UK’s digital economy must be built on fair foundations

This article by Sharon White, Ofcom Chief Executive, first appeared in the Financial Times on 2 October 2017

For all the uncertainty facing the UK economy and consumers, the telecoms sector can be sure that people and businesses will continue to demand faster and better broadband connections, at home and on the move.

The statistics are astonishing. In 2015, Britons used less than half the data they do now on their home broadband. Average speeds were a third of what they are today. And the amount of data flowing through our mobile devices has grown ten-fold in five years.

This pace shows no sign of slowing. Connected devices are on the cusp of taking off in our homes and offices, on our roads and railways.

That is why the UK urgently needs investment in the networks that will help our digital economy flourish. Not only because of the growth potential, but because British business needs to grab these opportunities as we reshape our international relationships. The government is putting up significant funding for new fibre and 5G networks to bolster this development.

The regulator’s job is to lay the foundations for companies to compete and invest. At Ofcom we take decisions in the interests of consumers and businesses, mindful of ensuring that industry has confidence to put money in and make a return. Those foundations must underpin a level playing field. But in the mobile phone sector that does not mean everyone having the same share of the airwaves that power portable devices.

To support the next wave of mobile growth and promote competition, we have carefully set rules to auction two slices of mobile airwaves, or spectrum, together. One will support the faster 4G mobile we use today. The other will be for the next generation of mobile, 5G.

After considering a diverse range of views, we decided to place caps on the amount of spectrum that operators can hold, in order to avoid very asymmetric distribution. Two companies, Three and BT/EE, are taking legal action because they do not like the rules.

We will defend our decision. Three believes we should effectively redistribute spectrum more evenly. BT/EE, the company with the largest existing amount of spectrum at over 40 per cent, conversely believes we should not have restricted how much spectrum it can hold.

BT/EE said its hand was forced by Three’s challenge and that its own appeal was therefore just a defensive move to cover Three’s case. But BT/EE’s appeal in fact goes much further and seeks to challenge the auction on a whole new set of grounds.

The courts have agreed to fast-track litigation, but the benefits for mobile users will inevitably be delayed. We planned to complete the auction this year. Now we will be in court in December. We believe that auctioning some 5G airwaves early would allow companies to start the vital groundwork to make 5G a reality as soon as possible.

Laying new fully fibre networks is equally crucial, and we are creating the conditions for more investment here. This includes opening up the network of underground tunnels and telegraph poles for others to lay fibre, and pushing through the reform of BT Openreach to make it more independent, with its own staff.

This is supported by careful regulation of wholesale superfast broadband prices to boost investment, without allowing profiteering by BT.

The millions pouring in from companies like Virgin Media, BT, CityFibre and others demonstrate confidence in fibre, especially as costs fall. We are encouraged by the early signs and the economics of fibre will only get better. And we see opportunities for “dark fibre”, BT’s dormant cabling that can be used by competitors.

We appreciate companies must look after their own positions. But commercial interests must not derail a golden opportunity for the UK to achieve leadership in 5G and be among the world’s best connected nations, which will benefit consumers and businesses and give our economy a competitive edge.