Network sharing is on the rise as a way to reduce the cost of rolling out new networks, especially to under-populated rural areas with their limited revenue potential. However, there are still plenty of conflicts of interest, especially when schemes are government-driven, and some of these threaten to derail the UK plan for a shared rural mobile network.
Incumbent BT has reportedly thrown a last minute spanner in the works of the £1bn government scheme to improve rural coverage. According to the Financial Times newspaper, BT claims that its mobile subsidiary, EE, has superior network coverage to those of its three rivals, and has invested more in coverage – and therefore should be able to charge more for access to its infrastructure.
Its eleventh-hour objections prompted an impatient response from the government, which has demanded that the issue is resolved this week. James Heath, director of digital infrastructure at the Department for Digital, Culture, Media and Sport, sent an email to all four MNOs, according to unnamed sources, which ordered EE, O2, Vodafone and Three to “step up negotiations” to finalize the deal.
According to the FT, BT is now proposing that the cost of 320 masts which it has yet to build should be included in the agreement; and it reportedly wants to charge its competitors 250% more than the going rate for access to its towers within the Shared Rural Network (SRN) to reflect its high quality network.
A BT spokesperson told TelecomTV: “BT remain fully committed to the SRN and are ready to go. We’ve proposed a far simpler and more pragmatic way for SRN to succeed in the 100-day window, plus a way to reduce any taxpayer money by also including new sites that are being built by us in the future. It’s now down to the industry to finalize the deal and to get it done. “
But Derek MacManus, CTO of O2, told the FT: “These latest developments seriously undermine the viability of the project.”
The aim of SRN is to deliver 4G coverage to 95% of the UK by 2025. Operators have pledged to spend £530m between them on the project, using new and existing infrastructure to hit that target. The government has agreed to add funding to the tune of £500m.
The alternative, if this scheme falls apart, is likely to be compulsory roaming, which the MNOs have resisted very strongly in the past because they say it is a disincentive for operators to invest in extending coverage, since it would not provide any differentiation. Similar issues have beset compulsory roaming schemes in other countries, notably Australia, where incumbent Telstra has also used claims of superior network coverage to demand a better deal than its rivals.