Rory Speaks on Rural Broadband and Mobile Coverage
I beg to move, that this House recognises that rural businesses and rural communities across the UK are isolated and undermined by slow broadband and the lack of mobile voice and mobile broadband coverage; urges Ofcom to increase the coverage obligation attached to the 800MHz spectrum licence to 98 per cent.; and calls upon the Government to fulfil its commitment to build both the best superfast broadband network in Europe and provide everyone in the UK with a minimum of 2 Mbps by 2015.
I am grateful for the opportunity to move this motion, which also bears the names of 100 other Members of Parliament. When I last saw Ed Richards, the head of Ofcom, he said that the most powerful argument he required was a political argument. He wanted to hear that Members of Parliament cared about broadband and mobile coverage. If that is all he requires, I might as well resume my seat now. I am not an expert on the constitutional history of this House, but as far as I know there have not been so many names on a motion on the Order Paper for debate on the Floor of the House in recent memory.
I wish to thank very much everybody who has supported this motion. I wish to thank first my hon. Friends from Cumbria, on both sides of the House, as well as the many Members who have put so much energy into mobile broadband over the last three to five years. That includes my hon. Friends the Members for Skipton and Ripon (Julian Smith), for Suffolk Coastal (Dr Coffey) and for Hereford and South Herefordshire (Jesse Norman), and of course many Members from other parties. From the Liberal Democrats, we have had contributions from the hon. Members for Caithness, Sutherland and Easter Ross (John Thurso), for Cambridge (Dr Huppert) and for Chippenham (Duncan Hames)—to roll out the Cs—and from the Labour side, we have had support from the hon. Member for Dagenham and Rainham (Jon Cruddas), and the right hon. Members for Coventry North East (Mr Ainsworth) and for Leicester East (Keith Vaz). We have also had support from the Scottish National party and Plaid Cymru.
What, though, is the motion facing us today? It has three parts. The first focuses on rural need, which I hope Members will address in their speeches. The second focuses on mobile coverage, and the third focuses on the Government’s commitment to super-fast broadband. All three are connected. In a sense, it is already outdated to separate them. It is increasingly clear that a separation between voice coverage and data coverage is a thing of the past; that an attempt to separate the rural areas from the urban areas is a thing of the past. The central fact about broadband and mobile coverage is that it is—not to be too pretentious—a single global universe. Nevertheless, I will hand over to other Members, who will talk about the first and third elements of the motion. I will focus exclusively on the second part—the mobile coverage obligation.
Enormous thanks are due not just to the many Members whom I have mentioned, but to the civil servants who have worked unbelievably hard in Broadband UK to make this happen. It is unfair to pick out names, but I would like, in particular, to thank Mike Kooley, Rob Sullivan and Jim Savage. I would also like to thank Ministers, including the Minister here today, the Secretary of State and all the communities that have been working so hard. I hope that others will develop that point, but again, although it is unfair to pick out names, I want to mention those extraordinary people in Eden—Libby Bateman, Miles Mandelson and others in the Leith-Lyvennet broadband group—who have been pushing ahead with their programme. However, that is not the subject of my speech today.
I am here to speak about mobile broadband coverage. I will take 30 seconds to explain the issue. This is the last chance for a generation to provide good mobile broadband coverage for 6 million people who will not otherwise get it. It is the last chance because, at the end of the month, the Ofcom consultation closes. That consultation will determine the coverage obligation imposed on mobile telephone companies for the 800 megahertz spectrum. This is a spectrum on which we all depend for our smartphones, our iPads and iPhones. It is also a spectrum that is ideal for rural areas. So why has Ofcom stated in its consultation that it has no intention of increasing the coverage from the current level, which, as hon. Members will know, is 95% of the population, 90% of the time? That equates to about 87% of the population.
Mark Tami (Alyn and Deeside) (Lab): Does the hon. Gentleman accept that it is not even that level of coverage? The companies produce maps claiming that there is coverage, only for people to find—I am in this position at home—that it does not actually work.
Rory Stewart: That is an enormously good point. It is a matter of bewildering complexity. Ofcom is over-layering four different models dependent on masts, terrain, topography and thickness of walls, and the reality is, as the hon. Gentleman says, that 90% of the time for 95% of the people is probably an overestimate of what we are currently getting.
Nevertheless, Ofcom states in its consultation document that it can see no benefits from extending the coverage further. In fact, it states on page 67 that the costs would outweigh the benefits. Why? Because it is worried about losing money in the auction—nobody knows how much—and is worried that when it tries to sell the radio spectrum, which it owns, to the mobile telephone companies and asks them to increase their coverage obligation from 95% to 98% these companies might pay less in the auction. Indeed, they may. It stands to reason they would pay less, but probably not as much less as Ofcom fears.
Duncan Hames (Chippenham) (LD): It may indeed stand to reason, but the evidence from past auctions of the spectrum does not show bidders producing bids while in any sense respecting the cost base of the project on which they are about to embark.
Rory Stewart: That is an excellent point. The reality of auctions is not that people operate on a fully rational basis, counting the number of their masts and then bidding exactly less than that. We have all participated in auctions. They are elaborate psychological procedures that are exactly designed to extract as much money as possible.
Dr Thérèse Coffey (Suffolk Coastal) (Con): My hon. Friend is putting the point so eloquently that this is a once-in-a-lifetime opportunity to cover the sorts of constituents that he and I represent, along with many others in the House. Does he agree that there is a risk that Ofcom is being penny wise, pound foolish, and that in future it could become very expensive for this country to have truly mobile broadband?
Rory Stewart: My hon. Friend makes exactly the right point, and much better than I could. “Penny wise, pound foolish” is exactly right. To put it bluntly, it is a no-brainer. This is the time to act. If we are going to do it, we should do it now. There is some fantasy out there that if we get it wrong, we can go back to the mobile telephone companies in two or three years’ time and say, “We’re very sorry, we didn’t impose an obligation on you, but would you mind awfully providing 98% coverage?” However, by that time they will already have begun to lay out their infrastructure and will have made their decisions. Acting then will be more expensive, the mobile telephone companies will be under no obligation to do so, and we will have to pay them. At that point their interests will not be aligned with ours.
If we impose an obligation at the right moment and say, “You’ve got the licence; now provide 98% coverage,” their interests will be to provide it as cheaply and efficiently as possible. If, on the other hand, we approach the mobile telephone companies in three years’ time as a contractor, we should remember that there will then be an additional problem. As my hon. Friend suggests, if we do it now, there is no cost to the taxpayer. The money would not come from raising taxes from people or stealing it from another Department. All that we would be doing is taking the risk that we would make slightly less in the auction. That would not be the case in three years’ time. If in three years’ time we suddenly wanted to spend £215 million on building masts, we would have to tax people or move money from other Departments; and we absolutely know that people who say, “Give me that bird in your hand, because I can promise you those two in the bush in three years’ time,” are almost certainly misleading us. This is the time to do it.
George Freeman (Mid Norfolk) (Con): While my hon. Friend is on the subject of investment in broadband paying for itself, does he agree that part of the significance of the measure—the Government are to be congratulated on the investment—is that every pound that we spend on rural broadband will pay back UK plc in spades? In my constituency, where coverage is extremely poor, communities are waiting for the opportunity to start businesses back in villages and drive a model of sustainable development. The investment will pay for itself; we merely need to think about how we recoup that benefit and use it to invest in infrastructure.
Rory Stewart: That is a fantastic point. I will come to growth in a second, but perhaps, rather than taking any more interventions, I could now make some progress and accelerate through my speech so that everyone can get in.
There is only one question—the fundamental question—that we need to ask Ofcom: does mobile broadband technology matter? Will this thing that I have in my pocket—this mobile device—and that everyone else has in their pocket matter in five years’ time? Will people be using iPads and iPhones then? If we have reason to believe that the technology is important, why are we proposing to leave between 6 million and 9 million in this country on the current figures excluded from using these machines? For the sake of what? Why exactly are we being told that those people should not be able to use the technology?
I hardly need explain to the people in the Chamber why this technology matters or what its uses are. Others will develop that far more, but to run through them quickly, the fantastic comment made by my hon. Friend the Member for Mid Norfolk (George Freeman) was absolutely right. Our economy is driven by these devices. Growth comes from productivity, and the biggest, simplest contribution that we can make to productivity in this country is through broadband and mobile coverage, which is particularly true for rural areas, as the many people in the Chamber from such areas know. Why? Because the biggest contribution to economic growth through mobile and broadband technology is made by small and medium-sized enterprises. What do we have predominantly in rural areas? Small and medium-sized enterprises. My constituency is an example. The national average is that SMEs occupy 50% of the private sector, but in Penrith and The Border, SMEs with fewer than 10 employees employ 92% of our work force. Furthermore, because we are almost starting from scratch in rural areas, we are not talking about a slight increase in speed from 2 megabits to 3 megabits; we are talking about a step change in economic productivity for rural areas.
We are also talking about making a real difference in public services. As we all know, more and more public services are being driven online. In Cumbria, for example, the justification for the Cumbria police closing police stations is that they want policemen to be on the streets more, using their tablets to transmit data straight back to the police station. Nurses and doctors visiting people in their homes rely on being able to transmit data in real time back to a hospital from the home. Education is being transformed by online learning. In the United States, 40% of post-secondary school students are taking a course online. Recent research by Carnegie Mellon university suggests that mixed online and classroom learning can increase the speed at which children learn by 100%. And I do not need to talk about Twitter, Facebook and all the other things that everyone in London, and every child in those parts of the country with mobile coverage, take for granted, except to ask why everyone else should be excluded.
Matthew Hancock (West Suffolk) (Con): My hon. Friend is making an extremely powerful and eloquent speech. In rural areas, we spend more time travelling from place to place, because the distances are greater. The coverage figures that he has given are those for static people when they are at home, but in fact, we spend far more time travelling from A to B, and our communication is often broken further when we do so.
Rory Stewart: My hon. Friend makes a very good point.
My argument is about mobile broadband coverage. What is the argument against extending it in the way that I have suggested? It is cost. Ofcom’s only argument is that it is worried that it might make a little less in the auction. Let us say that, based on the Swedish and German models, the auction is going to generate about £3.215 billion. Ofcom is worried that it might make only £3 billion. For a number of reasons, that is probably an underestimate. That £215 million represents an absolute worst-case scenario. Let us look this directly in the eye: £215 million is less than we spend in three weeks on our operations in Afghanistan. In fact, mobile coverage is one of the smartest, cheapest forms of infrastructure investment that we can make. It is far cheaper than fixed telephone lines, and far cheaper than ports or roads. As far as infrastructure investment that would create real productive growth in the British economy is concerned, £215 million is a small sum of money.
Chi Onwurah (Newcastle upon Tyne Central) (Lab): Could the hon. Gentleman give me some clarification on the figure of £215 million in lost revenue through a change in the coverage? What is the basis for that estimate, and have the providers supported it?
Rory Stewart: It is a very basic estimate predicated on the assumption that, to increase from 95% to 98% coverage, we would need to build approximately 1,500 masts, and that the average cost of a mast hovers at just under £150,000. So the figure of £215 million represents a worst-case scenario. The assumption is that the mobile phone companies will cover some of the costs of the masts anyway, because they will get increased revenue as a result of installing them. The Government should not have to pay for all those masts. Furthermore, companies such as Three already have the infrastructure in place, and were those companies to win that chunk in the auction, they would not have to pay to install new masts. The £215 million is a worst-case projection for getting up to 1,500 extra masts and pushing through to 98% coverage.
Are we prepared to turn around in 2015 and say to people in this country and people in our constituencies, “No, everybody else in the world can have this thing, but you can’t have it. In every other part of Britain, if you happen to live in central London, you will be able by 2015 to attach a device to your heart, which can monitor your vital signs, transmit in real time to a hospital, regulate your drug intake and help you stay at home. I am sorry, though, but you live in Northumbria and you are not going to be allowed to have it”?
Are we prepared to turn around to students and say, “Everywhere else in this country, if you happen to live in Chelsea or the centre of Manchester, you can do online learning, you can learn the harp, you can study German or Russian. In fact, you can study anything you want from anyone you want at any time you want, but unfortunately you live in Suffolk, so you are not going to be able to do those things.”?
By 2015 it will not be just data-rich businesses or internet-rich businesses, but the basic small and medium-sized enterprises that will be dependent on these devices to cut their transaction costs, increase their reach to market, drop their advertising costs and so on. Are we prepared to turn round to every one of those businesses and say, “Of course it is extremely beneficial for a business to have these services—in fact, it is the only way a business can compete and survive—but because you don’t happen to be located in the very centre of London, you are not going to be able to work in that way.” ?
Are we to say to a farmer, “Through this technology, you might be able to use special identification tags and make some use of the astonishing bureaucracy being imposed on you, but only if you happen to be farming in Chelsea. If you are farming in the uplands of Cumbria, you might as well forget about it.”?
We are looking for a positive narrative. We are looking for a narrative around growth. We are looking for growth, which is not effectively saying, “Oh, we are just going to get 90% of the country going”. We are looking for growth that is saying, “We want 100% of this country going.” Growth is about productivity; productivity is about the internet. If we are looking for a positive narrative, let it be this: at the moment, our best mobile next-generation coverage is worse than that of Uzbekistan. I know something about Uzbekistan. I would not be surprised if someone were to stand up and say to me, “In Uzbekistan, there are more political prisoners in jail than there are in Britain”. However, I am not just surprised, but horrified to learn that in Uzbekistan, the mobile next-generation coverage is better than it is in the United Kingdom.
Let us stand behind this motion. Let us push Ofcom with all our might to take that small risk to reach that 98% of coverage. Let us not allow the clever arguments of narrow economists who are blind to technology and obsessed with making their auction feature in a particular fashion allow Britain to miss the chance to get what it needs for its economy, for its society, for its health, for its education and for its communities by signing up to the best superfast mobile and broadband coverage in Europe.