Features

"Rural" broadband comes to London? Rat smelled in Shires ...

As far as the Government is concerned, the auction of 3.4GHz spectrum is a success. But the people who tried to bid for the spectrum disagree, because they don't think anybody in the countryside is ever going to be able to use it.

They have what seems to be good reason to be suspicious.

The original background for the freeing of 3.4 GHz was "the provision of telecoms services to end users ... " and spoke of "public broadband. Indeed, the project was the "Public Fixed Wireless Access" auction. What could be clearer? And when people asked the Government what it was doing about rural broadband, it always mentioned the PFWA project as one indication of how well it was doing.

Look behind the clean facade, and things are suddenly less clear.

First of all, nobody in the Department of Trade and Industry has even asked the bidders what they proposed to use the spectrum for. Next, the franchises don't look particularly rural. And finally, nobody can get a response either from Government, or from the winning bidder, about what is actually going to happen with this waveband.

Here's what the Government actually said, three years ago:

"The Government attaches great importance to the further promotion of competition in the provision of telecommunications services to end users. It is therefore keen to encourage market entry, sustainable competition and innovation. This is reflected in the objectives for the award of PFWA Licences, as announced to the House of Commons by the then Minister of State for Small Business and E-Commerce, Patricia Hewitt MP, on 20 October 2000:

"to secure the timely and economically advantageous development and sustained provision of fixed wireless access services throughout the UK, for the long-term benefit of UK consumers and the national economy;

"to promote early and effective competition for the provision of broadband access services; and

"subject to the above objectives, to design a licensing award procedure which is best judged to realise the full economic value to consumers, UK industry and the taxpayer of the spectrum."

The first rat to be smelled was when the Government assigned the twelve franchises around the country. As the map shows, there is no sign that this is based on geography. Rather, it's based on population. Why?

There's no need to use wireless to "provide broadband access services" in London or Manchester - both have excellent cable and ADSL provision! - and yet these two metro areas are distinct franchises. They even take priority over geography - look at the weird purple shape of the "North-West, Yorkshire, and North Wales" franchise. It surrounds the area which is easily recognised as Liverpool and Manchester. And Swansea/Cardiff/Bristol is the jewel in the Welsh crown, and Birmingham takes precedent over the surrounding countryside. Equally easy to spot where Newcastle is, or Glasgow/Edinburgh.

In metro areas? Would you smell a rat? Most of the bidders think so, and in private, that's what they say.

And then, suppose the companies which actually are doing the job of providing rural broadband, found that all the franchises bar two had gone to a giant Hong Kong-based firm which seems to have no plans to do anything with it at all?

Here's what Albion Wireless (one of the disappointed bidders) told Patricia Hewitt, the Minister in charge with the new project.

"It is clear the that final objective (' ... to realise full economic value ... ') has overridden all other objectives."

The letter, from Richard Nuttall, observes that the other objectives including, for example, "to promote early and effective competition for the provision of broadband services", have not been taken into account in any way in the auction process or the qualification of the bidders to the PFWA (Public Fixed Wireless Access).

Nuttall, a veteran of the effort to provide broadband to villages, is also chairman of Invisible Networks, which uses WiFi links to bridge the gap between small hamlets. It works, but it's hardly ideal. Was there something better? Yes - there was; or so he thought.

He set up Albion Wireless specifically to get access to this better technology - the 3.4 GHz spectrum. To his dismay, when he asked if he was allowed to bid, nobody asked him what he planned to do with the spectrum if he won the auction. "They only asked if I had a criminal record," he told NewsWireless.Net.

He began lobbying to make the ground rules clearer.

Nuttall told the Minister: "There was a period of industry consultation prior to the auction, and I (in my role as a director of the East of England Telematics Trust) responded formally to the consultation, setting out a number of ways to ensure that the 'timely and economically advantageous development and sustained provision of fixed wireless access' could be achieved."

It shouldn't have been contentious. "The aim of the auction was to see the licences in the hands of the operators best able to take advantage of them, and to see consumers - including those in areas currently without ADSL or cable - benefit from fixed wireless broadband access," was what Stephen Timms, the Minister in charge, said when the auction was over.

But in the end, none of these ideas got taken up in the final draft of the Information Memorandum, "and in fact changes were made to remove the impact of the primary objectives on the process," claims Nuttall.

He's not alone in his suspicion that not a single village - outside the Southern franchise, which was won by Public Hub with the promise that it "plans to roll out broadband to areas unable to access ADSL" - will see any benefit. Antony Walker, chief executive of the Broadband Stakeholder Group, told the VNUNet newswire that his group was now "calling for other frequencies to be opened."

Walker said: "The fact that 3.4GHz licences may not be used for broadband roll-out is a missed opportunity." He may be guessing that it won't be, but again, he may not. There are tell-tale indicators:-

1) There is no requirement to build any broadband network in any timescale within the terms of the licence,

2) If the network is built, there's no requirement to make it available to end users

3) Even if it is "inappropriate" to sell bandwidth direct to the end user, it should be a condition of service that if the franchise owner cannot provide an end-user service, it should re-sell to those who want to. There's no such requirement.

4) There's no time limit. If the winning bidder doesn't choose to build more than one or two token masts, it doesn't have to. This wouldn't normally be an issue, because one would assume that the winning bidder had a business plan which required the revenue from the investment to kick in quickly but -

5) PoundRadio doesn't need the spectrum the way other specialist "rural broadband" companies do.

It's a subsidiary of PCCW, a vast global communications company employing over 10,000 people, and with a Hong Kong dollar turnover in the $HK20bn area. That would be around $2.5 bn US dollars.

"They've spent less than seven million pounds on their bids. It's pocket money for them," said Albion Wireless's Richard Nuttall. "They could put this spectrum away until they need it, and not notice the delay."

Finally, there are signs that PCCW and PoundRadio don't have any rural dreams. Indeed, the industry is now convinced that the bandwidth is earmarked for other purposes. Off the record comments by people (like Walker of the BSG, and others) indicate strong rumours that PCCW intends to use the wireless network - when it builds it - to support the 3G phone network.

The UK does, indeed, lead the world with a genuine UMTS third generation phone network, where it is up with Italy and the Isle of Man and some of the Scandinavian territories in running a pioneering Wideband CDMA service - from Hutchison under the brand "3" - along the UK's road networks and a few metro areas.

One of the problems facing the cash-strapped Hutchison 3G is simply the cost of running cable to remote masts. A 60 megabit feed over a private wireless link at 3.4 GHz would be more than adequate for the job of replacing cable - and anybody who can provide such a service is likely to have eager customers. PoundRadio - it is widely suspected - is looking to this market.

It's hardly a secret that the 3G project was a disaster for everybody except the Chancellor of the Exchequer. Everyone was so utterly convinced that 3G licences were a gold mine, that absurd prices were bid; and one by one, the successful bidders are now writing off their past investments, selling off their franchises, and recycling their investment money for the future into other areas.

So the suspicion must be that the Department of Trade and Industry has decided that propping up the 3G network takes priority over providing broadband to a few thousand villages.

The argument has been heard: "If we can roll out the 3G network early, that will in itself provide a public broadband service to remote areas."

It's an argument that needs to be stamped on. Local broadband, whether cable, DSL, or wireless WiFi, is flat rate. Speeds, most of the day, are around half a megabit per second download, rather less (usually, half that) upload. By contrast, 3G data rates are closer to 128 kilobits, and charged for by the megabyte. You can't expect schoolchildren to surf the net over 3G phones to do their homework.

There are powerful lobbies, however, asking for the runaway bandwagon to slow down a little. Right now, Telewest, NTL and BT are all making money installing broadband (in metro areas, of course!) and growth is good. But they are all very alarmed by the sight of shared broadband, using WiFi hotspots.

One consultant to Telewest - Stephen Lowe, who is also Chairman of the Broadband Wireless Association - told a public meeting at the ISociety recently that if people carried on putting WiFi access points on their broadband outlets, and sharing them with all their neighbours, the backbone network would not grow, because there wouldn't be the revenue to support it. "Someone, somewhere, has to provide the transport mechanism, and pay for the transport; so it's not as straightforward as it should be," he said.

The Government is, of course, committed to providing widespread broadband. But it is also under real pressure not to do anything hasty which would undermine the commercial interests of rival service providers.

In this case, it can - almost - pretend that it's not a deliberate Government action which has prevented the 3.4 GHz spectrum being used for rural broadband. The auction went smoothly, openly, and honestly; no bribes were exchanged, no deals were done with "favoured" bidders.

But the bottom line is that the primary objectives - as set out in the Government's own PFWA documents - have been abandoned, and the only one that was in it which remains, is "to realise the full economic value to consumers, UK industry and the taxpayer of the spectrum."

Kerching! Auction closed! Sorry, you just didn't bid enough. Or, to put it another way, you country dwellers just don't have enough votes.

We're still waiting for the DTI to respond - either to Richard Nuttall's letter, or to our phone queries.