Delivering a fully connected nation – Part 3: Lowering the cost

Delivering a fully connected nation – Part 3: Lowering the cost

Rural and not-spot connectivity improvements are often expensive. Mast sites can be difficult to procure. Getting power and communications to the mast can be expensive and time-consuming. Maintenance can be hard given the distances involved.

Perhaps the most important decision is whether to require multiple networks in these challenging areas, or whether there will be a single shared network? If shared, will there be a neutral host, or will there be various forms of roaming? On the face of it, a single shared network is most sensible – if the network build is uneconomic then why build multiple uneconomic networks? However, this may have implications – if sharing is allowed in these areas, should it be allowed in other areas? Should national roaming be allowed, and indeed mandated, perhaps only in the identified areas? For some regulators, this may require study and perhaps a position paper, setting out overall implications.

Another question for the regulator is whether there is more spectrum they can make available. Low frequency spectrum (below 1GHz) can facilitate lower-cost coverage by enabling a high range. Higher frequency spectrum can also be useful in lowering the costs of delivering more capacity in existing coverage areas, resulting in savings that can be used elsewhere. Linking spectrum explicitly to the desire for improved connectivity can then allow for innovative auctions where bidders show how they will deliver against the connectivity objectives. Most regulators will be aware of spectrum that could become available but might need to study timescales in more detail and consider whether they have the legal and practical capabilities to undertake innovative new types of auctions.

There are many ways that costs can be reduced; perhaps the most promising is to use high altitude platforms (HAPS) and satellites to deliver larger cells in the lower density areas. These are both rapidly emerging areas, with many innovations and trials of a wide range of different HAPS solutions and with many satellite operators looking to deliver better broadband and direct-to-handset (DTH) services. While it may be tempting for regulators and governments to leave the development to commercial entities and then adopt the best solutions that emerge, there are strong arguments for greater involvement. Broadly, HAPS and similar have not emerged to date because the coverage that they offer is uneconomic for operators to provide. Only when the broader economic benefits are included does it become economic. Therefore, HAPS providers will struggle to raise financing and to quickly develop solutions unless it is clear that governments will create a market for their product through the connectivity enhancement policies set out here. This means that there is a case for direct government intervention, for example, to provide venture funding, or advance orders, for particular solutions. Hence, governments and regulators should study this area sufficiently to be able to make investment or procurement decisions. Success in enabling new HAPS solutions could dramatically reduce the cost of rural coverage. There is less need for investment in satellite solutions since this is happening in any case, but there may be a requirement for regulatory change, as the US has done with its “SCS” proposal, to allow for satellite transmission within mobile bands. A policy on the use of satellites to provide broadband in very remote areas may also be appropriate.

Coverage and capacity issues also exist in urban areas, and many of these are indoors, underground, in trains and metros, and similar. While there are various solutions using small cells and neutral hosts, a more promising way ahead is to use existing Wi-Fi resources. In most countries, almost all buildings have Wi-Fi coverage, and some trains and metros have added Wi-Fi solutions. Making use of these resources will both improve coverage and minimise the loading on the cellular networks, reducing the cost that operators will incur in adding new capacity as data growth continues. However, finding a way to enable automated access to Wi-Fi has long proven problematic. Government intervention to bring together much of a nation’s Wi-Fi into a single resource pool could change this. Most governments and regulators have given little thought to Wi-Fi, but this could be a low-cost and highly popular way to deliver significant network improvements.

This final stage in the process of enhancing connectivity should deliver sufficient cost reductions that the resources identified in the previous instalment are sufficient. It may take six months or more, but can be conducted in parallel with the tasks in the first two parts. The outcome would be clear positions on single shared networks, on spectrum release and on investing in new forms of coverage. Many of these will require their own, specific action plan and some might take years to fully implement. But collectively, they will allow a country to achieve its optimal level of connectivity.

Emperor Ofcom’s New Clothes by Stephen Temple and William Webb: https://www.amazon.co.uk/dp/B0CRGSSZSS?ref_=pe_93986420_774957520.

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