EU selects satellite broadband providers

The EU has awarded Inmarsat Ventures and Solaris Mobile enough radio spectrum to run trans-Europe satellite data networks, but Ofcom remains undecided if they'll still have to pay market rates to run their network down to the UK's street level.

The spectrum concerned, two blocks around 2GHz, has been allocated to satellite data services by every country in Europe. The EU has been deciding, by beauty contest, who would offer the best connectivity to the remotest parts of the EU, and it's come down to Inmarsat and Solaris, but they'll still have to do regional deals with the regulators in each country, with Ofcom presenting one of the more serious obstacles.

Satellite internet is a lovely idea, but a commercial disaster in recent years as a succession of companies have failed to make it pay. With near-ubiquitous ADSL available in the bigger and more profitable EU countries, satellite services have been left with remote communities hard pressed to cover the costs and businesses who can't be bothered with fixed infrastructure: tenants in out of town shopping centres and remote petrol stations being prime customers.

But existing services are very high frequency, which means a couple of grand's worth of kit and a big dish pointed in the right direction. Operating around 2GHz means briefcase-sized kit that should be a lot cheaper too, it will still suffer the latency inherent in communicating with geo-stationary satellites.

This makes it fine for web browsing and e-mail, but not so good for VoIP and online gaming. Furthermore, without serious bodging you're not going to get iPlayer or similar no matter how much raw bandwidth is available.

The new owners are also allowed to broadcast TV and radio from their birds, but that will mean having local re-transmitters in each territory being covered - satellites work great for line-of-sight, but to get proper coverage you need to retransmit the signal on the same frequency, which is where the regional regulators get involved.

Ofcom proposed, back in November, that the contest winners should be required to pay full AIP* to set up ground stations in the UK, a proposal that met swift rebuttal from Solaris Mobile at the time:

"Given the limited number of potential licensees, ACR [Administration Cost Recovery] in conjunction with concurrent trading of spectrum rights is sufficient to ensure efficient use"

Solaris also claimed that even if Ofcom did want to charge AIP it had the calculations wrong, as it had failed to allow for the fact that no-one except the EU-level contest winner could use the spectrum in the UK anyway.

Inmarsat didn't get drawn on pricing in their response to the proposal, claiming that this would be detailed in a separate letter.

We spoke to Ofcom this afternoon, and the regulator told us it would be issuing a statement in the next couple of weeks. But whatever the decision it will be heralded as a disaster by someone. Existing broadcast networks will be livid if the spectrum is handed over for free, but the satellite providers will threaten to leave the UK bereft of their services otherwise: not to mention shouting at the Commission about open and equal markets, in an attempt to force British compliance.

Based on previous performance Ofcom is marginally more likely to upset the EU Commission than existing broadcasters, but it will likely try to find a third way that can upset everyone involved equally. ®

* Administered Incentive Pricing - working out what spectrum would raise if it were auctioned, and then charging that amount to the only person who can actually use it.