HC Deb 26 January 1989 vol 145 cc1190-8

4.5 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins)

With permission, Mr. Speaker, I shall make a statement about personal communication networks. The statement covers Telepoint, greater access to channels for cellular telephones, and new personal telecommunications networks.

First, as the House will know, on 22 September last year, we invited applications for up to four licences to run Telepoint systems. These will allow subscribers to make outgoing telephone calls from public places and other locations, wherever Telepoint base stations have been installed, using their own portable digital cordless handsets.

Based on advice from the Director General of Telecommunications, we have concluded that four Telepoint licences should be awarded. The licences are to be granted to Ferranti; a Philips-Barclays-Shell consortium; a consortium involving STC, British Telecom, French Telecom and Nynex; and a grouping involving the Motorola-Shaye consortium and Mercury. We congratulate them. We expect the first commercial Telepoint systems to be in operation within a few months.

We have already made it clear that, at the outset, the new licensees will be free to use existing proprietary equipment to bring systems into operation quickly. But we want to give the user freedom of choice of equipment. So, from the end of 1990, the licensees will be required to support a common standard which will allow the customers of any one service operator to make their own choice of handset from amongst those available on the market. And from mid-1991, or such later date as the director general may determine, the user registered with one system must be able to communicate via the base stations of any of the others.

One specific question which both the Director General of Telecommunications and we have considered with care in the light of representations made has been whether a Telepoint licence should be granted to a consortium involving British Telecom. We have decided that British Telecom should be allowed a minority interest in one of the licences, subject to additional safeguards which will ensure that neither it nor the licensee obtains unfair advantages. A similar shareholding limitation arid appropriate safeguards will also apply to Mercury.

We have also had in mind the special needs of the disabled. We shall be requiring the licensees to make available on a commercial basis handsets which make provision for those whose hearing is impaired.

The director general will keep the market under review, and he will advise us of any changes to the regulatory regime which experience shows to be necessary. Where appropriate, he will initiate these himself, using his own considerable powers under the Telecommunications Act 1984.

Our second announcement concerns the two cellular radiotelephony networks run by Cellnet and Racal-Vodaphone. Strong growth in demand has led to congestion on both networks during peak periods, in particular in the area bounded by the M25.

We are pleased to announce today that the 400 channels, before now reserved for Ministry of Defence use, except in the area of central London, will be made available, subject to certain detailed restraints, over the whole area embraced by the M25. Together with the operators' own further investment, this should help to ease the difficulties which users have experienced, particularly in outer London. We are especially grateful to our right hon. Friend the Secretary of State for Defence for his co-operation in sharing the spectrum. We hope that, as technology permits, other sharing schemes will be possible.

Those measures will reduce cellular network congestion and allow continuing rapid customer growth. They will not of themselves add to the competition in the market with the potential for customer benefits which competition can bring. In August 1987 we announced the arrangements for United Kingdom participation in the pan-European cellular system. We made clear then that the Government would keep under review the opportunities after the pan-European system has come on stream in 1991 for licensing one or more further national cellular radio telephone operators in other parts of the spectrum.

The third announcement is that we are issuing today a discussion document, "Phones on the move, Personal Communications in the 1990s", which we shall be considering with interested parties. Copies are being placed in the Library and in the Vote Office. In that document we propose the licensing of at least two new public mobile telecommunications operators in the early 1990s by which time the pan-European digital system is expected to be on stream. They would operate within the frequency range from 1.7 to 2.3 GHz. Their networks would not be the same as the existing cellular systems but would compete with where we expect cellular systems to be in the 1990s. They would be new networks based on digital personal communicators, so linking and developing both the cellular and Telepoint concepts.

We shall be looking for innovative ideas to be put to us during the three-month consultation period that will follow today's statement and will wish to consult widely, both in the United Kingdom and in the rest of Europe, before finalising the details. Even so, depending on the outcome, from the consultation period we envisage a timetable which could permit the selection of prospective operators by the end of this year to enable the necessary development work to start.

The selection would be through a competition on similar lines to Telepoint, again with Professor Sir Bryan Carsberg as the assessor who will advise us on the merits of the claims being put forward. We shall make a further announcement on this after we have decided on the ideas put forward.

We believe that the decisions that we are announcing today, namely the immediate extension of the availability of the 400 channels, the go-ahead for the four Telepoint operators now selected and the invitation to industry to join us in the definition and development of the next generation of personal communications systems at the new frequencies, will mean investment, infrastructure development and jobs.

I am sure the House will welcome this, not only in its own right, but also because it will strengthen the United Kingdom's position as a world leader in telecommunications.

Mr. Roger Stott (Wigan)

We welcome the Minister's announcement today, particularly on Telepoint, because it will give many more ordinary people access to a useful service which, in the past, has been used only by people with expense accounts in industry. This move will considerably widen the market.

The Opposition have always believed that customers' difficulties, particularly with cellular telecommunications, have been a consequence of privatisation. We welcome the fact that the Minister has overruled the Director General of Oftel—at least we assume that he has—and allowed British Telecom a licence to participate in this exciting venture.

I am sure that the Minister is aware that BT has already spent £20 million at its research centre at Martlesham on CT2, which I am advised has a world lead of 12 months in technology, with estimated United Kingdom sales of £1 billion and overseas sales of £15 billion. That is bound to stimulate employment at BT and in manufacturing industry, and we welcome that. However, there are a number of questions that I want to ask.

First, what additional safeguards will be placed on BT and will they be so restrictive as to prevent BT exploiting that 12-month world lead on CT2? The Minister said, based on advice from the Director General of Telecommunications, that the Government have concluded that four Telepoint licences should be awarded. What criteria were used in the granting of those licences and did the Minister follow the Director General of Telecommunication's advice? If not, why not?

We welcome the recognition of the needs of the disabled, but the House will want to know how much extra the hard of hearing and other disabled people will have to pay for the service, particularly since it is based on a commercial service.

I am advised that after the terrible tragedy at Lockerbie the emergency services had great difficulty in using the cellular frequency. Is it not now time that the Department of Trade and Industry looked at the allocation of frequencies in order to mitigate the real problems that exist, and will continue to exist, as a consequence of saturation of the airwaves? Is it not now time that the Department allocated special frequencies for emergency services?

We welcome the Minister's statement, but is it not time that Oftel started the same monitoring and setting of performance indicators for cellular telephones as it uses for public telephone boxes?

Mr. Atkins

I am grateful to the hon. Gentleman for his warm welcome, which I would have expected from someone with his background. He recognises the advantages that today's announcements will give ordinary folk.

The hon. Gentleman asked a number of questions and I shall deal with them in the order that he raised them.

Safeguards for BT will involve a complete separation of businesses. There will be arm's length arrangements for accounts, billing, marketing, personnel, other commercial information and similar areas. In addition, BT will have to offer its network on a fair basis to all Telepoint operators. The consortium in which BT is a minority member must not receive favourable treatment over that received by other Telepoint operators. The Director General of Oftel will take a close interest in how those arrangements are made.

We have made our judgments on the criteria set out in the general duties contained in the Telecommunications Act 1984. Those include the provision of services to meet reasonable demand, obtaining effective competition, the quality and variety of services available to the user, research in new techniques and the enabling of companies to operate and compete well overseas. The direct answer to the hon. Gentleman's question about the Director General of Oftel's advice is yes, we took his advice as presented to us in confidence.

The hon. Gentleman made a good point about the hard of hearing. We have been impressed by the proposals made by the consortium members. We cannot say at this juncture exactly what the costs will be, but since the handsets are likely to cost £200 or less, we anticipate that, although we do not know the full technological detail about how it will work, it will not be too difficult to provide what is required for the hard of hearing within the cost of existing handsets. However, that remains to be seen as developments go on.

This is the first time that I have heard about the problems experienced after the Lockerbie disaster, to which the hon. Gentleman referred, and I should like to investigate and take advice on that in order to discover the extent of the problem. The hon. Gentleman will understand that, particularly in relation to the cellular network, we have sought to address his point about the spectrum and congestion. The Director General is also addressing that point in terms of the quality of the service that he and my Department are introducing.

I think that that covers all the hon. Gentleman's points and I emphasise again that we are grateful to him for the support that I would have expected from him.

Mr. Michael Grylls (Surrey, North-West)

Does my hon. Friend accept that this welcome announcement on Telepoint is proof that freeing the telecom market has resulted in this remarkable innovation and technological advance, giving us a real chance to have a world winning product, which the Government's decision will help to establish? There is also the by-product advantage—if I may call it that—of giving millions of people of modest means the opportunity to have mobile telephones rather than the rather expensive cellular phones. That will be a tremendous help to millions of self-employed people and those who run small businesses who cannot afford the more expensive Cellnet system. We wish the programme every success.

Mr. Atkins

I am grateful to my hon. Friend for his warm welcome. It is interesting to extract one simple statistic. The objective was that there should be 100,000 cellular telephone users by the end of next year. There are now 510,000. That is a measure of the demand. That is a sign of how successful privatisation has been.

Mr. John McWilliam (Blaydon)

Is the Minister aware that the members of the National Communications Union which I represent will be delighted with his statement? It represents a good opportunity for the future of international markets, but those markets depend on his officials being tough in the negotiations for international standards and making sure that, for once, they look after British interests rather than the interests of other companies, hearing in mind that we have the technological lead.

The Minister should not take too much comfort from his hon. Friend the Member for Surrey, North-West (Mr. Grylls). The process would not have been so complicated if British Telecom has not been privatised. In his statement, he referred to the safeguards that Oftel, British Telecom and Mercury think are necessary and to complete financial separation. He is of course aware of the absolute bar to cross-subsidisation of services to which the Telecommunication Act refers, so why are such safeguards necessary?

Mr. Atkins

I must reject the implied suggestion that officials of my Department are not looking after the best interests of Britain in their negotiations in Europe. [Interruption.] I shall rephrase that: there was a suggestion that we were not defending Britain's interests. I reject that because it is clear that one of the reasons why we are world leaders in this field and why Europe is coming to learn the lessons from us is that my Department has achieved such great things in developing telecommunications in many areas and is therefore to be congratulated.

The Director General of Oftel will look carefully at the question of cross-subsidy to make sure that the problem mentioned by the hon. Gentleman does not occur.

Mr. Michael Marshall (Arundel)

Does my hon. Friend accept that his welcome statement highlights both a complementary range of liberalisation and services in telecommunications and an increase in competition? Surely he accepts that the fall in the prices of cellular telephones will be accelerated by the developments in Telepoint. Will he continue to monitor the availability of radio-spectrum and band width through the Ministry of Defence, bearing in mind that from time to time specific problems, such as those his Department has already experienced in the case of theatre broadcasting, may occur in other areas?

Mr. Atkins

My hon. Friend is right to point to the effects of free enterprise and competition in pushing down the prices of equipment that has become so popular. It is evidence yet again that the Government's policies show that we can lead the world in new technology and provide it at an economic cost.

We are grateful to the Ministry of Defence for releasing what it has and we shall continue our conversations to ensure that, where it is possible, it will do so again, bearing in mind the need to retain emergency service facilities.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

I welcome the increased availability and the exciting national and international growth potential that the Minister has announced today. However, is he satisfied, despite the qualifications in his statement, that leaving the matter to market forces will not lead to a persistence of the problems that we have already had, such as difficulties in accessibility and high tariffs for consumers? Will those problems be dealt with as a result of the statement? In view of the increased space, particularly in the area around the M25, does he acknowledge that we want to spread the available technology further north so as to balance out the regional inequalities? When will we see such technology in Ross, Cromarty and Skye, where, on the few occasions that I have tried it, it has been singularly unimpressive?

Mr. Atkins

The hon. Gentleman will recognise that many of the problems of congestion relate to the M25 and the surrounding corridor. Demand is not yet great in my constituency, or, I suspect, in the hon. Gentleman's constituency, although it is very real and to be welcomed. It is generally accepted that Sir Bryan Carsberg has been singularly effective and well respected in the implementation of the licence conditions in the wide range of activities for which he is responsible. I am satisfied that he will continue to watch over this area of development, especially the expansion of the cellular network. That is evidence of the demand and we must ensure that we continue to encourage the operators to provide the service that is demanded by so many people.

Mr. Simon Burns (Chelmsford)

I welcome in general terms my hon. Friend's announcement about Telepoint. However, is he aware that many people in Chelmsford will be bitterly disappointed that Marconi Communications was not successful in its application for a licence? Is today's decision for four licences final, or will any further licences be offered later if any companies or groups of companies believe that it is viable to apply for them?

Mr. Atkins

The 11 applications that we received for Telepoint were, almost without exception, of a high standard. That is an indication of the demand and shows how well prepared so many of the applicants were to meet that demand. Unfortunately, in every competition, there have to be some winners and some losers, but that does not mean to say that Marconi's application, or any other application, was deficient; it was simply bettered by others. I cannot make any definite commitment as to when further applications will be accepted but, as the market develops, if the demand is like that for cellular communications, there may be chances in the future for those companies to be involved.

Mrs. Ann Clwyd (Cynon Valley)

I welcome the generality of the Minister's statement, but will he consider the frustration of people who have paid over £2,000 for their telephone receivers and then found that they are not able to use them in certain parts of the country? I am glad that the frustration of people stuck in traffic jams on the M25 will be alleviated. Will the Minister consider the way Vodafone and Cellnet market their products? They give inadequate information to customers about the best systems for particular areas. I have had an unsatisfactory correspondence with Oftel on this subject.

Ten miles north of Cardiff, in the Pontypridd area—where telecommunications will be very important in the next few weeks—portable telephone systems do not work at all. Further north, in my constituency, there is no service whatsoever. When will coverage be extended to the rest of the country? Will the Minister give firm instructions to the suppliers of the equipment that they must give their consumers proper information about the best system for their particular areas?

Mr. Atkins

It is not for me to give such instructions. The market will dictate what is required. It is up to us to ensure, through the Director General of Oftel, that standards are maintained. The quality of service initiative that we have introduced and the pressure from the Director General of Oftel, who is considering the matter at present, together with the increase in channels made available for the M25, will go a long way to improving the service. On the question of the Pontypridd area, I shall ask the Director General of Oftel to report to me in three months' time.

Mr. John Maples (Lewisham, West)

My hon. Friend's statement is most welcome and brings portable telephones within the price range of many people. Does he agree that, under the old British Telecom state monopoly regime, it is highly unlikely that we would have seen this or many of the other recent extensions of telecommunication services? Does not that prove conclusively the benefits of a much freer market and the competition within it?

Mr. Atkins

My hon. Friend is right. As I indicated in the statement, and on other occasions, we are where we are because of privatisation. We are the best in the world, the country to which all others beat a path to find out how and what we do. That surely must be the best evidence to demonstrate that this is successful technology which is being provided economically to people at all levels who wish to use it.

Mr. Bob Cryer (Bradford, South)

Will the Minister assure the House that all the people who will reap the rich rewards which the Department has doled out did not contribute in any way to the financing of the Tory party at the general election? Since this is a growth area for yuppies and property is involved, why cannot the Government impose conditions to make the companies provide telephones for the disabled, particularly bearing in mind that Right-wing extremist councils like Bradford are closing down telephone shopping facilities for the disabled? Could not this wonderful private enterprise provide assistance for people who cannot afford these yuppie facilities?

Mr Atkins

Contributions to the Conservative party were not deemed by the Director General of Oftel to be a criterion on which applications should be judged. The hon. Gentleman's implied criticism of "yuppiedom" flies in the face of the welcome given by his hon. Friend the Member for Wigan (Mr. Stott) to the availability that this will bring to more people. That is to be welcomed. The hon. Gentleman's question is a sign of how out of touch many members of the Labour party are if they think that, somehow, this is only for wealthy people, when its very raison d'etre is to improve the telecommunications available to ordinary folk at a reasonable price.

Mr. Ian Bruce (Dorset, South)

May I press my hon. Friend further on the question of when Telepoint licences will be expanded? The technology of the service means that the full band width is used by all four operators. Therefore, a fifth, sixth or seventh operator would make no difference to the band width, but obviously would affect the return on capital of the four licensees who will spend a lot of money on establishing the system. Has the Minister given a guarantee to the four licensees that further licences will not be issued within a certain period? Can he assure us that, as soon as competition allows, he will grant further licences?

Mr. Atkins

I cannot add to what I said earlier about the further availability of licences. The four licences, which have been given to wide-ranging consortia, are for a period of 12 years. We hope that that will bring about the availability to which I referred earlier, which has already occurred with cellular telephones. At this stage I cannot comment further on what the future may hold for other applications.

Mr. Dennis Skinner (Bolsover)

How many executive directorships will be available as a result of the Minister's statement? How many Tory MPs have left the Chamber since he started speaking to get their names on the Register of Members' Interests? Is not the statement an indictment of the savage, brutal, materialist society in which the Government are concerned about providing telephones for yuppies at the same time as they are depriving local authorities of the necessary finance to provide telephones for the chronically sick, the disabled and the elderly who badly need them to communicate with their friends and families? It is another example of private affluence versus public squalor.

Mr. Atkins

I thought that in recent weeks and months the hon. Gentleman was looking more and more like a yuppie. I am sure that he, being a man who represents his constituents to great effect, will be more than delighted to know that in future many of his constituents can contact him more easily by using the Telepoint service. I know that he will enjoy the extra burden of constituency correspondence and activity that this will give him.

Mr. Phillip Oppenheim (Amber Valley)

Will my hon. Friend accept that his announcement, and particularly the Telepoint element, is welcome? Many people have doubts as to why there was a need to limit the franchisees to four. None the less, this shows the benefits of deregulation and a freer market, more geared to consumer needs. Is it not also welcome that the Opposition Front Bench seems finally to see the benefit of a freer and more deregulated market, bearing in mind that the Telepoint service would almost certainly never have come about in the bad old days of a state-owned monopoly telecommunications authority, cossetted by a producer-oriented Government?

Mr. Atkins

I am grateful for my hon. Friend's support. He is an authority on these matters in the House and appreciates the full extent of what is involved. He makes a fair point about the hon. Member for Wigan (Mr. Stott) who understands these matters because of his background and therefore has had the farsightedness to recognise what an important and welcome statement this is. I only wish that the rest of the Labour party were as farsighted.

Mr. Michael Jack (Fylde)

Will my hon. Friend confirm that the announcement will be welcomed by many small businesses which have benefited from the growth of mobile communications? Can he also confirm that in no way will the announcement deter the Government from continuing their high level of support to technological development in telecommunications, particularly for projects such as RACE and LINK?

Mr. Atkins

We are already ahead of the game in this area. It is my intention, and the intention of the Department and the Government, to stay that way. We have achieved great things as a direct result of the new technology which has developed largely because of privatisation and the release of resources and enterprise. following privatisation. My hon. Friend is right to draw attention to RACE and LINK in which he well knows there are distant developments which are coming ever closer. Our commitment is strong. The more we are involved in that development, the better it will be for the future in this interesting and exciting sphere.

Mr. Clifford Forsythe (Antrim, South)

Will this facility be extended to Northern Ireland?

Mr. Atkins

Yes, it will.