Speech

Enabling mobile broadband

London

Since I became Minister for Communications, spectrum policy has loomed large in my day to day discussions, and the number one issue has, to date, been the availability of spectrum for the next generation of mobile broadband services. It has been both a stimulating and at times a frustrating experience, but one I continue to enjoy.

Eighteen months on, and mobile broadband and spectrum continues to be the focus of my attention. Some things have changed in that period, others regrettably, seem to have gone full circle or not changed at all.

So what is driving continuing interest and  the increasing demand for mobile broadband services? Here is a clue. In the last 12 months Apple has sold 72 million i-Phones and 40 million i-Pads. The new iPhone 4S sold 4m in 3 days. Google’s Android has activated 150m phones in the last year - and I’m sure many more will be attracted by the wonderful but bizarrely named Ice-Cream Sandwich. I should add of course that other smart devices are available.

A recently published Ericsson report estimated that by 2016 the number of high traffic smartphones will have increased five times and generated traffic twelve times and tablet subscriptions will have increased ten times with generated traffic increased by forty times.

The owners of these devices are what the Oxford Internet Institute calls the next generation users. In their most recent Oxford Internet survey, they have identified a significant trend towards portability and the wide range of available devices. They have also identified an increasing and rapid change in the way users access the internet - around 49% of all those owning a phone in the UK now use it to access the internet, that is double the figure of two years ago.

The Institute has defined the next generation user as someone who accesses the Internet from multiple locations and devices and on the basis of this definition estimates that 44.4% of Internet users in Britain are next generation users.

We are seeing creativity and innovation in content creation with mobile apps, over 300,000 have been developed in the last 3 years with nearly 11 billion downloads . Services around health, transport and a host of other socially valuable activities are emerging, with the potential to transform people’s lives at home and in work.

And we are seeing changes in business. I recently visited Vodafone to be shown at first hand the changes they are making in the way they work. They are developing an environment where no-one has their own office or designated desk, known internally - if a little dangerously - as sacking the office. They are now taking this concept out to others in the private and public sectors. Promising 30% savings to businesses on property costs.

These developments mean that mobile broadband is now the focus of attention across Government - including No.10 and the Treasury. Communications infrastructure and broadband technology are seen as being one of the drivers for future growth in the UK and their importance has increased accordingly. 

A good example of this is the recent announcement by the Chancellor that he is making £150 million available to improve mobile services. Although the primary focus here is to address voice not-spots, the intention will be to deploy infrastructure that can support broadband services as well. We expect the procurement process to begin next year, with services rolling out in 2013.

Broadband and good access to broadband for all remains Governments priorities.

I’m sure that many of you are familiar with our commitment to the UK having the best superfast broadband network in Europe by the end of this Parliament, with 90% of households having access to superfast broadband, and a good level of access at 2Mbps for everyone else. 

This is an ambitious programme, with over half a billion pounds of investment from central government alone, but we are convinced that this level of access is essential as we try to deal with the repercussions of the recession and look to grow our economy. 
 
Of course we share this ambition with others. The European Commission’s Radio Spectrum Policy Programme, now negotiated and shortly to be formally approved, identifies spectrum as contributing to the delivery of the target of not less than 30Mbps for all by 2020.
Equally recognised is the contribution these technologies will make to growth and productivity, in both urban and rural areas. We must not lose sight of the needs of rural communities in pushing out broadband services and wireless will play its part here as well.

So were are witnessing significant changes in the way people do business, access services, communicate and entertain themselves.

And they are all relying on mobile broadband or other wireless based technologies such as Wi-Fi to be connected - and this means using spectrum.

Ofcom is currently in the process of making available the largest amount of spectrum ever released in the UK in one go, 250MHz of spectrum suitable for mobile broadband services.

Ofcom’s decision to re-consult of aspects of the auction design is understandable and I hope can be conducted as soon as possible. The issues are complex and therefore subject of many - usually conflicting - views.

It is right that Ofcom should take the time to get this auction right - it will determine how the mobile market looks for the next decade and impact on the wider economy. What I wish to see is that this auction happens as soon as possible and that the outcome is beneficial to the economy and the business and individual consumer.

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I hope therefore that there will be no further delay caused by any challenges from the mobile operators themselves. They have all indicated that they have no desire to delay the auction and I expect them to act accordingly. I would echo Jeremy Hunt’s message in his recent speech to the Royal Television Society for operators to put aside their competitive differences for the wider benefit of the UK. I was pleased to see that the recent report from the Culture Media and Sport Select Committee on spectrum also called for the auction to happen as soon as possible.

I do of course want the future mobile market to be as competitive as it has been in recent years. That is why this Government directed Ofcom to undertake a competitive study in advance of the auction and put in place any measures that will promote competition post auction. Ofcom, as the relevant competition authority, has determined that it wants to see at least four mobile operators able to offer a wholesale service emerge from this auction. I am content with this position, although as I noted in my evidence to the Select Committee earlier in the year, there is nothing to say that further consolidation may not occur in the future as a result of market forces.

Indeed I would say that in spectrum policy terms, the future is very much under discussion. I have already mentioned the Radio Spectrum Policy Programme that has set out the European Agenda, with its focus on supporting the deployment of wireless broadband and seeking to make at least 1200 MHz of spectrum available for wireless broadband services in the Union by 2015, following an assessment based on a new spectrum inventory, as well as promoting more flexible spectrum management, including in particular collective and shared use of scarce spectrum.

Here in the UK we are also looking at spectrum management in the context of the communications review.  We are undertaking a wide-ranging review of the regulatory regime for the UK communications sector, to ensure the regulatory framework in place is fit for the digital age. Our ambition is to establish UK communications and media markets as amongst the most dynamic and successful in the world, with the review process culminating in a new communications framework by 2015, to support the sector for the next 10 years and beyond
I am grateful to those who contributed views in response to Jeremy Hunt’s open letter earlier in the year. We have been working over the summer to develop our ideas, with a view to publishing a green paper early in the New Year.

Among those who responded to the letter, there was a broad consensus that the existing spectrum policy framework, based around allocation through market mechanisms, liberalisation and trading, wasn’t in need of drastic change. However we have been considering whether there are areas where some changes might be made, in particular whether there are things that could be done to support additional growth in the UK.

I don’t intend to go into great detail, but broadly we are considering whether there is scope for a greater use of beauty contests in certain circumstances as opposed to auctions; are there ways in which spectrum trading can be increased;  how might access to spectrum for smaller businesses be improved;  and whether the interests of business users should be specifically identified and in a similar vein, whether greater account should be taken of the needs of  British businesses in our positions in international spectrum negotiations. We are also looking closely at the balance between licensed and licence exempt spectrum and whether further economic growth could be stimulated through the availability of more unlicensed spectrum.

We expect to publish a Green Paper setting out our proposals early in the New Year, with a White Paper to follow at the end of 2012. We will then commence the legislative process in 2013 aiming to complete this before the next election.

One thing that the Government is clearly committed to is the release of 500MHz of spectrum that it currently holds. Again I would like to thank those who have contributed to the work on identifying bands that might be prioritised for release. Much of the focus here has been on spectrum that might be suitable for mobile broadband use.

These views have informed the next phase of the work and an update on progress will be published shortly. Plans are already underway to release around 160MHz from MOD holdings. Alongside these plans, the MOD this week announced a number of bands where sharing might take place and where they were looking to assess the level of demand.

I wouldn’t underestimate the amount of work that has to go in to make these bands available and reach the 500MHz target, but I recognise, along with my Ministerial colleagues, that this spectrum can support further growth in the UK. We are therefore fully behind this release programme and the achievement of the target.

Let me conclude with some final thoughts on mobile broadband.

Today has seen a high powered set of speakers deliver hugely informative presentations, promoting much discussion and debate. It has been a welcome contribution to the issues around 4G services.

But the time for talking and debating is coming to an end - what we need now is to see these networks being delivered so that we can all benefit from the latest technologies. A huge amount of effort, and considerable Government funding, is going in to making the 800MHz and 2.6GHz spectrum available for the roll out of services as soon as possible. This includes moving existing users out of the 800MHz band, such as the broadcasters and programme makers and special events users, and dealing with possible interference into radars used in the adjacent band. Overall the Government is providing around £250 million pounds to ensure the spectrum in the auction is not subject to any constraints in its use.

If we all work together, I’m sure we achieve the right outcome and ensure that the UK has a communications infrastructure that it needs to be competitive and which will benefit the communications industry, business in general and the consumer. I call on all the people in this room today and the organisations they represent to help us achieve that goal.

Thank you.

[Ends]

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