UK government capitulates to operators over rural mobile coverage

The UK Department of Culture, Media and Sport (DCMS) has announced it has reached what it calls a “landmark” agreement with operators EE, O2, Vodafone and Three on how to tackle coverage issues in rural Britain. However, the agreement seems a far-cry from the original tough talk from the Culture Secretary Savid Javid.

The news follows the DCMS’s three-week consultation on what new rules should be imposed on telcos to ensure better mobile connectivity for so called not-spots.  The original proposals included the controversial idea of compulsory national roaming, a plan fiercely opposed by the operator community.

Other proposals in the consultation included infrastructure sharing, giving MVNOs access to all networks, and imposing a coverage obligation where operators would be obliged by law to cover a certain percentage of the UK’s land mass.

Under the new agreement, which will be legally binding, the operators have agreed to invest a collctive total of £5 billion on infrastructure improvements, guarantee 90% geographical coverage each across the country, and provide reliable signal for voice over 2G, 3G or 4G, all by 2017. The DCMS said these measures will lift the operators’ combined geographical coverage from 69% to 85%. “I am pleased to have secured a legally binding deal with the four mobile networks,” Javid said. “Too many parts of the UK regularly suffer from poor mobile coverage leaving them unable to make calls or send texts.

“Government and businesses have been clear about the importance of mobile connectivity, and improved coverage, so this legally binding agreement will give the UK the world-class mobile phone coverage it needs and deserves. The £5bn investment from the mobile networks in the UK’s infrastructure will help drive this Government’s long-term economic plan.”

While it’s inevitable that the gvernment would seek to spin this as a win for the voter, the reality is it ended up extracting very little in terms of concessions from the operators. The headline £5 billion figure is unlikley to be any more than the operators were going to spend anyway in that time period, while the operators likely secured a reduction in the increase of the cost of the annual licence fee.

Other agreed items in the agreement include reforms to the “out-dated and ineffective” (as the DCMS put it) Electronic Communications Code to allow operators easier access to sites to build new and carry out maintenance on existing infrastructure. The government will also allow its freehold buildings to be used as infrastructure sites, a move the DCMS claimed could potentially increase the number of sites by hundreds.

“We support the Government’s objective of delivering better coverage to rural areas including partial not spots,” A Vodafone spokesperson said. “This is why Vodafone is already spending £1 billion on our network and services in the UK this year alone and will continue to spend a similar amount next year as well.”

EE CEO Olaf Swantee said: “EE is focused on bringing the best voice and data service to its customers across the UK, and only last week announced 1,500 unconnected villages will soon benefit from EE coverage. This agreement ensures that our customers are able to stay connected in even more places up and down the country.”

Dave Dyson, CEO of Three said: “We’ve doubled the size of our network in the past five years and we continue to invest to maintain a great network experience for our customers. Today’s agreement reflects the strength of our network today, our plans for the future and our commitment to bring its benefits to more people and more places than ever before.”

O2 COO, Dereck McManus said: “a partnership between government and the mobile operators is required to maximise coverage across the UK, so this agreement is a good outcome for our customers. It will support investment in our network, while ensuring that strong competition remains between the different networks.”

Historically the UK regulator Ofcom, which of course is subject to the government’s policy, has set the operators coverage targets by population rather than by land mass. Lately, the government seems to have taken a different view and the rhetoric has suggested it wanted to shift the goalposts by setting geographical coverage targets as well.

As for the threat of imposing network sharing and other such onerous conditions on the operators, these are now revealed to be bluffs that were probably never credible threats, designed to improve the government’s negotiating position and play to the gallery. David Cameron has trouble using his phone in Cornwall and suddenly rural coverage becomes a key government policy. The DCMS was obliged to indulge this whim, but when confronted by legal, commercial and practical realities had to backpedal rapidly. This announcement is intended to be read as a win-win, but it seems clear the operators prevailed this time.