British Regulator Investigated Over Low 4G Auction Revenue

judgecorp writes "Ofcom, the British telecom regulator, raised £2.3 billion in the 4G spectrum auction when the government had hoped for £3.5 billion. Now Ofcom's auction is being investigated by the National Audit Office over whether it provided value for money for the British taxpayer. Ironically, the auction resulted in a low price but spread the bandwidth amongst rival firms, and so provided better value than if the auction had created a partial monopoly or (as happened in the 3G auctions in 2000) gouged as much money as possible from the operators leaving them unable to actually build a network."

Comments

Maybe it'll end up being costing the customer less

[ranulf]

When 3G was rolled out in the UK, the cost to the customer was prohibitively expensive that uptake was pretty slow, despite the fact that billions had been spent on acquiring the licence for the spectrum, let alone from the infrastructure costs. Gradually, it's come down to a more reasonable price, but it's still prohibitively limited by bandwidth for the majority of people - 250MB per month is often considered generous.

And so now we come to 4G. I happen to be on a network that was an early adopter of 4G and they've been pushing it agressively since they got the licence. Yet, it's only available in 10 cities (not mine), costs a minimum of £50 per month and the monthly bandwidth allowance can be used up in a matter of minutes if you actually use it.

Hopefully this time, with lots of companies getting in on the action rather than just a couple, there'll be competition and it'll actually become a viable technology for the customer rather than just being good in theory.

Policy

[AmiMoJo]

The Tory party sold off publicly owned infrastructure for a fraction of what it is really worth. Is anyone surprised?

Re:Policy

[maroberts]

The Tory party sold off publicly owned infrastructure for a fraction of what it is really worth. Is anyone surprised?

Um its an auction, companies bid what they think it will take to get the goods and beat competitors. You can't blame the government if the price fetched at a competitive auction is lower than expected. A kneejerk "blame the Tories for everything" reaction is what keeps them in power, because people see how shallow the argument against them is. If you really want someone else in, you have to say how you could have done better.

Also the high auction price of 3G last time slowed its deployment and arguably the development of 3G services in the UK. Hopefully the fact that companies have not bid as much this time allows them to invest more. If the companies make more money, then they will presumably pay more tax in the form of Corporation tax in the long run, and perhaps have more employees also paying income tax.

Re:Policy

[Xest]

It wasn't the Tory party that sold it off, it was Ofcom, but you can guarantee it's the Tory party that instigated this investigation.

Osborne factored the income from the auction into his budget to mask a shortfall in his budget to try and maintain the facade that he is economically competent and reducing the deficit. The problem is now, as the money that has actually come in is over £1bn lower than expected, his books now will struggle to balance so he's more likely to end up failing to hit his target yet again of deficit reduction.

There was nothing wrong with the auction, but Osborne is just upset he's going to have egg on his face that his attempt to mask a shortfall in his deficit reduction plan with a one off windfall (rather than do something that will reduce the deficit perpetually) has failed.

For what it's worth though it's not as if it's just the Tories that do this sort of thing that's bad for our country- Brown for example gave away billions of our EU rebate under some misguided delusion that France would then give up some agricultural subsidies which of course they didn't, and have only sought to increase them. Both Labour and the Tories are equally guilty of throwing money away, so don't try and make it about this part or that, they're all just as incompetent.

Re:Policy

[Anonymous Coward]

If you put something on Ebay, misspell the product name, don't mention important attributes in the title, set the end to the wee hours on a Monday morning and don't add a picture, then you're damn well at fault for the low price you'll get. How an auction is held makes a big difference.

Anybody who thinks telecommunication companies don't invest because they don't have the money is delusional. They'll reap even higher profits if you lower their costs. The price they ask is determined by what people are willing to pay, not by what it costs to provide the service.

Re:Policy

[Savage-Rabbit]

The Tory party sold off publicly owned infrastructure for a fraction of what it is really worth. Is anyone surprised?

Well at least this time Ofcom created an environment condusive to competition by not gouging out as much money as possible. The irony is that the Tories are now investigating Ofcom for not extorting as much money as possible and thus creating a reasonably level playing field for competition. This is very funny because Thatcherist/Tories tend to never shut up about how competition is good for the citizenry since it lowers costs. That being said I'm generally against selling off publically owned infrastructure since I have rarely seen it work out well and it tends to end with some form of cartel that effectively has a license to tax the public. In this case selling the spectrum was the thing to do, unless you want the govt. to' do what? Rent it out?

Re:Policy

[Anonymous Coward]

I was with you until the "rather than do something that will reduce the deficit perpetually" bit.

Exactly what makes you think that an economy in the grip of a 4 year recession about to hit it's third dip, recovering less well than it did in the 1930s is the right time to continue with GDP shrinking austerity? Has the Conservative "message" been so effectively fed that people aren't even questioning the sanity of the policy? As a lifetime Liberal voter I am utterly disgusted by the parties kow-towing to discredited neo-thatcherism - this is the party of John Maynard Keynes and the party that first pushed for a National Health Service. They of all people should be refusing to stand by and let another generation go to waste.

Pro-tip - you reduce the deficit when the economy is healthy, that way the "austerity" acts as a brake preventing overheating and the growth in the GDP multiplies the effect of the deficit reduction. It's not hard people...

Re: Policy

[madprof]

The public have never owned any mobile network infrastructure.
The government are selling licences to use a particular part of the spectrum.

If you want to go back to the bad old days of waiting weeks for a phone then feel free to do so, but elsewhere, not in the UK. Telecoms is without doubt one of the most successful privatisations. BT was challenged by competition and had to up its game in all areas. We, the consumers, won and moribund management lost out.

Do you pine for the days of union closed shops and secondary action too?

Re:Policy

[xelah]

AIUI, the NAO is a parliamentary body, not a government one, and reports to a commons select committee, not the government. In any case, the opposition have been keen to use anything they can get (including this) to convince people that the government's budget strategy doesn't work that it'd be far more likely to be pushed and publicized by them than by the coalition.

In this case selling the spectrum was the thing to do, unless you want the govt. to' do what? Rent it out?

It's not guaranteed to them forever. A quick search suggests an initial term of 20 years.

Re:Policy

[Xest]

"Exactly what makes you think that an economy in the grip of a 4 year recession about to hit it's third dip, recovering less well than it did in the 1930s is the right time to continue with GDP shrinking austerity?"

Why assume austerity is the only method of deficit reduction? investment can increase growth which will in turn increase tax receipts which will in turn reduce the deficit.

Deficit reduction doesn't have to be just about making cuts.

Re:Policy

[FireFury03]

That being said I'm generally against selling off publically owned infrastructure since I have rarely seen it work out well and it tends to end with some form of cartel that effectively has a license to tax the public. In this case selling the spectrum was the thing to do, unless you want the govt. to' do what? Rent it out?

I think whether selling off infrastructure is a good idea depends on whether it can sensibly turn into a competing market.

A good example is the rail network - there is only one rail network, which means that you can't have competition (if I want to make a long distance journey between two cities, I don't get to choose between lots of competing operators - there is one company that operates that route and I'm stuck with them, which means no competition and that's bad for the customer). This has resulted in a very bad situation for the public - the British rail network is an unmitegated disaster these days.

Although, that said, despite the phone network being a similar situation, that seems to have worked out surprisingly well (despite the fact that we're mostly stuck with using BT for the local-loop, and they are utterly utterly incompetent).

Re:Policy

[lxs]

Yeah but now they need the cash for vitally important projects like a state funeral for Dear Leader.

Re:Policy

[JaredOfEuropa]

We're in the same boat in NL: privatisation of railways hasn't worked since there is no real competition, but in case of telcos the improvement has been great... and no surprise either. Early on, the former state telco was forced to share the local loop with other phone companies and ISPs at a fixed fee, and the telecoms watchdog kept a close eye on them. As a result, there was real competition on a more or less level playing field, which quickly brought down prices and increased service levels. Competition seems to be working in the energy sector as well: the infrastructure is separated from the suppliers so you can buy electricity from whomever you want. (The surprise there is that people complain about having a free market, and can't seem to be bothered to select the best offer: they would prefer to pay a set price even if that price is higher than what they'd pay on the free market).

I'm a big fan of the free market, but I do realise that there are many situations where a market can not be free. And as the railroads have shown us, separating services from infrastructure and privatising only the services is not always enough to ensure a working market.

(For the Dutch eager to bitch and moan about today's crappy mobile telco service, I am old enough to remember that it wasn't uncommon for connecting a land line to take up to 15 months, and that had nothing to do with running cables; it was a purely administrative delay. And don;t get me started on their service department...

Re:Policy

[FireFury03]

We're in the same boat in NL: privatisation of railways hasn't worked since there is no real competition

I don't quite understand the problems with the rail network in the UK, despite the lack of competition with other train operators. I often travel late on Sunday evenings - if I book a couple of weeks in advance then the train works out cheaper than driving (although it takes considerably longer and is less convenient since I need to actually get to the station and have to stick to a schedule); conversely if I book the same train closer to the time of travel, it costs several times the cost of driving. This is not a crowded route - I'm often the only person in a carriage so it isn't as if I'm competing with other passengers for a space.

So clearly, if I have to make a relatively last minute decision to travel, I take the car because its far cheaper and more convenient - by overcharging, the train operator is losing my business because they are in competition with the road network.

Similarly, I usually travel second class - a first class ticket on *exactly the same train* goes for £150 (that's about 4x the cost of driving). Who on earth is going to pay such a high price to travel on a train when they could drive in half the time? I wouldn't be surprised if you could get a taxi for that price. I can't imagine they get *any* passengers in the first class carriage.

Early on, the former state telco was forced to share the local loop with other phone companies and ISPs at a fixed fee, and the telecoms watchdog kept a close eye on them. As a result, there was real competition on a more or less level playing field, which quickly brought down prices and increased service levels.

That's more or less how it worked in the UK too - BT were heavilly regulated to ensure they allowed other ISPs to use their equipment at a fair price (either by BT providing the local loop, DSLAM and backhaul to the ISP, or by the ISP installing their own DSLAM and backhaul and paying BT for the use of the local loop). What has surprised me most is that exchanges that are deemed to have "competition" (lots of third party DSLAMs), are now deregulated and this hasn't caused any problems, even though BT are still the monopoly owner of the local loops. Similarly, BT are the sole provider of FTTC and FTTP (BT own the cabinet and the local loop) and yet this still seems to have strong competition from the ISPs.

Competition seems to be working in the energy sector as well: the infrastructure is separated from the suppliers so you can buy electricity from whomever you want.

I must admit I'm not a huge fan of the privatisation of domestic energy suppliers: the electricity is still flowing over the same grid from the same generators, its just that we've introduced a load of middle-men into the mix. The energy supplier who you pay is essentially just a broker who matches customers with power stations. I don't have a better solution, but adding middle men doesn't seem like the right thing to do.

The surprise there is that people complain about having a free market, and can't seem to be bothered to select the best offer: they would prefer to pay a set price even if that price is higher than what they'd pay on the free market.

I think a lot of this (at least here in the UK) isn't helped by a complete lack of transparency from the suppliers. The prices the suppliers charge vary vastly from region to region and very few of them actually publish their prices. Frequently, the only way to shop around is to use a "price comparitor" (either third party or on the energy company's own website), enter lots of information such as your location and your annual energy consumption and look to see what they estimate you'll pay in total. Why can't they just publish how much they are going to charge for each KWh?

There's also a whole lot of mis-selling of energy - lots of direct sales people (

Re: Policy

[Anonymous Coward]

BT still owns all the copper that was set up from before, how is this a free market?

Re:Policy

[Anonymous Coward]

Travelling First Class by train isn't comparable to a taxi journey though, it's not comparable to any other method of travel currently available on short or medium distances. The closest comparison would be First or maybe Business class long distance flights. First Class train travel is for people who don't want to be bothered about the whole "travelling" thing. You're sat at a table, drinking free booze (OK, it's not free on some routes, but there is booze) and you can use the Internet and get on with your day without really caring that the entire train is moving. You cannot get stuff done while driving obviously, and you can't get very much done (maybe a few phone calls) in the back of a taxi. When flying for short haul the bag searches, ticket checks, and so on take up so much of your time that they dominate the experience, the few minutes you spend in level flight with working networking are hardly compensation. But you can literally buy a train ticket, step aboard, sit down and get to work and be undisturbed until you reach your destination. There's just nothing like it.

Re:Policy

[Anonymous Coward]

Deficit reduction doesn't have to be just about making cuts.

Unfortunately the Tories appear to believe it is.

Re: Policy

[Anonymous Coward]

If you want to go back to the bad old days of waiting weeks for a phone [sic] then feel free to do so.

That is the case right now, or at least it was in 2009, and I don't see how it could possibly have changed so dramatically as you assert in a few years. I think you're repeating propaganda straight from the Telegraph.

but elsewhere, not in the UK

Ah, the old "go and live in North Korea/Somalia/other fuckhole" "argument".

Telecoms is without doubt one of the most successful privatisations. BT was challenged by competition and had to up its game in all areas. We, the consumers, won and moribund management lost out.

I don't know what UK you live in, but I pay an outrageous price for the maximum sync speed my connection can handle: 1Mbps. There are many people in the same situation, and our country has fallen far behind much of the rest of the world (even Australia now) in terms of speeds and value for money. The national average "broadband" speed is equivalent to that of a domestic connection in Stockholm of 1996. There is no planned resolution of such abysmal speeds, there is only heel-dragging and claims that "people don't want such speeds" from BT. We, the consumers, have lost entirely. BT only makes (very marginal) improvements when forced to by regulators. Competition has nothing to do with it.

By the way, closed shops are a vital component of a free market. Secondary action is too, but to a lesser extent. Please do try to deny it; you'll show yourself up as even more of a dogmatist.

Re: Policy

[Goose In Orbit]

If you want to go back to the bad old days of waiting weeks for a phone then feel free to do so, but elsewhere, not in the UK

Curious... I waited almost 3 months (in 2007 - late-May to mid-August) for a phone line to be "installed" (meaning: "someone pressing a button on a PC somewhere") - the wiring was in place, yet I had to wait... so no phone line, broadband, etc...

Re: Policy

[Goose In Orbit]

Additional... then they charged me £125 for the privilege...

Re: Policy

[Anonymous Coward]

BT have to give access to said copper at cost to all operators. This is why you can swap suppliers with ease and not have an American system where you need a different cable run for each service provider.

Over time, that copper is going to be pulled out of the ground and sold as scrap metal, fibre is replacing it all over the country. And like the copper, BT has to give access to that too.

Re:Policy

[pr0nbot]

"It wasn't the Tory party that sold it off, it was Ofcom, but you can guarantee it's the Tory party that instigated this investigation."

According to the BBC, "The NAO's move was prompted by a complaint by Labour MP Helen Goodman." I don't think the Tories care particularly how much money was raised; ideologically, they don't want the government to have money. You could argue that cheap 4G licences will translate to higher profits and so more tax revenue... if any of these companies paid their taxes, that is...

Re: Policy

[Anonymous Coward]

Same here. Waited weeks to get my ADSL set up even though all the companies use the same copper. Also, BT own all the copper, so that's a government granted monopoly right there. Make the bastarding thing public and tell the profiteers where to stick it.

Re:Policy

[Pecisk]

"Why assume austerity is the only method of deficit reduction? investment can increase growth which will in turn increase tax receipts which will in turn reduce the deficit."

It's only method when you have massive debt on which in current circumstances no one sane in head will lend you with actually payable kickback. It also can do wonders when it's done very fast and in right time. Unfortunately, due of heavy unpopularity of this method, this is usually last fallback and then it have disastrous, but unavoidable results.

So when recession hits, and you have too much of debt, be unpopular, bite a bullet right now. You can mix this with some pumping money in most sensitive areas. But what's most important you have to be clear when you intend this to end.

If you have manageable debt, and can shore up some sweet money, some cuts still would be reasonable (especially waste evaluation), however do reasonable investments in infrastructure and research, so when downwards cycle ends, you can be first in line to get piece of action.

Re:Policy

[Xest]

"It's only method when you have massive debt on which in current circumstances no one sane in head will lend you with actually payable kickback."

This isn't a problem for the UK, we can currently borrow as cheaply as we've ever been able to.

Re:Policy

[Xest]

Interesting that it was a Labour MP that raised it, but the Tories most certainly do care - as I mentioned, the only way Osborne was able to claim he'd hit his borrowing targets was by factoring in £3.5bn from this auction, the fact that wasn't achieved means Osborne likely wont hit his borrowing targets and it'll give his opponents, and opponents of the Conservatives in general plenty of ammunition against him.

It was a cheap trick that lent him a lot of criticism at the time, that combined with the fact it hasn't even worked as he planned doesn't exactly bode well for him.

Re:Policy

[Pecisk]

I know, but still massive debt is not nice thing to carry in future, because things can get ugly pretty quickly.

Still I can agree that sometimes I wonder about some of UK decisions as getting too much into "doing austerity because we should" territory. But that's usually conservatives cred, so no big surprise here.

Re:Policy

[Savage-Rabbit]

AIUI, the NAO is a parliamentary body, not a government one, and reports to a commons select committee, not the government. In any case, the opposition have been keen to use anything they can get (including this) to convince people that the government's budget strategy doesn't work that it'd be far more likely to be pushed and publicized by them than by the coalition.

Well whoever controls NAO (I kind of assumed that would be the ruling political parties), isn't doing anybody any favors unless the prices were ridiculously low. If you try to extort the maximal amount of money out of anybody who wants to buy spectrum all you do is ensure that the entire spectrum ends up in the hands of a few big players whose CEOs then get together 'at the club' and fix prices in the best traditions of the 'old boy network'.

Re:Policy

[dkf]

if I want to make a long distance journey between two cities, I don't get to choose between lots of competing operators - there is one company that operates that route and I'm stuck with them, which means no competition and that's bad for the customer

That depends on the cities in question, and whether you are really keen on optimizing for costs or whether you care about how long it takes as well. It's usually (always?) the case that if you want the fastest vaguely sane option, you pay more.

Re: Policy

[Anonymous Coward]

Ha, it only took thirty years to get there though. Was sold for a fraction of its value and dragged their heels for two decades with LLU.

Re:Policy

[petermgreen]

Amusingly if you are booking in advance it's occasionally cheaper to travel first class than standard class on trains. This is due to the way each type of advance ticket is sold in limited numbers and (at least for manchester to london) the cheapest first class advance tickets are slightly cheaper than standard class off-peak tickets (I bought one of these once). There are also relatively cheap weekend upgrades available on some routes (I haven't actually ever bought one of these though i've been tempted a couple of times).

And the experiance on virgin trains is lovely, large seats, free wifi, free refreshments, seat groups with proper tables for 1, 2 or 4 people (while standard class only has proper tables for four people and "airline style" seats for two peoples with those flip down things that are too small to put a laptop on). The ride is smooth and the curves are gentle meaing motion sickness is far less of a problem when doing stuff on a train than when doing stuff in a car.

Overall if you either get a good advance deal or are rich enough that the cost is neligable to you it's hard to beat first class train travel as a comfortable way of getting to/from london.

OTOH I don't know why anyone would buy a first class ticket from manchester to leeds because the "first class" on those trains is not deserving of the name

Re: Policy

[Ash-Fox]

Actually, the government forced them to open their networks to other providers.

Re:Policy

[tehcyder]

Deficit reduction doesn't have to be just about making cuts.

Unfortunately the Tories appear to believe it is.

Exactly. In ten years' time, people are going to find George Osborne's name in the history books, hopefully as the only Chancellor of the Exchequer in modern times to have been hanged for treason.

If the Con-Dem coalition was a plc the shareholders would have stormed the platform at the last shareholdrs' meeting and fallen on Cameron with knives like the killers of Julius Caesar.

Re:Policy

[tehcyder]

"Massive debt" is just a scare phrase used by rightwingers who think that corporate and government economic behaviour is exactly analogous to that of a careful householder who pays their credit card bills on time and never has a mortgage.

Re:Policy

[FireFury03]

That depends on the cities in question, and whether you are really keen on optimizing for costs or whether you care about how long it takes as well.

For most long distance journies, your choice is:
1. Take the intercity, which gives you a choice of exactly one operator.
2. Take a long series of interconnecting very slow local trains, where each leg of the journey gives you a choice of exactly one operator.
3. Take a bunch of intercity trains that go via a very circuitous route, where each leg gives you a choice of exactly one operator.

(2) and (3) would usually be more expensive, take an unfeasibly long time and open you up to being completely screwed if one of the trains is delayed (since you would have one ticket for each leg instead of a single end-to-end ticket, and that makes you liable if you miss one of your trains due to the preceeding train being delayed).

(1) is usually several times the cost of driving unless booked several weeks in advance, and for a lot of routes is slower than driving.

It's usually (always?) the case that if you want the fastest vaguely sane option, you pay more.

Except in the case of the british rail network, the "fastest vaguely sane option" is usually to drive instead of taking the train...

I frequently take the train for a specific journey, and the _only_ reason I do that is because if I book it 2 weeks in advance its cheaper than driving. If I don't book it that far in advance, its considerably more expensive than driving; and since the train takes twice as long as a car to get there, I wouldn't take the train in that situation. Hell, if I wanted to travel first class it would cost *4 to 5 times* what it costs to drive, for a journey that takes twice as long as driving - that's a complete WTF.

Re:Policy

[tehcyder]

Although, that said, despite the phone network being a similar situation, that seems to have worked out surprisingly well (despite the fact that we're mostly stuck with using BT for the local-loop, and they are utterly utterly incompetent).

I'm no great fan of BT, but I shudder to think what it would be like if a load of different private companies tried to do it instead. At least now BT have to get a supply to your door. I personally couldn't give a toss about competition between phone companies, I'd be quite happy if one nationalised company was responsbile for the whole lot: any "unprofitable" services like providing decent broadband or 3G coverage to rural areas would just be part of the service, in the same way that you pay the same for a stamp on a letter to go from Land's End to John O'Groats as you do from Manchester to Liverpool.

Re:Policy

[tehcyder]

Competition seems to be working in the energy sector as well: the infrastructure is separated from the suppliers so you can buy electricity from whomever you want. (The surprise there is that people complain about having a free market, and can't seem to be bothered to select the best offer: they would prefer to pay a set price even if that price is higher than what they'd pay on the free market).

In the UK, ALL the power companies are corrupt, inefficient, guilty of mis-selling, hiding information from customers, obstructing rivals and obfuscating their pricing structures as far as humanly possible.

And no, I really, really do not have any interest in shopping in the glorious non-free marketplace that has been created. I want them to supply electricity and gas and for me to pay them sufficient to keep up on maintaining the infrastructure. Which I'd happily do for a nationalised company.

Re:Policy

[Pecisk]

I really don't care how rightwingers spin it. However, money lenders have their opinion about it and it's hard to ignore if you have budget deficit.

Re:Policy

[Xest]

"I know, but still massive debt is not nice thing to carry in future, because things can get ugly pretty quickly."

That really depends on whether your economy grows with that increased debt.

Consider this, you have £10,000 of debt, and are struggling to break even each month. A good friend starts a new business with a genuinely great idea and is looking for £5,000 of investment. If you borrow £5,000 and 2 years down the road his company has been successful such that you can cash in half your shares in the company for say, £50,000 then is that £15,000 of debt really very scary any more?

It's the proportion of debt to GDP that really matters in this respect - the net size of the debt doesn't matter too much if you can shrink it as a proportion of GDP because shrinking it as a proportion means you have to give up less of your money to pay it off.

What matters, as always, is that said investment is sensible. Spending £5bn to roll out 50mbps broadband to the whole country would easily pay for itself over time for example with the increased ability for people to remotely work for higher paying companies, sell their products and services online - even to other countries - even if they live in the middle of nowhere where previously they'd have been unable to and relatively unproductive as a result, move government services online meaning you can save money by cutting the need to maintain expensive buildings which in turn frees up buildings for private business to grow into and make use of, decrease use of north sea oil which could instead be exported for profit and so on.

Similarly as another example, investment in scientific research can help kick-start whole new industries (stem cell medicines, products based on nano-materials, green technologies) which can export products to the rest of the world.

There's certainly a challenge in getting the investment right, but there's nothing inherently scary about increased debt if you have credible plans to grow your wealth in greater proportion relative to it.

Re:Policy

[khallow]

investment can increase growth which will in turn increase tax receipts which will in turn reduce the deficit.

Government spending isn't automagically investment. If you're spending and not increasing growth, then you've just made the problem worse.

Re:Policy

[khallow]

"Massive debt" is just a scare phrase used by rightwingers who think that corporate and government economic behaviour is exactly analogous to that of a careful householder who pays their credit card bills on time and never has a mortgage.

Well, someone has to show first that the analogy is broken. How has high debt worked for Japan or Greece?

Re:Policy

[tehcyder]

Who on earth is going to pay such a high price to travel on a train when they could drive in half the time? I wouldn't be surprised if you could get a taxi for that price. I can't imagine they get *any* passengers in the first class carriage.

Well, they must get some... Anyway, I think you're forgetting about business travellers. They can (quite convincingly) argue that the cost is worth it for a long trip, because they can actually work during the journey, unlike in a car or even a plane. On a train you can phone, use the internet, effectively hold business meetings with colleagues, and so on.

I personally would only take the train somewhere if I was being paid expenses, as you say for personal use (if you don't book weeks in advance) it is just too expensive.

Re:Policy

[Xest]

Sure but the counter to that is that austerity isn't automatically deficit reduction - some of the cuts our government has made has resulted in a decrease in economic output which has led to a net increase in debt relative to GDP.

I wasn't so much suggesting whether or not our politicians are non-retarded enough to implement sane policy, simply that trying to hit debt targets by factoring in convenient one-off windfalls isn't exactly a smart long term plan and is a method you'd use for no other reason than a clear inability to deal with the actual underlying problem - whether that's through sensible cuts, sensible investment, or a mixture of both. The issue is that the current muppet certainly can't get the whole austerity thing right, so he may as well have a go at the investment thing and see if he's better at that. Ideally he'd just fuck off full stop and let someone with half a brain when it comes to this sort of thing take over (e.g. Vince Cable), but we're not that lucky.

Re: Policy

[tehcyder]

If you want to go back to the bad old days of waiting weeks for a phone then feel free to do so

You cannot compare telecoms in the 1970s with today. It's like saying that back in the Old Labour days, a home computer cost the equivalent of a car, so look at the fantastic efficiencies created by Margaret Thatcher and the Tories.

Where you have wired/cable/fibre connections, someone needs to pay for getting it to your house, and I'm fucked if I'm paying Richard Branson 25 grand for the privelege. Like the National Grid, it's a common good that should be equally available to everybody, irrespective of location or income.

Why, precisely, should telecoms companies be able to make money out of literal thin air?

Do you pine for the days of union closed shops and secondary action too?

Frankly, in view of the recent alternatives, with posh twats like Tony Blair and Cunt Cameron growing ever richer through diligently applied selfishness and amorality, yes.

Re:Policy

[FireFury03]

Overall if you either get a good advance deal or are rich enough that the cost is neligable to you it's hard to beat first class train travel as a comfortable way of getting to/from london.

OTOH I don't know why anyone would buy a first class ticket from manchester to leeds because the "first class" on those trains is not deserving of the name

Getting to/from London is possibly one of the more useful things you can use a train for, owing to how bad it is to drive in London (that said, there have been a couple of times when I saw the train price and said "sod that" and either drove and parked to the centre of london or drove to the outskirts and took the tube the rest of the way).

My typical train journey (second class, not to london) involves:
1. Get from the house to the station in the city centre: parking at the station is a non-option because of the amount they charge, similarly taking a taxi is about the same as half the cost of the train journey itself. Taking a bus would be an option, except that the busses are usually scheduled so that there's a long wait between the bus arriving at the station and the train leaving (to the point that its actually faster to just walk the whole way, which takes about an hour). Also the busses stop running after 18:30 and don't run at all on Sundays. So usually I either walk (an hour) or cycle (15 minutes).
2. The first leg of the train journey takes about an hour. Then I have a short (15 minute) wait for the next train.
3. The second leg of the journey takes about 3.5 hours or so. This gets me into my destination city. However, I need to go out to one of the small stations a few miles out from the city, and that train only runs every hour so I usually have a 30 minute wait.
4. The final train takes about 15 minutes, and from there its just a short (5 minute) walk to my destination.

So this adds up to about 5.75 hours.

If I wanted to do any work-type stuff, I could do maybe 4 hours once you take into account getting laptop out, packing away, etc. on the trains. Also the second train doesn't have power sockets, so I'm down to battery power for that. Although the first train does have power sockets, First aren't great at keeping their trains in good repair and they frequently don't work. And that's *only* if I manage to get a table and 2 of the seats at that table are empty - 4 people around a table makes it far too cramped to work, airline seats are too cramped to work (elbowing the person next to you while typing isn't good form). Either way, I'm not hugely productive on a noisy train.

Alternatively, I can drive, which takes 3 hours, is door to door (so no faffing with trying to get to the station), and I don't have to stick to a specific schedule (if I get 10 minutes late it doesn't matter when travelling by car, whereas by train it does - not only would I have to wait an hour for the next train, but I would have to buy a new ticket at great expense). Taking the train is cheaper than driving if I book 2 weeks in advance. If I don't then it is far more expensive.

(Oh, and before anyone starts going on about "you haven't taken the cost of owning the car into consideration": no, I haven't, because the public transport is generally so poor that I have to have a car *anyway* for other journeys)

Re:Policy

[interkin3tic]

I didn't think the rail was that bad when I visited. Japan seems to be the only place that is doing trains WELL. I have no idea why theirs is working. I've heard that homogenous societies tend to spend more on public good than heterogeneous societies do, so perhaps they're less stingy with their maintenance costs than the rest of us are because they identify more with the other riders. Here in Chicago, it seems like everyone hates the CTA, including the CTA itself, because it's so crappy, so why spend serious money improving it?

Japan spoiled me, I can't stand driving to commute anymore.

Re:Policy

[tehcyder]

Yeah but now they need the cash for vitally important projects like a state funeral for Dear Leader.

They should have asked Her Heartbroken Supporters to chip in to pay for the fucking thing if they're that bothered about the humourless old cow.

Re:Policy

[FireFury03]

I'm no great fan of BT, but I shudder to think what it would be like if a load of different private companies tried to do it instead.

Well, the point really is that where you have a single infrastructure, privatisation doesn't seem sensible. Admittedly it seems to have been moderately successful in the case of BT, although we'll never know how well state ownership would've handled the internet age.

For true competition, you'd have several companies, each running their own network, and when you find one is incompetent, expensive, whatever you could switch to another. Obviously that is relatively infeasible because of the build-out cost of the physical network though. However, thats exactly how it works for the MNOs and that seems to have worked out pretty well in the grand scheme of things.

Re:Policy

[FireFury03]

Well, they must get some... Anyway, I think you're forgetting about business travellers.

I'm talking a 5.5 hour train journey on a Sunday night that arrives at the destination at 1:30am on Monday morning... I really can't imagine they get any business travellers, let alone business travellers who are expecting to get any work done...

They can (quite convincingly) argue that the cost is worth it for a long trip, because they can actually work during the journey, unlike in a car or even a plane.

For some routes, potentially. However, I would question the productivity of someone on the train - are you really going to find a 5.5 hour train journey more productive than a 3 hour car journey and 2.5 hours of proper work? Especially when some of the train journey involves changing trains, waiting around on platforms, etc.

On a train you can phone, use the internet, effectively hold business meetings with colleagues, and so on.

Again, depends on the route. On one route I recently travelled on the train, I was without a 3G signal for around 90% of the journey and the train's wifi was almost unusable. Holding "business meetings" by phone is ok right until you go into a tunn-- (which on some routes you do very frequently).

I personally would only take the train somewhere if I was being paid expenses, as you say for personal use (if you don't book weeks in advance) it is just too expensive.

The thing is, for business use I'd take my time into consideration far more and this would make me less likely to take the train - ignoring the expense of the train, having to faff around getting to the station in the first place, spending much longer on the train than I would driving and then having to get from the station at the other end sounds like a complete waste of my time to me, which is significant if I could be getting paid by the hour for that time instead.

Re:Policy

[afidel]

Greece would be fine if they had their own monetary policy, look at other much more debt laden countries, they have a few years of hard times after the currency is devalued and then they bounce back, Greece is going to have a hard time for over a decade before this is over.

Re:Policy

[CrimsonAvenger]

Consider this, you have ã10,000 of debt, and are struggling to break even each month. A good friend starts a new business with a genuinely great idea and is looking for ã5,000 of investment. If you borrow ã5,000 and 2 years down the road his company has been successful such that you can cash in half your shares in the company for say, ã50,000 then is that ã15,000 of debt really very scary any more?

On the other hand, if two years down the line, your friend's new business has collapsed and your shares are worthless, you're pretty much screwed.

Re:Policy

[Anonymous Coward]

I won't say for Greece, but despite its economic slump, Japan is still crawling along.

People are getting fed. They're relatively modernized with access to first world luxuries. There are still Japanese companies doing business around the world (no matter how much slashdot likes to hate Sony or Japanese cars or whatever), and there are still people who want to do business with Japan

All this while Japan maintains a sizable military, and plenty of welfare (rife with abuse, I hear there are cases where people don't tell the government their elderly parents died, so they keep getting welfare payments) and regulation

Japan might not be the tiger it once was, but it's not like it turned into a 3rd world hellhole.

Re: Policy

[madprof]

That is the case right now, or at least it was in 2009, and I don't see how it could possibly have changed so dramatically as you assert in a few years. I think you're repeating propaganda straight from the Telegraph.

I have never read the Telegraph. Please don't sink to that level.
The waiting lists for phones back in the GPO's day was greater than it is now. I say weeks but maybe I should have said months.
I never waited weeks for my phone connection in 2008. It was done within 7 days. And had I decided to use the cable provider then I'd have had one much quicker.
Being able to choose your provider isn't possible with a state-owned monopoly.

I don't know what UK you live in, but I pay an outrageous price for the maximum sync speed my connection can handle: 1Mbps. There are many people in the same situation, and our country has fallen far behind much of the rest of the world (even Australia now) in terms of speeds and value for money. The national average "broadband" speed is equivalent to that of a domestic connection in Stockholm of 1996. There is no planned resolution of such abysmal speeds, there is only heel-dragging and claims that "people don't want such speeds" from BT. We, the consumers, have lost entirely. BT only makes (very marginal) improvements when forced to by regulators. Competition has nothing to do with it.

Competition has a great deal to do with it. We're in a bad situation with regards to BT and its place in the market.

By the way, closed shops are a vital component of a free market. Secondary action is too, but to a lesser extent. Please do try to deny it; you'll show yourself up as even more of a dogmatist.

I am not for unfettered laissez-faire business practices.

Re: Policy

[madprof]

Where you have wired/cable/fibre connections, someone needs to pay for getting it to your house, and I'm fucked if I'm paying Richard Branson 25 grand for the privilege. Like the National Grid, it's a common good that should be equally available to everybody, irrespective of location or income.

Why, precisely, should telecoms companies be able to make money out of literal thin air?

I agree. Amusingly, the government have made money "out of thin air" with selling off mobile spectrum. :)
And they generate money out of thin air with quantitative easing.

Frankly, in view of the recent alternatives, with posh twats like Tony Blair and Cunt Cameron growing ever richer through diligently applied selfishness and amorality, yes.

The personal finances of the PM and any ex-PMs is not as relevant as their actions when in office.

Re:Policy

[khallow]

some of the cuts our government has made has resulted in a decrease in economic output which has led to a net increase in debt relative to GDP.

Can you give an example of this? I happen to be of the opinion that this doesn't happen.

Re:Policy

[khallow]

Greece would be fine if they had their own monetary policy

If by fine, you mean basking in their double digit inflation, sure. If by fine, you mean a long term viable economy, well, I have to disagree on that. And why isn't Japan doing well? They have their own currency after all.

Re:Policy

[khallow]

Japan might not be the tiger it once was, but it's not like it turned into a 3rd world hellhole.

Japan crushed its future. It was on track to overtake the US. Then they somehow dropped the ball. I'd say that the difficult choices they tried to evade in the wake of the 1990-1991 recession and the huge debt they accumulated in the process, hurt them greatly. Even now, they're still accumulating debt faster than they're growing their economy. I don't see it ending well for them, unless they make some major structural reforms.

Re:Policy

[Xest]

Absolutely, but sometimes in life there are sure fire bets where the risk is so minimal it's silly not to invest in them and in government this is especially the case.

Unless somehow all modern Biology turns out to be wrong, it's pretty clear cut that stem cell research funding is going to yield new treatments that would be worth a fortune in exports for example. Similarly it's pretty clear cut that nano material research is going to yield new products that again would build a good export market.

The government isn't in the situation of stock market style gambling, they're in a situation where there are some obvious areas for investment that could yield 99.9999% guaranteed improvement in economic productivity. They opt not to do so because a) It would require them accepting they were wrong, which like most Slashdotters they simply cannot do, and b) It would require they get over their ideological boundaries (i.e. religious objections to some stem cell research), and c) In some cases said industry hasn't given them and wont give them the pre-requisite backhander bribe - and I mean bribe in the broadest sense, e.g. a party funding contribution.

Better value to whom?

[Anonymous Coward]

Saying that a low price provided better value is a completely subjective statement. Spectrum is a scarce resource and if it doesn't fetch a price which reflects that scarcity, then somebody wins and somebody loses. Obvious tax payer benefits of a high price aside, the spectrum could have been used for shared access protocols instead of the exclusive uses that it's going to be put to now. A handful of competitors is still an oligopoly.

Re:Better value to whom?

[Xest]

"Spectrum is a scarce resource and if it doesn't fetch a price which reflects that scarcity, then somebody wins and somebody loses."

Scarcity in itself doesn't define the value of something, you could take the most scarce thing on earth, but if no one cares about it and is willing to pay for it it has no monetary value.

The spectrum was sold at auction and it reached the price that companies were willing to bid against each other too. That's about as fair a value as you can place on the thing as it was determined by a genuinely competitive market competing for it.

Re:Better value to whom?

[Anonymous Coward]

A small number of competitors (artificially limited by regulation) can not be considered a market for the purpose of price-finding. Major stakeholders had no way of influencing the use of the spectrum and the price. Suppose you have three competitors and three blocks of spectrum, and you limit each operator to just one block of spectrum, then they will each only pay the minimum. Does that mean that the spectrum isn't worth more than the minimum? No, you set up the auction in a way which guaranteed failure. The mobile networks are a much bigger market now than they were when spectrum was much higher priced. This strongly suggests that the auction did not result in a fair price.

Re:Better value to whom?

[Xest]

But none of those theoretical restrictions you suggest could make an unfair auction happened did they so it's a stupid argument.

You can't come up with theoretical ideas as to how you can make such an auction unfair and then claim the auction was unfair based on that even though such theoretical ideas didn't happen in practice.

The auction itself was pretty transparent, there's nothing there that demonstrates corruption. There's decent plurality in the UK mobile market too so to use examples of three stakeholders is meaningless when we know for an absolute fact there was seven. This isn't like the landline market where BT still has an inherited monopoly, the UK mobile space is far from "artificially limited by regulation".

Having read a bit more about this the only criticism I can find is that there was no minimum increase in the bid bidders had to make (i.e. they could just bid a trivial amount more rather than say, £10million more than the next bid down) but that if anything would've further distorted the resultant figure away from the market value - if the market value was say, £15million then all that would do is mean companies either bid £5million too low, or £5million too high to pay for it.

Unless you have some evidence of actual wrongdoing that no one else is aware of then you're just clutching at straws, the price that was paid was the price that a healthy market determined. Maybe they could've squeezed a bit more out of those companies if they'd artificially restricted the auction to force higher prices, but as Ofcom said - their job wasn't to get money for the public purse, their job is to get companies to utilise the spectrum, and that makes sense. If the government wanted more money they should've bypassed Ofcom and forced the companies to pay x amount.

All that's happened is that the government has overestimated the worth of the spectrum, turns out reality disagreed with the price they perceived it to be worth, so it was stupid of Osborne to hedge his deficit reduction budget strategy on it.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

Bullshit. The price of a product is not determined by the cost. That only happens in perfect markets with many competitors, and only if at least some of those competitors try a low-price strategy, which then drives the market price close to where it's no longer profitable. Managers know this and avoid competing on price whenever they can. In a market with only a handful of competitors, they can and do avoid it. Reducing the costs drives profits up, not prices down.

Broken window falacy, again?

[Stolpskott]

Quoting from Ofcom on the suibject...
"Ofcom said that the aim of the auction was not to generate revenue for the government, but to promote competition that will ensure consumers will benefit from the rollout of 4G services."

However, I would be willing to bet my mortgage and my left testicle that the mobile carriers will say "this service is x% better than the 3G network, so we need to charge the consumer at least x% more than they paid for 3G services" irrespective of the relative cost of the 3G and 4G services to the provider.
Ofcom's approach is a nice idea, if the savings from reduced licence cost are passed on to the consumer, but in related news it has been discovered that the problems with the Curiosity rover on Mars are caused by the fact that the water we were hoping to find there is actually Champagne, and the rover is currently detoxing in a Martian Alcoholics Anonymous facility before resuming its place as a productive member of Martian society...

Reducing the cost to big business in the hope that there is a trickle-down effect will not see all of those savings go in Management bonuses at the mobile companies, but considering that the expected revenue will now have to be made up by the British taxpayer, the net result will be a win for the business and a loss for the man in the street.

Re:Broken window falacy, again?

[FireFury03]

However, I would be willing to bet my mortgage and my left testicle that the mobile carriers will say "this service is x% better than the 3G network, so we need to charge the consumer at least x% more than they paid for 3G services" irrespective of the relative cost of the 3G and 4G services to the provider.

Prices reflect what the market will bear, not the underlying cost of the service. The same would be true no matter how much they had paid for the licence. The difference is that with a lower licence cost, there is more competition and that reduces the price that the market will bear. Also, a higher profit margin means more money can be invested into infrastructure, increasing the buildout speed (at the moment, 4G is utterly useless because its only available in heavilly populated areas where you can already get wifi. The telcos need to build into the lesser populated areas for it to become useful - whilst starting in the heavilly populated areas allows them to claim to cover a high proportion of the population, I'd suggest its a bad strategy because that proportion of the population are exactly the people who don't need the service).

Reducing the cost to big business in the hope that there is a trickle-down effect will not see all of those savings go in Management bonuses at the mobile companies

That would be true if the buyers of the spectrum were the same companies in both the "high cost" and "low cost" scenarios. However, that's not the case - the reduced licence cost allows additional companies to compete who otherwise wouldn't have been in the running at all, and that drives prices down for the customer.

Re:Broken window falacy, again?

[Anonymous Coward]

However, I would be willing to bet my mortgage and my left testicle that the mobile carriers will say "this service is x% better than the 3G network, so we need to charge the consumer at least x% more than they paid for 3G services"

I'm not interested in your left testicle, but what do you mean by 'bet my mortgage'? Do I get the mortgage, and you keep your home when I show this to you? Three to offer 4G mobile connections at 3G rates. Or will I get the home too?

Re:Broken window falacy, again?

[Sockatume]

I would be willing to bet my mortgage and my left testicle that the mobile carriers will say "this service is x% better than the 3G network, so we need to charge the consumer at least x% more than they paid for 3G services" irrespective of the relative cost of the 3G and 4G services to the provider.

At least one carrier has indicated that they will not charge different amounts for 3G and 4G, while EE - the only current 4G carrier - has reduced its 4G surcharge well ahead of any of those competitors coming online. It's safe to assume giving the limited uptake of 4G at current prices that the surcharge will have diminished to zero by the time rivals arrive.

Re:Broken window falacy, again?

[Pax681]

Quoting from Ofcom on the suibject... "Ofcom said that the aim of the auction was not to generate revenue for the government, but to promote competition that will ensure consumers will benefit from the rollout of 4G services."

However, I would be willing to bet my mortgage and my left testicle that the mobile carriers will say "this service is x% better than the 3G network, so we need to charge the consumer at least x% more than they paid for 3G services" irrespective of the relative cost of the 3G and 4G services to the provider.

well as someone else mentioned before, Three, who are my mobile service provider have absolutely NO PLANS to charge more for 4G and will also keep their unlimited, unfiltered and the ability to tether into their plans and they are cheaper than the rest.
i reckon your house and left nut now belong to Three :P

Re:Broken window falacy, again?

[tehcyder]

It's safe to assume giving the limited uptake of 4G at current prices that the surcharge will have diminished to zero by the time rivals arrive.

Seeing is believing. Meanwhile, if the spectrum and the infrastructure were all still state-owned we wouldn't need to be speculating, the price would be fixed in an equitable manner already.

Re:Broken window falacy, again?

[crizh]

Much as I love Three I should like to point out that their service is filtered, they blacklist 'adult' content. You can 'opt-in' to their 'adult' sandbox but that does not remove the block from anything else.

Also, as I have just learned, only The One Plan allows unlimited tethering. You can buy tethering as an add-on but it has a 2Gb cap.

Nonetheless they would appear to be the best Carrier on Earth...

[Still room for improvement though]

Re:Broken window falacy, again?

[Pax681]

at the prices they charge bud, why go for anything else but the one plan?
never really had much of a prob with adult content tbh. was sent various filthy links by friends and they just worked... at times, much to my dismay.. you know what some links friends can send you!
as you say always room for improvement but they ARE damned good! i got an S3 with the one plan for 31 a month on a 24 month contract, which is only £6 over the cost of the one plan so an S3 for £120 effectively.. i am happy as hell with them.

Re:Maybe it'll end up being costing the customer l

[ranulf]

That's exactly why I ended by pointing out that this time around there is competition and hopefully this will lead to a lower price to the customer.

Re:Maybe it'll end up being costing the customer l

[wvmarle]

Reminds me of the UMTS auctions around 1999/2000. Huge amounts of money were spent in various countries - so much that several of the buyers of UMTS licenses almost went bankrupt, just on the license cost. Especially as the high license cost required high fees for subscribers in a time that there was no such thing as a smartphone.

Auctions got huge results in various countries, but after five, six such auctions in other countries in EU the prices offered fell drastically. Phone companies obviously smartened up, realising that the amount paid in the first auctions was so much that they'd never be able to get that back from subscribers. A few years later, mobile internet was being offered cheap as there was little demand and a huge bandwidth available, so the more subscribers the more money they could get back. Hence the lower prices.

Nowadays I'm sure mobile phone companies have smartened up a lot. They know the demand, they know what they can reasonably pay to make a reasonable profit, and of course a major competitor to the new 4G network is the existing 3G network - which for many people is good enough already.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

Five companies is not competition. That's a club.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

That's true when costs go down. But if something costs more to the manufacturer, or telecom operator in this case, you can be sure the prices will go up. Especially in cases like this where the competition is limited (i.e. only to those who could afford to pay a spectrum license, and did so).

Like you said, it's not a perfect market, but rather an oligopoly, which does makes matters worse for the consumer....and more so if the regulator, some very large consumers group or even gov't consumer protection agency is not stepping up and doing their thing. There's always the "we need to cover our costs or go out of business" card.

Re:Maybe it'll end up being costing the customer l

[Chrisq]

Managers know this and avoid competing on price whenever they can. In a market with only a handful of competitors, they can and do avoid it. Reducing the costs drives profits up, not prices down.

Surely this would be illegal under the Cartels and the Competition Act 1998, so they couldn't possibly be avoiding true competition. Could they?

Let us run some numbers.

[ron-l-j]

Going off of the numbers supplied from statista.com the number of US smartphone users is around 119 million. With 2016 numbers predicted to be 192 million. I now my monthly bill for my phone, and data plan hovers around $100 dollars a month. So today that's eleven billion nine hundred million dollars a month, or around 9 billion euros. The the price change of a billion euros is small when compared to the income.

Re:Let us run some numbers.

[tehcyder]

my monthly bill for my phone, and data plan hovers around $100 dollars a month.

In the UK it would be about 35GBP max with a free iPhone 5/equivalent, and there are quite reasonable plans for 10-15GBP a month. I am amazed that there is a single area where the UK is significantly cheaper than the US, except for whelks or something

Re:Maybe it'll end up being costing the customer l

[nojayuk]

The investigation being pressed is to see if the bidders colluded before and during the auction to keep the price down. This is illegal under British law but that's not stopped folks before.

Ofcom did exactly what they were told

[dayjn]

And they did a good job of it. Now someone (government, ofcom?) needs to keep the mobile operators in line, meaning they must fulfill their end of the deal to cover 99% of the UK with a good network and signal. It remains to be seen if the billions that the companies didn't spend on the spectrum auction are applied instead to network infrastructure - or corporate waste (executive wages).

Re:Ofcom did exactly what they were told

[Anonymous Coward]

Whenever I visit the UK I'm amazed by how lousy the 2G, yes 2G, coverage is. And I'm talking built-up areas, significantly sized villages, you name it.

Re:Ofcom did exactly what they were told

[Anonymous Coward]

99% of the UK, or 99% of the population of the UK? Two very different things...

Re:Ofcom did exactly what they were told

[Anonymous Coward]

The bidding process for the UK 3G auction was specifically designed to extract as much money as possible in the short term for the licences. Ofcom did what they were told, the process worked spectacularly well, but the buyers overbid and couldn't afford to roll out 3G. Do the networks get criticised for overbidding? No, it was obviously Ofcom's fault.

This time Ofcom were specifically told not to run the same process and to ensure takeup and competition. Again they did as they were told, the process worked well, but unfortunately the UK chancellor's department had made some unfortunate over-optimistic predictions of revenue:

http://www.guardian.co.uk/business/2013/feb/20/4g-auction-smartphones-george-osborne

Apparently this is Ofcom's fault again.

Re:Ofcom did exactly what they were told

[Anonymous Coward]

You must be visiting from continental Europe - if you came from the US you'd be amazed at how good the coverage was!

Re:Ofcom did exactly what they were told

[Ash-Fox]

I hadn't really noticed since I'm always on 3g everywhere, rarely do I end up transitioning to 2g because 3g is unavailable.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

No. The price is determined by the capacity and willingness of the consumers to pay. EVERYBODY knows that, except the stupid people who sell at a lower than necessary price because they "want to create competition" or some other delusional reason. If you sell me something and I can turn around and sell it to someone else for twice what I paid, then I'll do so. Unless there is a stupid person who needlessly undercuts my price, I have no reason not to sell at the maximum price the consumer will pay. Contrary to the prevailing opinion on Slashdot, managers are not stupid. A small group of competitors will not succumb to competing on price. Have you not noticed that mobile phone operators go for exclusivity whenever they can? New phone only available through one provider? Why the fuck do you think that happens? The shareholders of the five companies which got the spectrum cheaply will thank you very much, but not enough to even pay the taxes on their increased profits.

Pffft

[palemantle]

The difference between 'expected' and actual revenue is what ... 1.2 billion pounds? Politicians in other countries and their industry cronies are probably having a good laugh about now. Have a look at this: http://en.wikipedia.org/wiki/2G_spectrum_scam

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

It doesn't take collusion to avoid competing on price. If all competitors know that lowering prices will reduce profits for everyone, then nobody will lower their prices. What do you think they teach managers? Hint: "Sell cheap" is not among it. Competing on price is a last resort if you absolutely can't avoid it.

Re:Maybe it'll end up being costing the customer l

[FireFury03]

When 3G was rolled out in the UK, the cost to the customer was prohibitively expensive that uptake was pretty slow,

So, the same as 4G then...

At the moment 4G is completely pointless:
- Its only availble in highly populated built up areas (i.e. where there are already plenty of wifi hotspots)
- Its pretty expensive (although EE have at least made their pricing slightly saner since their initial launch, which saw them bundling lots of free talktime and SMS but charging through the nose for data - what exactly do they think people will upgrade to 4G for?)
- There's still not a lot of hardware that supports 4G

3G had very similar problems (ok, so it wasn't competing with wifi, but it was expensive, not widely supported by hardware and had terrible coverage). 4G will improve, just as 3G did, but for now I don't see the value in paying more for 4G network access.

Gradually, it's come down to a more reasonable price, but it's still prohibitively limited by bandwidth for the majority of people - 250MB per month is often considered generous.

Really? You can get some pretty cheap contracts offering gigabytes per month. Personally, I'm on a PAYG plan - I get 150MB "free" (expires after 45 days) every time I add £5 to my account balance, and I can purchase a 2GB bundle (expires after 30 days) for £5, which is taken from that account balance. As it happens, I often don't need more than 150MB over 45 days, so assuming I didn't use the phone for anything else that would be £5 for 75 days worth of data (so £2/month), but worst case its £5/month for over 2GB of data/month, which seems a pretty reasonable deal to me.

If you want to use 3G as a home internet connection then you probably want more than 2GB, but there are still pretty good options here - a quick look at Three's pricing shows they do a 10GB for £15.

Re:Maybe it'll end up being costing the customer l

[Ash-Fox]

250MB per month is often considered generous.

I have no idea what UK you live in, I'm with Three and have been for numerous years. I pay 25GBP (comparable to broadband costs and that's not even adding line rental costs etc from landline to it!) a month for unlimited Internet with tethering (along with a bunch of other things like 3000 minutes, texts etc). If your memory fails you, Three was that network that has only 3g towers (they rent 2g from other providers). They were the ones that provided free, unlimited options to all users on their network, including Skype, Live Messenger, Yahoo Messenger etc.

Yet, it's only available in 10 cities (not mine), costs a minimum of £50 per month and the monthly bandwidth allowance can be used up in a matter of minutes if you actually use it.

Maybe you should switch to Three? They stated they have no intention of charging extra for 4G either. In other words, the existing cheap plan coverage, covers 4G as well.

Re:Maybe it'll end up being costing the customer l

[MrMickS]

You can get an unlimited text/unlimited data pay as you go bundle for £12 on a 3G network.

Three have said that they won't charge extra for 4G connectivity so existing unlimited data plans will be fine on that network. Sadly they came out worst in the auction so they aren't going to be able to offer the same headline speeds as the other networks.

Re:Maybe it'll end up being costing the customer l

[hawkinspeter]

So, how many companies does it take for it to not be a club?

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

So have all PAYG plans in the UK copied the American scam of expiring them after X days?

When I emigrated (over a decade ago), PAYG never expired, you could have a tenner on a spare mobe forever (well, near enough).

Re:Maybe it'll end up being costing the customer l

[iank]

Concur. Three is the best performing network in London, though far from perfect. However I was on Voodoofone before and it was truly woeful for data.

The spectrum auction concept is fatally flawed

[aurizon]

Bidders are prone to bid wildly high amounts on the expectation they will have a captive audience to gouge, and this is what they have done.
The sale of spectrum is a de-facto tax that is not called a tax by means of this so called spectrum auction.

Lets have a sidewalk auction. Bidders would get ownership of lengths of sidewalk, and people would have to pay a fee to walk along and another fee to cross in their car. Some people who could not afford it, would be house bound, and unable to go to work, and all food delivered would be inflated by the sidewalk fees paid by the grocer on deliveries.

Why stop at that? Road auctions? Make everything a toll road, with each car, truck or bicycle tracked by bar codes and fees charged back that way. Does this sound like roaming? Would they have police preventing theft of cross over fees by people who went overland?

Spectrum should be free. Users must meet common technical standards for interoperability - like the land-line phone system does. Antennas and land-line interconnects to be pooled and common standards here as well.

Re:The spectrum auction concept is fatally flawed

[nedlohs]

Unfortunately reality doesn't match your fantasies. Spectrum is a limited resource - with our current technologies we can only fit a certain amount of "stuff" into a given amount of spectrum. So having it "free" and letting anyone do anything they want with it doesn't work - the transmissions interfere with each other and we end up either with no one getting to use it for anything useful at all, or the people who can afford the biggest transmitters being able to use all of it for whatever they want.

Rather than that society usually resorts to one of::

1. Have the government use it as they see fit not allowing the private sector to use it at all. So the government would run the phone network and the television stations and so on.
2. Have the government allocate parts of the spectrum to private sector users placing whatever restrictions it deems beneficial.

That second one is what most of the Western world uses. The government splits up the spectrum and allocates parts to certain activities "from A to B will be for television, from C to D will be for radio, from E to F will be for cell phones, from G to H will be free for all with a maximum power limit, etc". Then it comes up with some mechanism of assigning bits of spectrum to companies/etc; an auction is one such mechanism, "Tom donated $X to my election campaign so he can have it" is another...

This doesn't happen with sidewalks and roads because the physical world limits things. However, when it does happen again there are solutions. You mentioned toll roads - if there's a huge demand for traffic between two points then a toll road is a common way to have the people who make up the traffic pay for the infrastructure. Toll sidewalks are not as common, though I'm sure somewhere in the world there's a paid walkway. Usually for sidewalks lots of traffic means lots of businesses who can be taxed to pay for upgrades (converting the road to a pedestrian only walkway, widening footpaths, building alternative routes, etc). If it's in a residential area then it would usually be solved by adding restrictions to non-resident traffic - restricting parking to residents, etc

Re:The spectrum auction concept is fatally flawed

[aurizon]

Yes, spectrum is limited, as is land for walks.
The concept of leasing roads and sidewalks is not workable, we have grown up with these being a common good, provision and maintenance paid by taxes.

As for shared spectrum, it is perfectly workable, in fact it is now shared, with handoffs between carriers of assorted traffic being routine. Some carriers are accused of dropping traffic of other carriers. Each cellular base station has its landlines connected and will be a shared resource, with costs allocated by traffic by the various carriers. Currently we have 3-4 carriers with a base on the same high point and the same with other bases, although there is base sharing in low traffic ares.areas.
With sharing you would have one base on each high point and they could be lower in power and closer, with less RF interference from the other three bases on the same high point, and a single land line trunk into it. It would have to be capable of the traffic load of the 3-4 bases that it has replaced, but this is easier to do in a single piece of equipment versus 3-4.

The method of auctio of spectrum superficially looks good, but in fact the fees paid are passed through to subscribers = high service costs = barrier to entry = less tru competition

Re:The spectrum auction concept is fatally flawed

[nedlohs]

As always it's a trade off.

Sure the government could just tax everyone and use that money to build the towers an so on for a cell phone network infrastructure and then either give access to that to whomever wants to provide a cell phone service, or charge for such access and hopefully recover the costs for building and running the infrastructure. Or it could farm that out to a private monopoly. That's basically how the "copper" phone network in say Australia works. That's sort of how roads and foot paths work - just without the service providing middle man since the raw infrastructure is good enough (though of course you do have transport companies providing a service on top of the road infrastructure).

The downside to that approach is that the government (or other monopoly owner) of the infrastructure has little incentive to upgrade it. There's no room for private risk taking and experimenting with new technologies that can't work on top of that infrastructure. There's no competition being used to determine the "right" amount and type of such infrastructure.

Capitalism is far from perfect, but the base bones of it is that limited resources are allocated to those who will pay the most for them, with the hope that they are paying the most because they can sell the results for the most which in turn we hope is because that is what the population most wants to buy. Of course unless you happen to be a libertarian of the most extreme sense you likely don't think all those hopes actually always turn out to be the case...

Re:The spectrum auction concept is fatally flawed

[aurizon]

I was not suggesting that the government build it, with their layers of dogsbodies, private should build it, at their expense, with no cost for spectrum, but with full technical and interoperability conformity. Logically, with a small town that needs 10 towers, with a single multiplexed cell stack capable of the number of channels on each tower, instead of 40-50 towers with excess overlap etc/ In other words, onse system of 10 towers for the system load with the cost shared by the spectrum users

Re:The spectrum auction concept is fatally flawed

[nedlohs]

Exactly. So this will be the last iteration of cell phone infrastructure, since no one will ever be able to build anything that isn't completely interoperable ever again.

And once that small town grows a bit and needs more coverage why would any company spend any money to build it? After all everyone is sharing the infrastructure so there's no competitive advantage since everyone is sharing, it's just an extra cost with likely no increase in revenue. The people will put up with a few dropped calls after all.

It is after all a forced cartel between the companies involved.

Re:The spectrum auction concept is fatally flawed

[aurizon]

Well, The internet seems to operate well with standards. Cells do offer interoperability at the RF level and providers accommodate others for load sharing at peak times, and fee charging, so the equipment is there, if we can avoid the burden of uncivil serpents...

Re:The spectrum auction concept is fatally flawed

[nedlohs]

Nothing prevents me from sticking an ipv6 only hosts on the internet that is incompatible with existing ipv4 hosts and can't communicate with them (without an intermediate node that understands both). Sure it mightn't be able to reach other ipv6 hosts either if the only route is via ipv4, but it's still possible to add something incompatible in the mix.

Re:The spectrum auction concept is fatally flawed

[aurizon]

As we gradually change from ipv4 to ipv6 pressures will emerge that cause migration to ipv6. As the world as seen by an ipv4 gradually shrinks, the users will clamor for ipv6. Some dead ends might stay with ipv4? As the current low (~1-2%) rate of ipv6 adoption, the ipv4 group do not suffer greatly, but as allocatable blocks dry up, and the cost of ipv6 hardware declines there will come a tipping point which will place inexorable pressure on the ipv4 to switch instead of using translators or tunneling methods, which bottleneck them even more.

On cellular networks there are hard wired protocols that all must adhere to. recall the transition from the analog to digital methods a few years ago? A sunset time for analog was set and after that date(which varied by country) the analog went dark. Similarly, all makers of gear will have to adhere to a group standard to enable operation at all. I do not know enough about the tech to know if high speed cellular 'converters' will allow mixed operation? One suspects the overhead will be oppressive.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

If n companies are a club then n+1 companies are also a club. Two companies are a club.

Re:Maybe it'll end up being costing the customer l

[jimbolauski]

I remember reading that once a market has three competitors there is little drop in price when a new competitor enters the market. I guess dueling can be rigged but it's much more difficult to rig a Mexican stand off.

Re:Maybe it'll end up being costing the customer l

[TheRaven64]

No, the credit doesn't expire, but some of the bundles do. You can usually either use your credit to buy minutes / messages as you use them, or buy in bulk for a lower price but only valid for a certain amount of time. The only network in the UK I've ever seen do it differently was Orange, which from about 1998-2000 made minutes of talk time and SMS cost less if you had topped up with a £50 card than if you'd topped up with smaller ones.

Re:Maybe it'll end up being costing the customer l

[petermgreen]

What happens at least with O2 is that the balance itself lasts practically forever* BUT you get bonuses for topping up which are time limited and you can also buy "bolt ons" using your account balance which again are time limited. They also have call charging models where the first few minuites of calls on any given day cost a lot more than later minuites. Similally for data if you don't have a current package data is charged at a high rate up to a daily charging cap (£1 IIRC) and then there are no automatic data charges on that day thereafter**.

So provided you keep mobile data turned off you can keep a mobile active while spending very little (nothing if other people call you from time to time) but if you then take that mobile, enable mobile data and start making calls and browsing the internet with it you can easilly burn up a couple of pounds (or more) of credit in one session.

* IIRC you have to use the account in some way (calls both incoming and outgoing count, I think other stuff does too) every few months to stop the account expiring.
** There is a daily data cap after which they will cut your data off until either the next day starts, you buy a data bolt on or you top up and get data as a reward. I'm not sure if how much data this cap represents is documented anywhere (I wasn't aware of it until I hit it and i've only hit it once).

Gotta say it

[gravis777]

raised £2.3 billion in the 4G spectrum auction when the government had hoped for £3.5 billion. Now Ofcom's auction is being investigated by the National Audit Office over whether it provided value for money for the British taxpayers

So, how much is this investigation going to cost, and for that matter, will it have a return on this investment? Let's spend money to figure out why we didn't make enough money?

I get it, there needs to be oversight and accountablility, but just wondering how this investigation, which is going to be paid for most likely with taxpayer money, is going to benefit the tax payers.

Re:Maybe it'll end up being costing the customer l

[drinkypoo]

At the moment 4G is completely pointless:
- Its only availble in highly populated built up areas (i.e. where there are already plenty of wifi hotspots)

The two do not do the same thing. I have to find and then connect to a hotspot and maybe do a little song and dance with the web browser before I can use one. Mobile data might not always be at 4G speeds, but at least I can use the 3G speed... perhaps to tell me where to find one of these fancy open hotspots.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

Three barely works where I live. I don't know ANYONE who uses it. No, I'm not in London.

Re:Maybe it'll end up being costing the customer l

[Anonymous Coward]

£50 for anything approaching usable:

  * Samsung Galaxy S4 24 month contract, unlimited calls, unlimited SMS, 5GB data for £51/month, £29.99 up front.

Technically you can get it for fortyish quid though:

    * Samsung Galaxy S4 24 month contract, unlimited calls, unlimited SMS, 1GB data for £41/month, £79.99 up front.

Think I'll stick to my £25/month unlimited 3G data, 600 minutes plan thanks.

Re:Maybe it'll end up being costing the customer l

[Ash-Fox]

Three barely works where I live.

Three works fairly well wherever I go within the United Kingdom (and I do travel frequently). Coverage map looks like it supports the majority of the UK too.

I don't know ANYONE who uses it.

I know a few.

No, I'm not in London.

Neither am I.

Re:Maybe it'll end up being costing the customer l

[afidel]

Maybe with perfect competition, in the real world a market with fewer than say 20 players is often non-competitive. Look at the DRAM market for a large cartel/oligopoly.

Re:Maybe it'll end up being costing the customer l

[blackest_k]

I don't think you can take 4g in isolation since there are alternatives such as 3g and broadband, wimax, satellite.
  How much internet access do you need when you are out and about?

Most of the time when I am not at home, I am driving and not using the net or somewhere where there is wifi. I guess people riding the bus can use 4g but are they the people that can afford 4g?

Nobody needs 4g at any price, but if the cost is reasonable then people will use it. Reasonable has to compete with free data on 3g, most cell phone plans include some.

Re:Maybe it'll end up being costing the customer l

[jimbolauski]

The study was about competition in the real world. Yes there are always outliers.