Letter to Theresa May regarding PIE

Theresa May_Home Office_PIE

Letters from Home Office Permanent Secretary to the PM and Keith Vaz MP

Letter to Prime Minister

Letter to Keith Vaz MP

Letter to Theresa May

letter-to-theresa-may

Most newspapers have bought government spin about mobile phone network roaming. Here’s a little rant about why Cameron’s announcement is a gimmick that could leave consumers paying more.

The government has announced that it’s considering mandating the UK’s mobile networks to allow national roaming. And the media have bought the spin that it means when you’re out of coverage on your network you could roam onto another network with a better service. Sounds good except government spin doctors trailed it as filling mobile blackspots. But a blackspot is where no network has coverage, so this won’t increase rural coverage at all.

It might marginally improve the coverage you have on your network, but hang on, Vodafone and O2, Three and EE already share networks, so the coverage isn’t going to be vastly improved.

And who pays for the charge network ‘a’ charges network ‘b’ for using their infrastructure for roaming? You will. Just like you do when a French network charges a UK network to roam onto it when you’re abroad and we all know how much that costs.

Yes a vast chunk of it is profit, but the fact is the UK network doesn’t have control over the wholesale international roaming cost unlike when it’s using it’s own network in the uk, so it has to charge an international roaming price higher than the domestic cost in order to cover the high wholesale cost.

And now the government is going to force the networks to charge wholesale roaming costs in the UK too. That might mean UK mobile prices, currently among the lowest in the world, will increase.

Or say the networks don’t increase prices and instead reduce investment, where do you think they’ll make the savings? Will is be in urban areas with lots of customers? Or will it be in rural areas with fewer customers, where their return on investment is already low?

And what’s to stop networks starting to switch off rural masts, arguing they can now roam so they don’t need to spend £50k a Year on site rental, backhaul and electricity. What happens to rural coverage if they all decide to do that?

I suppose the government could intervene further and regulate wholesale costs but David Cameron says he wants less regulation. I suppose he could even ask Ofcom to force the operators not to switch off any masts, but isn’t that the same sort of state intervention that he slammed the Labour Party for saying it would take in the energy market?

Ah yes the energy market – a market recognised to be less than competitive, in complete comparison to the mobile market which is competitive, principally because the last Labour government legislated to introduce a challenger network operator back in 2000.

Thanks to that bold pro-competition intervention, UK consumers have benefitted from wider 3G rollout than either Germany and France and significantly lower prices than in the US.

What the PM is effectively doing is mandating all the networks to have the same coverage, that’s an eye catching intervention but pause for a second and think about what other services have the same coverage? Electricity. And that’s the awkward truth: the more you mandate specific outcomes from providers the more you shrink the opportunity for providers to offer something different, reducing competition.

I’m all in favour of improved rural coverage, but national roaming isn’t going to reduce mobile blackspots in rural areas.

You can only do that by lowering the cost of providing rural coverage, that will enable operators to provide coverage and make a return in areas where they’ve not previously been able to.  You lower the cost of providing coverage by taking action on electricity prices (as Labour have promised), a crackdown on the charges BT levies for backhaul (rather than handing BT hundreds of thousands of pounds as the government has) and legislation to reduce the rent rural landlords charge for placing a mast in the corner of their field.

Legislation to do just this has been stuck in the DCMS since the beginning of 2013, but rather than reduce the rents paid to their Tory chums in Conservative shires, the government is instead going through the pretence of fixing rural coverage through national roaming.

There are alternatives approaches.

Cameron ordered something must be done after he dropped two calls while out looking at floods earlier in the year. There is a whole misplaced government intervention because he happened to be on a poor network.

Rather than wreck competition he could just switch provider, we know how keen he is on switching.

Oh and to sweeten the deal for the Telcos i bet they offer not to increase the annual licences fees. Remember them? 18 months after the auction Ofcom hasn’t increased them. Now the government might trade an increase for national roaming. So the tax payer loses out again to big business not paying it’s way

Don’t be fooled, if you live in a mobile blackspot now, you’ll still be living in a mobile blackspot in June 2015. Former Tory Special Adviser Dominic Cummings was right, Cameron really is better at gimmicks than solutions.