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Written evidence submitted by Mobile UK

 

Select Committee for Digital, Culture, Media and Sport Inquiry into broadband and the road to 5G

September 2020

Introduction

  1. Mobile UK, the trade body for the UK’s mobile network operators EE, O2, Three and Vodafone, welcomes the opportunity to submit evidence to the Select Committee’s inquiry into broadband and the road to 5G.
  2. For many years, the importance of the UK’s digital infrastructure has been widely acknowledged, but the COVID-19 pandemic has really shown us exactly why. Not only has our digital infrastructure been central to meeting the many and varied challenges thrown up by the pandemic, but we fully expect the digital economy to be the engine of economic recovery.
  3. Now is a timely moment to be considering what policies will ensure the UK’s recovery is maximised and sustained and that the UK’s collective aspirations for 5G are brought to fruition.

Summary of key points

  1. Mobile UK fully supports Government’s ambition to be a leader in 5G, as this will not only greatly help 5G to be successful in this country but will also give rise to the wider economic benefits that accrue from being a global centre of excellence for wireless connectivity.
  2. Leadership in 5G is forecast to deliver a GDP boost of £173bn over ten years[1]. The powerful 5G features – faster speeds, lower latency, capacity to handle many more devices at once and the ability to partition network slices for mission-critical applications – deliver an even more powerful platform for creativity and innovation than previous generations of mobile.
  3. Against this promising backdrop, though, the sector faces numerous concurrent challenges: a difficult economic outlook, a very heavy compliance programme, and considerable investment needs (including 5G rollout and the Shared Rural Network programme)
  4. The Government has a significant role to play in creating a less stormy environment, one that fosters investment and innovation, through policy reform (planning, ECC, fiscal measures), incubating innovation (5G testbeds and seeding the development of a more open/diverse supply chain) and demand stimulation (through adopting 5G applications to drive efficiency and effectiveness in the public sector).

The economic impact of better mobile connectivity

  1. The Government has said it wants the UK to be a global leader in 5G. Mobile UK fully supports this ambition, as it will not only greatly help 5G to be successful in this country but will also give rise to the wider economic benefits that accrue from being a global centre of excellence for wireless connectivity.
  2. Each generation of mobile technology has had a hugely positive impact on our economy, often in ways that were not predicted at the time of launch. Improving access to mobile connectivity has a long history of unleashing innovation and driving new business models and practices:
  1. The fifth generation (5G) of mobile connectivity, in turn, is expected to drive innovation and growth across the economy to an even greater extent than previous generations. The potential economic dividend from 5G in terms of jobs, productivity and capital is considerable, particularly in light of new work patterns and behaviours adopted as a result of the pandemic.
  2. A report published by O2 in autumn of 2020 estimated that the UK’s mobile connectivity preserved £205bn[4] of the economy during lock down and economic research commissioned by Vodafone has identified that 5G and related technologies could deliver over £150bn to the UK economy by 2030[5].
  3. The powerful 5G features – faster speeds, lower latency, capacity to handle many more devices at once and the ability to partition network slices for mission-critical applications deliver a powerful platform for creativity and innovation.
  4. At this phase of the cycle, we cannot hope to fully anticipate what new applications and businesses will develop but there are plenty of emerging opportunities in such fields as healthcare, automation, connected vehicles and the green environment and where UK plc plans to capitalise on its leading role in progressing 5G.

Challenges

  1. Against this promising backdrop, though, the UK mobile industry faces numerous concurrent challenges now and in the medium term:
  1. In a recent survey of businesses carried out by the British Chambers of Commerce on behalf of Mobile UK found that 80% of respondents expected to use mobile at either the same [increased] level as during lockdown, or even increase it further. This will be the reality of the new normal for mobile operators.
  2. While the mobile operators are taking decisive action to address such challenges and to operate efficiently – sharing infrastructure, where practical, innovating with cloud-based and virtualised networks and installing more cost-effective infrastructure (and rolling out more open architecture is part of this), the Government has a significant role to play in creating a less stormy environment, through policy reform, incubating innovation and demand stimulation.

Policy reform

  1. The EECC and TSRs: In the next few years, the mobile operators will be implementing the European Electronic Communications Code (the updated regulatory framework overseen by Ofcom) and the Telecom Security Requirements in accordance with the National Cybersecurity Centre recommendations, both of which are major regulatory programmes.
  2. While Mobile UK recognises the great importance of complying with these measures, it must be recognised that the work is very labour and capital intensive, often draws on the same internal resources, and is being executed in parallel with the ever-present imperative of servicing our customers (including many public bodies) mission-critical needs.
  3. Our plea, therefore, is that this is all done at a sensible pace, in sync, as far as is reasonable, with the operators’ planned upgrade cycles, and with a proportionate stance on enforcement (particularly in light of the extra workload caused by the COVID-19 pandemic).
  4. Moreover, in this challenging environment, regulation should be looking to place more emphasis on promoting investment and less on consumer pricing, in a context where Ofcom’s 2020 data states that mobile data usage has risen by 146% since 2016 and average prices for mobile have fallen by 19%[6].
  5. Planning regulation: As local planning is a devolved matter, we are asking all Governments in the UK to continue to modernise and simplify their planning laws for the 5G era, so that it becomes much easier to upgrade and to share infrastructure. The basic principle should be that mobile apparatus is put on the same footing as fixed and that all telecom build-out is ‘permitted development’, albeit with some rights of prior approval retained for sensitive areas.
  6. The Government has signalled further reform for England in 2021. We urge them to pursue this with urgency and for other nations to do the same. Policy must reflect that, although local democratic processes remain very important, mobile networks are an essential infrastructure of national significance.
  7. The ECC: The Electronic Communications Code (not to be confused with the EECC), is the legislation that underpins operators’ ability to install equipment where it needs to be. It went through a significant reform in 2017, intending to be much easier for operators to upgrade and share infrastructure, and free up resources for investment (by putting payments to landowners on a basis much closer to the norms for other essential services such as power and waterfor example, a landowner might get £150 p.a. for hosting a pylon and £20k p.a. for hosting a phone mast of similar size).
  8. This was an essential reform but, after two years experience, it is clear the reforms are not working entirely as intended and this poses a significant risk to our collective ambitions for 5G (and the Shared Rural Network). Mobile UK has teamed up with the infrastructure providers[7] to propose some targeted legislative adjustments that will have a very positive impact. Currently, only about 20% of the agreements needed each year to acquire new sites, upgrade existing sites and replace ones where the host site is being redeveloped, are being concluded. This is a major problem. We expect the Government to publish a consultation on potential adjustments shortly and with legislation to follow as quickly as possible thereafter.
  9. Fiscal measures: Mobile UK proposes that new mobile infrastructure should be afforded the same status as new fixed fibre investment and be given business rates holidays to stimulate investment. On average, each mobile mast is estimated to generate at least £1m per annum in consumer surplus per annum[8]. There is a clear payback to Government and to regions where improved mobile connectivity strengthens the productivity and the profitability of the broader tax base.

Incubating innovation

  1. The Government’s 5G testbed programme has been a crucial element of taking 5G from the laboratory into commercial reality. “The DCMS programme has shown mobile operators new revenue streams and, particularly in manufacturing, alerted the wider industry to 5G’s extraordinary potential[9].”
  2. Mobile UK fully supports the work that the Government is leading and is confident that UK plc will develop expertise in the commercial applications that harness the power of 5G.
  3. In addition to the 5G testbed programme, and particularly in light of the decision to remove designated high-risk vendors from the 5G networks (but not only because of), the Government can also significantly help the sector to open up, diversify and strengthen its supply chain, reduce reliance on major proprietary suppliers and unleash further opportunities for innovation. It could, for example, invest in the development of OpenRAN[10].
  4. The Government has recently announced that investment in R&D is a national priority and that significantly increased resources will be devoted to it. Accelerating the development and deployment of OpenRAN is a priority candidate for such investment and affords an excellent opportunity to put the UK in a world-leading position and to open up new markets in a globally significant technology.
  5. Investment in incubation and acceleration of OpenRAN would have the following clear objectives:
  1. The UK’s mobile operators would be very supportive of such objectives, particularly in a context where recent policy changes will mean fewer major proprietary providers will be serving the UK market in the immediate future. There are challenges, though. Operators are rolling out 5G, the shared rural network and replacing high-risk vendor equipment and have limited resource; OpenRAN will take time to mature; interoperability between suppliers and scale will be vital to keeping prices competitive and growing a healthy ecosystem of suppliers.
  2. OpenRAN is not yet matching traditional vendors in terms of functionality, industrial scale, and efficiency. To realise the potential benefits of OpenRAN and for the UK to be a global leader, Government support could both fund and lead the further R&D that is required, together with support for trial deployments to stimulate scale and provide incentives for additional investment.

Government and the public sector as a customer for 5G

  1. One of the unexpected impacts of the COVID-19 pandemic is that we have all been forced to rethink digital strategies, and this has accelerated the adoption of new ways of working. This is not just about increased ‘working from home’ (which we certainly expect to persist at much higher levels than pre-COVID-19).
  2. It goes wider than that. For example, companies, using 5G, are going to invest more in preventative maintenance, and thus circumvent the need to fly skilled engineers around the world. There is an emerging use case for hospitals to deploy 5G because wireless is so much easier to keep germ/virus free than cabling.
  3. The Government and the public sector will have endless opportunities to benefit from 5G applications and are well placed to drive the market for 5G enabled services. Continuing the hospital example, medical staff, support staff, administrators, patients, visitors and indeed the equipment itself all have very different on-site communications needs (and access rights). The flexible architecture of 5G – the triple alliance of fast speeds, low latency and ultra-reliability - offers the potential for the network to be partitioned (virtually), and the different customer needs to be met with the appropriate functions and service levels. (There are numerous emerging use cases across the public sector for example in transport, education, and local government).
  4. Parliament has a scrutinising role in ensuring the public sector invests in 5G applications that will lead to the more effective delivery of public services. Not only is this worthwhile in itself but will also help 5G in the UK to be world-leading and ensure that the 5G ecosystem of developers, vendors, systems integrators and others develops strength in depth.
  5. Mobile UK is very excited about the possibilities for 5G. There is no doubt, though, that Government and parliament has a vital role to play in setting a conducive policy backdrop, incubating innovation and stimulating demand.

 


[1] https://www.gov.uk/government/publications/interim-report-of-future-communications-challenge-group-uk-strategy-and-plan-for-5g-digitisation

[2] https://www.yumpu.com/en/document/read/39650242/the-contribution-of-mobile-phones-to-the-uk-economy

[3] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/714112/The_impacts_of_mobile_broadband_and_5G.pdf

[4] https://news.o2.co.uk/press-release/20-of-uk-business-safeguarded-by-the-power-of-mobile-connectivity-during-lockdown/

[5] https://newscentre.vodafone.co.uk/press-release/5g-150bn-pound-boost-to-uk-economy-over-next-ten-years/

[6] Ofcom Pricing Trends for Communications Services January 2020

[7] https://www.speedupbritain.com/

[8] https://www.gov.uk/government/publications/impact-of-radio-spectrum-on-the-uk-economy-and-factors-influencing-future-spectrum-demand

[9] Mark Stansfeld, Chair Worcestershire 5G testbed, 5G Realised conference July 2020

[10] OpenRAN, or open radio access networks, refers to a cellular radio networks comprised of hardware and software components from multiple vendors operating over network interfaces that are open and interoperable