The devil’s in the detail

Comreg recently agreed to amend the termination date of three of the MMDS licences held by UPC (Ireland). MMDS is a wireless telecommunications technology, used for general-purpose broadband networking or, more commonly, as an alternative method of cable television programming reception. UPC use it to provide their TV services to people (approx 73,000) in areas with no suitable cable based system. It operates on the 2.6Ghz frequency which some of the mobile networks would like to get access to for launching LTE. I’m not going to go into to much detail on it but suffice to say Comreg had asked for soundings on the proposals to amend the termination date for UPC. UPC wanted to keep it as they make money from the service and dont want to loose it because BSkyB could mop up a lot of these customers with their satellite option (essentially a monopoly in UPC’s words). Comreg publishes online the responses they get from all the interested parties and sometimes we can learn a lot from these responses. Here’s some of the most interesting bits that I found:

• eircom group were vehemently against the renewal as they want to use the 2.6Ghz for LTE access eventually and they argued that, despite UPC saying if they lost the license there’d be no competition in the TV sector for these customers they said that the eircom Group is itself planning to enter the pay-TV market. When we dont know, but they must be in some advanced stage to be volunteering this information publically (even though all responses to Comreg are published companies can and do request parts deemed commercially sensitive to be redacted).

 

• UPC argued too that there’s enough room in the 900 and 1800mhz spectrums to support the demand for LTE services up until 2019 which if UPC got their MMDS license extended would be the limit. They also analysed the mobile network traffic levels in the most densely populated region of Ireland (namely the area of Dublin within the M50), which they feel is the only part of the country in which there might conceivably be any demand for access to the 2.6 GHz band for LTE services. The table below shows that currently the average low, medium and high user uses about 200mbs a month but they forsee growth our to 200, 700 and 1000mbs per month by 2015 for the same users. They also think that by 2019 the low demand smartphone users would still be using almost 600mbs a month, while the high demand smartphone user could be using as much as 10gb’s a month. This is some increase on what the Irish networks like O2 are currently offering on their plans. We’ve discussed before that the demands of data are increasing exponentially with the continued expansion of smartphone users so hopefully the networks will get serious and give us decent allowances. They (the networks) like to tell us how the “average” user doesn’t use much data but surely they themselves are doing their own analysis, like UPC, and can see data demand increasing. So why do people stay with networks that offer them paltry amounts of data and then charge high prices for overage?

 

• And the final tidbit of information that I found interesting was that BSkyB dont pay VAT to the irish government for their subscription services as they’re not in the Irish jurisdiction (they dont have an Irish-registered subsidiary). This is due to change in 2015 when an EU directive will force BSkyB to pay VAT to the Irish state, but until then they dont. UPC estimates this loss to the Irish exchequer to be 15million euro for the period 2010-2014.

The full text of responses to Comreg’s MMDS license proposals can be found here (at 225 pages long): http://www.comreg.ie/_fileupload/publications/ComReg1180s.pdf with comreg’s responses and final decsion (to go ahead and extend the MMDS license till 2014) available here: http://www.comreg.ie/_fileupload/publications/ComReg1209.pdf

Comments welcome below.