Rail crash? You wait until they try to auction the 4G mobile phone spectrum

October 4, 2012

Business groups have launched  a scathing attack on the Government over the 4G spectrum auction and say it has revealed serious problems at the heart of public sector procurement. Simon Walker, director general of the Institute of Directors, expressed a typical view: “It is shocking that such a crucially important process has gone so seriously wrong. Businesses need a stable, reliable telecoms network and certainty in the provision of key infrastructure.” “Procurement mistakes increase risks for companies, threaten jobs and harm Britain’s reputation as a destination for inward investment,” added Adam Marshall, policy director of the British Chambers of Commerce.

Just joking. I’m sure Messrs Walker and Marshall will forgive me for quoting them out of context this once; after all, I’m investing them with seer-like prescience. Their cited words are real, but in fact relate to the very clear and present danger of the West Coast Main Line rail fiasco. The fallout from that will be a moon-cast shadow compared to what will happen if HMG manages to screw up the mobile phone spectrum in the same way it has screwed up our railway network.

As it happens, there has been some relatively good news on the 4G front recently. Maria Miller, the obscure former Grey advertising and PR executive recently catapulted to culture, media and sports secretary, has made a brisk start to her tenure by bringing forward the inexplicably delayed auction date of 4G spectrum to January and cutting through the legal wrangling among telecoms carriers which has deadlocked the introduction of the new, much faster, mobile phone standard to the UK.

But will her timely action be enough to avert a looming disaster? First, a little background. 4G is not some minor incremental improvement on the current standard, 3G. It can offer speeds of up to ten times that of the average current home broadband service. Data-hungry yoof, but more importantly business people and commuters, will love it. Miller herself observes that its introduction is “a key part of economic growth strategy” and will “boost the UK’s economy by around £2-3bn” (growth at last – the stuff that George Osborne’s political dreams are made of). America’s already got it, Apple’s got it, Germany’s got it, Korea’s got it. For God’s sake, Estonia’s got it. Britain, which prides itself on being at the heart of the digital revolution, has not. Why not? Because of years of government dithering over the auction structure. Gordon Brown made a bit of an idiot of himself by appearing to hand out the lucrative 3G spectrum to the telecoms carriers for a song. Successive administrations since have been determined not to make the same mistake twice, but seem uncertain how to prevent it.

Now events have caught up with them. The situation is complex, but distils down to a simple reality. Apple has launched its latest ‘must-have’ iPhone with a 4G capability that no one in the UK will be able to take advantage of in the near future. Well, almost no one. The exception: those who use EE, as of October 30th. Er, let me qualify that. No, not all users of Orange and T-Mobile, the brands which have had all their resources pooled into the Everything Everywhere receptacle (or EE, as it is now known – what a whoopee cushion of a brand name). EE itself has the exclusive iPhone 5 franchise, and only new subscribers, not old customers, will benefit from the 4G offering. Everyone else – that is, the vast majority of UK mobile phone users – will have to wait at least 8 months to subscribe.

It may well be objected that what gives the EE brand a timely ‘digital’ lift is actually brand suicide for the company’s premier and better known brand, Orange. But that’s one for UK chief executive Olaf Swantee and his strategy team to worry about. In the meantime, they can congratulate themselves on having – unlike their competitors – farmed existing spectrum to make space for the 4G platform. A merry Christmas is assured, thanks to the exclusivity of their iPhone 5 4G contract.

Once EE’s rivals, O2, Vodafone and Three, realised what Swantee was up to, cries of  “Unfair” and “Unlevel Playing Field” were heard to rend the air. EE had played the ant in Aesop’s fable, and harvested its existing resources wisely, but the grasshoppers were beside themselves with rage that they would have to wait another six months to grab their share of the new spectrum via a dilatory government auction – and then some before the service could actually be implemented. What’s more, they were prepared to act decisively: they threatened to blunt EE’s leading edge with legal action. That might have been explicable in terms of competitive advantage and buying extra time to build the necessary 4G infrastructure. But as a prelude to launching the 4G standard in the UK, it would have created a public relations disaster. How do you explain to an iPhone-crazy public that access to much higher broadband speeds is being blocked by red-tape, selfish industry interest and legal chicanery?

Miller has therefore done well to defuse the legal wrangling by agreeing to bring forward the spectrum auction date 6 months to the end of January. But implementation of the 4G dream is still a long, long, way away for most of us punters – we’re talking at least the latter end of next year. In the meantime, all sorts of teething problems will need to be sorted out: poor signal distribution, patchy network coverage, a quite possibly incompetent auction process that leads to further legal action and, let’s not forget, potentially incompatible 4G phones.

“Wrong spectrum”. We’re going to be hearing a lot of that in the next 12 months, while the phone companies sort themselves out. If my mobile phone contract were coming up for renewal (which it is not), I would be very tempted to let it ride until at least the beginning of 2014 …

Vince hands BSkyB to Murdoch on a platter

December 21, 2010

It would appear the Scourge of Capitalism (aka business secretary Vince Cable) was bent on doing exactly what I earlier predicted. That is, committing a gross act of hypocrisy – in the clandestine manner of the bankers he so despises – by rigging the market to get the result he wanted.

This is the only reasonable interpretation of his unguarded remarks to two Telegraph undercover reporters about “declaring war on Mr Murdoch”. He is of course referring to his supposedly impartial role in adjudicating the acceptability of NewsCorp’s bid for the 61% of BSkyB it does not already own. For the avoidance of doubt the guileless minister of the crown went on to explain to the two reporters – posing as constituents: “I have blocked it [the bid] using the powers that I have got and they are legal powers that I have got…”.

Actually, that last bit is a tad premature. Ofcom is not supposed to report back on whether there is a prima facie case for referral to the Competition Commission until December 31st. But Vince was clearly confident that he had Ofcom in his pocket and could press ahead with a referral on the public interest grounds of an infringement of “media plurality”. The beauty of such grounds is that they reside entirely in the realm of political value judgement rather than the rigorously factual analysis of any threat to competition. And given that Cable would have had the final word, Murdoch & Co were clearly going to be thwarted.

No longer. Vince is off the case (indeed, he is off any adjudication of media competition cases from now on), although he has narrowly managed to retain his job. And culture media and sport secretary Jeremy Hunt will take his place. As a Tory, Hunt does not carry Cable’s Lib Dem ideological baggage; and if he does harbour any personal animosity towards the Murdoch clan it has so far remained scrupulously off the record.

Which is just as well. In the circumstances he will find it politically excruciating to deliver the thumbs down. The European Commission has just waved through the bid on competition grounds. That leaves the public interest argument. But this, too, is looking increasingly shaky when assessed on any fair-minded basis – as it will have to be in the wake of Cablegate. The legal precedent was set when the last government forcibly caused BSkyB to divest most of its 18% stakeholding in ITV. Ironically, the stated grounds were that NewsCorp’s then 39% holding in BSkyB posed a threat to UK media plurality. If you’re already a threat to media plurality when you hold a controlling 39% interest in a company, how is owning the rest of the shares going to make a material difference?

As political fiascos go, this is a corker. The Scourge of Capitalism has ended up performing a humiliating act of public self-flagellation. In the process, he has damaged Ofcom’s independence and almost certainly brought about the result he most feared: the strengthening of Rupert Murdoch’s commercial interests.

En passant, he has also damaged The Telegraph – one of his allies in the Murdoch matter, if no other; although Cable can hardly be blamed for that. The Telegraph deliberately suppressed Cable’s anti-Murdoch comments, presumably on the grounds that they harmed its commercial interests. Only because some nameless Assangeite felt that editorial integrity had been inexcusably compromised did the scoop come into the capable hands of BBC business editor Robert Peston.

I bet they’re laughing up their sleeves at Osterley Park and Wapping. I can’t say I blame them.

Arts Council prepares to give Tweedy’s business sponsorship body the heave-ho

September 28, 2010

Doyen of business sponsorship of the arts Colin Tweedy is in rueful mood these days, and for good reason. He’s waiting on tenterhooks to find out whether Arts & Business – the organisation he has built up over 27 years to champion commercial participation in the arts – has become the victim of a stitch-up hatched by his host body, the Arts Council.

The Arts Council, like every other quango, is under intense pressure to make deep cuts in its budget. And the suspicion is growing that, in order to save its own hide, it’s quite prepared to sacrifice A&B – which depends on the Arts Council for over half of its funding.

Naturally enough, that’s not going to be the way the proposal is presented to culture secretary Jeremy Hunt. The pitch is more like this: [Much wringing of hands] “…so, Secretary of State, unfortunate sacrifices have had to be made for the greater good of the arts community and we feel Colin’s organisation… well, it does receive quite a lot of private funding, and it’s about time it stood on its own two feet…” Or words to that effect.

Actually, it does receive quite a lot of public money – about £4m a year – which for obscure reasons is within the remit of the wholly subsidised Arts Council rather than being funded directly by the DCMS (the case before 1999 with the then Department of Heritage). Pulling the plug of public finance, however, would not be the best calculated method of ensuring it stood on its own two feet. In fact, quite the contrary. Much of the 45% private funding might disappear if it is not matched by a pledge of public money. And even if it did not, A&B would be crippled by the drastic restructuring that would have to take place to ensure some pale ghost of an afterlife.

It says a lot about the arts world that some would greet this outcome with ill-disguised glee. To them, commerce is a grubby word contaminating the purity of the artistic dialogue. And, let’s face it, Tweedy – tireless champion of commercial support of the arts over nearly three decades – has made a few enemies on this account along the way.

But he’s not without friends, either. And one of them is George Osborne, Chancellor of the Exchequer. It is a peculiar irony that Osborne, in whose name these swingeing cuts are being made, was – until his present elevation – a passionate advocate of the engagement of art with commerce. As you would expect, given he sat on the board of A&B.

Maybe the Arts Council should have a rethink. Not just because of Osborne either. The whole idea of doing away with our best-known and most successful arts sponsorship body seems daft, given that public subsidy of the arts is about to crater.

More about this in my magazine column this week.

Has Gordon Brown wrecked Digital Britain?

June 9, 2009

stephen CarterIt’s difficult not to feel a little sorry for Lord Carter, “temporary minister” (as he describes himself) of communications. Just as he’d got Andy Burnham house-trained as culture secretary (DCMS), away he tap dances to another portfolio at health; cue new wet-behind-the-ears replacement Ben Bradshaw.

Sorrows, they say, never come as single spies, but in battalions. Carter is already imprisoned in the reporting structure from hell, having two masters: Machiavellian Mandy at BIS and Buggin’s Turn at DCMS. Given that his magnum opus, the Digital Britain report, is due to be published on June 16, a reshuffle at culture was not exactly helpful. Perhaps luckily, Bradshaw has experience in media. He was once a BBC journalist, and started his career in local newspapers.

A delay in publishing the report while Bradshaw gets his feet under the table would, however, be the least of Carter’s headaches. Who is going to take notice of its recommendations when it actually appears? This is no facetious throwaway remark. Digital Britain, after all, deals with some crucial issues affecting the future of UK media. On its recommendations will hinge not only such matters as the future of Channel 4 and perhaps Five; the survival of independent local newspapers, the reshaping of ITV; but also the implementation of a new £3bn digital superhighway.

However, once the recommendations are out, Carter’s present task is virtually over. He can huff and he can puff about what the cabinet does with them in the autumn, but he won’t actually be able to exercise a lot of influence. He was frank enough to admit this at the ISBA conference last March. Even then, the idea of all his recommendations being accepted unconditionally seemed fairly improbable. Now it would be an irresponsible daydream.

Just how much time is this holed-below-the-waterline Government – whose damaged leader has “no plan and no vision” according to its favourite news organ – going to spend on an issue as low priority to its survival as the future of the communications industry?

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