Availability of future mobile services for citizens and consumers – revised proposals for promotion

During the March 2011 Consultation itself Ofcom has recognized the importance of the auction of 800 MHz and 2.6 GHz spectrum. The regulator was fully aware of the importance of this spectrum and how the future mobile services in the country are going to depend on it. Ofcom wants to promote competition not for the sake of competition but for the wide availability of superfast broadband access coupled with the aim of extending the coverage areas. The regulator wants to make sure that mobile broadband service is made available to a significant portion of the UK population within a reasonable period. With regard to coverage obligation, Ofcom proposed that in license for 800 MHz spectrum, a coverage obligation is to be included. As per this obligation, the successful bidders are required to deploy an electronic communications network. This network must be capable of providing telecommunications services with a download speed of 2 Mbps. The probability of indoor reception of this service should be at least 90%. By the year 2017 at least 95% of the UK population should be covered. Majority of the responses to the consultation demanded Ofcom to impose more conditions aiming the coverage of more extensive areas. The House of Commons Culture, Media and Sport Select Committee wanted the regulator to fix the coverage obligation at 98% on the 800 MHz licenses. Basing on these responses and also taking into consideration the decision of the Government to invest 150 Million Pounds in the MIP (Mobile infrastructure Programme) for the improvement of mobile coverage in the rural region, Ofcom has decided to impose a more extensive coverage obligation on one of the 800 MHz licenses to be auctioned. One method of achieving this aim is to fix the coverage obligation straight away at 98% of the population of the UK, as many of the respondents demanded. Ofcom regards that in the ordinary circumstance this measure would have been a reasonable one. However, here the Government has decided to invest 150 Million Pounds to improve mobile coverage and as a result Ofcom wanted to change its approach. In its opinion, it is better to link the coverage obligation directly with Mobile Infrastructure Programme (MIP) Accordingly, the 800 MHz licensees would be required to provide a 4 G mobile broadband service with coverage obligation. The second approach, i.e. linking the coverage obligation to MIP, has two advantages namely the Government’s investment in mobile infrastructure would yield more benefits. Both better mobile broadband coverage and better mobile voice coverage would be provided. Moreover, mobile broadband services will be provided to those areas where it is more valuable. If the coverage obligation refers only to a certain percentage of the population, the licensees would concentrate on the places where it is easy for them to meet the target, neglecting the places where broadband services are most valuable. Ofcom considers that the risk of inefficient use of the spectrum against the benefits that the consumers get from wider coverage would be balanced by the imposition of an obligation on just one 800 MHz license. It will make sure that the consumers through out the UK would be provided with a good quality mobile broadband service once they buy it from a designated service provider. The preferred approach of the regulator has two elements 1) providing coverage comparable to the 2G mobile voice coverage currently delivered by 2 G mobile networks, 2) providing coverage that is comparable to the extended mobile voice coverage achieved through MIP, to which extent the MIP infrastructure could support the provider’s 4G network equipment. With regard to the first element, the imposition of requirement on all of the 800 MHZ licensees is not necessary. The requirement is to guarantee that other licensees are likely to provide this level of coverage with in a relatively quick time scale. It may prove detrimental to the interest of consumers if the regulator imposed a time table on all licensees. As far as the second element is concerned the issue is more complicated. Suppose the obligation is imposed on one licensee. Then the consumers in that area where they are receiving service using the MIP infrastructure won’t have a choice of a provider. Again consumers who live elsewhere, when visit these areas won’t get any service in those areas. In addressing this issue, there may be consumer benefits, but Ofcom has to consider the costs as well as the challenges to be faced. There is a possibility that the licensees, other than the one holding the obligation, in the MIP areas may provide mobile broadband service to some or the whole of the MIP areas as it may be commercially beneficial to them. It is already noted that this may not happen with all operators and in all areas. To address the issue Ofcom considered two options, one is that on all 800 MHz licensees the second obligation is to be imposed and the second option is to impose an additional requirement to offer wholesale access on the one licensee who has the coverage obligation. Though Ofcom has considered both options, it has decided not to adopt either option since both give rise to concerns. Hence Ofcom would like to impose coverage obligation on just one licensee and that licensee would be free from wholesale access obligation. Building infrastructure that can accommodate the mobile broadband equipment of more than one provider is almost impossible. If only the MIP infrastructure could house all the holders of the obligation, the imposition of obligation on all licensees would become a success. Hence imposition of obligation on all licensees is not practical. Ofcom considered the possibility of imposing an access obligation. There are some important matters to be considered before imposition of access obligation, like the cost of the network involved in providing access, the terms and conditions of the access including price and the need for a new regulated access regime. Again if wholesale access is allowed then other operators won’t show any interest in making investment in the rural areas. Hence Ofcom has not taken any decision in this regard and left the area opened for further comments and evidence from stakeholders. The regulator needs more data regarding the costs and benefits of these measures to reach upon a decision in this matter. Ofcom wants to bring the maximum less commercially attractive areas under the coverage area of the mobile broadband.