UK MNOs want Ofcom kickback in return for reducing their own deployment costs
- Operators reportedly agree to form mast-sharing company in effort to plug 'not spots'
- They want licence fee discount, no 5G coverage obligation and presumably no national roaming
- Partnering to lower rural deployment costs is a no-brainer anyway
All four UK mobile operators are said to have agreed to establish a new company charged with building shared towers that will plug rural 'not spots', but they seem to want some juicy concessions from Ofcom in return.
The Financial Times reported late last week that EE, O2, Vodafone and Three have also proposed giving reciprocal access to one another's existing towers in remote areas in an effort to improve competition.
As a quid pro quo, the operators want Ofcom to remove coverage obligations from the 5G licences it plans to auction this year, plus they want a £200 million discount on their annual spectrum licence fees, which would fund the new tower company.
Presumably, they will also want Ofcom to drop its recently-revived threat of imposing national roaming. Indeed, the last time national roaming was on the cards, the operators pledged to spend £5 billion collectively to meet legally-binding rural coverage targets.
Given that Ofcom and telcos have been wrangling for years about the best way to deliver near-complete geographic mobile coverage without breaking the bank, it is surprising that it has taken so long for the industry to come up with this particular plan.
According to the FT, the offers were made at a meeting between the operators and culture secretary Jeremy Wright, and one unnamed attendee claimed it was the first time all four had come up with a firm joint proposal.
Yet, it's not as if infrastructure sharing is a completely alien concept to the UK mobile industry.
Vodafone and O2 have their Cornerstone joint venture, which builds and operates shared towers. Earlier this year it emerged that the operators will use Cornerstone to build out their 5G networks, and that they are also open to the idea of letting other tenants use their infrastructure.
Three and EE have a similar joint venture, MBNL, which was established in 2007 by Three and former EE parent T-Mobile.
It's not like these operators were strong-armed into these arrangements; the rationale is obvious – infrastructure sharing reduces the cost of deploying and maintaining networks.
With that in mind, it is curious that the operators suddenly need a bunch of incentives from Ofcom in order for them to build shared infrastructure in rural areas, while in the rest of the country they work quite happily together, albeit in pairs.
Of course, the business case for rural mobile deployment has always been difficult to establish. Generally speaking the cost of technology comes down over the years, but the cost of planning, acquiring and building new sites, and paying humans to physically deploy the equipment does not. Naturally these costs are felt more keenly in remote, sparsely-populated areas. Perhaps it really is the case that only by working together as a foursome can operators spread these costs thinly enough to make rural deployments viable.
Whether that viability is also dependent on spectrum fee discounts, and the removal of 5G coverage obligations remains to be seen. Are the operators really on the level, or are they trying their luck?
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