Machine-to-Machine Communication

Lord Vaizey of Didcot Excerpts

Wednesday 8th June 2011 Westminster Hall

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

I am grateful to you, Mr Scott, for giving me the opportunity to speak. This is the first time that I have served under your chairmanship, and it is a great and significant honour to do so.

I am grateful to the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) for securing this debate. She knows, from remarks that I have made about her before in the House, that I am not surprised that she is the first MP to raise this important issue. She has referred to the last innovative MP, Emma Nicholson, who raised the issue of the internet for the first time in Parliament. I only hope that the career of the hon. Member for Newcastle upon Tyne Central does not follow that of Ms Nicholson and that she does not end up as a member of the Liberal Democrat party. I say that with all due respect to the coalition, of which I am a full and supportive member.

The hon. Member for Newcastle upon Tyne Central is an expert in the House on this issue—she had a distinguished career in Ofcom. I mean it as a compliment when I say that this debate has perhaps been more like a seminar than the type of rambunctious debate that we are used to in this Chamber.

The hon. Lady has discussed machine-to-machine communications, or M2M. As she has rightly said, M2M sounds almost like a pop band, perhaps one that was competing in the Eurovision song contest. We also talk about M2M as “the internet of things”. It is an incredibly important subject and in some ways it is the “new new thing”, if I can put it that way, of the internet. It is something that people are now starting to talk about. As she elaborated on in her excellent speech, the possibilities of the internet of things are almost limitless, and they will transform how we live our lives. However, as both the right hon. Member for Oxford East (Mr Smith) and my hon. Friend the Member for Penrith and The Border (Rory Stewart) have rightly said, the internet of things will also bring complex social issues that will attract the interest of politicians, notably privacy issues but also other important issues such as social exclusion.

Today the hon. Lady has shown that she has another string to her bow. She managed to secure this debate, and we know how difficult it is to secure a debate in Westminster Hall, let alone a particular timing for a debate. However, she has secured this debate on M2M on IPV6 world day. For those MPs who do not know what IPV6 is, it is internet protocol version 6. Effectively, sitting behind the internet addresses that we all use is a string of digits, like a telephone number. At the moment, we use internet protocol version 4, or IPV4, and we are about to run out of IPV4 addresses. I do not want anyone to panic about that for a moment, but this autumn the wholesale sale of internet addresses in Europe will come to an end and in the next two years we will experience a shortage. Consequently we need to move to IPV6, which is a longer string of digits.

I held a seminar this morning with key figures in the UK who are involved in this transformation to IPV6. One of them described the transformation to me in a very clear way, by saying that moving from IPV4 to IPV6 in terms of increased capacity is like moving from a golf ball to the sun. We might not need all the capacity that the sun would bring, but we will certainly need significantly greater capacity. Given that IPV4 only has 4.3 billion internet addresses, the increase in capacity in the future will be driven by the internet of things. As the hon. Lady has pointed out, that will include things such as smart homes, smart meters and connected cars. For example, I learned today something that is pretty obvious once you are told it, namely that every new car that is sold has its own internet address, to allow it to communicate with computers. There will also be e-health, smart cities and many other variations of things.

As the hon. Lady indicated, a number of companies have made predictions about the number of internet addresses that we are going to need. Ericsson has said that we will need 50 billion internet addresses by 2020 to cope with the internet of things. Some people talk about trillions of devices or connections. The debate is very fast-moving, and nobody can be certain what will happen. To be frank, predictions are fairly pointless, except to say that we will need a lot more internet addresses.

I want to use the opportunity that this debate provides briefly to speak out to those watching, particularly companies and businesses, and ask them to start preparing their websites and information systems for IPV6. Although that change is not an immediate issue for them, they will need to be on top of it in the next few years. In fact, the slogan that I came up with this morning, which I thought was rather neat, was, “Don’t panic, but do start to prepare”.

The hon. Lady has asked me whether I have estimated the economic value of the internet of things. I have not done so, and as far as I am aware Ofcom has not done so either. However, as one might imagine, various estimates are knocking about. Some people have estimated that the value of the internet of things is about €200 billion a year. Again, however, I say with some caution—given that we are, as it were, in the “known unknown” territory—that it is impossible to put a realistic value on the internet of things. As she has indicated, however, virtually any device that business or consumers use will be internet-enabled in the coming years. For example, the most immediate example that right hon. and hon. Members will probably be aware of is the idea of smart metering, which the hon. Lady has discussed at length. Other examples include radio frequency identification, which relates to the near-field issues that she has discussed.

The thrust of the hon. Lady’s speech was about whether or not we should make spectrum available, particularly for entrepreneurs to take advantage of the growing internet of things. My hon. Friend the Member for Penrith and The Border has rightly reminded us of the need to set in place proper infrastructure for the internet of people. Both the hon. Lady and my hon. Friend will be fully aware of the Government’s plans to support broadband roll-out and that we have set aside about £500 million for that programme. Our objective is to bring superfast broadband to 90% of homes and businesses, and a minimum of 2 megabits per second broadband to all other premises, by the end of 2015. My hon. Friend is also making firm representations about the forthcoming spectrum auction and the need to increase coverage in that respect. As the hon. Lady has indicated, wireless will also be an important part of M2M communications, and, as she knows, we are well on track to get that spectrum auction up and running at the beginning of next year.

As the hon. Lady has said, spectrum is absolutely vital for the future of the internet of things, and it is incredibly important that we make as much spectrum available as possible. As I am sure that she knows, we have committed to releasing a significant amount of public spectrum to the private sector. In March, just after the Budget, we published our detailed plans to release 500 MHz of public sector spectrum below 5 GHz by 2020. That will be a complex task, bringing together a number of Departments. We must also ensure that the spectrum that we make available is internationally compatible and that we make it available with the minimum of disruption to the public sector, be it transport, security or defence.

As the hon. Lady has predicted, although I believe that much of this spectrum will be suitable for M2M communications, it is not for me, nor indeed, in my view, for Ofcom, to decide how best to use both the spectrum and the infrastructure available to meet the demands for communications. That is for the market to decide. She is right to point out that the United States is making advances in this area, but I think that we are keeping pace.

The hon. Lady is well aware of the duties of Ofcom and of its light-touch approach to regulation, and those duties include encouraging investment and innovation in relevant markets. In addition, the European Union’s radio spectrum policy programme, which we debated at the Telecoms Council last week and which is currently generally under discussion, also includes the principle of promoting innovation in telecoms. Ofcom is the independent regulator charged with managing spectrum in the UK, using licences when users want rights and unlicensed spectrum when rights are not needed. The use of wi-fi is a very good example of successful unlicensed spectrum use.

The hon. Lady made it very clear in her speech that Ofcom has made spectrum available for M2M use, such as that which allows intelligent transport systems to operate without licence in a European harmonised band, aiding the development of those systems. Ofcom is also considering whether the 872-+876 MHz spectrum paired with the 917-921 MHz one might be suitable for M2M communications, and it is working with the European Commission and European regulators to see whether such services could operate without interference to adjacent bands. We also have, of course, the so-called white space spectrum, which might be suitable for machine-to-machine communication.

Ofcom frequently consults on spectrum matters. I absolutely take the hon. Lady’s point that a lot of the small entrepreneurial businesses that could make use of this spectrum are not necessarily in a position to lobby Ofcom, but I assure her that there are many organisations out there that bring their thoughts about spectrum availability and how it can be used to the table. I hope that this debate will also highlight the fact that this is a very live issue and that it is perfectly possible to contact me or the hon. Lady, or indeed Ofcom, to make points. In my experience as a Minister, small and entrepreneurial businesses are often the ones that come forward with radical and interesting thoughts, so I encourage businesses engaged in this issue to make their views known not only to me but to Ofcom.

It is absolutely right that we should be ahead of the curve, aware of what is coming and looking beyond the horizon regarding how this spectrum could be used, but as well as first-mover advantage there is potentially first-mover disadvantage with spectrum. We, as the United Kingdom, have to align ourselves with our European partners, and being the first to make a band available for unlicensed spectrum use could end up being costly, if decisions are then made to harmonise different bands. I do not want to give the hon. Lady the impression that we are complacent; we are absolutely not—this is a very live issue. I do not, however, want to be in the position of rushing forward with decisions that we later regret. Our planned release in 2020 of the 500 MHz is a very good example of that, because we are pushing ahead our plans but are very conscious of the fact that we have to keep in step with our European partners, while at the same time pushing European member states to move on spectrum decisions.

I am confident that Ofcom’s approach to innovation and to spectrum management will continue to take account of its duties and will be both proportional and appropriate. It is important to recognise that machine-to-machine—