Treat us like the utilities we believe ourselves to be, say UK operators

Rents on mobile phone masts should drop dramatically, with a pricing model loosely based on that used for utilities, states a report from Deloitte, commissioned by several mobile network operators.

The professional services firm says that where a mobile network pays £7,500 yearly in rent for sites in rural areas, and £9,200 in urban areas, water and energy companies would pay £270 and £280 for the equivalent amount of land and time-scale.

The company points out that almost half of all MNO network sites generate less revenue than they cost to maintain, and this makes it hard to persuade operators to add more coverage, as it would be in even less profitable areas.

This is bad for the country as Government research found that every £1 of public investment in broadband would result in around £20 of net economic impact.

When the mobile operators agreed to increase coverage to 90 per cent of the UK (geographical), the government conceded in return to look at spectrum pricing and base station planning permission. Ofcom isn’t budging on the spectrum pricing.

The spectrum pricing issue looked at the AIP, an administration fee levied on all mobile spectrum and re-framed as ALF (Annual Licence Fees), which is designed to reflect “market prices”. It’s a very complex formula of spectrum, propagation, population and market prices around the world but which basically boils down to ALF equals AIP plus whatever the government can get away with.

This encompasses a price hike from £64m to £223m a year. There is a consultation document, but it strongly recommends no change.

So, it looks like the farmers could be those who end up paying for mobile coverage which may, or may not, be better than we have today.

The operators looking to site rental costs to save money, with which to then use to roll out the improved coverage, might be disappointed.

The Electronic Communications Code (ECC) regulates the relationship between landowners and fixed and mobile operators. The government has been considering the reform of the ECC for several years, having ignored a Law Commission report.

The mobile operators wouldn’t want a situation of 'no change' – although that’s unlikely – but would want it to favour the networks rather than the landowners.

The Mobile Operators Association (which represents the four UK mobile network operators on RF, health and safety, and related town planning issues) commissioned Deloitte in June 2014 (well ahead of the not-spots deal) to have a view on the ECC, and particularly the potential economic impact of reform. Its brief was to go beyond what the Law Commission had said previously.

The report dangles a digital carrot in front of the government, arguing that if the rights-of-way regime (public utilities on highway right of ways have traditionally not been charged) currently applied to water and energy companies were to be applied to mobile operators, this would unlock up to an additional £271m in annual rent reductions.

Moreover, if this reduction in rental payments was invested in network roll-out, network coverage could exceed actually 90 per cent.

Alternatively, it could be used to invest in deeper coverage and faster mobile broadband.

The document is the operators' response to the kerfuffle over not spots, and while the government may not be prepared to relinquish a little over £200m in spectrum fees, it may be perfectly happy for landlords to give up a similar amount in rents. ®