Ofcom confirms 90% geographical coverage obligation for all UK operators

UK telco operator Ofcom has taken six weeks to complete the formality of implementing the geographical coverage commitment compromise achieved between the government and operators late last year. Ofcom has “varied the licenses” such that all four MNOs are committed to 90% geographical coverage for voice calls by the end of 2017.

As previously reported by Telecoms.com, this compromise amounted to a capitulation by the department for culture, media & sport and its head Sajid Javid, who had initially threatened to impose compulsory national roaming on all operators.

This was soon exposed as a crude bluff, with Vodafone observing at the time “National roaming would also be extremely challenging from a legal and regulatory perspective as UK mobile operators have paid the Government hundreds of millions of pounds for spectrum licences on the basis of existing regulation founded on the principle of competing networks. Furthermore, national roaming would also harm the business case for further investment in rural coverage: why should any operator invest in providing better coverage for the benefit of a competitor?”

The handy revenue generated by spectrum auction has the side-effect of offering legal protection to operators regarding their obligations. The license fees effectively come with obligations priced in and any change in those obligations has a material effect on the value of the license.

This is why, in addition to announcing the 90% coverage obligation, Ofcom has also announced: “In light of these variations, Ofcom will shortly consult further on the annual licence fees for the 900 MHz and 1800 MHz spectrum bands.” In other words, part of the compromise was presumably to compensate the operators by reducing their license fees.

For most operators meeting this commitment shouldn’t be too tricky, especially since they all got some long-range 800 MHz spectrum in the 4G auction, although EE and Three only have small amounts and will probably need to implement VoLTE over it to tick the 90% box. We understand EE’s geographical coverage is already most of the way there but Three, which has tended to focus on Urban coverage, is likely to find the commitment more of a challenge.

Of course that job would be made considerably easier if the merger of Three and O2 is permitted and it would be especially cruel if the method by which Three could achieve this new coverage obligation was obstructed. O2’s 800 MHz spectrum win in the 4G auction included an obligation to cover 95% of the UK population by the end of 2017, so it’s likely that O2 is close to achieving the new obligation too.