UK red-tape is the biggest hurdle for digital economy – Vodafone

Pointing to regulation and legislation as a challenge in the telco space is hardly uncommon, but when a General Counsel suggests the UK is one of the most difficult regulatory environments she’s worked in, something might be amiss.

This is the view of Vodafone UK General Counsel and External Affairs Director Helen Lamprell; the UK is not helping itself with regulations which have created an unhelpful and complicated red-tape maze, which at times can appear contradictory.

“The regulatory environment in the UK is not conducive to infrastructure investment,” said Lamprell. “The right balance has not been found yet.”

Prior to her current role Lamprell worked for global law firm LinkLaters, before joining Vodafone at group level, advising on the disposal of Vodafone’s stake in Verizon and various acquisitions in the Indian market. These are not necessarily regions with the simplest of regulatory structures, condemning the UK’s environment further.

So what are the issues? Where do you begin? Let’s start with the height of masts.

As it stands, the tallest cellular masts in the UK are less than half the height of the same structures in Germany. While this might seem like a small point, physics plays a notable role; for every ten metres you go up, the coverage roughly doubles.

“We don’t want to pepper the landscape with masts, but the higher up you go the less you actually need,” said Lamprell.

This is where the slight contradictions come into play. The UK government and regulators are insisting on increasing mobile coverage and the quality of experience, but don’t want to have the countryside ruined with ugly telecoms masts. Work can be done to reduce the impact on the environment and landscape, but there has to be a bit of compromise to ensure effective coverage.

One idea which seems to be a popular one is to hide the masts inside foliage and behind trees. While this might seem like a good suggestion, Kye Prigg, Vodafone’s Head of Networks, pointed out that leaves on trees can distort the signal from these towers meaning performance is actually better in the winter than the summer. To traverse around this problem the masts need to go higher, reaching above the treeline, an idea which the government is not receptive to.

Another issue which the team are facing is that of unhelpful landlords. Gaining access to assets is a complicated issue, making maintenance difficult and expensive. This is of course not a new problem, ransom rents are a plague to the telecoms industry, but it is one which EE is trying to tackle.

EE is currently in the process of taking one of its landlords to court, in the hope legal precedent can be set removing the unfair balance of power. When we spoke to EE’s Tom Bennett and Howard Jones a couple of weeks ago, they highlighted to us that maintenance and upgrading sites becomes incredibly difficult because change to the assets essentially allow the landlord to renegotiate the terms of the contract, upping rent at every opportunity. Every minor change to the assets mean renegotiating of terms, and if the landlord is not happy, there is the legal right to block access to the assets. Other critical infrastructure does not face this challenge.

Another interesting little quirk to the UK is the position of Openreach. Lamprell pointed towards the separation of Openreach and BT as a positive step, but arguably the regulator has not gone far enough.

“We’re at a tipping point in the UK,” said Lamprell. “We need to stop tinkering and start making some fundamental changes.”

The issue here is the flow of cash. Openreach charges for access to a regulated product, but perhaps does not return enough of the profits to the maintenance and upgrade of the network. The feeling is there is an over-recovery of profits, which keep flowing back into the BT bank account. A pinch of salt should be taken here, Lamprell works for a BT competitor after all, but where there is smoke there is generally fire; the complaints about Openreach’s maintenance of the network are continuing.

Lamprell was keen to point out that Ofcom has not necessarily botched the separation of the two businesses; it’s too early to tell. The feeling does not seem to be incredibly positive though.

There are a lot of factors which are counting against the UK as we hurtle towards the digital economy, and while the UK government is preaching about how it is setting the foundations for a global assault on the technology riches, opinions like this point the other direction. We’re not suggesting the UK government doesn’t have a clue what its talking about, but the future of our digital economy is being handled by the same department which runs the Natural History Museum.