Skip to main content

Digital Britain: is it time for more radical spectrum policy?

Following the thoughts on the 'green-ness' of telecoms companies, it struck me that the forthcoming auction of digital dividend spectrum in the UK is a great opportunity for the Government and Ofcom to stop tinkering round the edges of both the green agenda and Digital Britain and take some positive action.

Auctioning the spectrum (suitable for LTE) to the highest bidder is a safe move, but it won't bring us any closer to either meeting the pledge to halve our carbon emissions by 2050, or the rather shorter term objective of giving everyone the option of connecting the Internet with reasonable bandwidth. Instead, I propose a scheme based on rewarding operators for being part of an industrial and social commons.

The carrot in this scheme is free spectrum for cellular LTE use. The value of this is yet to be established, however we have many data points to choose from, for example:
  • GSM licenses in the UK cost £142,560 per 2*200KHz slot per annum. This adds up to about £16m per operator;
  • 3G licenses were settled by upfront payments to HM Treasury of about £22b, split 5 ways (this was however, due to over excitement on the part of the bidding parties, amongst other things)

I prefer the first data point, or schemes such as that in India, where the license costs a small percentage of revenue, hence derisking investment (to a point). My suspicion is that Ofcom will favour an upfront capital payment for a chunk of spectrum. My prediction is that a 2*20MHz slot will cost the buyer between £300m and £500m.

In any case, in my scheme the spectrum is free, provided the following criteria are met:

  • The network must be demonstrably carbon neutral within 3 years of the license being awarded. This condition should include all operations and cannot be met by carbon trading or offset schemes;
  • All participating operators must agree to provide data on handset movement within cells to an aggregator, which will turn the information into a feed, similar to RDS, that enables efficient traffic routing applications. I see this as a similar 'social technology' to GPS;
  • Operators must commit to providing broadband to the final 10% identified in Digital Britain. Technical considerations will determine how fast this is, but I suggest a minimum of 512kbit/s, enabling eGovernment and other initiatives in the future. The range of LTE and the suitability of 800MHz should make this eminently feasible. I also suggest that a single rural network would be beneficial to achieve this (but that's another story)

These may or may not be the right criteria, but my opinion is that the sentiment is correct. We face an environmental crisis - that is nearly certain - and in the Government's eyes also a 'digital divide'. Conventional regulation and policy making will not jerk industry into action. It will not lead to innovation on green issues, or sudden decisions to act anti-commercially.

Neither do I believe that government should intervene in a command economy sense. What commercial entities need is a nudge in the right direction. Consumers will not do this alone as they are not experts in the technologies or supply chain for the services they love. It is up to the Government and Ofcom to set the UK on the right course and in this case, that does not mean taking hundreds of millions off the shareholders of MNOs.

Comments

Popular posts from this blog

Impacts of a handset leasing model on mobile telcos

Following yesterday's post, here's some related thinking on the impacts on operators of handset leasing. Handset sales represent around 25% of operator revenues in a typical European market, but generate only around 5% of margin. It may therefore be the case that the scenario described would lead operators to a more profitable structural model than exists today. Oil companies are consistently and acceptably profitable, despite being (literally in some cases) the ‘dumb pipe’ that operators are so desperate to avoid becoming. One of the reasons for the oil majors sustained profitability is clear focus on their role in the value chain – to supply the fuel that enables transportation, relying primarily on location, then brand and finally product innovation to compete. BP or Shell do not need to subsidise the purchase of a car in order to drive consumption of fuel because consumers are ‘hooked’ on it (it gets them from place to place) and there are many credible car manufacturers an

Value drivers for telecoms retail

I've been doing a really large number of driver trees recently - we've taken to using them on every project to get really into the guts of value creation for businesses and thus decide where to focus initiative development (How To Win, if you're keeping score). Anyhow, I had to pause for thought recently to work out how to represent the subscription aspect of telecoms retail for a client. Since it took me a minute, I thought I'd share... its lack of elegance suggests that its not quite right, although it was enough to demonstrate that there was a certain lack of coverage in the initiatives that my client was pursuing and thus spark a debate. Enjoy.

Chief Strategy Officers II - Career Development

Here's a follow up to my earlier post on the starting point of Chief Strategy Officer (CSO) careers in the FTSE 100 and S&P 500 companies - a visualisation of two steps in their careers: their first employer or job and the job they had before they got their current position. Lots of work went into this... so any insights that you glean from the visualisation would be great to hear about :). The CSO is a crucial strategic role on the executive (!) and the owner of the tone and philosophy of decision making across much of the business, knowingly or unknowingly. Scrutiny of their experience in defining the process and language of strategic management is therefore appropriate not just amongst their executive peers, but in my view amongst shareholders. The days when being very smart and able to analyse large amounts of data were enough to be a CSO are basically gone... has the profession moved on enough to cope?