligations should focus “specific unserved or underserved areas to deliver the greatest benefit to consumers” and suggested that Ofcom should consider targeting coverage on remote roads. Scotland has the lowest voice and data coverage on A&B roads in the UK, serving 56% and 50% of the road network respectively. Mobile coverage on roads is pivotal for businesses: research from the Scottish Rural College identified “an inability to work flexibly or on the move because of poor mobile signals” as one of the major issues for the 800 rural businesses they surveyed.
89.When we raised these concerns with Ofcom, they said that they set the nation-specific targets based on the “starting point for each nation” and would deliver a 12% improvement in Scotland’s coverage—more than any other UK nation. They also argued that if the obligations are too onerous companies simply would not bid for spectrum. Ofcom also said that they considered consulting on an obligation that was focused on roads but decided that the target for geographic coverage would deliver more coverage to more people.
90.We welcome the fact that Ofcom is consulting on the introduction of nation-specific coverage obligations for the next spectrum auction. We believe this will help ensure that Scotland’s challenging rural geography does not lead to its mobile coverage falling behind the rest of the UK, and recommend they are included in the next spectrum auction in at least as extensive terms as set out in Ofcom’s consultation.
91.However, even if these obligations are introduced there will still be some areas without coverage. We have heard that there is a particular issue with the quality of signal on Scotland’s A and B roads, which is important both for communication “on-the-move” and safety because large stretches of Scotland’s roads are in extremely remote locations. We recommend that Ofcom monitor the impact of its geographical coverage targets on mobile coverage on Scotland’s roads. If there is insufficient progress, Ofcom should consult on including specific targets for road coverage in future spectrum auctions.
92.Sharing infrastructure can lower the cost of network deployment, stimulate migration to new technologies and enhance competition between providers. There are two categories of mobile infrastructure sharing: passive and active.
a)Passive sharing is when operators share physical space, for example buildings, sites and masts, but networks remain separate;
b)Active sharing is when operators share elements of the mobile network, such as antennas, base stations and the core network. This includes national roaming, when a mobile customer uses a network not provided by their operator.
93.Witnesses told us that whilst building mobile masts is crucial to improving coverage, constructing sites and masts to be shared by operators can make a significant difference in rural and remote areas. These areas are more expensive to build in, and providers have to get planning permission, so it is more economical and efficient to build infrastructure that can be shared. Also, because it is easier for more operators to provide a service in these areas, it creates competition, giving consumers more choices and drives down prices.
94.The National Infrastructure Commission has recommended mobile mast sharing as a way to “help improve coverage for the users of all networks across areas of poor coverage”. One local resident in rural Ayrshire told us that sharing masts could help address resident’s concerns around “littering the countryside with aerials” because fewer masts are used by more operators.
95.Technology experts told us that passive sharing is viable: they noted that it is a “fairly typical commercial model” in many countries, where a third party normally manages the masts anyway. However, Professor Rahim Tafazolli, University of Surrey, highlighted that there are multiple cost elements to building a mast site: developing the technology, buying the asset, deploying the technology and operating it. He said that infrastructure sharing only helps reduce the cost of the asset and it is important to consider the other elements. We consider barriers to deployment in the next chapter.
96.Whilst the UK Government’s policy has shifted to focus on coverage obligations and away from its previous approach of funding the building of mobile infrastructure, it continues to invest in mobile signal broadcast points through its funding of the Emergency Services Network (ESN). The ESN is a new communication system for the three emergency services and other public safety users in the UK, which is delivered by EE using its commercial network. As part of developing the network, the UK Government is spending approx. £1.2bn to fund more than 500 new mobile mast sites, delivered by EE, across the UK, 300 of which will be in Scotland. Because emergency services are needed to cover the country, the ESN programme also involves building a further 300 sites in remote areas—Extended Area Services (EAS). Although the primary purpose of the EAS sites is to support the ESN, the intention is to allow a mobile provider to use these sites to host their own masts, improving the service they can offer in more remote areas of Scotland.
97.However, so far interest in other providers using these sites has been limited. As of May 2018, EE had only received formal interest in sharing two of 350 sites advertised. EE said they are supportive of “multi-operator rural coverage” and told us that they “stand ready to support other MNOs when they express interest in site sharing”. They told us that they share details on a weekly basis with other MNOs.
98.While part of the reason for current low interest from other operators may be because the ESN is in its early stages, some witnesses said that the cost of accessing the infrastructure could be a barrier. Vodafone told the Committee that the ESN wholesale price should be a “commercial rate that ensures use”, saying that the “cost of accessing sites must not be so high that there is no point doing it.” Ardross Community Council said that the UK Government should “consider the use of arbitration to enable a fair commercial rent to be charged and reasonable access allowed for other operators.”
99.As the provider of the ESN network has a potential to gain competitive advantage from the Government’s funding of the network, the Government was required to get State Aid clearance from the European Commission for this programme. One of the conditions of this clear was that, to limit competition distortions, the ESN network would have to offer access to the network, on wholesale terms, to other mobile phone providers. The Commission said that this price should be set through agreements between MNOs or, if this cannot be agreed, set based on the advice of Ofcom.
100.The ESN network presents an invaluable opportunity for operators to improve coverage in rural areas, and has the potential to create competition in areas which have been poorly served previously. To achieve this, EE need to ensure they facilitate and encourage site-sharing in their building plans. We are concerned that there has been such little interest from other operators in sharing the sites so far. Ofcom should carefully monitor provider take-up of ESN site-sharing, and require EE to provide an update in early 2019. If take-up is still low, Ofcom should consider intervening to regulate the wholesale access price for ESN mast sites.
101.Active sharing is when operators share elements of the mobile network, such as antennas, base stations and the core network. Active sharing is already core to the UK’s mobile phone network, which operates via two networks shared between the MNOs: one used by Three and EE and the other used by O2 and Vodafone. They compete as separate operators, using different radio frequencies, but these signals are received by jointly-owned antennas and backhauled over shared cables. However this does not include sharing spectrum, and there has been debate about whether more should be done to encourage a form of spectrum sharing known as national roaming.
102.National roaming involves an agreement among operators to use each other’s networks to provide services in geographic areas where they have no coverage. It allows users to make calls and use data, as long as one provider has signal in an area; the user does not need to have a contract with the provider. This is a similar process to “international roaming” which is when people use a network other than their home provider’s when travelling abroad.
103.A 2014 DCMS consultation considered national roaming as a solution to partial not-spots (areas when not all providers have coverage). However, the Government abandoned proposals in favour of imposing coverage obligations in spectrums auctions. The sector expressed notable opposition, arguing that it would harm competition and provide a poorer consumer experience. When we raised this issue with mobile operators, they explained that it would be likely to reduce the consumer experience with an increase in “dropped calls”, impose additional costs on network operators, and inhibit investment. Paul James, O2, said: “…why would we invest if we felt that we could roam on someone else’s network?”.
104.One alternative to national roaming is ‘macro not-spot’ roaming—this refers to operators making network sharing arrangements in targeted areas that are particularly affected by partial ‘not-spots’, rather than sharing across the whole network. A small-scale version of macro-roaming was introduced in the UK to enable the entry of Three into the mobile market—in certain areas Three customers could access EE’s 2G network in absence of their normal service. The British Infrastructure Group have suggested that “the ability of consumers to roam between networks in areas with partial ‘not-spots’ would encourage competition, as operators are incentivised to provide coverage in areas deprived of signal.” The National Infrastructure Commission have also recommended roaming, highlighting that it would guarantee consumers a strong signal.
105.Oxton and Channelkirk Community Council said a form of macro-roaming would be the “quickest and simplest way to extend coverage” in their area:
Oxton has 4G with Vodafone and O2, 3G with EE but nothing with Three. The next village south (Lauder) has no Vodafone coverage but it does have O2 coverage. So why not compel Vodafone to allow Three to use its network in Oxton and for Vodafone to use O2’s coverage in Lauder.
106.However, MNOs had similar concerns to macro-roaming as they had to national roaming. Simon Miller from Three UK said whilst “regionalised roaming options could be a way of addressing coverage issues”, he noted that “what we charge one another to go on to another’s network” would be a potential hurdle. Brendan Gill, CEO of OpenSignal, told us macro-roaming would “not solve everything because there are many areas where no provider has coverage and, therefore, roaming will not address the situation.” Scottish Rural Action said that national roaming networks do not work in rural locations “where there is no coverage at all”, instead arguing that more should be done to “encourage the building of more masts in rural Scotland.” Aberdeenshire Council said they did not support roaming because “it would not promote the build of any new infrastructure.”
107.However, in other countries there is evidence that macro-roaming has delivered improved coverage in remote areas and not inhibited investment in infrastructure. The British Infrastructure Group notes that rural areas in Australia, the USA, Canada and New Zealand have all benefited from improved coverage through macro-roaming. Whilst having much less remote landmass than these countries, the UK faces similar challenges in the lack of competition between operators, “which targeted roaming arrangements are well placed to provide.” In some countries, investment has increased as a result of this type of Government intervention: France implemented a system in 2003 targeted at rural areas which created 3,000 additional sites of mobile coverage by the end of 2009.
108.Ofcom told us that macro-roaming was “technically feasible” and “gives you an immediate improvement in the coverage experienced by consumers… because there is usually someone else who is available”. Whilst they raised the risk it posed to investment, saying that it could inhibit competition and “destroy the incentive to networks to build infrastructure…”, they have previously concluded—in their original report on national roaming—that macro not-spot roaming could “potentially save money for one operator in one area and another operator in another area, while decreasing some of the operational challenges. Any aggregate money saved by the operators could be used to fund ‘not-spots’ where there are no operators at all (e.g. in remote areas).”
109.We heard from some companies that universal national roaming is not viable because of the impact on the consumer experience and potential disincentive to investment. However, we believe that more work should be done to explore introducing roaming in specific areas which are only serviced by one provider as we believe this has the potential to radically improve coverage in some rural areas of Scotland. We recommend that Ofcom carry out a feasibility study into macro-level roaming, considering the potential benefits to specific remote areas which are only serviced by one provider and how a scheme could be designed to minimise any disincentives for MNOs to invest in their own network.
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178 [Ewan Sutherland]
179 [Professor Tafazolli]
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Published: 23 July 2018