Slashdot Mirror
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."
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.
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.
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?
Only to idiots, are orders laws.
-- Henning von Tresckow
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...
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.
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?
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.
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.
http://blog.nexusuk.org
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.
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.
Change is certain; progress is not obligatory.
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).
http://blog.nexusuk.org