Mallinson: Will the UK get it right with broadband deployment?

The UK is belatedly edging closer to a future of widespread broadband with 4G network spectrum set for auction by yearend 2012. An obligation in one national license will wisely maximise coverage at the expense of auction proceeds. The political, economic and technical debate on how best to achieve universal broadband service rages on.

4G licencing at long last

According to the UK's telecommunications regulator, Ofcom, the nation's largest ever auction of spectrum for mobile services is set to get underway by the end of 2012, laying the path for next-generation 4G networks to be rolled out next year. The "4G auction" will release new 2.6 GHz frequencies and "digital dividend" frequencies recycled from analogue terrestrial TV usage in the 80 0MHz band. Together these two bands will provide 250 MHz of additional mobile spectrum, compared to 333 MHz in use today.

The additional spectrum is desperately needed due to growth in demand for mobile broadband with traffic doubling annually.  Even though the auction will increase total spectrum available by around 75 per cent, proceeds will surely be much less than the £22.5 billion ($35.7 billion) raised in the UK's millennial auctions for 119 MHz of 3G spectrum. Ofcom is holding its line that a national UK market for cellular with four network operators is in the best interests of consumers. Spectrum caps restrict how much spectrum any operator can have, effectively ensuing new allocations for all incumbent operators: Everything Everywhere, Vodafone, Telefónica's O2 and 3 UK.  Neither the high prices achieved nor a new entrant, as came with the 3G auction, seems at all likely with the 4G auction, given the allocation rules, brutal economics and competition among operators.

Obligations, measurements and sanctions for non-compliance?

Ofcom wisely recognises that maximising financial proceeds in auction is not the be all and end all in allocating spectrum. Mobile broadband access is vital for social welfare and economic development. It is most desirable to maximise its availability across the entire nation. Large spectrum fees are a severe burden on mobile operators, and yet we need them to make very costly network investments.

The spectrum will be auctioned as a series of lots. One of the 800 MHz spectrum lots will carry an obligation to provide a mobile broadband service for indoor reception to at least 98 per cent of the UK population by the end of 2017. Ofcom reckons this is equivalent to 99 per cent population coverage outdoors.  In addition to the above UK-wide coverage obligation, indoor services must be available to at least 95 per cent of the population in each of the UK nations: England, Northern Ireland, Scotland and Wales.

These coverage requirements will depress the spectrum price significantly below what could otherwise be obtained in auction, as with the lots that do not have such obligations. Money that would have gone to government coffers for other uses such as schools and deficit reductions will, instead, be used to subsidise extending the reach of the network into areas that are not expected to provide a positive economic return. Similar approaches were adopted with spectrum licensing for LTE in Russia and Germany. 

It is also important there will be adequate and competent measurement of coverage and service performance, with penalties for non-compliance to conditions. Operator coverage maps are, in my experience, crude assessments of questionable accuracy. Adequacy of mobile broadband "coverage" needs to be defined in terms of various criteria including uplink and downlink throughput speeds, latencies, minimum and median, as well as peak and mean performance. Recent debate about over-optimistic franchise bidding by train operating companies in the UK also highlights the possibility that, once licenced, operators might default, seek to renegotiate terms or even walk away from their obligations altogether if things do not work out as well as they had hoped. Mobile operators who benefit from reduced-priced spectrum must also be made to live up to their obligations or pay significant penalties.

Fix the not-spots and the hot-spots can take care of themselves

Meanwhile, the question of how to expand broadband communications access in general is a matter of contention between the UK government and the House of Lords. The latter recently published a Select Committee report calling for a more radical policy than the "Superfast Broadband Future" policy currently being pursued. Instead of simplistically setting access speed targets based around limitations of current technologies and network architectures including DSL-based connections at around 24 Mbps for links close to an exchange and 2 Mbps for those a long way away, the Select Committee presents its alternative vision for "open-access fibre-optic hubs." It states that of one of these hubs should be placed "within reach" of every community.  

I find both proposals rather difficult to fathom. Neither of them recognises that henceforth broadband access to mobile devices will be at least as important as it is to fixed locations. There are already more smartphones than computers. For many, mobile devices will remain the primary or only means of Internet access. Overall, people are more likely to do their messaging, browse or stream video on a mobile than on a fixed device. The government has a rather unenlightened plan to take fibre--providing the highest speeds--as far as the limited public and private funding will go, and then stop. That will not ensure universal service for broadband. If you happen to live, work or play in the wrong places you will remain the wrong side of the digital divide. The Select Committee proposal focuses on fixing the "middle mile" problem on a national basis with these fibre hubs, but it then makes a colossal leap of faith that local initiatives will connect individuals to these. That will also surely leave many folk unconnected or significantly under-served with slow, limited functionality and poor-quality connections for a long, long time. The hubs might be helpful to mobile operators, but there would still also remain the need for the costly backhaul connections to these from radio access network equipment on masts and at small cell sites.

Broadband needs to be brought to everybody, almost everywhere they go. This includes at home, at work and on the move with mobile devices. It is not the fastest headline speeds or even average-speed targets that are needed in policy-making--advanced technologies and favourable economics will surely beat the superfast broadband path to most doors.  What we need most from policy makers is that they ensure minimally acceptable broadband speeds and service levels to virtually everybody, no matter where they are or what devices they choose to use.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. WiseHarbor publishes an Extended Mobile Broadband Forecast. This includes network equipment, devices and carrier services to 2025. Further details are available at: Find WiseHarbor on Twitter @WiseHarbor.