Wednesday, June 17, 2009

Digital Britain - what it means for mobile operators

Yesterday's publication of the Digital Britain report has predictably been met with headlines about the imposition of a broadband ‘levy’ (or ‘tax’ to you and me) to help fund the future investment in a national high speed internet infrastructure. But, as the appointment of Martha Lane Fox as ‘Digital Inclusion Champion’ perhaps mischievously suggests, is this all a little bit of a lastminute strategy?

There are some interesting points contained within the report (Martha's appointment not being one of them!), not least the news that ISPs are going to be made responsible for policing their own subscribers. This is maybe not such good news for the ISPs, but for anyone selling DPI-related products, it can only be a good thing ... but more on this in a later post.

One area that hasn't received much attention thus far has been what it had to say about mobile networks. There has been some moaning that mobile is just being seen as a stop-gap solution until fixed networks can sort themselves out and deliver the requisite speeds (a heady 2Mbps) to the more remote, broadband-deprived parts of the country. However, I think that's a bit harsh, to be honest.

The report not only acknowledges that next generation mobile networks will be able to deliver data rates of up to 100Mbps, but clearly says that both 3G and LTE have a key role to play in delivering the goal of universal broadband coverage.

What is of perhaps more significance though is:

  • WiMAX is essentially dead in the UK. While it advocates "the immediate release of WiMAX-suitable 2.6Ghz unpaired TDD spectrum for auction", the reports lays its cards on the table and states that there is "an encouraging consensus amongst incumbent mobile operators for the mobile broadband networks to be based on either 3G or LTE. This does not preclude a new entrant using other technologies, such as WiMAX, but in the highly competitive UK mobile radio market it is highly unlikely that such a new entrant would have the market power to de-stabilise the vital standardisation that underpins national and international mobile roaming for UK users."
  • The 'Big Auction' for 2.6Ghz paired FDD spectrum (i.e. the spectrum for LTE) is set for mid-2010. But, there is still a big debate to be had over spectrum refarming before this can happen. Essentially, if Vodafone or O2 (who occcupy 900Mhz spectrum for their GSM services) want any 800Mhz spectrum for future mobile broadband services they will have to trade in their 2G spectrum. The reason, simply, is that the economic advantages of 900Mhz over 1800Mhz (greater cell coverage etc.) are such that the regulator has to balance it out so T-Mo and Orange aren't penalised. So the auction of 800Mhz and deployment of LTE rests on how easily 900Mhz can be refarmed.
  • In a bid to drive universal mobile broadband coverage and so get 3G services as nationwide as 2G, the terms of the 3G licences are going to change from time limited to indefinite in order to give operators a chance to see an ROI from extending their 3G coverage. What's more, the Digital Britain report seems to favour network sharing in the sub-1Ghz spectrum as a way of expediting this network expansion, not least because lowering the cost of delivering broadband coverage to the last 10% of the UK is critical given that they are so well dispersed and "not a viable market" on their own.

Overall, the Digital Britain report seems positive for mobile operators. I've heard murmurings of people saying LTE could solve all the problems and so we wouldn't need to pay the 'broadband tax' to bankroll building a nationwide high speed fixed network, but realistically this was never going to be the case. Any anyway, the economics of delivering mobile broadband in remote areas is still something that needs help from the regulator to balance.

Either way, with several important spectrum issues to be resolved over the next 12 months, it's clear that there is still much to play for in the role mobile networks will have in policies to finally deliver a universal high speed internet in the UK.

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