When London hosts the Olympics in three years’ time, the Government wants every single person in the country to be able to watch the 100m final on BBC’s iPlayer.
That is not the overriding objective, but the goal of universal broadband has triggered fascinating discussions between the Government, the BBC, BT, fixed-line broadband players and mobile operators, on reshaping the technological landscape and the financial obligations.
Last week, communications minister Stephen Carter announced in his interim Digital Britain report that every household in the UK should be guaranteed access to broadband at a speed of 2Mbps by 2012.
The report frees BT of its current obligation, under the Universal Service Commitment, to be the sole provider of fixed-line telephony to everyone in the UK, and replaces it with what Carter calls a ‘modern equivalent – next generation broadband’.
It turns the spotlight onto the mobile operators, with telecoms now playing a central role in the Government’s economic recovery plan.
In a briefing for the launch of Digital Britain, Carter compared the report to the contribution of energy in its significance, adding: ‘There is no sector that the economy depends on as much as this one.’
However, the interim report draws no conclusions on what the new commitment should be. Responses will be sent back before Digital Britain is published in June, with the new terms set to go live in November.
Carter accepts that fixed-line giants BT and Virgin Media are not going to cover the minimum standard for broadband coverage in the new agreement.
The report says: ‘We will develop plans for a digital Universal Service Commitment to be effective by 2012, delivered by a mix of fixed and mobile, wired and wireless means.’ It adds: ‘Britain needs to match the development in its fixed infrastructure with its mobile infrastructure. The mobile phone has become the one device no citizen wants to leave home without.’
Currently, there are 1.75 million households in the UK, or 7% of the country, that do not have access to an internet connection at 2Mbps over BT’s network. It is estimated that 17 million people over the age of 15 are not using computers or the internet.
The move creates a new phase of importance for the mobile broadband market. Carter says: ‘The priority is tying in fixed to liberalise the wireless market if we are to see the expansion of mobile broadband that we have seen in fixed. The next three years will see this step up to accelerate that market.’
But there are obstacles. The Government has not yet decided how the targets will be funded or whether the services will be free or at a low cost. Instead, the report said it would be shared between ‘a range of communications providers, and those who provide communications services over the network’. It said BT alone could not make a commitment, as its broadband customers total only 25% of households.
Carter has hinted that the consumer may have to pick up some of the cost. The report says: ‘We expect that the end consumer should, beyond a certain point, make a contribution to the cost of providing connectivity.’
It remains unclear how much the internet service providers (ISPs) and the Government will need to provide. Matthew Howett, analyst at Ovum, says: ‘Some are reluctant to make investments but that is a role for the Government.’ He suggests: ‘They could demand aggregation, for example by putting Government services online.’
New carve-up expected
Only around 60% of the UK has the kind of broadband coverage that Carter desires.
He admits that to achieve the broadband coverage needed it ‘might involve’ reallocation of the spectrum between mobile providers. The digital dividend spectrum – which will be available when analogue TV is switched off, could be used for 3G broadband, says the report. Ofcom has already proposed the release of the 3G expansion band at 2.6GHz.
The allocation of the current spectrum could be an obstacle to universal broadband coverage. Licences in the UK were released in chunks – the first in 1985 for the 900MHz band to Vodafone and O2 (then BT Cellnet). In 1991, further licences in the 1800MHz band were granted and were relicensed in 1995 to Orange and T-Mobile (then One2One). They are set at around £15m per year per operator.
In 2000, the Government auctioned spectrum in the 2100MHz band for 3G use. All five operators – including new entrant 3 – were awarded a licence for 20 years, running until 2021 for a total of £22.48bn.
The 900 and 1800MHz bands are reserved for 2G use, so only the 2100MHz band is currently used for mobile broadband. Ofcom’s strategy of spectrum liberalisation has not yet applied to these bands because of European legislation and disputes between operators. However, Ofcom has said that £1.7bn could be saved if 3G is provided over the 900MHz spectrum rather than the 2100MHz.
Some have criticised the low-level speed Carter is aiming for. While 2Mbps is enough to watch TV services such as the BBC iPlayer, the UK’s average speed is currently over 3Mbps – and some European countries are currently working to a benchmark of 20Mbps.
Mobile operators need to brace themselves for the significant part they will be expected to play in implementing Carter’s vision. Howett says: ‘There is no simple solution; it will need a patchwork between mobile and fixed. Mobile has a huge role to play.’
Differing agendas of the operators
At the heart of the report, for mobile phone operators, is the impact on their spectrum. Carter has given the operators three months to reach an agreement on re-allocating spectrum. If they fail to do so, the Government will intervene and impose a new allocation.
Current 3G licences run until 2021, and a complete overhaul of all the various spectrums that the five mobile operators run, would be extremely expensive.
Another factor is whether the mobile industry will secure spectrum through the ‘digital dividend’ – the spectrum that will be freed up when analogue TV is switched off, and only digital TV is available. But the BBC wants the spectrum from the digital dividend for HD TV, as do other broadcasters, and BT wants some too.
Vodafone and O2, as the first two mobile operators in the UK, have total ownership of the spectrum that runs on 900MHz, while Vodafone, O2, Orange and T-Mobile all have a share of 1800MHz. 3 only has access to a 3G network, and has a costly deal with Orange to use its network when its own is not strong enough.
Vodafone and O2 are expected to fight hard to protect their spectrum advantage, or give away as little as possible.
T-Mobile – UK managing director Jim Hyde
‘The report clearly understands the contribution that mobile has already made, and the exciting potential that mobile broadband offers. It also puts its finger on a key current roadblock – the inability to use all existing mobile spectrum for 3G, and to do so on an equitable, competitive basis. We have long argued for this.
‘T-Mobile “wholly agrees” with network sharing – something it has “already pioneered” with 3 UK, which is designed to provide it with 3G coverage wherever we have 2G. Sharing network infrastructure does not impede competition; it reduces costs for all, it reduces the total number of cell sites needed and it enables more rapid deployment of network coverage and network quality.’
O2 – UK CEO Ronan Dunne
‘We are pleased that the Government recognises the importance of the communications industry in the UK, and welcome the fact that they are paying such close attention to these important issues. We