Ben's Talk3G Blog

Wondering vaguely back into the territory of using song titles on my blog posts...

I've been thinking a little about some of the massive mistakes that still plague our mobile industry to this day. These mistakes contribute significantly to the status of the UK mobile market at this time.

GSM Licences

It's no secret that the GSM/PCS licences issued yonks ago to mobile operators in the UK restrict the usage of the frequency allocated. What this did was ensure an interference-free start in life for digital mobile communications. What it didn't do was provide the flexibility for new technologies (cough, 3G) to take over in the same frequency bands as time went on.

Now, we have a pretty good GSM network in the UK. As far as I know, all operators have in excess of 99% UK population coverage, or are at least close enough to that number not to draw significant attention to themselves. Perhaps this would not have been possible without the safeguards built into the original licences.

However, it does mean that we're now stuck with a massive, slow, oversubscribed GSM network and 3G operating at a non-ideal frequency that's barely capable of penetrating buildings. 2100MHz has long been known as not ideal for the application at hand. So why hasn't Ofcom/the government acted faster to demilitarise 900/1800MHz, even if just to allow 3G, or make new frequency available?

I'm assuming it would be possible to run GSM and 3G next to one another without horrendous interference. No one has ever mentioned this in anything I've read, so I don't think it's an outlandish assumption.

I suppose there's a little argument to be made for legacy support. All those old dears clutching their red Nokia 8210's probably wont have their needs best served by an iPhone. But low end 3G handsets do exist, and will exist increasingly if regulators signal that GSM is no longer written in stone.

I think it was right to protect certain technologies in certain frequency ranges. It's still right to do it now, sometimes. But why is it taking so long to change these restrictions with the times? It's unacceptable, and a massive mistake that lies mostly at the Labour governments door. Poor frequency management since 1997 Perhaps the Conservatives would have been just as cumbersome, but since mobile comms coincide with the Labour dictatorship that has seen us declare war on not one but two countries we'll really never know just how things could have been different if our leader had been somebody with a brain, not to mention a moral compass.

The 3G Auction

It all happened 9 years ago.

Licence A:
TIW £4.3847bn Now called "3" or Hutchison 3G UK Ltd

Licence B:
Vodafone Airtouch £5.964bn Now called just Vodafone

Licence C:
BT £4.03bn Now Telefonica O2

Licence D:
One2One £4.003bn Now T-Mobile (owned by Deutsche Telecom)

Licence E:
Orange £4.095bn Still known as Orange, despite being bought by France Telecom who actually owned NTL at the time of the auctions and failed to get a licence! It probably worked out cheaper to just buy Orange after the licence values had plummeted...

T-Mobile UK is currently up for sale. Despite paying £4bn for its licence to operate 3G services in the UK, it's currently valued by analysts at closer to £3bn. For the entire network. Including its GSM licence. And it's subscribers.

That statistic makes my point so well I don't really need to bother!

The sheer greed of the Labour government in orchestrating this charade is immense. Then-Chancellor Gordon Brown took an incredible £22.47bn from an industry right at the infancy of its potential. £22.47bn that could have been spent on network rollout, new services and, most importantly, lower bills for you and me. You see, somebody pays, and in business it's always the customer.

Biggest stealth tax ever

An impotent clutch of indebted organisations is all that remained.

"But the mobile networks didn't have to buy" you shout. No, they didn't, but if they didn't then they would have been unable to deploy any 3G services at all. I know O2 have hardly embraced 3G, but can you imagine a UK network having no 3G capability whatsoever? It's entirely unthinkable in today's market, which is already looking towards LTE as consumer demand for data finally takes off.

I mean, damn, Vodafone paid £6bn for the most attractive piece of the 3G spectrum pie. It's just beyond comprehension to spend that amount of money on something they've barely been able to use. Which, I suppose, is why there'd be some argument that, when the regulator divvies out the GSM 900 spectrum that they currently have to themselves, Vodafone should retain a larger share. Can't see it happening, myself. In hindsight all of the networks should have tried to bid for as little 3G spectrum as possible, just so they had some, and then they could have lobbied for changes and swaps between each other at a later stage. But in the heat of the moment it was all about being able to offer Britain's next generation mobile network, and, for the existing operators, that was a binary affair!

--

So what should happen to correct these massive bloopers? I believe that what we need is a completely gratis shake-up of UK spectrum allocation and allowed usage. Sweeping changes, in consultation with the mobile operators, need to be announced that will not only allow all of our current mobile operators to operate 3G and LTE services in 'better' frequency bands, but also allow for some competing technologies to emerge and, quite possibly, fall by the way side. I don't think GSM/3G/LTE need to be protected to the same extent anymore now that they're the globally agreed standard, and localised technologies that may be better suited to local communities should be allowed to flourish where they can.

But perhaps we'll have to wait until analogue TV is switched off, some time around 2012 I believe, before the regulator steps in. Heartbreaking for the industry, if so, because it means years of stagnation are still ahead. By 2012 we'll be lucky to still have three operators, down from our current 5, at this rate, as they struggle to make money from 3G after such massive outlays, can't justify building out their networks past ~90%, and have no 'future' set out to add value to their shares.

Oh, and there's no way any reallocation of spectrum will be free, by the way. The regulator (cough, government, Ofcom is just a New Labour quango) is likely to ask mobile operators to pay a 'market value' for any new arrangement, based on what the true market value is perceived to be. Given how indebted our poor nation is at the hands of Gordon Mugabrown it's hard to see how the Tories could not take the opportunity to raise at least a couple of billion this way, assuming any mobile network even bats an eyelid this time around.

I never used to feel sorry for the mobops. But when you see what they've been through in the last 10 years it becomes easy to see why they're such a shambles.