Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2010

Lord Faulkner of Worcester Excerpts

Thursday 16th December 2010 Lords Chamber

[Lord Berkeley]

My Lords, I rise to identify a few problems that are occurring in the relationship between this order, which provides for a clearly welcome increase in spectrum availability, and the railways. I declare an interest as chairman of the Rail Freight Group, but the issue covers the whole railway—passenger, freight and Network Rail itself—and could result in some serious problems in the safety and the operations of the railways.

I welcome the Minister’s comments about the need to rebalance the economy and the provision of superfast broadband being an important part of that. However, it is not much use having superfast broadband if it prevents the running of superfast trains—or even ordinary trains—which are another of the Government’s priorities. Perhaps I can explain the problem in a little more detail.

The problem for the railways is that the 900 megahertz spectrum for mobiles sits quite close to that of the GSM-R railway radio system, which is the modern digital replacement for the very much life-expired analogue system. In terms of safety and operations, GSM-R has very great importance. Its rollout on the railway network is largely complete, and about 6,000 driving cabs are being modified to install the new cab mobiles. All this work is being funded by the Department for Transport. As I understand it, the worst-case scenario is that, in order to contain and eliminate interference between GSM-R—both track-side and in-train systems—and the 900 megahertz mobile systems, there would need to be significant modification, which would cost about £100 million. Network Rail would of course seek funding from the Department for Transport, or maybe from BIS depending on how it all worked.

I think that it is extraordinary that things have got this far. As the Minister said, there has been widespread consultation and I am aware that Network Rail responded pretty heavily, as no doubt did other departments, including the Department for Transport.

We seem to be getting into a situation in which the railways and the broadband systems are both seeking to comply with EU-wide rulings that appear to conflict. Network Rail, which identified this issue quite some time ago, aims to move forward from GSM-R to the new signalling system ERTMS, which is being rolled out. ERTMS already operates in many other member states, including Germany and Finland. Network Rail was involved in commissioning a report—report O-8700—that clearly demonstrates the absolute need to co-ordinate the use of technologies such as UMTS 900 where those are used within four kilometres of any railway infrastructure. In this country, four kilometres either side of a railway does not leave much space. From the little that I know about the issue, I am sure that that would not work for the mobile technology.

Unfortunately, the timing of the order is not terribly good, given that Network Rail has employed consultants ATDI to validate previous work and to produce a set of conclusions to inform a meeting of stakeholders that will take place next month. Therefore, the timing is not very helpful. Everyone wants to work together—as indeed they should—to make sure that everyone fully understands the issues involved. However, the problem is that two independent European studies already show that the deployment of UMTS 900, operating at 900 megahertz, affects the performance of GSM-R and causes interference in radio signals between the trains and the signallers.

These technologies are very different from pulling levers—which you still see in one or two parts of the country—that then make the signal go up or down. As we all know, telephone systems, signalling systems and mobile systems sometimes do funny things. As a safety-related matter, the issue is extremely important. It is important that the GSM-R used on the railways is instantaneously available across the whole network to maintain the protection measures. Some measures must be put in between the railway system and the UMTS900. Otherwise, there may be detrimental effects.

Apart from the cost, which is estimated to be about £100 million to change the railway system, I understand that filters would need to be added to the set in each train. There are also timing implications. As with the mobile phone network, there are concerns about the mandatory withdrawal of existing radio systems and the European requirements to have all these things in place by a certain date, which has already slipped. Given the seriousness of the problem and that £100 million plus a lot of delays is at stake, I would be very grateful if the Minister could comment on what could be done to mitigate the effects. Implementing the order without anything else could raise serious issues for the railways. Going through a signal at red—to use older terminology—could cause accidents.

BIS says that it is required to provide UMTS for mobile in order to comply with EU regulations; railway operators say that they are required to do something similar under other EU regulations. I suggest that the aim is for interoperability, which I am sure we would all welcome, whether for mobile phones or the railways. The existing systems are perhaps well past their sell-by date and something should have been done years ago. If we have really have a situation in which the European Union, for better or for worse, has issued two such regulations—or directives or whatever—that need to be complied with across the EU, it is extraordinary that they should come into conflict with each other. Otherwise, someone has got it wrong. I hope that the Minister can tell us a bit more about that.

As for what the Minister might consider by way of giving assurances to the House, I suggest that he could perhaps withdraw the order completely for further consideration. I suspect that a small change to the order would make life a lot easier for everyone and might save us from some of the problems. I believe that it would be possible for Ministers to require Ofcom to ensure that, within the spectrums, the relevant wavelengths—or frequencies or whatever—that cause the biggest problem for the railways are not sold or issued until it has been fully agreed that the railway operators’ system can be maintained in a safe condition. Perhaps the Minister will comment on whether that would be possible for him to give an instruction to Ofcom to do that.

Finally, given that the railways were there first—the issue has been going on for a number of years now—and the telecom spectrum came later, perhaps the Minister will confirm that, if there is any additional cost of modification for the railway system, his department, rather than the Department for Transport, will provide any extra funding necessary.

[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.

--- Later in debate ---

[Lord De Mauley]

My Lords, I am very grateful to noble Lords for their comments. We have covered a number of key areas, and a number of interesting and important points have been raised. The Government note the concerns that your Lordships raised during the debate. The noble Lords, Lord Berkeley and Lord Faulkner, raised the important issue of the conflict with the GSM-R rail operators’ frequency. I thank them for that. The Government are fully aware of the potential safety issues involving the use of spectrum, specifically of the 900-megahertz band for mobile broadband services, and of the adjacent spectrum planned for the rail safety network system. Noble Lords are absolutely right that safety is a key priority for the Government, and we will not allow it to be compromised. The level and severity of any possible interference is still being investigated, but discussions are taking place between Network Rail, the mobile operators, Ofcom, BIS and the Department for Transport to address the matter. Further technical work is under way to determine the likelihood of any potential interference and the available technical solutions.

As the noble Lord, Lord Berkeley, said, this is not just a UK issue. The use of these bands is harmonised across Europe, so we are discussing this with the Commission, too. I thank the noble Lords, Lord Berkeley and Lord Faulkner, for their helpful suggestions. I will definitely take them back to the department.

[Lord Faulkner of Worcester]

Will the Minister say something about who might have to pay for modifications?

[Lord De Mauley]

I thank him for that. That issue needs to be part of the discussions to which I have just referred.

My noble friend Lord Clement-Jones asked about the reasons for the delay. That is a very justifiable question. The new Government had to consider the options that are open to them and what they wanted to do against a backdrop of a changing market. The process was completed before Parliament rose in July for the Summer Recess. It was not considered immediately after Parliament returned because of the threatened judicial review by Everything Everywhere, and the need to address that threat.

My noble friend asked about a timetable. Ofcom intends to consult on its assessment in February. The 900-megahertz licences will be liberalised before the 800-megahertz licences become available, but Ofcom’s latest analysis is that the competitive distortion is not so great as to require action in the 900-megahertz spectrum. I confirm broadly that my noble friend's outline timetable is what is anticipated, although if there is anything I can add, I will write to him after the debate. I certainly agree with him that speed is of the essence. However, it is a very complex area and it would be equally dangerous to rush things through.

My noble friend also asked about the emergency services. The Government fully recognise the importance of spectrum in allowing the emergency services to operate effectively. The safety and security of the United Kingdom's citizens is of paramount importance, and the Government have consistently stated that spectrum management should pay due regard to this. However, as I said, spectrum is a scarce resource for which there is increasing demand. In these circumstances, the allocation of spectrum should be as efficient as possible. For that reason, the Government's agreed approach is that, in the first instance, such requirements should be sourced through the market. I hope that my noble friend will be somewhat reassured to hear that where this is not possible, a case will need to be made for an administrative allocation to be considered. Any requirement for additional spectrum by the emergency services will be considered within that framework.