BT Shun Rural Mobile Roaming Plan from Three UK, O2 and Vodafone

Telecoms giant BT (EE) has rejected an industry proposal from rival operators Three UK, Vodafone and O2 that would have aimed to improve national 4G network coverage via “rural roaming,” where signals in remote areas could roam onto whatever alternative network was available (like EU roaming).

At present the Government wants to see mobile networks achieve 95% geographic coverage of the UK by 2022 (here), ideally via 4G or faster network technology (their manifesto commitment wasn’t specific). The difficulty stems from the fact that not all mobile network operators are currently expected to achieve that level of coverage (except for EE).

According to Ofcom’s most recent Connected Nations 2018 report, geographic 4G (LTE) network coverage from all operators is 97% in urban locations but sadly this falls to only 62% in rural areas. The overall outdoor geographic coverage of 4G services across the UK is still painfully low at 66% (up from 43% a year earlier) from all four mobile operators or 91% from at least one operator (EE).

The idea of solving this via a roaming agreement, even if only applicable to UK rural areas, is nothing new and has cropped up multiple times over the past few years in one form of another. Last autumn Ofcom proposed it again (Rural Wholesale Access) and the regulator suggested that it could “improve coverage by 2-3 percentage points for the holders of the 700MHz coverage obligations and by 5-10 percentage for the other operators” (i.e. taking geographic coverage from all operators to about 90% today).

Naturally EE, which currently has better geographic coverage than their rivals, isn’t terribly keen on this idea. The operator may well view it as giving a free ride to rivals that haven’t made the same level of investment (excluding ESN related masts as those can be shared), while at the same time also removing any limited advantage they may get from it themselves and stifling the attraction of making future such investments (extending rural coverage isn’t exactly very profitable).

As Ofcom said last year:

“It introduces investment risks and consumer experience issues that could be mitigated to a degree. The surest way to introduce a rural wholesale access arrangement would be with the co-operation of operators.

In the past, such arrangements have been strongly resisted by most mobile operators on the basis that the case to impose them is unsustainable, and we expect they will continue to take that position.“

Suffice to say that we weren’t surprised when The Times reported over the weekend that BT had refused to take part in the rural roaming proposal from their rivals. Meanwhile O2, Vodafone and Three UK couldn’t see the plan progressing without support from BT, which would of course mean they’d alternatively have to build a lot of extra infrastructure in areas where a signal from EE was already present.

Instead BT remains supportive of Ofcom’s forthcoming auction for the 5G friendly 700MHz radio spectrum band, which includes new coverage obligations (here). This should extend outdoor data coverage to at least 90% of the UK’s entire land area and provide coverage from at least 500 new mobile mast stations in rural areas, among other things.

Ofcom has recognised that it will take “significant investment” to meet the new obligations and so they’re proposing to offer the two coverage obligations as “coverage lots” alongside and separate from spectrum lots in the auction. Each coverage lot would carry an associated discount, up to a maximum set by Ofcom, on the price of spectrum (i.e. a maximum discount in the range £300m-£400m for each obligation).

Sadly this still leaves the problem of getting from 90% to 95% coverage across all operators, although as we said earlier the Government’s manifesto doesn’t specifically mention 2G, 3G, 4G or even 5G technology for this target in the text and it’s easy to see why.

“We have already invested heavily to create the widest 4G coverage in the UK, and we are keen to collaborate with government and industry to extend rural coverage into areas where there is none today,” said BT.