Connected Research

Union policy research in the 21st century

Posts Tagged ‘Spectrum

everything, everywhere

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So, it’s not going to be T-Orange after all, then. T-Mobile and Orange have resisted the temptation of the obvious and have decided to run in a completely different direction, calling their joint venture everything, everywhere – perhaps a slightly hyperbolic name for a mobile company, even if it is the largest one in the UK, and one which appears something of a mouthful in comparison to the available competition (it has more syllables than the three other network operators put together).

Its ‘vision’ includes a single ‘super-network’ giving ‘unsurpassed coverage and capacity’ for customers (though 3 might take issue with this bit), and at a lesser impact on the environment. Few details are as yet available other than that the company will seek to combine both the Orange and T-Mobile networks and, by cutting out duplication, reduce the number of stations and sites that the company uses (which currently stand at some 27,000). Nevertheless, how this network looks, and operates, is a vitally important consideration not least given the terms on which the JV was approved (i.e. the guarantees given to 3; and the sale of spectrum). The company has, however, confirmed that all four of the companies served by the network (including both 3 and Virgin Mobile) will run on a common infrastructure.

The new company claims a customer base of more than 30 million people – ‘over half of the UK adult population’ (I can’t recall the companies trumpeting this sort of statistic while the regulators were looking at the proposed JV: funny, that!) and its press release helpfully breaks these down into pre-paid and contract mobile customers and Orange’s fixed network (the management of which was outsourced last month to BT) – so would seem to incorporate the potential for some double-counting.

The merged company will have 16,500 employees – 2,500 fewer than they had when the JV was announced seven months ago – and is, according to the same report, seeking savings of some £3.5bn by 2014 in shared infrastructure, technology and in the savings resulting from job cuts.

Not everything, everywhere for everyone, then.

Written by Calvin

12/05/2010 at 11:21 pm

A greener wireless industry

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Telecoms companies have united in another green initiative, this time with the aim of achieving a 50% reduction in the energy consumption of so-called 4th generation (or LTE) mobile wireless communication networks, and with the aim of commercialising its work by the end of 2012. The Earth (Energy Aware Radio and neTwork tecHnologies) project is based on research into ways of saving energy in mobile networks, network components and radio interfaces with the aim of laying the foundations for a new generation of energy-efficient communications equipment.

Other than that, the company press release is really rather dense (which may well account for the distinct lack of interest amongst the UK press, even on what seems to be a slow news day). Indeed, the initiative seems to have got underway some three months ago and only now has a press release been put together about it. Alcatel-Lucent and Ericsson are the lead names on the initiative (as indeed the former was on a previously announced green initiative, which I blogged about here) but it also encompasses 13 other partners, including research institutes and universities, and the European standards organisation, ETSI, alongside the telecoms partners.

LTE (Long-Term Evolution) is the name for the next generation of mobile, with a wide range of frequencies deployed to allow users to watch high-definition video and receive much faster downloads on their mobile devices. An auction encompassing LTE-appropriate spectrum has just been concluded in the Netherlands, while similar is currently underway in Germany. Plans in the UK, intended to have been facilitated by Kip Meek’s independent brokerage and accepted by the government, have been derailed both by operator objections and by the loss of key chunks of the Digital Economy Bill, but may return to the agenda after the general election.

So, the new initiative is timely and very welcome – even if the EARTH programme, if not its aims, suffers from an inevitable imprecision as well as the equally inevitable strong dose of corporate puff. Similar to the last initiative, however, my gripe remains the relative lack of UK involvement. The University of Surrey is one of the consortium partners, but UK involvement seems otherwise to be minimal. Leadership on these sorts of initiatives is up for grabs and it would be a shame were the technical expertise in energy efficiency generated by such initiatives to flow largely elsewhere.

Written by Calvin

28/04/2010 at 4:07 pm

America’s National Broadband Plan

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After 11 months of work, extensive public consultation and heavy recent trailing of proposals, the American Federal Communications Commission released Connecting America, its National Broadband Plan, on Tuesday this week (Connecting America; press release). Not all the five Commissioners agree with the Plan so, instead of a formal vote, an agreed joint statement has been issued focusing on the principles at stake. More information is available at a specific broadband website.

Running to some 360 pages, the Plan is not a light read and I’ve as yet got only as far as the executive summary. However, it’s useful to compare and contrast policy approaches to the development of broadband; policy-making doesn’t exist within a vacuum created by geographical borders.

The Plan exists on the basis of a four-pronged approach to policy-making in what it calls the ‘broadband ecosystem’, each of which it has a series of recommendations numbering 200 overall, and the six long-term goals the FCC thinks can serve as a ‘compass’ for the development of broadband over the decade-long lifetime of the Plan.

Starting with the latter – the vision thing – the six goals are these:

1: At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second.

2: The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.

3: Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose.

4: Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals and government buildings.

5: To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.

6. To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.

To ensure delivery of these goals, the Plan envisages the release of 500MHz more spectrum – the aim being that auction monies will be sufficient to finance the Plan; a Connect America Fund based on a shift of $15.5bn over the decade out of the existing Universal Service Fund and the provision of public funds of ‘a few billion dollars per year over two to three years’; and a Mobility Fund designed to ensure that no states lag behind the national average for 3G wireless coverage.

Aside of a small quibble around the slightly hyperbolic reference to the Plan ‘always being in beta’ (well-intentioned as the reference is to ensuring the Plan is flexible enough to meet changing circumstances, drafts do have to be concretised if action is ever to result), there are a lot of good things in it. Specifically, I like the following:

– the measure for high-speed broadband to be not ‘average’, or ‘up to’, but ‘actual’ and ‘at least’

– the specific requirement for upload speeds, as well as download ones, to be of a minimum standard

– an interim milestone of 50Mbps download and 20Mbps upload speeds to be delivered to 100m citizens within five years

– the universal service aspects of broadband to be based on delivering a ‘robust’ service to ‘every American’ which appears to be based on 4Mbps actual download speeds (not my emphasis but that of the Plan)

– the requirement for ‘anchor institutions’ (schools, hospitals, government buildings) in each community to have a 1 Gbps service

– the serious component based on improving digital literacy to improve the choice for citizens to be online.

There are some clear gaps. The availability of high-speed broadband is, despite the impressive language around speeds, aimed at just one-third of Americans; while a universal service of 4Mbps by 2020 might be said to be a little conservative. Such a programme creates, or exacerbates a clear digital divide within America with some, inevitably heavily urban, citizens to have super-fast speeds while others, inevitably out in the sticks, have to be content with a much poorer service.

There also appears to be little said about the levels of investment required to deliver such high speeds, which clearly require fibre to the home, other than via private sector investment based on competition. Estimates have put the costs of the Plan at some $350bn (£230bn). Given that there is a simultaneous requirement for access to be ‘affordable’, and in conjunction with other aspects of the Plan being funded by sales of wireless spectrum, that is likely to place a serious burden on capital expenditure amongst telephone companies and on the regulatory environment in which they operate. Whether that could be supplemented by state funding other than the $7bn intended to come from President Obama’s 2009 stimulus package is an interesting point for debate.

I would also be concerned that the Connect America Fund, designed to deliver universal service, is to be funded largely by a shift in existing Fund resources, together with a few billion dollars extra. The Fund (raised, incidentally, by a levy on telephone providers’ revenues, currently running at 15.3%, which may then be passed on to consumers) is already in difficulty concerning its existing responsibilities, so there is a natural concern as to how these will be met once the Fund is re-focused and – more so – how an expanded target will be delivered.

Nevertheless, the Plan – welcomed by the Communication Workers of America as a ‘good roadmap’ and described by it as ‘far-reaching’ – provides policy-makers with an extensive amount of material to debate over the coming months as the recommendations start to turn from paper towards implementation.

Written by Calvin

18/03/2010 at 11:50 am

T-Orange in the pink – but unresolved issues remain

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The European Commission has today approved the joint venture between T-Mobile and Orange in the UK. The outcome had been heavily trailed in press speculation last weekend, and the concessions appear to be in line with what the papers were then discussing, i.e:

– specific protection for 3 UK regarding its own network joint venture with T-Mobile

– T-Mobile and Orange to give up 25% of their jointly held spectrum in the 1800 MHz band

Today was the last day, according to the European Commission procedure, for the decision to be made and, as a result, the Office of Fair Trading has also today withdrawn its request that the merger be referred to it.

The questions that remain appear to me to be as follows:

1. The Commission decision talks of the arrangements with 3 UK being necessary ‘to ensure that there remain sufficient competitors in the market’. If four is now ‘enough’, why has competition policy been geared towards establishing and maintaining a fifth operator in the market – not least in the light of the influence this requirement for an additional market entrant had on the auction for 3G spectrum in 2000 (and on the subsequent fall-out)? And what should happen in the light of four operators now being a ‘sufficient’ number were Vodafone to decide it wants to merge with 3 UK, as the two smallest operators in the UK market, as happened in Australia last June? [Edit 5 March: One analyst has already commented that such a deal would, in the wake of the T-Orange JV, be ‘competitively appropriate‘.]

2. According to the press speculation, 3 UK signed a deal with T-Mobile and Orange giving it access to 3,000 more sites to support its own network expansion. Part of the OFT’s fears of the impact of the merger on 3 were that it could end up facing severe jeopardy if T-Mobile and Orange were to switch customers on to the Orange network, running down maintenance on the T-Mobile network, allowing it to atrophy and thus undermining the critical quality component (para.67). With the greatest of respect to 3’s negotiators (and of course to commercial confidence), how do we know that the additional 3,000 T-Mobile and Orange sites to which it has just secured access will continue to be ‘viable’ ones into the future (i.e. that the OFT’s fears won’t end up being realised)?

3. The European Commission correctly points out that it is contiguous spectrum across frequency bands which offers the key to early implementation of LTE (so-called 4G) services. With it, T-Orange is in a clearly advantageous – a market leading, in fact – position. The concession of the 15MHz of spectrum that T-Orange has offered must, therefore, be done in such a way as to ensure that, afterwards, there is no such contiguous position (note here that the JV appears not to have had to go further than its initial offer, according to the press speculation). This could easily be achieved were the 15MHz of spectrum conceded to be that of one of the operators alone rather than from them both. It is clearly imaginable that point (2) above is also very much tied in with this.

4. Both the EC and the OFT press release contain clearly jointly-worded statements on the concessions doing enough to satisfy on the impact of the JV on competition. Even a cursory glance at the OFT’s request indicates that this was not the only (though of course it was the primary) concern: issues of subsidiarity also featured, for example. Other question marks around the approach to regulatory decision-making highlighted previously on these pages are also important.

And, finally – something may have been lost in the translation, but the competition issues are not yet ‘resolved’, in the words of Competition Commissioner Almunia: please note that crucial decisions and actions have to be taken before that can be proclaimed.

Written by Calvin

01/03/2010 at 4:21 pm

EU private consultation on T-Orange concessions

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Mobile companies in the UK, plus BT, are reported to have received questionnaires from the European Commission concerning the concessions [registration required; limited viewing time] which Deutsche Telekom and France Telecom are (again) said to have made as a means of winning regulatory support for the merger of their UK interests.

Citing the old stand-by of ‘a person familiar with the situation’, but who appears to be a representative of the parent companies, the report states that the concessions include the sale of part of their combined radio spectrum and the provision of some network sharing guarantees to 3 UK, which has a network sharing agreement with T-Mobile. (It probably helps the spread of such rumours that more than half the mobile world is at a congress this week in Barcelona. Nevertheless, this seems to be a serious story, having also appeared in The Observer on Sunday.) The purpose of the EU questionnaires, which are due back with the Commission by the end of the week, is to assess whether the concessions on offer are sufficient to allay rivals’ concerns over the impact of the merger on competition.

Few of those involved – from the operators to the Commission – can thus far be found who will comment.

Those responsible for the appearance of the story are thought to believe that allaying the concerns of rivals might be sufficient to persuade the UK’s Office of Fair Trading to withdraw its request for the competition aspects of the joint venture to be examined in the UK – thus leading to a potentially shorter period in which the merger is officially reviewed.

Three comments, really:

1. Since when did the leading subjects of competition policy assume responsibility for determining its direction? Perhaps something of a naive question, and no doubt the questionnaires are consultative only and that the Commission will take into account the views of others, including the UK’s Office of Fair Trading, but competition policy cannot, as a matter of principle, be determined on the basis of what other companies in the industry think. Did consumer organisations receive a questionnaire? Did the Connect sector of Prospect and the CWU? (Slightly rhetorical questions, these.) Policy must be made on the basis of clear (and transparent) principles (and also in line with the principles of democratic accountability), not subject to a laissez faire carve-up between the major operators. Of course, the views of rivals are important ones, but this process is currently back to front.

2. The concessions which are reported to have been made are a matter of public concern and need to be made public. While they remain secret confidential, they have, in terms of the policy-making process, no validity. Policy is made on the basis of public consultation and that essential principle needs to be re-asserted.

3. The joint venture concerns only the UK interests of Deutsche Telekom and France Telecom. It thus concerns only the UK. The EU has clear rules of subsidiarity in terms of decision-making, with the result that the primary location for the determination of the policy issues behind whether such a joint venture should be allowed to proceed is the UK. Furthermore, where there is little or no direct interest in the outcome of decision-making, i.e. little or no stake in its outcome, how valid is that decision-making process in the first place, and how reliable are the decisions that result from it? Consequently, it is the Office of Fair Trading, not the EU, which ought to have the final authoritative say.

Perhaps it will. And perhaps the view of rival companies will be just one component in the decision-making, rather than what appears to be its sole determinant. Indeed, this may simply be another battle in Deutsche Telekom and France Telecom’s intentions to get the merger examined in Brussels – that if, by planting the story, they appear to assert the primacy of the European Commission’s role, via the apparent (though this may not be actual) by-passing of the UK authorities in this questionnaire process, the ‘logic’ of the venture being examined in Brussels will follow on.

This would, however, be a dangerous way to see both this story and the discomforting aspects of the policy-making process that it embodies.

Written by Calvin

18/02/2010 at 11:36 am

Spectrum issues and the T-Orange JV

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The Financial Times reported this week that O2 and 3 have told the European Commission that it is the UK authorities that are best placed to review the T-Orange joint venture, while Vodafone has also publicly commented on its view that the UK authorities are keen to review the spectrum aspects of the merger, an issue to which O2 also points.

These pages have declared their view on these issues already – it should be investigated in the UK, as the joint venture affects only the UK market and there are thus strong subsidiarity-related reasons why the EU should choose not to get involved – but the most interesting part of the FT‘s story is the bit relating to spectrum allocations.

Last summer’s report by the Independent Spectrum Broker included a useful chart documenting existing spectrum allocations, which I have reproduced below:

Vodafone and O2, as the two earliest operators from the mid 1980s, have some frequencies at the 1800 MHz level but frequencies here are otherwise dominated by T-Mobile and Orange, which appeared on the scene in the early 1990s. Vodafone and O2 have the only spectrum awarded at the 900MHz level while frequencies at 2.1 Ghz are the ones allocated for 3G services, which is where 3 comes in – it has none of the lower frequencies allocated earlier.

The key to understanding spectrum issues is that lower frequencies (like 900 Mhz) lend themselves well to quick network roll out because they cover longer distances, and thus requires less infrastructure (base stations and masts), and because their signals penetrate buildings better than those at higher frequencies (like 1800 MHz), which require more infrastructure and which are better suited to providing capacity in denser populated, urban areas. The less good penetration of signals at higher frequencies is the reason why 3G services are, in principal, suitable for mobile services outdoors and are much less suited to fixed installations inside buildings.

Ensuring a more even allocation of frequencies was the aim of Kip Meek, the Independent Spectrum Broker, on the grounds that allowing operators to trade frequencies between them would allow them all to choose the combination of spectrum that best suited their needs and which, as a result, would improve services (and access speeds). By ending the legal challenges by operators over policy on 2.6GHz frequencies (best suited for so-called 4G services), it would allow Ofcom to catch up with European counterparts on allocation.

The dominance of the T-Orange JV at the 1800 MHz level, and thus its ability to dictate the terms of spectrum trading between the operators, is the reason why the argument has been raised that the JV should concede 1800 MHz spectrum. Without necessarily going too far down that road, it is easy to see why the JV would blow apart the work done by the Independent Spectrum Broker in reaching his conclusions on spectrum trading. It thus becomes easier to see why it is the UK authorities that need to investigate this proposed JV: these are issues that properly concern the UK, not the EU.

Written by Calvin

08/01/2010 at 12:44 pm

T-Orange in the pink?

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Orange is reported to have claimed [subscription required; limited viewing time] yesterday at the FT World Telecoms conference taking place in London that it and T-Mobile would not be required to make concessions to the regulator to get the go-ahead for their joint venture, dubbed T-Orange.

Well, it would, wouldn’t it? And continuing to claim that the venture would be ‘good for the market, good for the consumer, good for the entire industry’ doesn’t make it any the more true (though, depending on definitions, I can easily see a situation in which a reduction in competition might be held by those responsible to be ‘good for the industry’).

The context of the claim is the issue of making any concessions on spectrum – and here the company may have a point: T-Mobile and Orange have spectrum at the 1800MHz frequency, whereas the more prized 900MHz frequency, because it lends itelf better to penetration inside urban buildings, is – currrently – the preserve of Vodafone and O2. This might indeed require T-Mobile and Orange to invest more for the future (a crucial argument in the Vodafone and 3 merger in Australia, interestingly enough, which I blogged about here), although the proposals of the Independent Spectrum Broker (see also the Digital Britain final report, at p. 72) to ‘rebalance’ operators’ holdings will change this. So, over time, investment by T-Mobile and Orange will be lower than it is currently stating.

But, of course, spectrum concessions are not the only regulatory tool at the disposal of the regulator and I remain unconvinced that the creation by merger of what would be the industry’s dominant organisation, in terms of numbers of consumers, is in the interests of consumers. That it can be argued that it is so is an indictment of a regulatory policy which has been focused – not just in the UK, and not just in the telecoms industry – on the sole purpose of encouraging competition as a means of driving prices down. Short-term, low prices are clearly good for the consumer but, long-term, when they are apparently too low to meet the investment needs of the operators (or – outside telecoms – when they allow dominance of the entire industry, including of the links in the chain by Tesco, for example), they are bad. It is of course that situation which had led T-Mobile and Orange into this merry dance.

And it won’t stop there. The same report claims that Vodafone, which would become the smallest UK operator (excluding 3) were the merger to be allowed to proceed, said at the same event that it is ‘unphased’ by the proposal and that competition in the UK would remain ‘extremely robust’. Well, it would, wouldn’t it, given that this would then replicate the situation which allowed Vodafone and 3 to merge in Australia. No doubt Vodafone does indeed believe in ‘consolidation in some markets’ since it is perfectly possible to imagine that it will lead to a situation where the UK has just three mobile operators rather than the five that currently exist. And wither competition policy then?

But, more than that, we do need to consider how regulatory policy has led to a situation which appears to facilitate a reduction in the number of competitors in the market place. Aside of what the regulators may otherwise ask T-Mobile and Orange to do as a condition of the venture being allowed to proceed, we do need to have the debate as to how we have got into this mess.

Written by Calvin

20/11/2009 at 2:08 pm