Spectrum – the billion pound prize?
One of the issues in Digital Britain that gets the least coverage compared to its value is that of spectrum reform. It is a highly obscure and technical issue that many people in government have yet to get their head round, never mind the general public. Yet I would argue the prize at stake, in terms of the sort of services and economic activity that could be unlocked, deserves a huge amount more attention than it gets.
An extremely short history of radio spectrum policy in the 21st century goes something like this.
Spectrum in the UK had historically been licensed for specific purposes to a range of public and private sector users, paying varying amounts for the privilege, having been selected by various means, and with various controls over what the spectrum could be used for.
In line with the Cave review, the government adopted a new market-led strategy which aimed to put spectrum in the hands of those who valued it most, to do with it broadly what they wanted. The spectrum auction in 2001 was the first step towards this goal, and with the creation of Ofcom, the process of liberalisation was to be embarked upon.
That we have not got further down the track of a market-based system of allocation, with widespread spectrum trading, change of use and greater efficiency, is at least in part due to the complicated nature of legacy spectrum licences. Incumbents have naturally sought to maximise the value of their licences and avoid what they see as discrimination, including by legal challenge.
This is most evident in the mobile sector, where we have five players falling roughly into three camps. Yesterday, the Secretary of State met the five UK mobile operators to discuss next steps on how to drive forward liberalisation. There is a growing understanding that this might be the best chance we get to unlock new spectrum for use, and allow already-held spectrum to be used for other services, at a pace with which everyone can live.
The fact it has taken me four paragraphs just to understand why we want to take action, never mind what the details will be, demonstrates how obscure an issue this is. But the prize – new services; new technology; new economic value – is enormous and could well be one of the most important things we achieve in Digital Britain.
Fair use of the spectrum will be great for people moving around and still being able to access information. It is not the solution for rural broadband, despite what someone has told Lord Darth.
Imagine running your departments and homes on it. And if you are happy to do that then I guess we can all settle for it. If you need high speed broadband then mobile can never deliver it, so please don’t be fooled, and don’t try to fool us cos we ain’t that stupid. We need fibre to the rural areas. We need to compete with countries who already have next gen access. Don’t let Darth turn us into a backward country dependent on an obsolete copper technology. Light the fibre. Gigabit or bust.
PS. If you use the money you save selling the spectrum off and don’t let them waste it like last time you could do fibre to the home for everyone in the UK and we really would rule the waves again…
If you want to put spectrum into the hands of those who value it most, then remove licensing entirely. Look what that did to 2.4Ghz.
We have seen so much innovation at the edge with wifi that now every laptop and most mobiles have it built in. Why did that happen? No licenses. Let every Tom, Dick and Harry have a play on it and within a very few years we have COTS kit to play on that costs pennies, wireless networks springing up all over, remote communities connected, voice over wifi, hotspots, liveblogging from events, etc etc etc.
No big players or market forces there because it wasn’t about money, initially it was all about innovation, engagement and JFDI.
Market-led forces will not put spectrum to the best use, ever. The mobile operators will not use the spectrum to the advantage of the consumers but for their shareholders. That slab of mobile spectrum will not deliver next gen broadband whatever technology you use, UNLESS you keep on re-defining broadband to a lower, and lower, and lower spec. Hmm, surprise, surprise, look at what COMcast etc have said today about lowering that bar to 1/4Mbps….
Spectrum is worth a fortune in what consumers can do over it. Not in what mobile operators can earn in taking their slice of the pie, nor in what governments make in licence fees. If we can forget so quickly what freeing up 2.4Ghz did in enabling MOST OF THE WORLD to go wireless, we are failing ourselves appallingly.
Lyndsey is incorrect on several fronts. The basis of free market economics is that businesses in competition will use their resources in the best interests of both their shareholders and their customers – because customers are where the profits that the shareholders want will come from. Competition is what keeps prices under control. On the same basis businesses will, if allowed, interfere as much as possible with the effective use of resources by other competing businesses, which explains the delaying tactics being employed by the mobile industry on the 2.6GHz auction.
WiMAX could start delivering a high quality broadband service today – no need to wait for LTE, which will in fact be so similar to WiMAX in use that it will be impossible to create practical product differences on the basis of the technology alone. This means that being first to market becomes an important factor – another reason for the delaying tactics. However, the number of different services that could be delivered and their conflicting requirements means that there is plenty of room for everyone, no one operator could possibly satisfy all customers on a single infrastructure.
The problem with public spectrum is related to an economic idea called “the tragedy of the commons”. 2.4GHz is heavily congested and Wi-Fi often close to unusable in densely-populated areas because two unco-ordinated transmitters operating at the same time will interfere with each other and need to back off and try again. This is a fundamental requirement for radio equipment used for public spectrum. As more transmitters are added more collisions occur, until the data that manages to get through drops to a fraction of that In particular it becomes impossible to deliver a reliable datarate in public spectrum at relatively low levels of interference – and many services, particularly business services, require a reliable datarate. There is already plenty of public spectrum in rural areas because user density is so much lower, it is just an unattractive proposition for a serious business. Additional spectrum is only needed in towns and cities with high user densities, and it is needed now.
Agree with the sentiments expressed by Lindsay and Tom and would add that an ability to raise money has little to do with an ability to deliver services.
The market has not developed because it has not recovered from not so much an auction but a £24bn heist. Getting telecomms companies to bid for their own lives is another description of that policy.
The current Ofcom consultation on NGNs is revealing. The investment in NGNs and data connectivity has not advanced as thought as companies need to recover costs on existing investments. So Ofcom is proposing we run with another 4 years of TDM Call conveyance charges- not ‘bits’ based cost recovery.
I am not sure how a policy on allocating spectrum can be announced when the UNiversal high speed connectivity to the internet and the services it is expected to support are not defined.
The success of the internet teaches us there is connectivity and they are services on top. Connectivity is established anyhow, anyplace – fixed (copper, cable, fiber) and mobile wifi, GSM HSPDA).
BT is re-focuing its 21C activity (5 years late but it’s happened) from replicating its heritage services to delivering better connectivity using we hope an open and transparent data transport layer, without the control layer.
Let’s hope that 1) Ofcom see the need to separate transport from services and change regulation accordingly, and 2) at the end of this high speed data transport, enough spectrum is allocated to permit the bit commons to be extended for wireless access. We could even use our Broadband end points as Mobile access nodes. They are using the same protocols we are accessing the same services.
It is not that complex, we make it so by extracting taxes any way how and call it policy and then wonder why we need 4 different contracts to get my bits sent and received.
Our spectrum is not a prize but a national asset to be used in the creation of a bit transport infrastructure to deliver critical services.
The reform is still a tax extraction exercise not an investment in Digital Britain.
I think that it is important not to forget who are the winners and losers of this ‘market-led’ spectrum policy. For every band that is ‘liberalised’ (i.e. sold by Ofcom for lots of money with revenues going to Government), existing users with existing equipment have to be kicked-out first. What happens to them? A case in point is the digital dividend spectrum – the 600 MHz and 800 MHz bands – that are being cleared of existing services, including TV and Programme Making and Special Events (PMSE) technologies, so they can be sold to the mobile operators so they can deploy broadband services.
The result will be that the Government gets lots of money from auctions, the mobile companies get lots of ‘prime’ spectrum for their services, which they will make lots of money from by supplying them to the public. Unfortunately for the little-known sector called ‘PMSE’, the ‘clearance’ of the spectrum they use will render the vast majority of radio microphones, in-ear monitors and talkback systems operating in the UK entirely redundant. This will affect charitable organisations, churches, community organisations, theatres, music producers, freelancers, concert venues, TV producers – i.e. a massive part of the creative industries (that apparently contributes £60bn to the Uk economy every year and employs around 2 million people). Who is going to pay for all the new equipment they need? As the auction revenues will go to the Government, should it be them? As it is the mobile companies buying the spectrum and benefiting from it, should it be them? I’d say the Government, because it makes things simpler. What I certainly do know is that it shouldn’t be churches and charities and cash-strapped theatres paying for what will benefit mobile companies and the Government.