Motion to Approve
My Lords, the Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2010 will direct Ofcom to take certain action in respect of radio spectrum management. It is an important step in achieving the Government’s objectives on broadband and the contribution that it can make to a balanced economy.
Wireless communications are now an integral part of everyday life in the United Kingdom. There are now more active mobile connections than people: 3 million access broadband using wireless modems, or dongles, and the arrival of smartphones is changing the way in which people communicate and interact. These devices all require radio spectrum. Without sufficient spectrum being available, mobile services cannot continue to function nor can new and innovative services be brought to market.
The explosion of data traffic across networks is putting the networks under strain. Technical advances can play a part in mitigating the impact of this increased demand but ultimately what is needed is access to additional spectrum. However, spectrum is finite and therefore a scarce resource. Spectrum suitable to deliver mobile broadband services is even scarcer. Where spectrum is available, we need to bring it into use at the earliest possible opportunity. The Government’s proposals will achieve that and accelerate the deployment of high-speed mobile broadband services that can deliver benefit to consumers, citizens and business. It is that desire to secure the release of spectrum suitable for mobile broadband services that is behind this statutory instrument.
I will not detain the House with the detail of the long and tortuous route that has been travelled to bring us to this point, although some of your Lordships will recall it in vivid detail. Some of the issues involved, such as the liberalisation of the 900-megahertz and 1,800-megahertz spectrum, have been the subject of discussion and consultation stretching back several years. This issue has made the progress towards the release of suitable spectrum particularly difficult. That this matter is not particularly politically contentious is demonstrated by the fact that the previous Administration laid a statutory instrument in March, with measures that they considered would address some of the most difficult areas of concern. However, there was insufficient parliamentary time prior to the general election to debate it. There was therefore a need for the new Government to make a decision on how to proceed.
The Government have made it clear that one of their key priorities is to rebalance the economy, in terms both of supporting growth in a broader range of economic sectors and of seeing a more even distribution of economic opportunities across regions and industries. For that balanced economy to develop and thrive, a critical requirement is the right telecommunications infrastructure, specifically the provision of superfast broadband connectivity. The Government have already set out their agenda for accelerating the deployment of higher speed broadband connectivity, and we recognise that the widespread deployment of superfast mobile broadband services will contribute to that objective, delivering significant benefits to businesses and consumers.
In the light of these objectives, careful consideration has been given as to how best to proceed. We have taken into account responses to the initial consultation and have held further discussions with Ofcom and operators to inform our decision. As I have already mentioned, the principal objective is the earliest possible release of this spectrum and to give certainty to the market, so that new mobile broadband services are deployed as quickly as possible. We are already seeing 4G services deployed across the world, including Europe. Further delay would result in the UK falling behind in the availability of these services, and I am sure that noble Lords agree that we simply cannot afford that. We are justly proud of our position as a leading mobile market and we stand to lose that position; indeed, some argue that we already have.
We concluded that intervention by the Government, in the form of this direction to Ofcom, is desirable to achieve an early release of this spectrum, but we are also of the view that the previous set of proposals would have had a disproportionate impact on the functioning of the market. The United Kingdom has enjoyed a competitive mobile market that has resulted in widespread availability of services, and it remains our view that competition will drive the deployment of new mobile broadband services.
For that reason, the Government have decided on a simplified direction. We have been able to remove much of the detail in the draft laid by the previous Administration which we now consider unnecessary. That decision has been further informed by additional analysis by Ofcom on the competitive distortions that might occur through the liberalisation of the 900-megahertz and 1800-megahertz spectrum. Ofcom concluded that the risk of distortion was less than it had previously thought, primarily because of the establishment of Everything Everywhere, the joint venture in the UK between Orange and T-Mobile. It was Ofcom’s view that the joint venture is in a better position to respond to changes in the use of the spectrum than was the case when Orange and T-Mobile were independent of each other.
I recognise that there may be concerns about the removal of the coverage obligations that were included in the original draft order. The Government are committed to achieving the best superfast broadband infrastructure in Europe, and we have recently published our strategy to achieve that goal. Rural and remote areas of the country should benefit from that infrastructure upgrade at the same time as more populated areas.
We also remain committed to ensuring that by 2015 virtually all homes will have access to a minimum level of service of 2 megabits per second. I recognise that there may be concerns about the removal of the coverage obligations that were included in the original draft order. The Government are committing £530 million over the lifetime of this Parliament to supporting the rollout of these services to less well served areas. We will be working with local authorities and communities to ensure that local needs are met. Four superfast broadband pilots have already been announced, which will provide valuable insight into possible technical solutions that can be further exploited. We can expect wireless, whether fixed or mobile, to play its part in achieving these goals.
Alongside that government investment, we expect the market to deliver most of the necessary connectivity. That is why we are directing Ofcom to carry out a competition assessment in advance of the auction, to ensure a strongly competitive market that will help to drive the deployment of services. Ofcom is currently looking at the issue of areas of the country where there is no mobile coverage—either 2G or 3G—known as mobile “not-spots” and how they might be addressed. We also expect Ofcom to consider, as part of the competitive assessment, whether other conditions, such as coverage obligations, are necessary to enable it to deliver its primary duty of ensuring a wide range of electronic services throughout the United Kingdom to consumers, citizens and business. We expect that approach to address the issue of rural connectivity, but we will of course continue to monitor, with Ofcom, the extent to which these services are being delivered to rural and less urban areas.
The statutory instrument will fulfil a number of objectives. First, it will allow the United Kingdom to meet its obligations to implement the European Union’s revised GSM directive, which came into effect on 9 May 2010. That will liberalise the use of 900 megahertz spectrum for new technologies in the hands of the incumbents, and will also implement the accompanying Commission decision harmonising the use of 1,800 megahertz spectrum with 900 megahertz. Those licences will be made indefinite, subject to revocation on spectrum management grounds, and tradable. They will be subject to revised annual fees to be determined by Ofcom.
Ofcom is also being directed to amend licences for the use of spectrum at 2.1 gigahertz, so that they are made indefinite. Those licences will be subject to an annual licence fee once their initial term has expired in 2021. The licence holders will also be required to meet additional coverage conditions, and the licences will also be made tradable. We consider the extension of these licences to be necessary to encourage further investment in 3G services. This technology will continue to be an important part of the wireless broadband landscape for a number of years before 4G services can be fully rolled out. Without the change to the licences, further investment in those networks will be uncertain, to the detriment of users.
We are also directing Ofcom to begin immediately with preparations for the 800 megahertz and 2.6 gigahertz auction. As I have already mentioned, we are requiring Ofcom to carry out an urgent competition assessment in regard to further developments of 3G and future 4G networks, including the potential for new entrants, to inform the design of the auction rules for this spectrum. Maintaining a healthy competitive environment post-auction is a clearly desirable outcome.
That direction to Ofcom will permit the earliest possible release of this important spectrum, benefiting business, the consumer and the telecommunications industry alike, and I look forward to hearing the views of noble Lords.
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.
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.
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.
As I understand it, we have an obligation under EU law to agree on spectrum for the emergency services, and agreement was reached at a recent European Council of Justice Ministers. The only really suitable spectrum bands for the emergency services to use are at a much lower frequency, so the state does not have to invest in double the number of masts. The emergency services network has about 3,500 masts to operate in the 400 megahertz band. It would need nearly double the number to operate in the 800 megahertz band.
This rule applies universally: the higher the frequency, the more base stations are needed. This is why there is such interest in the digital dividend spectrum—it is at relatively low frequencies.
The problem for the emergency services is that it appears that Ofcom and BIS do not intend to make any spectrum available to them at any frequency. They will simply say that the business case, which is required for a direction to be made, is too weak. My interest in raising this matter and urging that some spectrum be exempted from the auction is to protect our population and our first responders. Can we please learn the lessons of past disasters? We must have proper communications for our emergency services.
There appears to be something fundamentally wrong with a situation where the emergency services in Dorset cannot use their radios and do not have enough spectrum, while there is spectrum lying fallow here and not being released in a timely fashion. Is it really the case, too, that some police forces are being asked to send text messages from their mobiles rather use their radios because the spectrum is too expensive? Why cannot a direction be given to Ofcom on use of spectrum for the emergency services?
Finally, there is the aftermath of the settlement with the PMSE sector, which ran such an effective Save Our Sound campaign. I am glad that my honourable friend Mr Vaizey ensured that a better deal than that envisaged by the Labour Government was agreed, so that compensation was not based on residual value of equipment. However compensation will cover only 55 per cent of the replacement cost of new equipment. Some people will struggle to find the balance needed. In addition, I understand that final funding will be signed off by the Treasury only in March 2011. Is this correct? It would be extremely awkward to say the least if the Treasury backed off at the last minute. What is the current status of the agreement? When will payments be made? I would be grateful if my noble friend could answer those questions.
Spectrum allocation may not make the front pages of newspapers, but it is a fast-changing area with fast-changing requirements. The last fundamental review of the UK’s spectrum strategy was the 2005 Cave review. The previous Government did not update it more recently, so it seems that all current decisions are based on a policy which we know to be out of date and where the balance between auction and other means of allocation has gone. Some would say that what we are doing is all a bit ad hoc. Are we really confident that we are proceeding in the right way today? I hope that my noble friend can reassure me and I look forward to his reply.
My Lords, this debate is definitely one for the techies. As a football commentator said, it certainly feels like déjà vu all over again.
I was grateful to the noble Lord, Lord De Mauley, for being one of the few Ministers who has not said that he is doing this because of the terrible deficit left by the previous Government. It was a great relief. I hope that that is not a career-limiting observation.
The last spectrum auction took place 10 years ago under a Labour Government and is widely considered to have been a success in injecting much needed competition into the mobile market. The 3G auction specifically reserved a licence for a non-2G licence holder so as to kick-start competition. The result today, with each of the four mobile networks holding roughly the same amount of 3G spectrum, is a highly competitive market where the operators compete to expand and increase their mobile broadband networks.
While we on this side of the House support this statutory instrument, the proposals to liberalise the existing 2G spectrum ahead of agreeing the rules for the auction of the 2.6 gigahertz and 800 megahertz spectrum run the risk of significantly upsetting that competition. I note that Ofcom has concluded that liberalisation does not distort competition, but that is because its competition assessment examined the effect of liberalisation only on the basis of 80 per cent population coverage. Its assessment completely ignored the advantage that holders of the existing 900 megahertz spectrum gain from being able to use that spectrum for rolling out mobile broadband in more rural areas.
Your Lordships will be aware that sub-1 gigahertz spectrum enables network operators to cover significantly larger geographic areas. Indeed, it was estimated that holders of low-frequency spectrum are able to roll out their networks five times more cheaply than operators who hold high-frequency spectrum. It is this low-frequency spectrum that is critical to ensuring that mobile broadband supports the Government’s own broadband strategy and delivers universal broadband coverage to rural areas. However, there is much less likelihood of this being achieved if competition is significantly weakened. It would be ironic if the outcome of this spectrum auction, under the watch of Conservative/coalition Ministers, undermined the competition delivered by a Labour Government. I noted that there were a couple of attempts to cover that area. Although these are indefinite licences, there was the question of revocation and an annual assessment. I welcome those aspects.
What assurances will the Minister give the House that Ministers will give a clear steer to Ofcom that the auction of the 800 megahertz spectrum must be done in such a way as to ensure that the advantage gained by the current holders of low-frequency spectrum is corrected either through a spectrum cap or, as in 2000, through reserving a licence for a non-2G spectrum holder? In another place, the Minister Ed Vaizey said that Ofcom,
“must draw up auction rules to ensure fair access and competition on spectrum”.—[Official Report, Commons, Fourth Delegated Legislation Committee, 1/12/10; col. 11.]
Would the Government consider an auction that resulted in the concentration of low-frequency spectrum in the hands of the two networks that already hold low-frequency spectrum to be a failure? If so, what discussions have the Government had with Ofcom to ensure that the auction is structured so as to avoid this? I welcome the commitment to competition assessment prior to any decisions. I was interested in the point made about the hope that there would be universal coverage. We talk about the importance of rural connectivity, but the fact that it is not stipulated gives some cause for concern.
Given the importance of the digital economy to the UK’s wider economy, do the Government agree that it is essential that Ofcom actively protects competition in the mobile broadband market? While I share the Government’s view that release of spectrum to the market as quickly as possible is critical, does the Minister agree that the long-term interests of consumers depend on ensuring that the release of new spectrum is achieved through an auction that preserves a level playing field in spectrum holdings? Can the Minister give the House an assurance that Ofcom will have the Government’s full support in taking steps to preserve competition in the mobile broadband market, particularly if that is opposed by companies whose actions have delayed the release of spectrum to the detriment of consumers? I share the concerns of the noble Lord, Lord McNally, about the timetable.
My apologies. I meant the noble Lord, Lord Clement-Jones. I hope that he does not take legal action.
I share the noble Lord’s view on the timetable. It would be good for Ofcom to be challenged on the length of the timetable, given the importance of the introduction of 4G.
There is an ambivalent attitude in this country, in that everybody wants a mobile phone and universal coverage, but people do not want a mast anywhere near them. That pushes to one side those who believe, in my view mistakenly, that they will suffer some deadly effect from the rays from mobile masts. It is usually the aesthetics that concern most people. Will the Minister give any steer to Ofcom to ensure that we maximise mast sharing, so that we do not have the countryside or towns littered with more mobile phone masts than we need? I also welcome the commitment to the previous Government’s policy of ensuring universal 2 megabit per second coverage by 2015 and to the superfast broadband trials.
I conclude by sharing the view expressed by the Minister on the role that mobile broadband can play in delivering universal broadband coverage. Does he agree that the best way of extending coverage is through a market where all operators can compete equally? I share the concern of my noble friends Lord Faulkner and Lord Berkeley about the possible impact on rail signalling systems. I would have thought that that would have been drawn to the attention of Ofcom a while ago. No doubt it is something that the Minister will comment on.
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.
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.
I am sorry, my Lords, but the timing of that is rather important. Once the spectrum is subject to auction, the emergency services will not have access to it. The spectrum below 1 gigahertz is of extraordinary importance because it means that the masts do not have to be so close together. It means that you have fewer masts, less cost to the emergency services and so on. What worries me in all this is the question of whether the emergency services should be subject to a market test. It is rather like the NHS—we do not subject that to a market test.
I agree with the noble Lord about the seriousness of the matter. It is, as I said earlier, a complex area. It might be helpful if I wrote to him further about that matter.
The noble Lord, Lord Young, expressed a number of concerns about the auction, competition and coverage. The important thing is that we have asked Ofcom to conduct a competitive assessment of the future development of the 3G and 4G markets in the United Kingdom to inform the design of the auction. Ofcom may well decide that some form of capping is appropriate; the noble Lord referred to that. I agree with him about the importance of competition.
The noble Lord also asked about the benefits for consumers. Again, I broadly agree with him. Widespread next-generation mobile broadband services, which are capable of delivering data at speeds that are considerably in excess of today’s offerings, will be of huge value both to consumers and indeed to business. For the consumer and citizen, access to real-time information while on the move will be invaluable as well as offering a considerable market opportunity to creative industries wishing to develop content.
The noble Lord asked about the perceived blight of masts across the country. One has to say that if people want additional coverage of mobile broadband services, some increase of masts is likely. Given the capital expenditure involved, though, no operator will want to deploy more masts than are necessary to deliver an acceptable level of service.
I agree with the Minister that they will not, but I made the point about encouraging mast-sharing. While I am on my feet—I do not want to do this any more than I have to—there is also the question of universal coverage and how concerned the Government are to ensure that the mobile service is less effective in some parts of the country than in others. How much premium do we put on that?
I broadly agree with the noble Lord about mast-sharing. We have it already and I have no intelligence that it is not going to continue. It seems to be in the economic interests of all parties.
The noble Lord’s other question is about coverage. Again, I agree with him about its importance. The Government believe that our approach, particularly given the need to crack on with it, is the way to achieve that, and that the competitive pressures and the number of participants will assist it. A number of technical advances will also assist that.
On the European network for the GSM-R, my understanding is that Network Rail responded to Ofcom on this some time ago, as well as to BIS. I am concerned about the reported reaction of BIS to these comments, which was, “We understand where you’re coming from, but basically you should have incorporated something into your design in the first place to ensure that the receivers and all the other equipment on the railway were robust”.
The legislation from the commission has been around for a number of years, and I am pretty persuaded that Network Rail and the Department for Transport have got it right, because they take it all very seriously. It seems a trifle arrogant for anyone now to say, “Sorry, mate, something new is coming up and you’d better go and change all your systems—and, by the way, possibly pay for it”. I hope that I have got this wrong. Maybe the Minister could look into that as well.
I am grateful to the noble Lord for his comments. If there is some interdepartmental fencing, that is extremely concerning. I will go back to my department and shake some cages. Having said that, I hope that I have addressed as many of your Lordships’ questions as possible and if I have not I will, as I say, write to noble Lords. This is—
I certainly intend to include that.
This area is, as I say, immensely complicated, as I am sure has become abundantly clear in the course of the debate. There are those who assert that the Government’s approach is flawed or lacks ambition, but it is clear that years of debate and consultation have shown that any proposals—whether they come from the Government, the regulator, or indeed the European Commission—are unlikely to receive universal acclaim. Experience shows that any proposal will receive differing levels of opposition and support. The point is that a consensus on what should be done is, frankly, unlikely.
That lack of consensus has been the case over a number of years. Ofcom’s attempts to find proportionate measures to deal with the issues raised by the refarming of 2G spectrum have faced challenges which, in turn, have led to delay. Any further delay cannot be to the benefit of consumers or business users, nor, I suggest, to the operators themselves. Regulatory uncertainty is seldom helpful to industry. The longer we delay, the further the UK will fall behind other countries that are already deploying new high-speed broadband services.
The issues involved have, as I say, already been the subject of considerable discussion, debate and consultation involving industry, the regulator and the Government. In our view, this direction to Ofcom represents the most appropriate way forward to allow the earliest deployment of next-generation mobile broadband services, to make a valuable contribution to the broadband infrastructure of the United Kingdom and to ensure that this country remains competitive in a digital world. I commend the order to the House.
House adjourned at 4.52 pm.