MP accuses Ofcom of setting 4G coverage rules too low

Ofcom is failing to ensure that potential 4G spectrum bidders would provide mobile broadband to rural not-spots, because forcing applicants to cover those areas would lead to lower bids, Conservative MP Rory Stewart has said.

In a debate on rural broadband in the House of Commons on Thursday, Stewart said the regulator's demand for 800MHz LTE networks to cover 95 percent of the UK population did not go far enough. The MP, who represents the rural constituency of Penrith and The Border, called for that coverage obligation to be extended to 98 percent.

He criticised Ofcom for saying in its consultation document — drawn up ahead of the upcoming spectrum auction — that the costs of extending that coverage would outweigh the benefits.

"[Ofcom] is worried about losing money in the auction — nobody knows how much — and is worried that when it tries to sell the radio spectrum, which it owns, to the mobile telephone companies and asks them to increase their coverage obligation from 95 percent to 98 percent, these companies might pay less in the auction," said Stewart, who organised the Commons debate. "Indeed, they may. It stands to reason they would pay less, but probably not as much less as Ofcom fears."

Stewart estimated that, based on the 4G spectrum auctions in Sweden and Germany, the UK auction would probably generate £3.215bn. He said Ofcom was "worried that it might make only £3bn", a number he suggested was an underestimate. He said the £215m discrepancy was based on the cost of rolling out an extra 1,500 masts to extend coverage from 95 percent to 98 percent.

"If we impose an obligation [on operators] at the right moment and say, 'You've got the licence, now provide 98-percent coverage', their interests will be to provide it as cheaply and efficiently as possible," Stewart said. He suggested that it would be much more costly to ask the operators to extend their coverage in the future.

Ofcom itself has in the past refused to openly speculate on the amount of money it will raise for the public coffers from the 4G auction, which is due to be held in the first quarter of 2012.

"We welcome the debate on broadband access," Ofcom said in a statement on Friday. "We are currently consulting on the design of the 800MHz and 2.6GHz auction and are listening to views of all interested parties. Our objective is to encourage investment, promote competition and deliver a wide range of services for consumers."