The big 4G win for UK Ltd

Almost exactly a year ago I pressed a short paper I co-authored into the hands of my MP and then Culture Secretary Jeremy Hunt at a meeting in the constituency about rural broadband.Estimating the cost to UK businesses of slow mobile...


Almost exactly a year ago I pressed a short paper I co-authored into the hands of my MP and then Culture Secretary Jeremy Hunt at a meeting in the constituency about rural broadband.

Estimating the cost to UK businesses of slow mobile broadband ( pdf) put a headline figure of £732 million per year - 0.5% of UK GDP - on the business hours wasted simply from having poor mobile broadband connectivity.

So I welcome the news late yesterday that mobile operators and Ofcom have agreed an accelerated timetable that should see 4G services from all UK operators launched in spring next year.

In producing the paper I wanted to highlight just one of the many indirect long-term benefits to the UK from 4G data services at a time when political focus seemed to rest purely on the potential windfall to the exchequer in these difficult economic times - the 3G spectrum auction raised over £22 billion in 2000. 

Our paper came at a time when the process to auction the radio spectrum needed for commercial 4G was floundering.

After a series of delays to the auction, Ofcom and DCMS insiders started briefing that it wouldn't help the UK to be at the bleeding edge of 4G roll-out as the technology wasn't quite ripe.  It would, some were claiming, be cheaper for operators and smoother for consumers to be in the "main wave" rather than at the forefront.

Whilst true in some cases, this was infuriating and nonsensical in relation to 4G.

The UK's planned deployment was already going to be four years behind the first 4G deployment jointly in Oslo and Stockholm, and three years behind the first US deployment.  Our paper continued with a long list of countries that would have extensive 4G coverage before we got our first commercial service.

Some operators - well, one in particular - seemed particularly unkeen on 4G.  Speaking to insiders it felt like fear of competition.  4G would level the playing field, introducing more competition for mobile data services at a time when this particular company hadn't yet made a return on the 3G spectrum it had overpaid for eleven years ago.

Competition: great for consumers, a PITA for telcos.

Behind the scenes, lobbyists working for major mobile operators tipped me off that rivals were effectively holding Ofcom and the government to ransom, threatening legal challenges and injunctions to the auction process for perceived unfairness.

The spat spilled-over into the broadsheets, with Vodafone accusing rival Three of "dressing up in short trousers running around the playground complaining that they're being bullied". 

The government had a worthy aim: to increase competition in the sector by gifting some spectrum to a new entrant.  The major operators didn't like this.  

The smallest operator, Three, didn't by all accounts mind this, but it wanted in on the positive discrimination as they had less spectrum than the others.  They were all but out of 3G spectrum and soon this would affect performance in some areas.

Other operators were holding spectrum "in the bank" - spectrum that could be used to increase 3G capacity,  plus Ofcom had hinted it would allow these airwaves to be used for 4G services.  

When Ofcom threatened to make a concession to Three, at least one of the major operators threatened Ofcom with legal action - or so I was told.

By last summer it looked as though the process could drag on and on and I wanted to ram home the message that this would cost the UK economy.  Consumers and small technology firms in particular wanted 4G now!

4G or more precisely the modulation technology Long Term Evolution (LTE) brings much more than faster internet connectivity and increased mobile capacity.

LTE works on lower frequencies than 3G, meaning it can cover larger areas from a single transmitter.

This means, in theory at least, that everyone who can access a 2G phone signal today should get access to a 4G signal once roll-out is complete  without  the need for additional phone mast sites.  

There are many disclaimers to this statement: the data is based on field tests, not real world deployment; bandwidth at the fringes will still be significantly worse than at short range (but significantly better than 2G and perhaps on a par with 3G or, hopefully, HSPA today); sufficient spectrum is needed to cope with growth in demand; mast sites might themselves have poor internet (landline) connectivity due to their rural location, therefore won't be able to route an increase in net traffic; increased power requirements at mast sites might cause a headache and operators might only upgrade underused rural transceivers if forced by regulators as the cost of upgrade outweighs the revenue benefit.

But taking all this into account, 4G will be a major part of the mix in improving dire rural broadband.  Plus it will bring some much-needed competition to the country's incumbent fixed line operator.

Our paper was widely distributed and, on the whole, very well received.  It was mentioned on page 2 of the Financial Times, in various Westminster briefings and we were invited to talk and defend it at some heavyweight industry events attended by senior technology and telco leaders held at plush city law offices.

I was collard by representatives from two operators who seemed to instinctively dislike our interference.  Small tech firms paid for my time producing the paper, not major lobbyists, so we weren't really on message.

Ofcom representatives seemed equally uncomfortable with my repeated suggestions that the regulator was too cosy with the big operators and that heads needed knocking together and a solution found for 4G.

Over time, as I bumped into these lobbyists at various events, one operator softened, confiding in me that his organisation wanted to play - they would press our case for 4G launch as early as was practical.  They seemed prepared to cut their losses on 3G and move on.

The breakthrough took a change in Secretary of State for Culture. Within weeks of Jeremy Hunt leaving office, Maria Miller presided over yesterday's reported deal.

As for our report itself, whilst a few accused us of arm-wavery, many more accepted our method as valid.  Only yesterday morning, Dr David Cleevely of the Centre for Science and Policy at Cambridge University stated a figure of 0.5% of GDP when talking about the benefits of 4G on Radio 4's Today programme.

I'm sure today as I was then that our estimate was conservative.  It accounted only for lost hours, not lost opportunities; of which there are many.

And, although it would be absurd to claim credit, the mood in Westminster with respect to the 4G process changed considerably over the last year.   No doubt Apple with their 4G-enabled iPhone 5 played a very significant role in more recent developments.

And, although I'm reluctant to admit, maybe the string of legal threats resulted not in a delay to the process but an acceleration - by forcing Ofcom and DCMS to focus on the problem.

Aside from Ed Balls' unfortunate pronouncement this week than the proceeds of the 4G auction could be used to build 100,000 homes (unfortunate because the money - I hear - has already been earmarked and in some cases allocated for reinvestment in universal access to broadband), the political focus has shifted away from the potential direct returns to the exchequer from the auction of spectrum and towards the long term benefits to the UK and in particular to innovation in the technology sector.

Lessons were learned from the 3G auction by telcos and by government.  Data is a utility, not a value-added service, and this realisation limits the value of the spectrum and shifts the government's focus onto provision rather than extracting direct financial returns.

And so on to the next battle: ensuring the whole country sees the benefit of 4G.

It was inevitable that the first 4G services announced would be in cities.  Mast sites (roof tops) are in greater supply, subject to fewer planning regulations and, arguably, less planning opposition.  High speed (back-haul) data connections are in abundance and each transmitter covers tens of thousands of subscribers.

The challenge for Ofcom will be ensuring 4G services reach the areas they are needed most, the so-called rural fringe - rural areas that are within, say, ten miles of a town with a decent internet connection.  

This should allow fairly painless deployment of 4G to cover rural areas that currently have poor fixed line broadband and unusable mobile data. 

But the cost of upgrading such sites with new base station controllers, radios and antennas is still unlikely to be cost effective for mobile providers and so rural broadband campaigners should keep the pressure on the government and Ofcom to ensure coverage targets are set high and met in a timely manner. 

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