Aug/Sept 2008

Ofcom's review of the mobile communications market makes fascinating reading,

and it flags up a few warnings among its extensive statistics

n the short term, massive growth in mobile data services could lead to 'significant capacity constraints', according to a new report from Ofcom entitled Mobile citizens, mobile consumers. The growth in demand is likely to require investment to expand network capacity, both on the radio access side (via new technologies, more sites and extra spectrum) and on the backhaul network, Ofcom warns.

That's one of the few slightly cautious notes in this otherwise remarkably upbeat view of the telecoms industry. The UK, we are told, has the most competitive mobile industry in Europe. Five mobile network operators and 'a healthy number of virtual network operators' compete to offer services, generating over £15 billion a year – 51 per cent of overall retail revenue for telecoms in the UK.

 

The well-presented report, lavishly illustrated by charts and graphics, tends to focus more on the consumer than the business telecoms market, but in many respects the two overlap, so much of the extensive and detailed contents of the document applies equally to both.

The sections that do focus specifically on business use throw up some interesting findings. Voice calls continue to account for the greatest proportion of revenue from business users of mobile services, the report says, although revenue from data services (including SMS) is increasing at a faster rate.

It attributes that growth in part to increasing take-up of devices such as PDAs and BlackBerrys by business users, although it does point out that growth in 2007 was lower than the 44 per cent reported in 2006.

Mobile broadband activities are linked quite closely to handset developments and the growth in 3G networks, the report seems to suggest. It says 'non-message data services' are strongly dependant on handset screen size, connection speed and user interface. It contrasts the present situation with that of a few yeas ago, when handsets were equipped with only Wireless Markup Language (WML) browsers, which were limited to customised Wireless Application Protocol (WAP) Web sites.

At several points the report raises concerns about the consistency of mobile network coverage around the country, pointing out that some user-companies are particularly vulnerable to poor coverage – for example, mobile workforces operating in areas where 3G has yet to roll out extensively. It calls these 'not spots'.

It does acknowledge steady improvements in coverage by the established 2G networks, though it says the remaining gaps 'are a source of real frustration for those affected.'

On the thorny topic of available bandwidth for mobile services, the report warns that growth in data traffic may quickly outstrip the capacity needed for voice services, though it admits: 'Uncertainties about demand and the patterns of user behaviour mean that, in our view, this issue is too early to call.'

On the positive side, it suggests that a steady increase in the uptake of mobile broadband services can, in the longer term, permit network operators to realise economies of scale when providing data services. Over time, it speculates, this may in turn lead to lower prices, creating a 'virtuous circle' of falling costs.

The good news, the report says, is that there are plans to release new 'spectrum' into the mobile market, as well as exploiting under-used wavelengths. It says the 2.6GHz band is particularly important in this regard; it is significantly underused, and has been designated for harmonised mobile use across the EU. It is due to be auctioned 'as soon as possible,' the report points out.

There is also a reminder that the move from analogue to digital television will lead to the release of a significant amount of low-frequency spectrum which can be used for mobile services: the 'digital dividend', as the document puts it.

The report highlights some intriguing statistics about the UK's mobile market – pointing out for instance that the UK is the only European market where all the major multi-national European network operators are present, and adding that no single player is a clear long-term leader in terms of market share. It also points out that the UK is the only major European market where the incumbent fixed-line operator (BT) does not have a mobile network.

We at m.logistics can't remember when we last saw such an extensive and well-presented report on an entire market sector. Whether or not you support all its judgements, it ought to be obligatory reading for anyone with strong involvement in supplying or using telecoms in the mobile market. Unless you're already an expert, you'll find it an invaluable reminder of details you thought you knew, but probably didn't.

Having your say

Ofcom is inviting responses to its Mobile citizens report, and is giving you plenty of options for submitting them. You can simply write your comments and send them in, or you can go to the rather neat Ofcom Web site and submit them interactively (see www.followuponline.net).

If you take the latter route, you get individual comment boxes against separate sections of the report, so you can be very precise about which points you're responding to. But we couldn't see any obvious way to save your own comments if you do this, so you might want to compose them elsewhere first and paste them in.