Ofcom loses the 4G signal
Published: 11 Aug 2006 16:40 BST
With an annual salary north of £300k, Ed Richards is no stranger to the idea that where money's concerned, more is more. But Ofcom's chief operating officer may be letting the opportunity to turn a quick buck blind him from repeating the fiasco of 3G.
On Thursday, Richards revealed that Ofcom is considering auctioning off radio spectrum that could be used for fourth-generation mobile services. The regulator believes that as spectrum is a finite resource, the best way of distributing it is for telecoms firms to whip out their wallets and out-bid each other into submission.
This approach is popular with economics experts, but it neglects to consider two vital facts. At a time when no-one knows what 4G will be, and when 3G is still gasping for the oxygen of take-up, the last thing Ofcom should be doing is plotting how to shake another windfall out of the UK mobile industry.
Ofcom's own report into the UK communications market, published this week, starkly illustrated 3G's failure. Six years on from the £22.5bn licence auction, there are just over 4.5 million 3G users. That's £5,000 per user, if you ignore the billions of pounds spent building the networks as well.
3G take-up is poor because it has failed to deliver on its promise. Only with HSDPA are we seeing the high-speed downloads we were promised. But even then, prices are too high to tempt the average user. Forcing operators to bid for 4G spectrum will do nothing to help them push 3G into the mass market.
But before Ofcom takes another step towards another auction, perhaps it could do us a favour by defining what 4G is. No-one knows. Not the regulators, not the operators, not the manufacturers. There are some interesting ideas out there, including connections of 100Mbps, or "pervasive connectivity" where users could access a whole range of wireless networks, guaranteeing constant coverage, or a melange of WiMax, Wi-Fi and UWB, or… well, your guess is as good as Ofcom's.
All very exciting. But we don't have technical standards with industry backing, interoperability with other systems, or any clear idea of demand. Without these, it's impossible to put a price on a piece of spectrum.
Ofcom should give serious consideration to relaxing the controls on the 3G spectrum. Perhaps 4G could simply supplant 3G, much as GSM replaced the first-generation analogue mobile networks.
If not, they should consider a 4G beauty contest where the spectrum goes to the operators who make the best case, not the ones who'll pay the most. Surely even the millionaires running Ofcom know that there's more to life than money.
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