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Grand Bargain on Roaming is Possible

    Mobile technology is essential for the British economy. It is right that universal mobile access should be recognised as a key part of national infrastructure. Calling and texting is now not only essential for business but also in everyday personal life. However these services are not guaranteed for people living in areas known as ‘total not-spots’, or in ‘partial not-spots’, which are areas that have coverage provided by only one, two or three mobile network operators. This is largely because the privately funded networks have unsurprisingly not had identical rollout plans.

    According to the telecoms regulator, Ofcom, partial not-spots cover 21% of the UK’s land and affect 1.5 million customers – this means that for those affected there is no mobile signal if their own network is unavailable. Rural areas are most severely affected with 35% of customers suffering from a frequent lack of mobile signal. However the industry believes that these figures may be out of date and thus may not reflect the full extent of the coverage today. The current Ofcom data has nevertheless been accepted as the actual state of UK mobile coverage.

    It is therefore clear what inspired the Secretary of State for Culture, Media and Sport, Sajid Javid, to outline a number of proposals to create better mobile coverage including national roaming, infrastructure sharing, and coverage obligations for network providers. Yet while these proposals to equalise voice coverage amongst the operators are well intentioned, it may be that they are not currently the best option given the potential impact on competition and the practical difficulties which they may cause.

    There is some evidence that the industry is already addressing the problem. Investment in mobile networks has been substantial; EE for example has invested £17billion since 2000 and plans to extend 4G signal to 98% of UK residents by December 2015. Vodafone is using innovations like the Rural Open Sure Signal Programme to bring reliable mobile signal to 112 successful applicant villages in not-spot locations.

    Moreover there are some particular problems with roaming which have yet to be resolved. First, it’s unclear to what extent it would actually increase coverage. Research by Capital Economics suggests that it would only increase geographic coverage in the UK by 2% to 4% because phones actually hold onto a signal within a much lower threshold than Ofcom has claimed. Second, network providers claim that roaming devices are up to 50% more likely to experience issues with making and receiving calls as well as having lower battery life and a higher number of dropped calls. Third, allowing mobile providers to piggyback on the masts of rivals might erode incentives to maintain, upgrade, and expand their current infrastructure. Resolving this problem by legally obliging networks to expand into partial not-spot areas might then lead to increased costs to customers as providers attempt to recoup their losses. This is of particular concern given that the industry is already dominated by a few large players.

    Nevertheless, the reason why mobile coverage has not already been expanded to reach universal access is that, on a strictly commercial basis, it is often simply not profitable to serve a small number of customers in remote locations. At least part of this can be explained because of the rigid regulatory framework which constrains expansion; so it surely makes sense to explore sensible deregulatory measures and the expansion of competition first.

    Rather than increasing their regulatory burden, the Coalition should focus on cutting the extra burdens which add needless costs to expanding coverage. Cumbersome planning legislation means that it is very hard to obtain planning permission from the relevant Local Planning Authority for mobile communications apparatus over the height of 15m. Restrictions on mast heights hinder signal range, which means that a relaxation of the legislation could lead to more masts and higher masts. The result could be an expansion of network coverage along with a reduction in the bureaucratic costs associated with the application process – which would ultimately feed through to customers. In addition, the Government should reform the Electronic Communications Code which inflates land prices for mobile infrastructure relative to other key infrastructure. This is to say nothing of the increase in spectrum fees which are being proposed by Ofcom.

    Universal coverage is a desirable goal. But promoting competition and cutting expensive red tape should be the way forward. Better surely is a grand bargain between the Coalition and the industry to agree a package of deregulatory measures in return for a clear timetable by which universal coverage must be achieved. This would increase competition, improve coverage and cut prices: a win-win for all. But if universal coverage is not achieved according to the timetable, then the Government should swiftly return to its plans for national roaming.

    Adam joined the Centre for Policy Studies as Head of Economic Research in January 2014. 

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