Release of Spectrum Band

Drew Hendry Excerpts

Tuesday 15th November 2016 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Flello. I congratulate my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) on securing this important debate. I am sure that the tens of millions of people who have heard about it will be streaming it right now on their mobile phones, to get Members’ words of wisdom.

An important set of points have been made. On the point made by the hon. Member for Mid Worcestershire (Nigel Huddleston), there is a clear need for further debate and scrutiny, and for far more attention than is given to the subject at the moment. That was laid bare in the comments of my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk, who highlighted a number of issues that are important—nay, essential—to ensuring a fair distribution of the opportunities provided by the technology in the future. He mentioned the need for rural coverage to take priority—for an outside-in approach to be applied. For far too long, people in rural or less commercial areas have found themselves stuck at the back of a queue, unable ever to get to the front because they are always overtaken by a commercial imperative. The situation in the Borders is, I think, similar to that in my own area, where some 432 miles of road are not covered by 2G, let alone 3G or 4G signals. Those issues must seriously be addressed.

I commend my hon. Friend for his suggestion about the approach taken by Germany. He pointed out that not only is there a requirement there to get to 90% coverage in smaller towns before widening access, but they managed to raise €5 billion through the licensing process, so that approach can be taken and at the same time a return made for the public purse.

[Calum Kerr]

Does my hon. Friend agree that it is also noteworthy that in Germany they have mandated minimum data speeds, with a minimum average of 10 megabits? Coincidentally, our own measly universal service obligation for fixed wired broadband stands at that same speed.

[Drew Hendry]

My hon. Friend shows just how on top of his brief he is by pointing out that anomaly and the lack of ambition we often see when it comes to broadband and wireless access.

That brings me on to the need to accelerate the process. Although it is important that there is further debate and that the considerations for manufacturers and those using the facility at the moment need to be carefully taken into account—I think we would all support that—we should not allow that to hold up the development of something that should be giving us not only a commercial edge, but a social edge for people across the whole UK.

There is rural-proofing and the need to accelerate, and I also completely agree with the “use it or share it” approach. There needs to be an acceptance that we must access all the technology as productively as possible. When we consider ambition, it is important to remember that in the United States they freed up the spectrum in 2008. That is how far behind we are. The UK already lags behind countries such as Finland, Estonia, Latvia, Lithuania and Sweden, which have all committed to accelerate the programme. There are important debates to be held, but there is also a need to pick up the pace—I hope the Minister will indicate how that will be achieved—to ensure that we can take advantage of the benefits.

My hon. Friend the Member for Berwickshire, Roxburgh and Selkirk also mentioned the need to be ready for the internet of things. That is not something we need to be ready for; it is being deployed here and now, and nowhere is it more important to rural areas than in mobile healthcare. There is an opportunity to give people the chance to improve and restore their health and get the kind of social benefit from the technology that at the moment they cannot access. Until the spectrum issues are solved, people will not, however, be able to do that.

I conclude by repeating one of my hon. Friend’s lines that we should all take away: everyone—the people in every corner of these islands—should be getting the best and fastest possible access and the best possible advantage from new technology.

[Louise Haigh (Sheffield, Heeley) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Flello. It is also a pleasure to follow the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), who I congratulate on securing this important debate. He has considerable experience and expertise in the area and brings a wealth of knowledge to the debate and to the House in general. He clearly set out what we can achieve if we get this right from the outset, tackling the considerable disparities across the UK.

The hon. Member for Mid Worcestershire (Nigel Huddleston) clearly laid out the unintended consequences that could arise from the changes, particularly for our creative industries and the PMSE sector. He made clear the need to determine from the outset exactly how spectrum licensing is to be used and how to mitigate any possible issues. I echo many of the comments made, some of which I will come on to.

The auctioning of an electromagnetic frequency for public use may not set pulses racing or minds whirring, but it is the quality of the debate and not the quantity of people here today that shows how important this is. It is a matter of considerable significance for the public, our businesses and our country’s economy. In fact, it is one of the public sector’s most significant assets. How it is auctioned and regulated and, crucially, how the public stand to benefit from any auction are issues of critical importance to the expansion and growth of the digital economy and the economy at large. That is why we have been pushing the Government to be so much more ambitious in this crucial area. The sector is crying out for more clarity, vision and ambition.

In an always-on world, where the demand for mobile data is increasing at almost the same rate as digital entrepreneurs can think of novel ways to use it, the provision of mobile data, both geographically and in terms of residences and businesses covered, is crucial. It should absolutely be seen as a utility in this day and age, and we should, as far as practically possible, do everything in our power to achieve near-universal coverage, regardless of any vested interests that may try to hold back progress, and to overcome the flaws and market failures that hold back investment in infrastructure.

Recent analysis by Ofcom made the future trajectory of data usage clear. It suggested that between 2015 and 2030 demand will increase forty-fivefold. Since March 2011, data traffic has increased by 710%. It is not just usage, but the way in which data are used that is transforming our economy. The next decade will see only more change—change that we cannot currently imagine.

Let us look at some recent examples from around the country and the globe. In Germany, the annual harvest is on the cusp of a digital revolution, with sensors monitoring everything from air temperature to harvesting rates in real time, increasing productivity and bearing down on food insecurity. One German company has spent more than €2 million developing ways to automatically transmit information from the harvester operating in the field to grain experts thousands of miles away who can instantly assess the yield.

For there to be a true success story in Britain, data coverage is vital. That is not just in residences and not just on one mobile network, but across all networks, on the many transport arteries that criss-cross the United Kingdom—motorways, train routes, where coverage is still abysmal, and our waterways—and in the most rural parts of the country. The 700 MHz spectrum will help in achieving coverage in hard-to-reach places, particularly due to its ability to penetrate through thick walls. It will help to provide that foundation layer of connectivity. To do that, however, the licensing conditions for auction have to be ambitious and tough. The auction cannot just be a boon for the Treasury; it has to bring substantial benefits to the public at large and to our digital economy.

[Drew Hendry]

Does the hon. Lady agree that it is possible, as we can see from the German example, to put tough conditions in place and still raise some money from the auction?

[Louise Haigh]

Absolutely. I could not agree more. The issues that have been raised today need to be seen alongside that point. The income for the Treasury should not be the first and only priority.

In our view, while Ofcom does a fantastic job of regulating and auctioning the frequencies, such decisions are in reality political. Where and how coverage targets are met matters greatly, and we in this place should be setting tough conditions for the auction. We would like the Government and Ofcom to be much more ambitious, and we would like to see clear licensing commitments to reflect that ambition. Geographical coverage is still poor, as we have heard. The targets set by the Government—to reach 90% of geographical coverage for voice and text by 2020—simply do not go far enough to meet the challenges of a data-driven world. In fact, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) mentioned, we are lagging behind many of our international competitors, who have significantly improved coverage through different and imaginative approaches to licence obligations. For example, Denmark has focused on specified postcodes, France has covered an incredible 99.6% of its population, the Netherlands has covered all main roads, waterways and airports, and Cyprus has specified rural areas and high schools as priorities.

With that in mind, I will conclude by asking the Minister a number of questions, in addition to those asked by the hon. Member for Berwickshire, Roxburgh and Selkirk.

--- Later in debate ---

[The Minister for Digital and Culture (Matt Hancock)]

Rarely has Westminster Hall seen a debate of such technical expertise and such unanimity on the thrust and direction that Members want to see. They were unanimous that increased connectivity is important and drives productivity; that when we clear the 700 MHz spectrum, we need to ensure that the concerns of those who currently use it are taken into account; that we need to use licence conditions for mobile operators in order to reach more people; that we must work appropriately to deliver the very best connectivity that we can; and that demand for that connectivity is going up. That is a reasonable summary of the points made on the direction of travel.

First, I will cover the current use of the 700 MHz band, why that is changing and what will happen as a result. I will then turn to the broader points raised on connectivity. This band of spectrum is an important public resource, and we will auction the use of it with the aim of getting the best benefit. It is currently used for digital terrestrial television, which is the TV we get through an aerial. Some 75% of UK households use it in some way. When TV was first launched in 1936, it used a large block of radio frequencies for which there was no competing use. Today those frequencies are in demand for mobile phones—in particular for mobile phone data—and other technologies, such as wireless microphones for the programme making and special events sector, to which my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) referred.

Demand for mobile data is growing exponentially, as Members have said. The figures I have are that in January 2011, 27% of UK adults had a smartphone and 2% had a tablet. By August 2016, that had grown to 71% and 59% respectively. That meant that demand for mobile data doubled every year from 2012 to 2015. That trend is forecast to continue, and Ofcom has decided to reassign some spectrum from DTT to mobile, namely the 700 MHz band. That will mean that there is enough spectrum for DTT services and new spectrum to carry a lot of data longer distances, making it very useful for providing coverage across the UK. The 700 MHz spectrum is important because it can carry heavy data loads over longer distances, which is particularly important to the debate about ensuring that we have rural connectivity.

Working with Ofcom, we have set up a programme to ensure that we can clear the 700 MHz band, and up to £600 million is available to support the necessary changes. The main change is to adapt the infrastructure for TV to ensure that that switchover can happen. Support is also available for that for the PMSE sector, as my hon. Friend for Mid Worcestershire mentioned. To answer his questions specifically, Ofcom is consulting on the assistance to be provided. The details of exactly how that support will flow will follow on from that consultation. I met the industry body last month to hear the concerns directly, and we will continue talking to the industry to ensure that the switchover happens effectively. Although the spectrum is essentially domestic, in that the distances it covers mean that there is not overlap, there is overlap in the fact that other countries use equipment on similar spectrums, and therefore in the manufacture of equipment. I acknowledge that, but I think that the issue can be dealt with, given the taxpayers’ money set aside for mitigation.

On the questions on rural connectivity raised by the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), I agree strongly that we have seen a positive direction of travel. It is rare that an SNP Member describes the Government thus, but I am delighted that he did. No doubt he will agree that this week’s announcement by Virgin that it will cover 360,000 more premises in Scotland, the majority with fibre to the premises, was extremely good news.

The hon. Member for Sheffield, Heeley (Louise Haigh)—I almost called her my hon. Friend, we have spent so much time together—made a very interesting speech. Both she and the hon. Gentleman raised the need to ensure that licence conditions include coverage, which is well understood by the Government. It was a mistake by the Labour Government in the early 2000s to set out licence conditions without such geographic coverage requirements. We had to reverse that after the licences had been set, in 2014, to get enforceable targets into the licence conditions, and we are strengthening that enforcement in the Digital Economy Bill that is currently before the House. There are now licence conditions for the four main providers to reach 90% geographically, which is equivalent to about 98% indoor coverage.

[Drew Hendry]

Can the Minister confirm that he is saying that the Government will adopt an outside-in approach to licensing in future rounds?

[Matt Hancock]

We have actively brought that into the existing licences, even after they were struck by the previous Administration. The hon. Gentleman can see clearly the attitude that we take to the need for high-quality, ubiquitous coverage of voice and text and then of 4G, as well as to the groundwork needed to make sure that we prepare for 5G in the years ahead as that technology comes on stream.

[Drew Hendry]

I just want to push a little further on that point, if I may. The Minister has suggested that there is an attitude and a direction of travel, and has accepted what needs to happen. Will he go a bit further and say that that will be the Government’s approach?

[Matt Hancock]

We expect to auction mobile licences for the 700 MHz band in late 2018 or 2019. It will be for Ofcom to conduct those auctions. The hon. Gentleman can see that the Government’s existing policy is to insist on licence conditions on mobile coverage. We are clear about the need for broad mobile coverage and the need to hold the mobile network operators’ feet to the fire on their licence conditions. Some licence conditions go further than 90% geographic coverage—not least those of EE, because it has the emergency services licence—and also include road coverage, to make sure that we get not simply geographical coverage but coverage of the geography where people use phones, which, along with premises, is on the roads.

The hon. Member for Berwickshire, Roxburgh and Selkirk mentioned the Faroes. I am meeting Jan Ziskasen from the Faroe Islands Government tomorrow to understand more about what they have done. Areas of sparsity with similar geographies to some parts of Scotland can always give us a greater understanding of what can be used to deliver connectivity in those geographies. I am enormously looking forward to that meeting and to hearing what more we can do.

The hon. Member for Sheffield, Heeley asked a number of specific questions. First, she asked whether we expect availability by 2020. The answer is broadly yes, we do. As I said, the auctions will take place beforehand, but we want to get on with this as soon as we make the switchover. I have answered her question on coverage being included in licence conditions; that is existing Government policy.

The hon. Lady asked a question about maximising revenue. She said that we should not maximise revenue first and foremost, but should instead look to the benefits of productivity. If only that had been the approach of the last Labour Government, perhaps the list of countries that we are behind would not be so long.

Finally, the hon. Lady asked whether we will work with EU partners. Yes, of course we will. I will be travelling to the Telecoms Council myself next month to make sure that while we are a member of the European Union, we continue to work with our European partners to get the very best connectivity for the whole country.

[Matt Hancock]

That is a matter for Ofcom to consider in setting the details of how the spectrum is auctioned. It will of course consult on exactly how that auction takes place, and I am sure it will have noted the hon. Gentleman’s comments.

I hope that I have answered all the questions asked today. This is a very important issue, if a rather technical one. I am grateful for the interest in it—

[Drew Hendry]

rose—

[Matt Hancock]

That interest extends to constant interruption by SNP Members while I am trying to finish my speech—I will give way to the hon. Gentleman.

[Drew Hendry]

I am extraordinarily grateful for one last opportunity to intervene on the Minister. I asked a question during my speech about the opportunities for accelerating the process. I wonder if he could give an answer on that.

[Matt Hancock]

I apologise for not answering that question. These changes are best done in an orderly way, with a clearly set timetable. In this case, there are three and a half years still to run. Having set the timetable, I think it is best to stick to it, especially because of the impact on existing spectrum users, and to make sure that the changeover happens in the most orderly way possible.

With that, unless there are any further interventions, I will finish by saying that I am grateful to Members for the broad consensus of support for what we are trying to do to improve connectivity through the use of the 700 MHz band.