Significant changes to the UK mobile sector – the consultation on Partial Non-Spots
[co-author: Amanda Pilkington]
A recent consultation paper from the UK government could have significant effects on the UK mobile sector. On 5 November 2014 the Government issued a paper setting out a suite of proposed policies aimed at tackling “partial non-spots” in mobile phone coverage – meaning areas where coverage is restricted to just one or two out of the four UK mobile network operators (MNOs). A significant proportion (21%) of UK landmass (including 3% of residences) are currently affected by partial non-spots, which means that over one million UK residents do not have the same choice of provider, handsets and packages as mobile telecoms consumers in other parts of the country.
In a clear departure from the policy of earlier years, which used to encourage the networks to compete with one another on coverage and network quality (called “infrastructure competition”) the consultation sets out three potential measures to address partial non-spots across the UK (all of which would represent a significant move away from the infrastructure competition policy), as well as a fourth “do nothing” option.
Option 1 – Addressing Coverage (Infrastructure Sharing)
This option refers the use by multiple mobile network operators of equipment within a shared compound or site. This varies from site sharing, to mast sharing and up to full radio access network (RAN) sharing. This would represent an expansion to the existing infrastructure sharing arrangements which the four UK MNOs currently operate: ; Mobile Broadband Network Limited (MBNL) in the case of EE and Three, and Cornerstone Telecommunication Infrastructure Limited (CTIL) in the case of O2 and Vodafone. There are no technical barriers to such infrastructure sharing, but practical and commercial implications must be given consideration. The clear direction from the Government is that it wishes that MNOs would agree a more ambitious programme of passive infrastructure sharing.
Option 2 – Multi-Operator Mobile Virtual Network Operator (“MO-MVNO”)
An MO-MVNO would be a separate business which would have wholesale agreements with two or more of the MNOs to provide access to their networks. Customers of the MO-MVNO would then be given access across all these networks, depending on which network had the strongest signal, to result in improved coverage. The consultation paper envisages two physical models by which an MO-MVNO could be established; either through a full MVNO (with its own core network infrastructure) or through roaming agreements similar to those currently used in international roaming arrangements, either at comparable or more favourable prices. Currently, many MVNO agreements contain exclusivity provisions, which would need to be relaxed or removed completely to make this type of arrangement work.
Option 3 – National Roaming
National roaming would make the coverage provided by certain MNOs in partial non-spots available to all MNOs. Consumers in partial non-spots would be then be able to “roam” on the networks of others. While the MNOs have expressed a desire to improve coverage for customers, currently no MNOs have been willing to provide national roaming on a voluntary basis and the financial practicalities of doing so would need to be considered in detail (how would customers pay for such access?) .
Option 4- Do Nothing Scenario
This is the “no-intervention option” relying on the market to solve the problem . As mentioned above the MNOs have already, without regulatory intervention, set up two separate infrastructure-sharing initiatives. Figures produced by OFCOM show that Project Beacon (the original project name for the O2 and Vodafone venture) should reduce partial non-spots in the UK from 21% of landmass to 13% of landmass by 2016. In addition to Project Beacon, Vodafone have successfully delivered broadband internet to rural areas through their Rural Open Sure Signal initiative, and O2 and EE are both offering voice connectivity over broadband connections. The benefits and cost of these existing projects will be assessed against those of the other proposed measures.
The Government are seeking feedback from any interested parties on the consultation paper, with the aim of reaching agreement between all interested parties as to the best course of action. That said, Government has said that if agreement cannot be reached then it is prepared to legislate to tackle the issue.
The consultation closes on 26th November.