Hutchison: “We don’t have a problem with innovation from OTTs”

John Blakemore Is Director Of European Regulatory Affairs, Hutchison

John Blakemore is director of European regulatory affairs, Hutchison and will be speak on the topic on, “Growing the data roaming market” on Day 2 of the LTE World Summit, taking place on the 23-24 May 2012 CCIB, Barcelona, Spain. We catch up with him to see what the spectrum challenges are for 3, his views on roaming charges, and on innovation in the industry.

What are the main challenges as you roll-out LTE across your territories?

The main challenges are getting the right spectrum to enable us to deploy LTE. Besides that, there are concerns around planning permission in some countries, particularly for the large antennas. Deploying 800Mhz in some of our countries is a challenge as getting permission for a two-metre mast is not easy. Now a lot of operators will already have 900MHz so for them putting an 800MHz antenna may not be so problematic, but for us it could well be more difficult and time consuming to get the 800 ones up. On the commercial side, dongle availability is not going to be an issue – they’re already in the market where we’re already running LTE. The regulatory barriers are the main ones. We are a 3G-only operator so the only spectrum that we’ve got at the moment for our 3G at the moment is at 2.1GHz.

Are you bidding on other spectrum?

In Europe, where spectrum has become available, we have been bidding. What we’re seeking to do in common with all operators is to get low frequency spectrum but also to get sufficient contiguous blocks to provide the best LTE capacity. For example in Austria we have acquired 2.6GHz and we’ve also acquired 2.6GHz in Italy, Sweden and Denmark. We’ve also acquired some 1800MHz in Denmark and Italy – some of that has come up as its refarmed spectrum that has been made available. We have 800MHz in Sweden and an auction will be coming up in Denmark.

What about the situation in the UK?

There are ongoing consultations and discussion. I think that this process has gone on for a long time in the UK and in other countries it seems to have been resolved more easily. In other countries  some of the existing 900 and 1800 spectrum has been redistributed, whereas in the UK there has been no redistribution of spectrum held by the incumbent GSM operators, so that’s made it more difficult. For example in Sweden we’ve managed to get 5MHz of 900; we’ve managed to get 1800 in Denmark and 1800 in Italy. That’s made it easier to get all operators to have both low frequencies and large blocks of higher frequencies. In the UK the regulator has decided not to reallocate, which means there’s much more emphasis on the 800 and 2600. There are four operators and a limited amount of spectrum available so I think that’s the problem in the UK. In other countries, Demark and Italy, certain spectrum was reserved for operators that didn’t have existing holdings.

In Denmark some of the operators had to release an amount of 900 and 1800 spectrum to make it available to a new entrant to the band, it needn’t necessarily have been us – it could have been other operators, though we were in pole position to get that, but there has been a forcible distribution of existing holdings.

Is there a possibility of you refarming your 2100MHz spectrum?

I believe the legal position is that the European Commission is currently in the process of drafting a decision which would allow refarming of 2100 spectrum. Would we as an operator refarm? The current situation is that the only spectrum we have is 2100 and that is heavily utilised for 3G services so I don’t think that using the 2100 for LTE would be our best option. Of course, in the future, having the legal ability to do that refarming is obviously welcome.

Are roaming charges too high or is lowering them an unfair imposition?

We’ve been pretty strident on that actually. And we’ve said that for years the prices for roaming are too high and we’ve supported regulatory moves to force down prices and this has been our position since I’ve been working on it for at least the last six years.

A typical smartphone customer uses around 1GB of data per month, which in most of our countries will cost around £10, but a GB of data when roaming – well I don’t even want to make a calculation. We’ve always said that if you look at the kind of applications that people are using – mobile access – the value of it is greatest when you’re away from home. And LTE will bring this into sharp focus.

There are whole issues around how you actually charge for a services when you’re moving to an LTE roaming world because of course voice is going to be data, and if data roaming stays at current levels ( i.e. very expensive) then you won’t be able to use your phone at all!

I think that we need to step back and decide what is the service we are providing customers here? We’ve not providing voice, or SMS or whatever – what we provide is a mobile service, a whole bundle of different things that consumers use on their mobile handset. Now what we want to do as an operator is to increase the value to the consumer of that overall bundle.

If you imagine that you only bought a handset that you could only use in London then it’s not very valuable. It’s more valuable if you can use it across the whole of the UK, and even more valuable if you can use it across the whole of the EU. So we need more sensible roaming prices.

Why did 3 then remove its free roaming on its partner networks?

Some of our businesses, such as Austria still have ‘3 Like Home’ and we still offer it between Denmark and Sweden. The problem from the UK perspective is that it was causing quite a bit of confusion with customers. As soon as they went off one of our networks we were being charged high wholesale rates which we had to pass on to our customers.

Do you feel that there’s enough innovation in the mobile operator industry?

My observation here is, does it really matter where the innovation is coming from? We don’t have a problem with innovation coming from the OTTs. A few years ago, we had a service called ‘X-Series’, where we worked with Microsoft and Yahoo, and Skype to put their services on mobile devices. We did that when it was still early days and the services weren’t out there in the market. If you look at the industry as a whole, our record of developing services is not that strong. As operators, what we’ve been really good at is deploying efficient networks and making sure our networks support services – and that’s fine. We’re a little bit more relaxed about the content and applications not coming from within the industry.

What sort of changes would you hope to see in the industry over the next few years?

Quite a lot of industry moves are still quite defensive. As an industry, we’re still making money out of voice and SMS and, of course, the industry wants to maintain those margins. But we’ve got to grasp the changing world. There is this question of how we make money out of data but we need to embrace the world of data and applications. I think that as an industry we need to change from being a little bit defensive to being a bit more open to the new.

The LTE World Summit is taking place on the 23-24 May 2012 CCIB, Barcelona, Spain. Click here to register your http://ws.lteconference.com/interest.