Official Report: Minutes of Evidence

Members present for all or part of the proceedings:

Mr Patsy McGlone (Chairperson)
Mr Conor Murphy (Deputy Chairperson)
Mr Steven Agnew
Mr A Cochrane-Watson
Mr Gordon Dunne
Mr P Girvan
Mr Paul Givan
Mr William Humphrey
Mr Fearghal McKinney
Mr M Ó Muilleoir


Mr Scott McGimpsey, EE
Mr Paul James, O2
Mr Simon Miller, Three
Mr Paul Morris, Vodafone

Development Plans, Future Plans and Relationship with Ofcom: O2, Vodafone, Three, EE

The Chairperson (Mr McGlone): Briefing the Committee today are Mr Paul James, head of public affairs at O2; Mr Scott McGimpsey, principal delivery manager at EE; Mr Simon Miller, head of government and regulatory engagement at Three; and Mr Paul Morris, head of government affairs at Vodafone, Belfast. You are very welcome. Thank you for coming along and joining us.

We conducted an inquiry into the economy — I do not know if you are aware of that — and into the issues that may be useful in developing the economy, if and when a decision is made to reduce corporation tax. Communications factored into that strongly — broadband, certainly, but also mobile communication for businesses and their ability to function. I was looking through your documentation last night and said, "That will be wonderful, except for me. I cannot get any mobile signal where I live". You will see from those details that hundreds of your customers in many of the places that I represent cannot get signals.

I look forward to hearing from you, and thank you for taking the time. Have you agreed who is going first, or will we just take you in the order that I have in front of me? We will start with Mr James, then. The last time we had a collective here, it went on a wee bit. We want as much opportunity for engagement with members, not just on their own constituencies but on the capacity of your organisations to develop and support businesses and consumers locally. Mr James, you are up first then.

Mr Paul James (O2): Thank you very much. I will start by saying that as an industry we recognise that coverage is key for economic growth and productivity. As an industry we are making strenuous efforts through our investment of £3 billion or £4 billion. The government commitment was to £5 billion investment in mobile networks, so we all are investing in our networks in Northern Ireland. There remain some challenges, particularly in the more remote rural areas from a business case perspective, underpinned by things like the planning regime, access to fibre and access to suitable sites. These things influence the way that we can build networks but also where we build networks. The business case in some areas is very challenging. A good example of that is the likes of the not-spots developments with the Department for Culture, Media and Sport (DCMS). It looked at not-spots and the success, or lack of it, with those types of things.

Finally, I think that the approach to rural engagement is one of partnership. Unless we have a partnership approach to all or some of the issues I have raised, coverage will probably remain a problem. As an aside, we are working with the Scottish Government on things like the strategic covering of certain parts of Scotland with very big masts in order to improve coverage, and I can go into a bit more detail on that. That is maybe a slight aside. I think that the guys would like to add some points now, as well. We are keen to take as many questions as possible, so we will keep it short.

The Chairperson (Mr McGlone): Grand. The next person on my list is Scott McGimpsey.

Mr Scott McGimpsey (EE): I will just make some prepared opening remarks. Mr Chairman, Mr Deputy Chairman, Committee members, good morning; I am thankful for being here for the first time since our session in 2013. I am the principal delivery manager in the network delivery team at EE.

EE remains one of the UK's most advanced digital communications companies, providing the fastest and most reliable service according to a number of independent assessors. In 2012, we became the first telecommunications provider to bring 4G services to the UK and specifically to Northern Ireland. By the end of this year, we will have covered 98% of the UK-wide population.

All four mobile network operators (MNOs) here today have signed up to a new and binding coverage obligation to reach 90% of the UK geography by the end of 2017 and will be supported in achieving this through a number of government reforms. The figure is UK-wide; it is not 90% each in England, Scotland, Wales and Northern Ireland. However, we have achieved over 90% in voice and text coverage in Northern Ireland already.

We have invested £15 billion in our network since 2000 and are just at the start of a new £1·5 billion investment over three years. Since the end of 2012 we have already invested £24 million in Northern Ireland to upgrade our existing 2G and 3G services and roll out our 4G services to the Province. We are now looking to invest a further £8 million to complete our upgrades in Northern Ireland over the next two years.

On the government side of things, however, it is not going as well. I am sure that this will form part of our evidence today. It is extremely difficult to continue to expand coverage, increase capacity and maintain some of the lowest prices for consumers without UK-wide regulation and devolved planning laws being changed to support that.

I have already supplied our network coverage maps of Northern Ireland to the Committee in advance but, in summary, our outdoor population coverage is currently 98·5% for 2G, 96·6% for 3G and 94·6% for 4G. We have 446 sites in Northern Ireland, and 319 of them are already 4G-activated. Many of the remaining sites will also be 4G-activated between now and the end of 2017. Thank you.

Mr Simon Miller (Three): Thank you very much. I will start off with a few words of introduction on Three and explain who and what we are as a company. Then, I want to talk about how networks work, because a key point is coverage. Without understanding how networks work physically — what you need to get good coverage — a lot of the more academic points around policy that my colleagues will be raising might be a bit moot.

Three is the smallest and newest of the mobile network operators; we are between 10% and 12% of the subscriber base. We are slightly different from the more established operators in that our focus has always been on data. We are Three because 3G was specifically data — 1G has historically been voice, 2G text and 3G is data. Our focus has always been on data. We carry around 42% of the UK's mobile data traffic. That is 10% of users using 42% of data.

We have a record for innovating, so we launched 4G at no extra cost. We offer a service called "Feel at Home" that enables all our contract customers to use their handsets in 18 countries abroad at no extra cost. That helps to deal with issues such as inadvertent roaming in the border areas of Northern Ireland.

Like EE, we recently completed a significant programme of investment in Northern Ireland, which has seen the number of our sites double. That has also doubled our geographical coverage and brought our population coverage up to about 95%. We are now rolling out 4G across the Province.

Knowing how mobile networks work is fundamental to understanding how to improve coverage and some of the regulatory and legislative issues that impact the roll-out of improved networks. You need to have three things to run a mobile network: masts, power and transmission. If you do not have them, you cannot provide coverage.

Transmission is the cables or microwave links that link our mast sites into our core network. Lots of people assume that a mobile phone signal bounces to a mast and then goes off to a satellite or into the ether. It does not; it goes along very large pipes that carry huge amounts of data. The transmission market, which Paul from Vodafone will talk about shortly, is predominantly provided by BT; so there are issues there.

Mast sites are linked to planning and our ability to build. Assuming we have the mast sites, reception, which enables us to send signals, and a physical electrical power supply and transmission, it all then depends on how and where you site the mast. Masts and mobile phone signals are bound by the laws of physics, so you have to have clear line of sight from the antennae on the masts to the device. If you do not have that, you will not get coverage. Put simply, the higher you build, the greater the lines of sight from a mast site will be. It also means, though, that if you are in a village or in an area of outstanding natural beauty, and the people in that community want that mast hidden because it is something of an eyesore despite us doing everything we can to disguise them, they may want it put behind a line of trees. As soon as you do that, you reduce the coverage footprint.

Coverage is also impacted by building materials in an area. Signals are particularly susceptible to bouncing off concrete. You will also be affected by the basic geography of a place; so, if you can build on a hill, you will get better coverage because you will be that much higher. You can then provide coverage for all the dwellings at a lower area.

So, we are constrained by physics, geography, legislation and regulation in what we can build and how it operates. In a perfect world, we would build in the centre of communities and on the highest ground to provide as many dwellings in that community with the best coverage possible. We cannot always do that, and we have to operate within a regulatory and legislative framework. That means that the coverage we provide in some areas is not as good as we would like it to be. However, there are things that the devolved Government here in Northern Ireland and the Government in Westminster can do to improve coverage and make it much easier for us to build mast sites in appropriate places and enable the science to work to its best extent.

Mr Paul Morris (Vodafone): Good morning, everyone. Vodafone, like my colleagues here, has been investing across the UK. We are about half way through a £2 billion investment programme. In Northern Ireland, we are a little over half way through the improvements.

I noted today that my 4G in this building works. When I came here last time, it was not as good; so, there is an improvement in the building. Those improvements have been most noted in the major cities and towns of Northern Ireland, but we are just starting to roll out to rural areas. I know you will come back and say, "My area does not work". We should have a discussion about that.

As Paul from O2 said, we are in the middle of a major investment programme — the biggest investment programme that, certainly, my company and, I think, the industry have engaged in. From a standing start, we are up to 70%-odd population coverage for 4G; so, it is not bad, but we still have more to do. The key point here is that we are building this in the face of a regime that was designed up to 30 years ago; so, it is taking longer than we would have hoped. The legislative regime that we work within is not focused on us delivering coverage; it basically gets in the way. Hopefully, we can talk about that a little bit today. Ultimately, that is it on coverage.

On capacity, as Simon says, the key point will be how much fibre we can get to use to make connectivity really good. When we do the coverage, we will deliver up to 98% outdoor coverage in Northern Ireland. The point is this: how good is that going to be? We will deliver it to a good coverage today, but what we are seeing in other major cities at least and as we roll out it in rural areas is that demand for the mobile internet, when it is there, is very high. Some predictions say that, within about three years, the demand could be six times higher than it is today. The key point is whether we can deliver that capacity. This is all about having broadband connection — it is a bit like the broadband that you have at home — to our masts. We need more masts to be connected to fibre or to a broadband connection than we have had historically. There is an opportunity here in Northern Ireland because you have more fibre in the ground and to premises than is the case in, I think, all other places in the UK. The question is whether we can get access to that fibre and to the ducts that are built and are being built by public money to make sure that you can have some of the leading speeds and capacity going forward, because that will be the next demand. We will deliver the coverage, but there will be holes in it. We should talk about the mobile infrastructure project (MIP) and how we can work in partnership. Ultimately, once you get that coverage, will it be enough? That is what we need to talk about today as well, because that is the next question for the next five years.

The Chairperson (Mr McGlone): Thank you for that. Thank you all.

Picking up on that point, you raised a question about linking to the fibre. I will move the question back to you: what have you done in conjunction with either the technical people at DETI or, more particularly, BT, which has been responsible for the roll-out of much of that fibre across the North? Indeed, there is a new scheme starting in the new year to facilitate and invest a lot more in that, too. What have you done, as a collegiate, with the likes of those major companies to look ahead on that?

Mr Morris: As you identified, there is more than one fibre provider in the UK. Indeed, Vodafone bought Cable & Wireless and integrated, so we have our own fibre. When it comes to the local area, you generally end up using BT fibre, particularly in rural areas. We all have commercial relationships with BT, which provides that broadband connection back to our core network. Basically, we pay BT for a broadband connection. The argument is that that regime is not regulated. If you wanted a broadband connection to your house and you went for another provider — we have just launched a broadband product so that you can now get Vodafone Connect in the home — again, it would be the same situation, in that we would use BT Openreach to get us to the exchange and to our own core network. The challenge in providing that to homes is that that is a regulated piece and, even under that, it does not work very well.

On the mobile side, it is pretty much what you can negotiate at the BT shop. I think there are some issues about cost, how it is regulated, whether we should have better access to ducts, for example, to run our own fibre and whether, indeed, we should have access to unused fibre that is in the ground. All these questions are, frankly, policy questions. They are not commercial questions, because the commercial deal that we can do is to one point. It is about regulation on what is called — to use the jargon — significant market power. The reality is that the company needs to have regulation.

The Chairperson (Mr McGlone): What I am trying to get at — I hear the questions you pose — is whether you have put those questions to the Department or explored the mechanisms or outworkings of that with the likes of BT? Has that initial work been done by all of you?

Mr Morris: We certainly have commercial conversations with BT. Basically, we have policy debates with it. The issues I have highlighted are, by and large, policy issues. So, yes, we have a commercial relationship with BT. Some of it is also about regulation and Ofcom, so Ofcom Northern Ireland is part of that. We have also raised it with your colleagues and the Minister. To be honest, I think that we focus largely on planning here because that is obviously devolved, but, increasingly, we probably should —

The Chairperson (Mr McGlone): Specifically going back to the technical issue you raised, I understand that you raised it commercially with BT, as I anticipated that you would, but you mentioned that it is a policy issue. I am trying to get it clear: has this not been raised with the Department and the policy people there yet?

Mr Miller: Can I interrupt on this one? To take the example of Three, all our sites are connected using fibre pipes. The issue is demand going forward. As Paul said, it is anticipated that, by 2030, data use will have increased by something like 80-fold. It is about ensuring that the infrastructure keeps pace with that. We all have commercial relationships with BT. There was an issue around what we pay for rental of the pipes. That will be determined by Ofcom as the regulator, and it is looking at that issue at the moment.

We are keen that the devolved Administrations and the Government in Westminster understand that this is a real issue, because, if you are trying to get coverage out to areas where there is no coverage, the build-up of those networks is disproportionately expensive in rural and hard-to-reach areas, particularly the transmission element and renting the pipes from BT. At the moment, this is a purely commercial negotiation. We want it to be a regulated issue, and we want all Governments across the UK to bring pressure to bear on Ofcom to make sure that it is a regulated issue. At the moment, it is inflating costs, which means that it is totally uneconomic for us to build out further. It does so in a way that is purely to the commercial gain and benefit of BT, given that all these things have been paid for by —

The Chairperson (Mr McGlone): I am just trying to work this out in my head. I am not a technical person, but I am trying to work through the sequence of what has been raised here, the capacity of the broadband, and the considerable multi-million pound investment that has been made by government in many of our rural, isolated areas to facilitate enhanced broadband. In many of those areas, there has been a powerful investment. I am trying to establish the link between what you have raised and the capacity of your network to tic-tac with that and roll that out, and if the particular issue that you mentioned has been raised with the policy people at the Department. That is what I am trying to get at.

Mr James: I think that the answer to that question is that the conversation is just starting. We have had some initial conversations about that, because, as Simon and Paul said, this is, in a sense, a future-planning exercise. As 4G is being rolled out and data increases, we will have a requirement for bigger pipes, effectively. So, the conversation is just starting. To answer your question, the conversation is just starting in that context with Ofcom and the Department.

The Chairperson (Mr McGlone): I was going through some of this stuff last night, as you do in advance of a meeting. I am with O2, and I presume that you have 4G coverage. In the tabled papers we have before us today, there is a document called, 'Project Beacon', which refers to two areas that I know very well, one of which I was brought up in and the other is just peripheral to it. One gives 4G area coverage at 73·7% and the other gives 100% coverage, neither of which is actually the case, unless there is something wrong with my phone.

The first one is in Creagh — if it is the same Creagh — but there are not too many Creaghs about. You are lucky if you get 3G there. In the second area, I travel that route every day when I come this direction, and it is one of the most difficult areas for coverage that you will get. In fact, the issue was raised with me in the run-up to the meeting today, especially in the arterial route between Derry and Belfast. It is incredibly patchy in parts and is, in fact, non-existent between the two main cities in the North.

What is being presented to us does not appear to be the reality on the ground.

Mr S McGimpsey: I will answer that as a general point. A lot of the tools that are used to provide the signal, such as coverage checkers, are based on propagation tools based on assumptions about the topography of the land, undulations, clutter heights and various factors to give an understanding of what we think the coverage would be in a certain area. In reality, what you experience is that that is not materialising because it is a propagation tool; it is an assumption — a best endeavour or a best guess of what it will be.

The Chairperson (Mr McGlone): This is very flat land; it was used by the American forces during the Second World War as an air base. When I see figures of 100% and then 73·7% for O2, which is not, in fact, the case, I begin to query where those figures come from and what kind of device is being used to measure them. It is certainly not at the mobile phone.

Mr James: As Scott said, these are propagation tools that are looked at. All I can say in that context is that I will take the details of those areas and I will get the guys to —

The Chairperson (Mr McGlone): I will tell you what is on my phone, since you are the technical guys. When I am in Creagh my signal alternates between the capital "E" and 3G sporadically and rarely, if ever, moves to 4G. In Toome, I saw it move to 4G just once; the rest of the time you are lucky to get 3G. You claim that coverage is 100%, but it certainly is not; it is far from it. From practical experience I would query the validity of those figures or claims.

Mr James: I know that we are having a catch-up later. I will drill down to some of those areas with you. All I can offer is that we will drive round to see what gaps there are.

The Chairperson (Mr McGlone): I do not know whether you know the geography. This is on the main arterial route between Belfast and Derry. There is also a big industrial base for businesses, so, aside from your average day-to-day consumers like me, there are a lot of businesses in that area. It is a very important commercial area. I would not like you to put claims out about coverage that, in reality, does not exist.

Mr James: That is fine; that is why we are here. I will investigate that and whether there are issues with obtaining the right sites in some of those areas. That will be another factor.

The Chairperson (Mr McGlone): Just to make sure, does everyone have the tabled areas that have been raised with me?

Mr James: These gentlemen will not have them because these are O2 —.

The Chairperson (Mr McGlone): These are areas that have been raised individually with me; they are the problem areas.

Mr McKinney: You talked about starting a future planning conversation. Surely that conversation was supposed to be about the mobile infrastructure project in 2011.

Mr James: Do you mean the actual mobile infrastructure project? A programme was done and developed and sites were identified and everything else for MIP across the whole of the UK. However, MIP has not been followed through, and those sites —

Mr McKinney: I raise the matter this way because the problematic issues that you are pulling out, which need to be discussed, are part of the issues that —

Mr Miller: That is a very interesting question. MIP was probably the best-funded and most collaborative piece of work to be done by us as operators together with government and other agencies, including infrastructure providers such as Arqiva. There was huge goodwill behind it, but, in reality, MIP has highlighted all the problems with planning decisions and transmission in a way that is entirely symptomatic of the problems that we have in rolling these out to our networks on a commercial basis. Although it was intended to break through all those bottlenecks and all that deadlock, all it has done is highlight just how intractable those problems are and how parts of our regulation and legislation are very much in need of reform, particularly when it comes to mobile infrastructure.

Mr Morris: We at Vodafone, as the operator, during the procurement process for that project, which, remember, is about someone else getting the money to build the sites, agreed to pay for operating costs on those sites. To be clear, we were to lose money on those sites, so we were not going to turn a profit on this scheme. We raised all those points at the time of the procurement process and said that the procurement and the policy need to be well tied together, and I agree with you that they have not been.

Mr McKinney: Back to the Chair's question: what have you been doing collectively? I appreciate that your presentations are individual presentations, but what have you been doing, and what can you point to as happening, collectively to shift the issues around planning and access to sites?

Mr Miller: We have jointly, through the Mobile Operators Association, submitted a very lengthy consultation response on planning reform in England. We are jointly talking to the Government in Scotland.

Mr McKinney: What about here?

Mr Miller: This is why we are here. It is clear that these problems exist across the UK, and, yes, in certain areas, responsibility is devolved, so that is why we want to make these points to you now.

Mr Morris: We should talk through what we have been doing. We have been talking to Ministers about it. I might get into trouble here, but, in Northern Ireland, your planning rules are behind the changes that happened in other parts of the UK, so it is harder to build here than it is anywhere else. As we speak, England is looking at going further, although they have not necessarily been fast about this. You talked about rural coverage. We are building masts that are not those that we want to build, as they are shorter than, say, Vodafone's networks across other EU countries. That basically means less coverage, especially in flat areas and in rural areas. That is where we will need to build bigger structures. We need fewer structures that go further, basically, and we need more kit on them.

The Chairperson (Mr McGlone): Can I pick up on that point? I have had this conversation previously with Scott about height and dimension and the megahertz and the waveband that it is on. The case has been made that 800 MHz can broadcast further and all that stuff, so it is about not just the height of the substance of the mast but the capacity of the mast and the waveband that it is on.

Mr Morris: That is certainly true, but remember that we are also sharing more masts. These two guys share, and we share as a default. We also share in some rural areas anyway. We share Arqiva sites. You have to remember that taller means more. Of course, some spectrum goes further, but taller generally means more whatever the spectrum. Moreover, we need to put more kit on the mast, and it is not like a Christmas tree where you put the fairy on the top. We need to put more kit lower down, which basically means that, if we stand still, we are almost lower down in some ways. We need taller masts just for today, but we need taller masts because we get more coverage and they are more efficient. We are behind other European countries.

Mr Miller: It is worth unpacking the point about spectrum as well because different parts of a radio spectrum network have different qualities and characteristics. Generally, the higher up the spectrum band you go, the greater the capacity. You can go faster and can carry lots more, but it does not go nearly as far. Lower down, it carries less and is slower as it will go much further, irrespective of what spectrum you are rolling out at any point. Ideally, we would all want to use low frequency spectrum in rural areas where demand and traffic is less and distances are greater. The higher you build, the more coverage you will get. We build what we are able to. In most places, there is a mast about 15 metres high. If you double that height, you will double the coverage footprint, topography depending. There is a direct correlation between the height of a mast, the expense of network roll-out, and the coverage that you get. To put that in context: when we say that we build smaller masts than elsewhere in Europe, on average in the UK it is about 15 metres; in Norway, it is between 70 metres and 100 metres high. It is a huge differential.

Mr McKinney: Your presentation in the tabled papers contradicts what you are saying here. You have the commercial bit that tries to tell us that everything is going fantastically well and that you are the best guys in the world, and you are strategically telling us collectively that, in fact, it is our fault because we have not got the planning system right, the access to fibre right and the access to sites right. Anyway, to go back to the point, why has more not been done collectively by you and why are we hearing this pretty much for the first time? It is not the first time, because we are aware of it, but this is the first time that I am aware of you collectively coming to us.

Mr S McGimpsey: It has been raised for many years on the planning side, and we have all had meetings separately with Ministers regarding planning. At the end of the day, when you put in an application, the success rate is usually quite high overall. However, what is sometimes not clear is the time that it takes to get planning permission. Everything becomes a full planning decision, and that takes time. When that happens, times move on, budgets in companies change and opportunities to spend that money may vanish or change, or that budget may have to be used elsewhere.

We have regularly raised that as a point. There is an investment vehicle and an opportunity to use it within a timeline. Planning can be seen as successful, and that is what gets thrown back to us. At the end of the day, you still need your permissions and, sometimes, the time taken to get them is detrimental to how quickly mobile networks can deliver to areas.

The Chairperson (Mr McGlone): It is hard to beat hard stats. It would be useful if we could get a range of views from you — I do not expect them today — on whether there are specific delays in planning and how long those are. I want to see what they are. That does not seem to be our experience since the new councils took over planning powers.

Mr Miller: It is partly historical. Previously, planning decisions in Northern Ireland were made by councillors rather than by planning officers, and the process lasted on average about 131 days.

The Chairperson (Mr McGlone): No, that is wrong, sorry. It has only changed to that system. Previously, it was officials in the Department.

Mr Morris: Can I explain what we think is a sensible approach? We did a couple of pilots in England, one of which was very close to where our HQ is based. We thought that we should try to work with the existing system to see what could be done. That is a challenge that we always get from you guys: what we are doing in the existing system. What we discovered was that, first, telecoms are quite small beer in planning. The building of state housing is becoming a massive issue and there are lots of other bigger things than a mobile mast, so it does not always get the focus that it needs in planning, which is an overstretched department; we know that they have lots to do. Also in that process, we found that it was difficult to come up with new ways of doing it in a system even if there was pre-planning because they had to go through a series of rules; otherwise they would get into trouble.

That is why we are asking for change. The change basically is the question of whether we need to go to planning as much as we do for what are fairly small decisions such as putting extensions on existing masts, swapping out existing masts to slightly bigger ones or putting more equipment on masts — lowering slightly the obligation on whether we build a bigger mast. We are asking what we can pull out of day-to-day decisions with an understanding that we would talk to local communities through various means, including a code of practice, which we have in England. What are the ways by which we could speed the thing up and make it more certain that we can build the structures that we want to build rather than the structures that the regulations make us build, which, frankly, were designed when we all had huge phones and turned them on once a week? We are not in that world today.

The Chairperson (Mr McGlone): You raised a number of things that I want to tie down. First, if there are specific areas where there have been problems —

Mr Morris: We will come back to you.

The Chairperson (Mr McGlone): — or where there are problems, we want to hear from you.

Mr Morris: That would be great.

The Chairperson (Mr McGlone): Secondly, there are permitted development rights in planning, which I am sure you are all aware of. If the work being done is marginal or is just adding to an existing bit of plant, you may not need planning permission at all. There is also the other system — I see that someone down the back thinks that they are correcting me, but that is the way it is —

Mr Morris: You cannot take away —

The Chairperson (Mr McGlone): Can I add to that? There is also the new system of pre-application discussion whereby people can meet planners to talk things through. All the inefficiencies that you seem to be telling us about should be removed before it ever comes near a formal planning application, if, indeed, one is required.

Mr Morris: It is yet to happen, but the Government here have said that they will look at the changes that have happened in other parts of the UK to see whether they can mirror them. They are a bit behind. That is largely looking at upgrading existing sites, which, to be honest, is pretty much a large majority of what we are doing. That would be helpful. I will come back to that in more detail, but I urge the Committee to encourage that to happen quickly so that it can impact the roll-out that we are doing today, which will then make it quicker, but it could also, potentially, deliver more coverage. That is the reality. We can put in some 10-metre extensions on existing sites, and that might fill the gap that you mentioned to Paul. That is the scenario that we are in. You should be challenging us, through the regulations, to do more, and not the way that it is at the moment — basically, the regulations mean that we can do less.

The Chairperson (Mr McGlone): That needs to be proven. I need to know what you are —

Mr Morris: We will not be able to do it today, but when we come back —

The Chairperson (Mr McGlone): We need to know specifically what you are talking about and whether work is being retarded or whether there are glitches in the system, because that is for us to investigate and, indeed, to share with another Committee.

Mr Morris: Yes.

Mr Murphy: Thanks, Chair.

The Chairperson (Mr McGlone): Sorry, Fearghal, did you want to come back there? Excuse me, Conor.

Mr McKinney: I do not know who is to blame here. You guys appear, at least, to be having conversations, but I do not think that it has reached the strategic collective list that your presentation suggests. Clearly, there are issues about planning, etc, but it is the customer, as you quite rightly pointed out, who is losing out in the midst of this debate. It may be that future demand is one of the issues that you see as an opportunity, and maybe we need to look at that. However, the conversation has not proceeded at anything like the speed or direction that it should have.

The Chairperson (Mr McGlone): To re-emphasise, for us to take it a stage further, we need the factual base. We need the stats and the information.

Sorry about that, Conor.

Mr Murphy: OK. I have to go shortly, so I have two brief questions. You made a brief comment about the Scottish Government, and maybe you could elaborate on that. With regard to the regulator and the access to fibre, are you suggesting that the regulator is leaving you open to BT's commercial interests and that there is no greater sense that, in terms of economic development and the ability to communicate across the country, there needs to be access to fibre, that it is not just left to the commercial demands of BT and that there needs to be some government or official intervention to give you an access to fibre that you currently do not have? What is the issue with the regulator in that regard? Obviously, it is not just here; it is an issue in Britain as well.

Mr Miller: Ofcom is looking at that issue, and we have been asking Ofcom to look at it for a number of years. It is looking at access to the unused part of BT's fibre network, which is called dark fibre and, potentially, also looking at access to BT's piping. In many situations, we, or others, might like to run our own cables along BT's piping.

Mr Murphy: Has the regulator been reluctant to take on BT in that regard? I presume that BT would prefer to charge you for any access to its equipment.

Mr Miller: Absolutely. We are not suggesting that they should not charge us, but the charge should be fair and regulated. At the moment, there is a rate of inflation to it that bears no proportion to cost. I think that it is fair to say that the regulator is unkeen, sometimes, to challenge the biggest operators and BT in particular. That is largely as a consequence of the appeals system. The communications regulation sector is unique in having a particularly low standard of appeal. For most other economic sectors, if a regulator makes a decision, it is appealed on judicial review; in communications, it is on the merits. That means that every aspect of a regulator's decision and its decision-making process is open to legal challenge. As a consequence, there have been some very large, notable legal challenges to Ofcom's decision-making, and, as a consequence, Ofcom seems less likely to make big, brave decisions. Indeed, it is unwilling to make decisions in the first place, or, in an effort to avoid its decisions being challenged, it seeks to armour-plate its consultations and its work, so quite small pieces of work end up taking many, many years. There is a process of Ofcom's decisions becoming slower, less ambitious and, ultimately, more ineffectual.

Mr Morris: To some extent, it is extending the system to include mobile but then improving that system. I will give you one stat. I am sure that you have seen the rectangular BT manhole covers in the roads or paths. In Spain, it costs us £32·47 to access that — that is a regulated price, because this is the broadband fixed side of the business — and in the UK it costs £600. That is a regulated price. Not only is it about ensuring that mobile gets a fair price, it is about ensuring that the whole industry, whether mobile or broadband fixed, gets a fair price.

That is what we need to ensure. If we have to use that network, the amount that we give BT will have an impact on how much capacity we can deliver. At the end of the day, we can pass only so much of that cost on to customers. It is a fairly competitive market. That is the reality.

Mr James: Mr Murphy wanted to know about Scotland. We are working with the Scottish Government and Highlands and Islands Enterprise. In certain areas in the Highlands, because of population densities and other issues, there is no business case at the moment for putting up a mast. We are looking at putting up big masts of 50 metres-plus strategically that all operators would use to spread geographically. At 50-metre level you will get a reasonable level of coverage, and, because of the population density, capacity, which is the point that some have been talking about and is not so much of a problem. We have a pre-consultation approach to site some of those masts.

Mr Murphy: Is that simply around permission to site? Is there any grant aid to spread the coverage?

Mr James: There is difficulty with that, but all those conversations are a part of that. For instance, if an appropriate piece of land could be used to site a mast and it is not going to be expensive, we might work with the community to do that. Because of the size of these masts, we might remove the BT fibre point and use what they call "point-to-point" because you can align masts. That reduces the business case, so it becomes more economical to build these things.

In terms of planning, if you knew where you wanted, say, 10 sites in Northern Ireland, you could work with the enterprise guys to put the fibre to those sites. Again, it is that forward-looking approach to be able to do that. The challenge is to change the economic or business case for those sites because they are in areas that would be used maybe only five or six times per day. In terms of a cost perspective, as Scott said, the business case and the challenges around that mean that you do not normally do that. I would be happy to share some of that with you once we have taken it through that process. However, we are in that discussion at the moment.

Mr Dunne: Thanks, gentlemen, for coming in. The evidence we have heard gives me the impression that there is not a joined-up approach to the way you do business. Is that because you are doing the bit you like doing, where there is more profit to be made, and the areas that are less desirable are being left out? Would that be fair?

Mr James: We compete against each other —

Mr Dunne: Yes, I appreciate that.

Mr James: — so there are rules on where we can cooperate and where we clearly cannot from a regulatory perspective. For instance, we got a regulatory approach that we agreed with the regulator and the Government to work with Vodafone to share sites, so we are now sharing.

Mr Dunne: I know from my experience as a councillor for many years that that did not really happen, but I understand it happens now to some effect.

Mr James: We are building a single-grid network of 18,000 sites that we share with Vodafone because that reduces the —

Mr Dunne: Are you now obliged to share?

Mr James: No, we agree that we will share, and we got that signed off by the regulator.

Mr S McGimpsey: In planning policy guidance, there is a policy of non-proliferation of masts, so you have to look to share where possible.

Mr James: That then increases the height of masts, which goes back to the point that getting permission for a 30-metre mast is sometimes a lot more difficult than a 15-metre mast. If there is a demand for coverage, an operator might build the 15-metre mast because it meets local needs quicker rather than go through the whole planning process to build a 30-metre mast.

Mr Morris: Gordon, just to be clear, we are embarking on improving coverage in rural areas. It is not that we are not doing it; by the nature of it, unfortunately, it is often the last piece. That is not just because the model is cities and towns; it is also because the infrastructure has to follow. If there is no fibre in the ground in those areas, there is no point in trying to do 4G. There are a number of things going on that mean that rural areas end up being at the end of the investment cycle. We are just starting to do that now in Northern Ireland.

Over the next 18 months, you will see bigger improvements. Will there be gaps? Yes, there will. There are gaps in very rural areas. That is where partnership comes in, but the partnership needs to be between the industry and government. We have examples that have worked well. I admit that it has been a bit of a mixed bag, but, ultimately, if we can come up with a model in which there are masts by which we can connect our spectrum and we can avoid some of the high operating costs that we see and have highlighted today — rent, getting the right size of mast and the amount that we have to pay to use the broadband connection — that is the model that we need to work to. If we can come up with a model that satisfies you when you challenge us by saying, "You've got the spectrum; can you connect it up to this mast?", which we have done in places like Scotland, on an individual basis, that is the model we need to work to. Things will improve in the vast majority of areas in Northern Ireland, with some challenges around the corner, and there is the point about whether it will be enough once it is there.

Mr Miller: May I interject on that point? It is interesting to note how the whole telecoms market functions have changed so dramatically. About five years ago, people were lucky and glad to be able to use their mobile phone to make calls and to receive texts. Mobile phones have since become ubiquitous, and the services they provide are radically different from some of the areas that were envisaged five years ago. That has led to an absolute transformation in how consumers not just use their phones but want to use them. Regulation, legislation and, indeed, our approaches need to keep pace with that. It is not by accident that all of our licences for the use of our networks were based on population. We all achieve 98%-plus population coverage. It is now about geographical coverage and ensuring that people are completely connected all of the time. That throws up huge numbers of new challenges, because, as Paul says, network growth is incremental. You build out from the core, which means that it is often rural areas that are the last places to receive connectivity. That is not about choice; that is simply about logistics and physics.

Mr Dunne: I am still worried that you will continue to be selective in addressing the rural area issues. You will tend to shy away from them because the cost of addressing those issues will certainly be a lot more than the costs of dealing with an issue in a higher-density area.

Mr Morris: We will do 98% population coverage across the UK and around 90% land mass coverage across the UK. We have most of it covered. We are saying that there will be some gaps. That is where we will need to think about the partnership model and whether there will be enough once it is there. I will give you an interesting stat to give you a model. We have been looking at how the regulation around property law needs to change to ensure that the cost model of what we spend on rent goes down, effectively. We did some analysis through Deloitte. Deloitte found that our industry lost money on nearly 50% of our masts. The problem is that we cannot lose money on all of them, because you need enough in cities, mainly, to pay off the other 50%. We are not doing just the sites that make profit; we are also trying to do as much as we can with the biggest investment cycle that we have ever had, but as Simon said, the model that we are working in now has completely changed in four years. We have gone up to nearly 70% smartphones. Has everyone got a new phone in the last four years? What are we doing on our phones now that we were not doing four years ago? It has completely changed. We are trying to keep up with that as well, but we need to work together to keep up with that because it is completely changing.

Mr S McGimpsey: Obviously, there is a business case that has to be justified, with a strategy behind it, but, like any privatised business, it has to make profit. We are not trying not to cover rural areas; we are trying to be creative from a technical perspective. As the Chair said, 800 megahertz is a signal that can travel further; we are also Wi-Fi calling enabled. Those technical changes can help that.

Mr Dunne: The Committee is very aware of the huge investment by BT in the fast broadband system. We are concerned to learn now that there are difficulties for you getting access to that. It is something that we will have to address. Huge investment is going on. As the Chairman mentioned, the programme is rolling out again next year. At the moment, there are different ways of getting funding for broadband through councils. In fact, I was at a meeting last night. Rural partnerships are now going to get funding for broadband. What worries me is that an awful lot of people out there are, in many ways, doing the same job. Will there be duplication? Will there still be areas that lose out because we do not have a proper strategy and direction for how it is all managed?

Mr Morris: The MIP sites are shared sites, but they have to be in areas where there is no coverage at all because, obviously, you cannot use state aid for areas where there is coverage. Clearly, you do not need to use state aid for those areas. That is the challenge. You are right: there certainly should be a partnership model that works and does not cost us millions of pounds because we would still lose money as an industry. That is not happening under the BDUK model for BT. We would be up for that conversation. That it is something that we need to think about going forward: once the MIP programme, which is coming to an end now, is done, what do we do next? I have to say that you are right: mobile is probably thought of less in those terms than maybe fixed is, but, once we have got the fixed, as Scott says, there are complementary things that we can do. If you have got that equipment and you have got broadband for mobile, it means that you can get better coverage in your house. There are some complementary things coming along as well.

Mr Dunne: The Chairman has reminded me of another point. If you go up, say, the Craigantlet hills, which are around two or three miles away — I am sure that a number of you have done it — your phone will cut out. Why does that still happen?

The Chairperson (Mr McGlone): It might even cut out here at the seat of government.

Mr Dunne: Yes. It cuts out in Massey Avenue if you are driving through there while on the Bluetooth. You would have to have the Bluetooth system, which most of us have — hands-free, of course. As MLAs, we have to comply. If I am driving on the Bangor road at Cultra, the phone system cuts out. You are on a road that DRD or Transport NI says 40,000 vehicles use every day. How is it happening that you still have gaps there in an area like that? That is not relative to the density of the population of people or customers that you can use as an excuse. There are pockets throughout areas like that.

The Chairperson (Mr McGlone): Which network are you on?

Mr S McGimpsey: I am aware of some of those areas. When we rolled out the initial network, it was obviously based on trying to maximise the speed of delivery but also working within the planning rules and trying to find site providers who would accept a reasonable rent to have a mast on their site. Fifteen-metre structures are the general thing. Along some of these roads, we obviously have a lot of clutter. Unfortunately, masts are not tall enough to get over the clutter. Trees grow. They have now had 20 years of growth and are interrupting the signal. We now need to put in applications to upgrade the antennae and get them above the trees that have grown over the last 20 years.

Mr Dunne: I think that that is a poor excuse, with all due respect.

Mr S McGimpsey: It is a fact.

Mr Morris: We even planted trees around them originally, 20 years ago, to hide them. Lots of things need to change in that sense. Trees get too high.

The Chairperson (Mr McGlone): Gordon, maybe if we could get the contact details, you could relay those to some of the gentlemen here.

Mr Dunne: I will phone them in if my phone works.

The Chairperson (Mr McGlone): Do not rely on customer services: you want to get in a wee bit closer to the top.

Mr Morris: Exactly. If you have got any and you want to email us with the information, I think that all of us would accept it.

Mr McKinney: How many MIT masts did we get?

Mr Morris: Just to be really clear, we are not running the MIT programme.

Mr McKinney: I know that.

Mr Morris: I think that the prediction is that, when it ends — not today — it will be somewhere between 40 and 60.

Mr McKinney: For Northern Ireland?

Mr Morris: No, for the whole of the UK.

Mr McKinney: How many in Northern Ireland?

Mr Morris: I do not know; you will have to ask the MIT programme. We do not run the programme.

Mr Dunne: On the other point about masts and planning, there is something that I find rather difficult to accept. I have been a councillor for a number of years, and we initially were involved with the big masts — huge things — to which people and communities objected hugely. Even in north Down, we had those problems. Now, they are really like a monopole system. Certainly, from our experience, most of them appear on the side of the road or in local developments without any real opposition or concern. I honestly cannot see that there is a real issue with planning. The other thing is that councils have streamlined their systems. Most of those applications will never come before the actual council and will be dealt with by officers. That is the way in which councils deal with the majority of planning applications now. I do not honestly see that planning is the major concern that it was some years ago. You are at this game now about 15 years, is it?

Mr Morris: I think that attitudes have changed. The rules need to catch up with the attitude; that is what I think.

The Chairperson (Mr McGlone): That is the point. The rules are what I do not get at the moment. I am not sure of what you are doing. From the Committee's point of view, you need to be specific about rules or what aspects —

Mr Morris: We will come back. They need to be higher and a bit wider, and we need to be able to put more equipment on them without going back constantly to ask for planning permission to do it.. That is basically it, particularly where sites exist, because they are already there.

The Chairperson (Mr McGlone): I do not know whether that there is maybe some specific area in which you have someone with a clipboard in Planning Service who is a wee bit — how shall we put it? — adventurous in their interpretation of planning law or whether there is a consistent theme right across the North. However, we need specifics on that. It can be a perception or an actuality.

Mr Morris: We will come back with what we want and some specific examples of why we cannot build what we cannot build.

Mr Humphrey: Good morning and thank you for your presentation and answers so far. I think that it was you, Paul, who said that demand will perhaps become six times what it is at the moment. Given the difficulty that we have all articulated in relation to masts and network connections, will we not face a crisis here in the near future around the issue of people being connected to networks, whether they are using mobile phones, iPads, iPods or whatever?

Mr Morris: I think that we have made improvements to our service, and we should welcome those. Even in this building, I have noticed improvements. However, you are right: we need to keep an eye out for what we will need going forward. Should we not get some of those right, yes, people will not get the connectivity that they may be demanding. Equally, if we do it, they can. It will come down to getting the regulatory framework right and to the price that people want to pay for RCS.

Mr S McGimpsey: There are two elements to that question. Coverage is one, but with usage going up the capacity increases and you obviously have to have the big fibre pipes behind to support it. Generally, the big usage is going to be in cities and towns, and that is usually where we have the fibre infrastructure to support it. I am not as pessimistic at the end of the day about not being able to cover that in the main populated areas. The issue is probably pushing it out to more rural areas.

Mr Humphrey: I notice that in your answer, Paul, you said "If we can" and "If we do". Whether they are individual customers or businesses, people out there need certainty around these issues. If business in Northern Ireland and across the kingdom is to be competitive, it needs that certainty. I am a bit concerned, whether I hear about issues of connectivity to the BT network or around masts. I have seen examples in north Down of masts being disguised as trees. One is at a very well known hotel, and another is in the grounds of a well-known swimming pool. People can use a certain amount of ingenuity, even if there are objections. However, I am concerned that we will face a crisis if this infrastructure is not put in place and the capacity is not there to provide the supply and the connectivity.

On the issue of planning and the differential in planning, I remember, a couple of years ago, watching a man from Northern Ireland transfer his business to Wales simply because he could not wait any longer for planning permission. He took the whole kit and caboodle to Wales and got the planning through in a few months. His factory was in place and he was employing people and generating wealth, when he had been waiting for potentially months if not years for that permission. What is the planning differential between Northern Ireland and Scotland on these masts? Scotland was used as an example of how you work so closely with the Scottish Government.

Mr Morris: In Scotland, we had reform about three years ago to be able to upgrade existing sites. In England, it was OK. It did not help all that much. Scotland allowed more flexibilities, and one in particular was the ability to add a 10-metre extension to basically expand that site and add a few more bits of kit onto it. That is why Scotland was the best in that process. What we are doing now — there is a consultation going on in England as part of the productivity review — is looking at how we can build new, taller sites, put new equipment on those and just rear it up even more. That is what we are looking at.

Mr Humphrey: Where are you looking at that?

Mr Morris: With you guys — you have not done the upgrades bit — we have largely been trying to say, "Come on, why don't you try and catch up with what's gone on in the rest of the UK?", but, frankly, we would still be saying, "Actually, you should reform the whole thing to make it easier to upgrade and build new sites". If you could mirror Scotland on the upgrades, that would be helpful, but, equally, if you want to catch up completely and start looking at new builds as well, that would be great. The danger is that, once you have done the upgrade, you will still be behind because others will have reformed the planning system further.

Mr Humphrey: I imagine that that is in all your interests, whatever the size of your company and how many customers you have in Northern Ireland, so have you, as a group of companies, gone to the relevant Ministers and made those points?

Mr Morris: I think we have as the Mobile Operators Association (MOA) — as our trade association, yes.

Mr Humphrey: You have?

Mr Morris: Yes.

Mr Humphrey: And you do that on an ongoing and regular basis.

Mr Morris: We certainly have.

Mr James: We do it on an individual basis.

Mr Morris: We have done some collective work but also individual work.

Mr Humphrey: Do you not think that, if the industry came together with one voice, went to the relevant Ministers and made the points that you are making to the Committee, your voice would be stronger? At the end of the day, Ministers are politicians, and politicians have to be elected and re-elected. That will be very soon, so I think —

Mr Morris: We will do that, yes.

Mr James: Just on your point about Scotland and the bigger masts, that will still require full planning. The difference is that we are trying to do pre-consultation to explain what we are doing and how it benefits the community before we do it, but that is still a full planning environment. We are not saying, "Bend the rules. Change the rules. Amend the rules for the big masts"; we are saying, "Let's have the conversation and then agree an approach before we put in planning". That is what we are doing in Scotland with those two big masts. It is quite an important point, because we are not saying, "Waive all planning requirements here"; we are saying, "Let's talk about it properly first".

The Chairperson (Mr McGlone): The facility exists at the moment.

Mr James: Yes. What we used to get five or six years ago was people in some of those areas writing to say that they did not want masts. Now they want masts, so what we need to do is engage them in that context. We are actually getting more letters in asking for people to build masts than for people not to build masts. Conversely, we are getting more problems with cities turning down stuff than rural areas now. We are saying that we need to have that consultation early in the rural areas in order to facilitate it. That is the conundrum. It has flipped: cities, in some respects, are now more difficult [Interruption.]

The Chairperson (Mr McGlone): Right. That means that there is a Division in the Chamber, so we will probably have to suspend proceedings. Unless any member was going to ask anything further, we may well be finished with you just at the moment anyway. OK. Saved by the bell. Thank you.

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