Spectrum Debate Keeps Its Feet On The Ground****

Nigel Walley – November 2013

Sept 2011 - New NW BW Head & Shoulders (thumbnail)And so to the House of Commons for the Royal Television Society evening debate on the Future of DTT (colloquially known as the ‘should we turn off Freeview?’ debate). The background to this is a growing commercial realisation that using DTT spectrum to deliver Coronation Street may be commercially and technically inefficient, and the there may be more cash available if we flog it to the mobile industry.

Note: Government and regulator heads were initially woken up to this notion by the perceived success of the 3G auctions. However, their enthusiasm for flogging off the spectrum has been somewhat tempered by the mobile companies failure to make a decent return on 3G, and by the subsequent muted outcome of the 4G auction. However, the debate rages on.

While the debate on Tuesday had no formal role in the decision making process, it was important as it is part of the general ‘noise’ that gets created as government edges towards any sensible legislative activity.  These debates are also useful for taking the temperature of the arguments.  Making the case for the mobile industry was Kip Meek of EE – who in previous lives has been a spectrum consultant with …erm…Spectrum Consultancy, a regulator with OFCOM, and non-Exec Chairman of the (DTT using) YouView consortium.

Making the case for the TV industry was James Purnell, the BBC Director of Strategy & Digital*, who also in a previous life was a Labour Government Minister, and part of the team who ran the previous 3G spectrum auctions.  Sitting between Kip and James, was the Rt Hon The Lord Fowler  as Chair, and Teresa Wise of the RTS, who, after reading her scripted intro, limited her input to one, highly misinformed intervention about Freeview and broadband**.

The debate, at times, tried to pretend that there was serious, grown-up analysis going on.  Kip spoke eloquently about  ‘OFCOM favouring the white space approach’, and how ‘low and high frequencies are getting more equal’.  It was riveting.   James Purnell described an incredibly detailed ‘Marginal Value Analysis of free-to-air broadcasting as a public good’.  All the time, down the corridor, the Advertising Association was holding a party with alcohol and dancing girls that half the room had been invited to***.  We sat and reflected on the choices we make in life.

However, all the clever talk of economic and technical analysis was a sham.  The trouble with an auction between the mobile and the TV industries is that, it can’t work in this instance.  Given the government intervention in the role of PSBs in this country, we don’t have rationale, independent economic players to bid against each other.  Any auction involving the TV industry would necessarily be flawed because the PSBs don’t pay commercial rates for the spectrum they use, and it wasn’t even clear who would bid on their behalf.

The trouble with James Purnell’s Marginal Value Analysis, is that it doesn’t factor in the totemic, political value of the aerial’s on our roofs.  No politician is going to stick his or her neck out and mandate a new kind of switch over that involves voters taking their aerials down. As even James Purnell conceded ‘public policy goals cannot be sacrificed to an auction focused on the economic value of the spectrum’.   So the clever economics were pointless – why bring them up in the first place?

Eventually the debate got off its high horse. Both Kip Meek and James Purnell in their submissions had highlighted the demand pressure on the spectrum.  They reminded us that there is an increasing demand for spectrum from the existing users – the free-to-air TV channels –  many of whom who want to launch more SD and even HD channels.  (Note: everyone accepted without debate that DTT will almost certainly never be able to deal with the next evolutionary step of UltraHD).   They also pointed out that there is growing demand from alternative users, the military, civilian emergency workers and – in Kip’s case – the mobile industry  who are facing massive data growth across their networks, particularly with the rise of mobile video.

Both pointed out that the other side have alternative technologies they could use to meet this demand.  For the mobile industry, James Purnell pointed out that the mobile networks have the potential of WifiMax, in cities at least, to deliver services and also that with the roll out of basic level WiFi, the spread of general mobile connectivity was increasing.  It is getting harder to find places where there isn’t some form of WiFi connection that the mobile industry can deliver across.

For the TV industry Kip highlighted the growing promise of broadband delivered TV and the fact that YouView had been built with an assumption of a gradual switch to IP.  However, everyone accepted that we are a generation away from the point where IP can pick up the job of distributing Corrie to 12M homes every night. The debate has come too early for the broadband industry.

What was strange was how quickly Freesat was dismissed as an alternative free-to-air network? Neither did anyone point out how inefficient it is that we currently run two parallel free-to-air networks in the UK – the DTT one and the DSat one.  James Purnell commented that ‘Freesat doesn’t deliver national coverage’ and that ‘there are too many buildings that block the signal in built up areas’.  Apart from the fact that, as a Freesat shareholder, the BBC might be expected to talk up the Freesat platform, these comments aren’t consistent with OFCOM or the market’s position?  A technical study carried out by the ITC (pre Ofcom), estimated that technical coverage of UK satellite services was 98.2% (with errors of -1.6% and .3%).  Both Freesat and Sky quote 98% UK coverage – and that is before any technical problem-solving that would accompany any grand switchover.

We have to consider Freesat as an alternative free-to-air network when assessing the future of DTT.  It would be bizarre not to, but it was hard to escape the idea that no-one wants to hand Sky the massive commercial advantage of mandating a switch from aerial to dish.  As James Purnell commented ‘Sky would snap up a huge percentage of homes that put a dish on their roof’.   Ignoring the fact that that would be a consumer choice, and ignoring the fact that the BBC don’t seem to object to funding the development of an operating system for BT and TalkTalk, this shows that any talk of economic value analysis in the decision making for DTT is a nonsense.  It is a highly politicised decision, with any rational, commercial or technical basis undermined by emotional considerations.

However, there is technical and commercial fudge on offer (something to do with ‘white space’ and ‘shared licencing’ that had the bearded types nodding). It would allow politicians to avoid serious decision making and buy time for them to create the commercial conditions for someone to build a decent broadband network.  By the end, there was a general acceptance that we are working our way towards this fudge and that we might as well get on with it.  2018 seemed a nice date.

The only upside that was on the horizon was the filip that the consumer electronics and advertising industries would get from a good switch-over campaign and a new generation of consumer electronics to sell.  Bring it on.

Nigel Walley

1.  I don’t know who the BBC’s Director of Analogue is?

2. In her mis-informed intervention Teresa Wise lamented the fact that Freeview can’t be connected to broadband – oblivious to the fact that this capability has been part of the basic Freeview HD specification in the UK since 2011 (DBook7) and that there are numerous TV services and providers currently using it.  None was more surprised to hear her comments than the man from Synapse, sitting next to me, whose company launched 25 pay TV channels over the Freeview broadband connection this week. But what should we expect from the RTS?

3.  I made up the bit about dancing girls.

4.  ‘Spectrum Debate Keeps Its Feet On The Ground’ – See what I did there? No?  Really?


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