Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2010

Lord Clement-Jones Excerpts

Thursday 16th December 2010 Lords Chamber

[Lord Faulkner of Worcester]

My Lords, the Minister will be aware that I wrote to him about this matter earlier today. I apologise for the late notice I gave him, but I did not receive notification about this problem until seven o’clock last night when a member of the railway industry wrote to me to draw my attention to exactly the points just alluded to by my noble friend Lord Berkeley.

This is clearly a significant issue for the railway. It is not a situation where we can take a chance and see what happens. If it is the case that the new broadband width is going to interfere with signalling, obviously the railway will become unsafe. The solution would seem to be the fitting of filters not just to the train sets, as my noble friend Lord Berkeley says, but I understand to trackside equipment as well. The estimate of costs he gave is a figure that I am familiar with as well.

We are all anxious to see the extension of digital Britain. I played a small and modest part in the legislation passed in the previous Parliament, as the Minister knows, and I am keen to see the benefits of broadband extended as widely as possible. This is a potentially unfortunate unintended consequence, but the operation of the railway, if not endangered, will certainly be embarrassed as a result of the introduction of these broadband widths without some mitigating measures. My noble friend Lord Berkeley referred to the possibility of the Department for Business, Innovation and Skills paying the costs, but perhaps it would prefer that the purchasers of the new broadband width should have them built into their contracts. However, it is clearly unacceptable to expect the railway to pay for it, and indeed if the railway were to do so, it would then be for the Department for Transport because it is responsible for the cost of the new signalling system which is being introduced progressively over the next six years.

Again, I apologise for bringing this up so late. It is not a matter that has been considered either in the other place or in your Lordships’ Merits of Statutory Instruments Committee, but it needs to be taken into consideration. I hope that the Minister will be able to give us some assurance.

[Lord Clement-Jones]

My Lords, I suspect that, looking at the numbers in the House, we are in rather arcane territory with this order. We are indebted to Kip Meek, the former independent spectrum broker, for having come up with some solutions that are reflected in the order, but of course he has now gone to run YouView, and good luck to him in that very important project. But luckily today we have my noble friend Lord De Mauley, who was fully conversant with all the discussions over spectrum during the passage of the Digital Economy Bill, so I am confident that he will be able both to reassure and to enlighten me about some of the issues underlying this order. It is also a little bit of a reunion when I see the noble Lord, Lord Young, across the way as well.

I broadly support the order, and for those of us who worked in the salt mines of the Digital Economy Bill, the legislative and regulatory background to spectrum allocation is familiar. For the most part so is the content of this order since we were all ready to debate it before the last election. Indeed, we assumed that it would be reintroduced immediately after the election, but the Department for Business, Innovation and Skills appears to have been ruminating on it for some time.

The Minister helpfully mentioned some of the differences between this order and the draft order we saw in March, particularly simplification of the order and the removal of the coverage obligations, but otherwise it is not entirely clear what other differences there are between this regulation as tabled and the previously tabled regulation. The essence, as I understand it, is because there will now be a competition assessment before the auction takes place. What is the thinking behind this change? Is it because this means that the auction conditions can be tailored in the light of the assessment? This is an important and welcome addition, and if so, can my noble friend say exactly when that assessment will happen and what the process will be? I think he described the assessment as “urgent”, so I assume that means that the assessment is imminent.

Given the importance of fair allocation below 1 gigahertz spectrum, can the Minister confirm that Ofcom will conduct the assessment before the existing 900 megahertz licences are varied? Can he also confirm that the key element of the combined auction for the 800 megahertz and 2,600 megahertz licences will continue?

There is then the issue of timing which, according to the CEO of Ofcom, will be 2014. It will be at least a year before Ofcom issues an invitation to bid for the so-called four key radio frequencies that will allow mobile network operators to offer network speeds that are competitive with fixed-line broadband.

As I understand it, the timetable as set out by Ed Richards is as follows. Starting in February 2011, there will be consultation on steps for a competitive auction. On the consultation finishing, in the early autumn there will be a statement on future competition. At the end of 2011 the final auction regulations will be published. The auction will take place and then finally, in 2014 the 4G networks will be up and running. It will be helpful if the Minister can confirm that that is the expected timetable.

Mr Richards appears to describe this timetable as ambitious, but to many it appears rather slow. After all, the first Meek report came out in May 2009 and the final report came out in September 2009. Mobile network operators have been waiting for 4G spectrum in the 800-megahertz and 2.6-gigahertz bands for several years; they want and need the higher frequencies to relieve congestion in their urban networks and they want the sub-1-gigahertz frequencies, which carry further than 3G frequencies for the same power, so that they can extend their coverage cheaply.

These frequencies are also needed to enable networks to roll out the next generation mobile transmission technology known as LTE. The industry, however, has said that this timetable will put the UK well behind other markets. LTE services are already up and running in other European countries; a few networks in Europe are already running or testing LTE in 1800-megahertz and compatible devices, notably dongles for laptops.

What has been the cause of the delay? Was it the threat of legal action by Everything Everywhere because it feared being locked out of the sub-1-gigahertz spectrum, or the threat of litigation by BT on rather different grounds? Is the competition assessment the price of its withdrawal? Or is the real reason why Ofcom has been delaying the 2.6- gigahertz spectrum release until 2014 because it has no other spectrum ready that could be used for wireless cameras during the Olympics?

Have the Government thought seriously about the consequences of this delay? Is there any way the auction can be brought forward? It has been calculated that delay in the 800-megahertz and 2.6-gigahertz auctions is estimated to have already cost the Treasury £6 billion in lost revenues as industry has spent the money elsewhere in the EU buying spectrum. The longer we delay before the auction takes place, the less money industry, it appears, will have left to spend in the UK. Can the Minister tell us frankly what the situation is and why we are so late coming to this order and adopting such a leisurely timetable?

The form in which the spectrum is released also matters. In the current plans, 2.6- gigahertz is split into two blocks; this means that it is less suitable for use by the technology known as WiMax. Does this not need to be changed to ensure technical neutrality between LTE and WiMax? Alternatively, could some of the 2.6-gigahertz allocation be for WiMax and some for LTE? Otherwise, we run the risk of prejudicing WiMax deployment and failing to be technologically neutral, as Ofcom is obliged to be.

On the position of the emergency services and the spectrum allocated to them, I recently asked the Government a number of Written Questions. Had they agreed to find spectrum for secure broadband services for the emergency services from below 1- gigahertz? If so, what steps were being taken to set aside an allocation from within the tuning range of existing Tetra radios and exempt it from being auctioned? Thirdly, did they need to produce a business case to do so? The reply that I have received is baffling if I have not understood, and unsatisfactory if I have.

The Minister, the noble Baroness, Lady Neville-Jones, has said that it is unlikely that the emergency services will use a spectrum band below 1-gigahertz due to the lack of available spectrum in the range. Furthermore, she claims that the technical benefits would be minimal. Public sector organisations apparently “must engage with the market”; BIS does not currently anticipate exempting any spectrum from auction and no business case has been produced. That is what I would call the dustiest of dusty answers.

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[Lord Clement-Jones]

I am sorry, my Lords, but the timing of that is rather important. Once the spectrum is subject to auction, the emergency services will not have access to it. The spectrum below 1 gigahertz is of extraordinary importance because it means that the masts do not have to be so close together. It means that you have fewer masts, less cost to the emergency services and so on. What worries me in all this is the question of whether the emergency services should be subject to a market test. It is rather like the NHS—we do not subject that to a market test.

[Lord De Mauley]

I agree with the noble Lord about the seriousness of the matter. It is, as I said earlier, a complex area. It might be helpful if I wrote to him further about that matter.

The noble Lord, Lord Young, expressed a number of concerns about the auction, competition and coverage. The important thing is that we have asked Ofcom to conduct a competitive assessment of the future development of the 3G and 4G markets in the United Kingdom to inform the design of the auction. Ofcom may well decide that some form of capping is appropriate; the noble Lord referred to that. I agree with him about the importance of competition.

The noble Lord also asked about the benefits for consumers. Again, I broadly agree with him. Widespread next-generation mobile broadband services, which are capable of delivering data at speeds that are considerably in excess of today’s offerings, will be of huge value both to consumers and indeed to business. For the consumer and citizen, access to real-time information while on the move will be invaluable as well as offering a considerable market opportunity to creative industries wishing to develop content.

The noble Lord asked about the perceived blight of masts across the country. One has to say that if people want additional coverage of mobile broadband services, some increase of masts is likely. Given the capital expenditure involved, though, no operator will want to deploy more masts than are necessary to deliver an acceptable level of service.

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[Lord De Mauley]

I am grateful to the noble Lord for his comments. If there is some interdepartmental fencing, that is extremely concerning. I will go back to my department and shake some cages. Having said that, I hope that I have addressed as many of your Lordships’ questions as possible and if I have not I will, as I say, write to noble Lords. This is—

[Lord Clement-Jones]

My Lords, I am sorry to interrupt but, when the Minister says that, I hope specifically that he will include the radio mikes PMSE issue as well.

[Lord De Mauley]

I certainly intend to include that.

This area is, as I say, immensely complicated, as I am sure has become abundantly clear in the course of the debate. There are those who assert that the Government’s approach is flawed or lacks ambition, but it is clear that years of debate and consultation have shown that any proposals—whether they come from the Government, the regulator, or indeed the European Commission—are unlikely to receive universal acclaim. Experience shows that any proposal will receive differing levels of opposition and support. The point is that a consensus on what should be done is, frankly, unlikely.

That lack of consensus has been the case over a number of years. Ofcom’s attempts to find proportionate measures to deal with the issues raised by the refarming of 2G spectrum have faced challenges which, in turn, have led to delay. Any further delay cannot be to the benefit of consumers or business users, nor, I suggest, to the operators themselves. Regulatory uncertainty is seldom helpful to industry. The longer we delay, the further the UK will fall behind other countries that are already deploying new high-speed broadband services.

The issues involved have, as I say, already been the subject of considerable discussion, debate and consultation involving industry, the regulator and the Government. In our view, this direction to Ofcom represents the most appropriate way forward to allow the earliest deployment of next-generation mobile broadband services, to make a valuable contribution to the broadband infrastructure of the United Kingdom and to ensure that this country remains competitive in a digital world. I commend the order to the House.