February 14, 2022

A Strong Investment Environment Must Be At The Core Of Ofcom’s Future Approach To The Mobile Market

The UK’s mobile market is evolving. Both the Government and Ofcom have rightly taken the decision to review what these changes mean, so as to maintain a highly competitive market that generates value for consumers. From the mobile network operators’ standpoint, the key to achieving this is to promote a strong investment environment to facilitate the build of 4G and 5G, while ensuring all market actors are bound by fair and balanced regulation. 

Ofcom has published its ‘Future approach to mobile markets’ and running to around 300 pages its review is certainly comprehensive and contains a lot of interesting data. For example, Ofcom estimates that 94% of UK premises can now get Fixed Wireless Access, broadband via a mobile signal, via the UK's Mobile Network Operators (MNOs), including 528,00 premises that do not have access to reasonable broadband. Further, around 150 Mobile Virtual Network Operators (MVNOs) have launched in the last 10 years, many of whom serve innovative Internet of Things (IoT) applications, such as home security, illustrating the rich variety of services in the UK mobile market. 

Indeed, the central thrust of the paper emphasises how well the market has delivered for mobile consumers, with the main drivers of competition being price and network quality. 

As the Government wrestles with the cost of living crisis, it will be heartening for them to read Ofcom’s analysis which “shows that in comparison with France, Germany, Italy, Spain and the USA, the UK had the lowest standalone mobile prices in 2020” and that UK customers have been ‘getting more for less’. Over the last 10 years or so, mobile operators have invested about £2.5bn every year in 4G capacity and coverage, enabling 20 times growth in mobile data traffic, while prices have been falling. 

According to Ofcom’s crowd sourced data, the improvement in network quality, enabled by this extra capacity and coverage, has led to customers being able to access 4G data 96% of the time, including in rural areas. I would expect this to improve further as 5G and the £1bn Shared Rural Network programme roll out. 

Customer demand does not stand still. Ofcom is forecasting a further 20 times growth in data traffic up to 2030. Operator margins are under continued pressure and with the substantial costs involved in rolling out full 5G (so called ‘standalone’), the sector will need a stronger investment environment to support further advances. Ofcom must not underestimate the scale of the challenge. It is positive that Ofcom recognised in its review that there is no immediate need for further interventions on consumer regulation – projects that tend to be extremely costly, time consuming and complex to implement, and divert scarce resources away from market innovation. 

We also welcome the Government's reforms to planning laws, and to the Electronic Communications Code, which will keep the cost of accessing land reasonable, release funds for investment and help keep consumer prices affordable. 

Ofcom points to the evolution underway in the eco-system. We share their concern at the growing influence of ‘Big Tech’ in the mobile value chain and the risks of market-foreclosure. As Ofcom stresses throughout the discussion paper, the UK consumer has enjoyed good outcomes from healthy competition, and so we are very much counting on the regulator to insist that consumer regulation, including switching where relevant, falls fairly on all providers, and to take appropriate and timely action should harmful practices and bottlenecks develop. We will also be calling for a reasoned and balanced reassessment of the net neutrality regime. 

The Government has set out its ambition to be a leading 5G economy and we support this. Having world class mobile infrastructure is core to delivering its wider agenda of building a resilient, post-pandemic economy, getting to net zero and levelling out prosperity across the UK.  The mobile sector’s catalytic role will only increase over time. It is now the foundation for how different sectors work, how businesses engage with each other and how they serve their customers. Ensuring the market operates correctly and fairly is crucial. 

This blog has been written by the Chief Executive of Mobile UK, Hamish MacLeod

About Building Mobile Britain

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Building Mobile Britain is a campaign created by Mobile UK seeking to work with national and local government, as well as interested industry groups to overcome the challenges we face with expanding the existing mobile networks, while also developing innovative services for customers.

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