Fight Over Costs Threatens Shared UK Rural Mobile Network

The £1bn Shared Rural Network (SRN) agreement between BT (EE), Vodafone, Three UK and O2, which aims to extend geographic 4G mobile (mobile broadband) coverage to 95% of the UK by 2025, could be in doubt after some of the participants expressed concern over high costs. A key meeting is due to discuss the issue today.

The SRN is essentially an industry-led way of improving coverage, which proposes both the reciprocal sharing of existing masts in certain areas and the demand-led building and sharing of new masts in others. However some key details of the SRN are still being decided, such as the question of how much will be charged by each operator for rivals to access existing sites.

Catering for remote rural areas tends to be very expensive and there are fears that this could thus be the one area where the SNR hits a major stumbling block. In particular BT has a fair bit more infrastructure (masts etc.) deployed across rural areas than their rivals and as such the costs they propose will arguably be the most important ones to watch.

Last month BT issued their first cost proposals and they did so alongside a somewhat defensive sounding blog post (here), which read as if they were bracing rivals for some hefty charges. Today the BBC appears to confirm that at least some of their rivals have grave concerns about the proposed costs.

For example, O2’s boss fears the fees “may undermine the viability of the project” and an industry source suggested that it might end up being cheaper for operators to build their own masts. The report claims that BT are seeking to include 320 yet-to-be-built masts into the agreement and to charge 250% more than the existing commercial rate for rivals to access them.

BT will also offer rivals a cheaper rate for masts on its Emergency Services Network (ESN), which were partially funded by the government (several hundred of these have been built in rural areas). Despite this, all of the major mobile operators have expressed a desire to reach a final deal and get it implemented before the Government’s next Budget 2020 announcement on 11th March next month.

The alternative would delay the SRN or could potentially result in the Government returning to their long-running threat of a legislated Rural Roaming solution, which is likely to hit BT harder than their rivals and could stifle future investment in rural areas. Equally they could go back to forcing through new coverage obligations via Ofcom’s forthcoming auction of the 700Mhz band.

At the same time we shouldn’t forget that it’s normal for negotiations to start with each side proposing something extreme, before later finding a more acceptable middle ground.