“We support Ofcom’s position on the spectrum auction, which is why we haven't litigated in the way some of our competitors have,” said Nick Jeffery, CEO of Vodafone UK, during a recent press briefing.
During a briefing for Vodafone new service offerings Jeffery shared a number of interesting insights into his view of the well-publicised 5G spectrum auction. Earlier this month EE, which is owned by BT, and Three, part of CK Hutchison both decided to appeal against Ofcom and its decision to impose restrictions on upcoming spectrum auction, in high court.
When asked about their decision to launch court proceedings, Jeffery said “Any operator that is delaying the implementation of 5G, either through slightly selfish objectives or wider concerns that delay the implementation of 5G in anyway is bad for the country.”
Jeffery firmly believes that 5G is important not only for business and technological advancement but it is also in the national interest.
“We’re a committed investor in the UK and we think 5G is an important national infrastructure that underpins future growth. It’s important in a post-Brexit world and it should be deployed as quickly as possible.”
But it’s not all tough love from the Vodafone CEO, he goes on to add that he empathises with the position of the two operators saying: “I understand their position, doesn’t mean I agree with them. At the end of the day whether we agree or not the thing that really matters is that the UK becomes a leader in next generation network.”
A particular grievance for Jeffery was clearly BT and its monopoly on the UK’s infrastructure, he doesn’t think the UK can become that global network leader whilst BT has a “complete strangle hold on the underlying dark fibre and access networks,” he said.
Jeffery says that BT is trying “to push a technology that stretches the limits of physics to the nth degree” and that it is using “Gfast on copper versus actually doing what should be happening in the UK and investing in fibre” adding “and at the same time using every legal and regulatory trick they can find to delay the auction of 5G spectrum which we’re already wanting to deploy.”
But what about BT who claim to only be defending their position in this scenario? Well Jeffery says: “We argue that firstly they have they spectrum they need to compete and secondly there should be a free market for spectrum.”
He goes on to add: “Committed investors should be allowed to buy what they want at the market rate. And then there’s Three who already has spectrum through their acquisition of UK Broadband.”
But why is the deployment of fibre not happening in the UK? “We haven’t got the right regulatory, financial, operational infrastructure to make that happen,” says Jeffery.
“It’s lamentable that our fibre penetration rate is so low, I think its 2% in the UK versus Spain which is 70%, so from a national interest point of view we really should be a lot more advanced,” he continues.
“There has to be something structurally wrong with the way the UK’s communication industry is set up, because there’s willing investors all around the world, the technology’s there yet investment isn’t happening. I doubt very much that is a supply side issue and it’s certainly not a demand side issue because we know people want to buy this, so it must be the interface between these two things,” he explains.
The right environment for Jeffery would be access to BT’s ducts, poles and fibre infrastructure. “We want access to dark fibre at a competitive rate, as enablers to help us build or co-build the fibre infrastructure the country needs,” says Jeffery.
And in case you haven’t guessed Ofcom’s steps to make BT open up access to its network, are less than to sufficient, according to Jeffery: “The dark fibre issue is a good one. We would like to have access to BT’s dark fibre at a sensible conventional rate and BT have done everything it can to obfuscate that, delay it confuse it and that is one barrier.”
On the topic of fibre, he’s to agree that that “anyone investing in something would want to ensure they are going to get a return on that investment” but his argument is “there’s lots of ways you could do that. You could have a very commercial rate with less exclusivity, a less commercial rate with more exclusivity, though he isn’t even sure if co-invest is the best way of achieving those goals adding “If indeed is the best model maybe building it ourselves is the best way to do it”.
As our attention turned to the ever present topic of Brexit, Jeffery made it clear that Vodafone has three very distinct areas of concern on the subject. One is free movement of capital because as he says “most of Vodafone’s income is euro denominated”, free movement of people because Vodafone is an international business that needs “talent to move around the world” and lastly there’s maintaining data equivalency which Jeffery explained “a lot of Vodafone’s structured big data centres are offshore so we want to make sure that we’re still able to move data around the way we do today. Also that there weren’t any constraints put on us that would lead to any unnecessary costs to the business which inevitably need to be paid for somehow.”
As the briefing ends Jeffery ends looking forward announcing that Vodafone have applied for a 5G trial licence and though the company is still pushing hard with 4G (it now has a number of live sites in London on 4G with 500 MB of upload/download speeds) he says: “the quicker we get those trials up and running the better.”
