Telecommentator

Phone hacking

2011-01-27T15:39:00.004Z

The current fuss regarding alleged activities of journalists or researchers allegedly hacking into voicemail of public figures and the apparent musings by the police and their legal advisers regarding application of the law on this subject prompt me to take a fresh look at the Regulation of Investigatory Powers Act (RIPA).

RIPA applies to interception of communications 'in the course of transmission' so you might be forgiven for querying how unauthorised intrusions into stored voice mail could be in the course of transmission of a communication. However RIPA has an extended and quite complex definition of what constitutes interception (including interference and monitoring) and also specifically contemplates accessing telecommunication systems which store messages.

So it does indeed seem possible that, with the appropriate evidence, 'hacking' of this kind could be an offence under RIPA. Nonetheless, if civil or criminal trials do result, the judgements should provide some useful clarification.

Spectrum saga

2011-01-04T16:15:00.004Z

With the entry into force, on December 30, 2010, of the Government's Directions to Ofcom and today's announcement by Ofcom of its variation of GSM (900 and 1800 MHz) licences to implement both the Directions and (at last) the GSM Amendment Directive, at least a part of the long-running saga of implementation of the UK's 'spectrum modernisation' programme has been completed.
This originated with Ofcom's much earlier attempts, and Lord Carter's subsequent Digital Britain initiative, to liberalise the GSM frequencies for 3G services and release (by public auction) new spectrum at both 2.6 GHz and 800 MHz, to support the expansion of mobile broadband services nationally.
Most recently these elements have been distilled into Government 'Directions', issued to Ofcom under the Wireless Telegraphy Act, requiring Ofcom to carry out this auction as soon as reasonably practicable (which may in fact not be until early 2012). These Directions have at long last come into force – on December 30, 2010.
The GSM Amendment Directive ('GSMA') meanwhile has had its own timetable, requiring Member States to "make….available" the 900 MHz band for UMTS (3G) as well as GSM systems and to bring into force the necessary laws and regulations for this purpose by May 9, 2010. (The 1800 MHz band was dealt with similarly in a separate 1800 MHz Decision). So on March 2, 2010, O2 applied to Ofcom for a variation to its licences to allow it to deploy UMTS in the 900 and 1800 bands, arguing that it was entitled to have the necessary variation as from May 9.
Ofcom refused O2's request, saying BIS had asked it not to take action before the next Government had been elected and able to consider the previously proposed Directions regarding the 900/1800 MHz and other spectrum (a response later described in O2's appeal by Mr. Justice Vos as "plainly an inadequate one"). O2 appealed this decision to the Competition Appeal Tribunal (CAT), supported by Vodafone, with Ofcom supported by Everything Everywhere and Hutchison 3G. O2 initially were seeking a ruling that the GSMA created a directly effective right for O2. However, during the hearing its Counsel conceded that it did not have such a right and so the Court was left to decide essentially whether the UK and thus Ofcom were obliged actually to remove any licence restrictions preventing the deployment of UMTS in the 900/1800MHz bands by the May 9 deadline.
In the appeal O2 argued with conviction that "make available" meant "capable of being made use of", but two of the CAT judges disagreed. Focussing particularly on the procedural requirements of Article 14 of the Authorisation Directive, they held that the only steps to be taken by Ofcom by May 9, 2010 were to ensure that any technical harmonisation measures were in place, so that subsequently the 900MHz band could be used for UMTS technology.
The third judge, Professor Pickering viewed things quite differently. Noting that Ofcom's original view (2009) was that it must liberalise the 900 MHz band in the hands of the licensees by the May 9 deadline, and its subsequent change of mind, he diametrically disagreed with the majority opinion that implementation was a two-stage process (i.e. first freeing the band and then subsequently authorising its use after any necessary public consultation). He found this 'not convincing' and decided that the appropriate interpretation was that all steps should be taken by May 9, 2010 both to remove the restrictions and allow existing holders of spectrum rights to use them for UMTS.
So the majority view, that making the bands available for UMTS systems required the two stages of technical harmonisation (although the UK apparently had nothing to do in that respect) and then the authorisation process, remained the decision of the Court, though now subject to appeal to the Court of Appeal, due for hearing (unless withdrawn) in July 2011.
The GSMA required the UK, as an EU Member State and when implementing the Directive, to examine whether the existing assignments of the 900 and 1800 MHz bands to the competing mobile operators were likely to distort competition in the mobile markets concerned (see below). No mention was made of this requirement in the Directions, though apparently when issuing them the Minister stated that he had considered the competitive situation as required by the GSMA and "the greater need for capacity on existing networks…..cancels out any potential advantage of sub-1 GHz spectrum".
It seems that subsequently (October 25, 2010), Ofcom advised the Government in a published statement that in fact it no longer considered there to be a risk that there would be a competitive distortion from liberalising 900 and 1800 MHz spectrum for 3G/UMTS use. Ofcom seem never to have formally consulted the industry before issuing these views. The very next day (October 26) the Minister issued a statement adopting this advice. So, clearly, the Government maintains that it has satisfied the Directive on this score, but doubts nonetheless remain regarding the lack of consultation: critically these were picked up by Everything Everywhere in their recent comments to Ofcom on the then proposed variation to 900 and 1800 MHz licences to comply with the GSMA.
The same statement by the Minister emphasised the further competition assessment required before the auction rules are formulated pursuant to the Directions, so any lingering doubts regarding a competitive imbalance may finally be resolved at that stage. Whether the outcome in preparing for and designing the auction will be sufficient to neutralise further objections remains to be seen, but given the strategic importance of the issues, the discretion exercisable by Ofcom in its assessments (for which the Directions do not provide a security blanket), and the difficulty of resolving all the different interests involved, it cannot be presumed that legal challenges are necessarily behind us. In some ways we seem no further forward than when Ofcom embarked on this journey in 2007/2008. Whatever happened to critical path analysis?

Happy New Year!
January 6, 2011

A Suit of Chocolate Armour?

2010-08-04T17:02:00.002+01:00

Apologies for the hiatus since my last blog, but until recently a state of purdah has held back any important initiatives in the telecoms sector and we have had to wait for the Coalition Government to get into the saddle and take up the reins again in order for it to produce something worthy of comment.
The last significant thing the previous Government tried to do, by way of implementation of the Digital Britain report, was to create an entirely new beast, "Directions to Ofcom" to implement the so-called Wireless Radio Spectrum Modernisation Programme. The shorthand for this is that the Government wanted to use never-before wielded statutory powers to clear the legal/technical log-jam around harmonisation of the 900 and 1800 MHz wireless spectrum bands for UMTS (i.e. 3G) and GSM systems and to have Ofcom run a combined auction of 800 MHz and 2.6 GHz spectrum, which had proved particularly controversial. As part of this, the Government sought to equalise spectrum holdings, in particular using spectrum caps.
When Ofcom originally planned to implement GSM system refarming, as well as auctioning new 2.6 GHz spectrum, it was confronted with legal challenges from e.g. O2. So the blunt instrument of statutory Directions to Ofcom was deployed by the Government, ostensibly to avoid the need for further consultations and no doubt protect Ofcom from renewed legal challenges: a legal 'suit of armour' if you will.
However, the statutory instrument containing the Directions failed to come into force before the May election and it has fallen to the new Minister for Communications, Ed Vaizey, to consider whether to revive it, produce a new version of the Directions or abandon this stratagem altogether.
Following talks with the wireless industry, the Government has in fact now issued a new form of draft Directions (for approval by Parliament) which is much simplified and shortened compared with its immediate predecessor. Essentially they set out (belatedly) to implement the GSM amending Directive, provide for variations to the existing 900 MHz, 1.8 GHz and 2.1 GHz licences and reintroduce the central concept of a combined auction of the 800 MHz and 2.6 GHz bands.
Crucially, as regards the auction, the new Directions throw this rather hot potato back into the lap of Ofcom, in that they require Ofcom first of all to carry out a forward-looking assessment regarding the likely future competitiveness of mobile markets after the conclusion of the Auction, taking into account the possible effects of the Auction. They then require that Ofcom should put in place 'appropriate and proportionate measures' to promote competition in those markets after the conclusion of the Auction, which measures could be included in the rules governing the Auction.
Consequently it is clear that if the main purpose of the original Directions was indeed to protect Ofcom from legal action regarding the Auction conditions, nothing in the new Directions will provide any such protection this time around.
There is no real hard deadline for the Auction provided in the Directions, even though the Government have indicated elsewhere that this should take place before the end of 2011: Ofcom is simply required to make the Auction regulations as soon as reasonably practicable after concluding its competition assessment, but this of course does not dictate the timing of the Auction itself.
Other parts of the Directions, notably the variations to existing 3G licences to impose service coverage requirements, extend their duration and impose annual charges after 2021, are expressly subject to the licensees consenting, which of course is no different to the position that would have applied even without the Direction.
So all in all, I am really left questioning the utility of the Directions and whether very much, if any, of significance remains of their predecessor's main legal purpose, namely of providing to Ofcom a suit of armour against legal challenges. A suit of chocolate armour might be more apt, as certainly this whole area remains something of a confection.

Slow-release spectrum

2010-02-15T18:58:00.001Z

Seeing in Policy Tracker that Optus in Australia has just bumped up its holdings of 3G spectrum by acquiring some at 2.1 GHz, put me in mind of the quagmire that the field of play has become for UK spectrum.
Unfortunately I think the developing consensus is that, for procedural and technical reasons, as well as the looming UK general election, the long-promised 2.6 GHz auction, even if not combined with 800 Mhz, will not take place before 2011. That might raise an argument for the decoupled 800/900 MHz to be auctioned earlier, but this would need to be assessed against the Independent Spectrum Broker's reasoning for his original recommendations to Government.
If there's enough time left before May (tight), there may well have to be a new consultation and a new draft BIS direction (if the Government stick to that way of doing things) about these proposals once BIS and Ofcom have a clear view on 'which spectrum and when', leaving aside of course the possibility for legal challenges, which still remain a threat.
Meanwhile would-be bidders for 2.6 who want the auction to take place as quickly as possible are publicly pressing for the release of at least the central portion of 50 MHZ spectrum in the 2.6 band.
All very frustrating for those waiting for a seat at the spectrum high table!
You can always blame the lawyers..........

Next Generation Fund

2010-01-26T19:01:00.002Z

The BIS consultation on Proposals for a Next Generation Fund, issued on 7 January 2010, poses in all 23 questions on how best to deploy the funds generated through the proposed new Landline Duty and contributed to the special pot known as the Next Generation Fund ('NGF').
The stated principal objective of the NGF is to support the roll-out of next generation access (NGA) infrastructure to at least 90% UK of households by 2017. In particular, on the basis of the working assumption that the market itself is likely to provide NGA to up to 70% of the population, the NGF would be targeted at securing the remaining 20% of the overall aim of 90% national NGA coverage by 2017.
The Consultation Document canvasses a range of different options for delivery of NGA using the NGF. The commercial considerations and financial implications, as well as the potential impact on market competition, are discussed in some detail and reflected in the questions posed by the Government.
Of particular note is what the document says about technology neutrality. Here, rightly or wrongly, there is an evident bias towards using the NGF to support fixed-line infrastructure. Whereas the Digital Britain report, in floating for the first time the concept of the NGF, suggested that all operators would be eligible to benefit from the NGF, the Government is now clearly stating that a straightforward technology-neutral approach may not be appropriate in determining how the funds should be disbursed – "We need to consider whether that approach still applies in the context of NGA. Whilst other technologies might in due course match the expected performance, we believe that fixed line solutions, based on fibre are likely initially to be the most appropriate".
Some wireless operators, whether mobile or planning WiMax roll-out, may disagree with this analysis and its impact on the use of the NGF. The Government may be taking a rather static view of the service possibilities afforded by wireless networks, given the dramatic pace of their evolution. Be that as it may, it is issues like this that are likely to feature in discussions the Government are having with the European Commission in regard to obtaining State Aid approval for the NGF. In this connection, the European Commission is also likely to take an interest in the Landline Duty and how this is structured, and the competitive implications overall of both the imposition of the Duty and the potential beneficiaries of funding from the NGF.
In terms of Wholesale Access and competition, Ofcom have previously been seen to be embracing the concept of Active Access (based on wholesale products that use network owners' physical infrastructure and electronic equipment) as opposed to Passive Access (based on renting network owners' physical infrastructure and combining this with wholesale customer's own electronics). The Consultation is, however, careful enough to query again whether active line access is the right approach to achieve fixed access competition and whether or not such active access remedies should be applied in areas that receive subsidy from the NGF, but of course these are very much today's questions. As the NGF is to last until at least 2017, no doubt correspondents will bear this in mind in responding to the consultation questions.
The BIS consultation on the NGF closes on 1 April.

The New Landline Duty

2010-01-18T18:19:00.001Z

Last month (December 2009), the Government, in a joint consultation by HM Treasury, HMRC and BIS, published its proposals for a new tax or duty to be imposed on local loops, as heralded in last year's Digital Britain report. The Consultation closes for comments on 12 February 2010.
The duty, to be known as the 'Landline Duty', will amount to 50p per month on each local loop made available for use (whether or not actually used) and regardless of whether it consists of a copper pair, a co-axial cable or a fibre connection. The duty is expected to raise about £175 million a year.
A local loop is defined in the draft legislation as being a physical circuit connecting a network termination point to the main distribution frame or equivalent facility in the public telephone network. In traditional parlance, this equates to an exchange line; it will not matter whether that line is being used for voice telephony, security alarm transmission, telemetering or whatever, as the duty will be payable with respect to each line.
When more than one local loop is provided in order for an end user to receive two distinct services, the duty will be payable on both lines. The only exemption so far contemplated will be for lines used to provide a social telephony service, e.g. to low income groups.
The duty will be imposed on network owners and may be recovered from end-users. Although there is an apparent ambiguity on this point in the draft legislation, which will need to be corrected, it does not seem to be intended that line owners should actually be obliged to recoup the duty from individual users and so will be at liberty not to do so; however, if they do so specifically, the additional payment of the duty will itself be subject to VAT.
The Consultation reveals that the Government did consider applying the duty to wireless networks as well, but did not pursue the idea partly because of the impracticability of applying it to pay-as-you-go mobile users. This becomes relevant to the classes of network builders able to benefit from the fund to which the duty payments are to be contributed in order to subsidise the cost of roll-out of next generation access.
The mechanism for this fund is explored in a separate BIS consultation on Proposals for a Next Generation Fund issued on 7 January 2010, discussed in my next blog.

Colin's Telecoms regulatory look-out list for 2010

2010-01-14T19:07:00.004Z

Happy New Year!
These are some of the key events and initiatives I suggest to look out for in 2010:

UK
(Subject to some potential policy reversals in the event of a change of power at the forthcoming UK Parliamentary election!):

Introduction of the new Landline Duty legislation to support the Next Generation Fund (NGF): see my next Post
Government's conclusions to be reached on make-up of NGF; introduction of NGF: see my next Post
The proposed Government Direction to Ofcom to implement the Wireless Radio Spectrum Modernisation Programme (WRSMP): the Government has just suffered the embarrassment of having to issue a supplementary document to its October 2009 consultation, clarifying the proposals and views sought. Now it appears from press reports that BT, who may themselves be interested in acquiring new 2.6GHz mobile broadband spectrum at auction, are threatening judicial review of the proposals, particularly the proposal to extend indefinitely the duration of the incumbent mobile operators licences. Issue of the official Direction will doubtless be delayed as a result.
Further word from Government (BIS) and/or Ofcom regarding the proposed combined 2.6GHz and 800 MHz auction (part of the WRSMP), though because of the above delays it is looking increasingly likely that this auction will not take place in 2010 as originally hoped.

Launch of the new EU Body of European Regulators for Electronic Communications (BEREC), the successor to the European Regulators Group, to "serve as a body for reflection, debate and advice for the European Parliament, the Council and the Commission in the electronic communications field": Regulation (EC) no.1211/2009 of the European Parliament and of the Council, November 25, 2009
Issue of the European Commission's Recommendation on Next Generation Access, following its review and a second consultation round in 2009: last year's draft version was not received with universal acclaim, so it will be interesting to see what changes are made by the Commission in the final form.
In 2010 the Commission is also expected to publish its proposals on the scope and funding of universal service obligations.

Digital Britain report: the Next Generation Fund

2009-08-13T12:47:00.004+01:00

As I hinted in my last post on this subject, there is an asymmetry in the make-up of the fund (NGF), in that as proposed it will be levied only on fixed-line operators, yet apparently the fund will (or should be) available to assist all-comers including wireless operators. The proposal would have to be approved by the European Commission from the State Aids perspective and I think the Commission would be likely to have reservations about it because of the competitive distortions it could cause if it is not balanced in relation to the burden of the inputs and the benefit of the outputs.
I raised this at a conference recently and a senior representative of BT said she agreed with me and that BT were also not happy about it. I have also since learned through an industry body that when coming up with the NGF proposal and the decision to impose the levy with respect to fixed lines only, apparently BIS assumed that delivery of the final one-third of next generation access would be through fixed systems, i.e. fibre! If accurate, this is extraordinary, indeed silly, and has come as a nasty surprise to the wireless industry.
BIS is I understand promising to provide more detail on the NGF (and Universal Service Commitment) in September, so hopefully these issues will have been addressed by then.

Digital Britain - Lord Carter's Final Report

2009-06-30T13:37:00.006+01:00

One of the many interesting features of Lord Carter's report is the embryonic proposal for a new 'Next Generation Fund' to help subsidise the build out of advanced telecom infrastucture to the 'Final Third' of the UK population. This apparently would be a levy of 50p per month on all fixed lines (that is BT's, Kcom's and Virgin Media's). It would likely be introduced through primary legislation, and whether that would be communications legislation or more general legislation remains to be seen. Clearly a lot of detail needs to be worked out.

However, laudable though may be the objectives for the Fund, I am set wondering about its legality and whether it would be able to satisfy EU State Aid rules and the Treaty, even perhaps the EU regulatory framework.

Why? Well, the proposed structure is very unusual: it would be levied on all fixed operators and collected from all but low income households. It would not be imposed on mobile or other wireless operators or their customers, yet mobile and other wireless operators would be eligible (presumably) to benefit from the Fund by applying for grants from the Fund to help pay for new infrastructure. Many premises have multiple lines and presumably would pay multiple levies. (Compare the TV licence regime for a moment). Legal terms like discriminatory, market distortion and objective justification spring to mind as relevant here.

I shall be pondering this further so watch this space ...

Report from the Independent Spectrum Broker

2009-06-16T11:14:00.004+01:00

Background – auction stalemate

As part of its long term strategy to liberalise spectrum usage and within that to release new spectrum in order to create more competition in mobile and broadband wireless, Ofcom has long-promised to conduct an auction of spectrum in the 3G expansion band, i.e. 2.6GHz, working to a plan which originally envisaged the auction and award of the spectrum during the course of 2008.

However, this initiative was caught up in the debate and eventual dispute between certain mobile operators on one side and Ofcom on the other regarding a joined-up approach to GSM spectrum refarming for 3G or next generation mobile (NGM) services use and the planned release of other spectrum for NGM technologies, as well as disagreements at a Community level regarding amendments to the GSM Directive designed to allow the use of GSM spectrum (at 900MHz and 1800MHz) for such services.

During the course of 2008, despite strong objections from certain mobile quarters, Ofcom decided to plough on with the 2.6GHz auction, and two mobile operators, T-Mobile and subsequently O2, brought and joined in an appeal against that decision in proceedings before the Competition Appeal Tribunal ("CAT") and, in case the CAT did not have jurisdiction, for judicial review in the High Court.

As a consequence of this litigation, potential new players in the market and candidates for bidding in the 2.6GHz auction have been kept waiting in the Ofcom auctions 'departures lounge' ready for the stalled auction process to restart. Meanwhile of course the economics of starting new mobile ventures will have come under even closer microscope analysis.

Government intervention – a broker's role

At about the same time as this dispute surfaced, coincidentally if not fortuitously, the appointment of former head of Ofcom, Stephen (now Lord) Carter as the new Minister for Communications, Technology and Broadcasting, injected a new sense of purpose and energy (and not a little know-how) within Government regarding the future for telecommunications development, superfast broadband in particular, in the UK. As part of this initiative, given the 'entrenched positions' taken up by those in the mobile industry (an negotiated solution was deemed unlikely), Lord Carter asked one of his former deputies at Ofcom, Kip Meek, now chairman of the Broadband Stakeholders Group, to review the impasse in the 2.6GHz award and to come up with some recommendations in relation to refarming of 2G spectrum and the removal of blocks on future auctions, at the same time indicating to the mobile operators that if they were unable to negotiate a solution between themselves, Ofcom would be asked to impose a solution.

Kip Meek, under the title 'Independent Spectrum Broker' (ISB) has now (May 12) published his Final Report and at last it looks as though, if Ofcom are willing to proceed on this basis, and there are no lasting industry objections, the log-jam may be cleared. This well-written report is impressive not just for its clarity of thinking but, in a refreshing departure from regulatory practice in the recent past, its adoption of a holistic view of the issues. The contrast is quite striking: whereas before Ofcom planned to deal with 2.6GHz award, the digital dividend (800MHz award) and 2G liberalisation as three separate matters, now, according to the ISB, "the recent emergence of LTE as a near-to-deployment standard and the harmonised 800MHz band has changed an appropriate way forward … towards one that requires thinking about the entire relevant spectrum – not just 900MHz and 1800MHz but also 2.1GHz, 2.6GHz and 800MHz".

The ISB's task was not made easy by the evident tensions caused by different commercial, spectrum management, broadband and competition policy imperatives pulling in various directions. Different parts of the frequency bands have different merits (such as propagation characteristics) and can be of more or less value depending on how they are able to be deployed. Timing differences can also have an impact, particularly on competition and market entry: for example, if the 900MHz spectrum were to be brought into use for mobile broadband earlier than 800MHz became available, the 900MHz operators would gain a crucial first move advantage. Then there is the classic regulators' dilemma of trying to encourage the opening up of the market whilst at the same time not favouring one operator or group of operators over another, particularly pertinent to the frequencies up for grabs here.

ISB recommendations

In summary the ISB's recommendations are:

* allow 2G (GSM) spectrum to be liberalised (refarmed) in the hands of the existing operators/users, not in an imposed timeframe, and revising the associated usage charges to reflect the spectrum's full economic value;
*provide greater certainty for NGM spectrum portfolios through a separate auction of the TDD 2.6Ghz spectrum suitable for WiMAX services, before the end of 2009;
*coordinate the FDD-suitable spectrum auctions at 2.6GHz and 800 MHz (mid-2010) to allow existing and new operators to build holdings in an 'integrated, strategic fashion';
* impose regional coverage and access obligations on releases of 800 MHz spectrum, the part of the band most useful for rural areas;
* encourage extension of 3G coverage in return for making 3G licences indefinite and allowing greater infrastructure sharing to avoid concentrations of holdings at the outset;
* apply to the combined auctions an event-specific temporary total spectrum cap whereby (for a maximum period of perhaps one year) no operator would be permitted to have more than 2x60MHz of paired mobile-suitable spectrum; although the existing 900MHz operators would be free to bid for 800MHz, they would have to give up an equal amount of 900MHz if successful.

Denouement

Kip Meek has thus picked up the hot potato of mobile spectrum, cooled it down, chopped it up into bite-sized portions and offered it on a plate to Lord Carter and the industry. Whether everyone will want to dine on it as served remains to be seen. For that, apparently, we must await the Digital Britain final report and, depending on whether the solutions are all within the powers of Ofcom, either a Government direction to Ofcom, or Ofcom's re-visitation of these issues through a consultation and revised decisions, though that route would seem to require as a pre-condition a consensus within the mobile operator community, if we are not to face further delaying manoeuvres. Given the MoD's announced intention to release for public use some spectrum which will also be suitable for WiMAX and other mobile applications, there is mounting pressure for all this to be sorted, and quickly. Meanwhile the judicial review case is, I believe, suspended pending further discussions between the parties, O2 and Ofcom. (I note that O2 have welcomed the ISB report).

Final Observations

We live in interesting telecom times. Not only do we have the Government at last taking a real interest and showing a lead to Ofcom on policy, but we have the very unusual spectacle, in the history of UK telecom regulation, of an independent party seeking to broker a compromise solution between the regulator and the industry. Surely unprecedented.