§ 3.25 p.m.
§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
My Lords, with the leave of the House I shall make a Statement about personal telecommunication networks. The Statement covers Telepoint, greater access to channels for cellular telephones and new personal telecommunications networks.
First, as your Lordships know, on 22nd 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, whereever Telepoint base stations have been installed, using their own portable digital cordless handsets.
Based on the advice from the Director General of Telecommunications, I 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, finally, a grouping involving the Motorola/Shaye consortium and Mercury. I congratulate them. I expect the first commercial Telepoint systems to be in operation within a few months.
I have already made clear that, at the outset, the new licensees will be free to use existing proprietary equipment to bring systems into operation quickly. But I 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 among 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 I have considered with care in the light of representations made has been whether or not 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 and appropriate safeguards will also apply to Mercury.
I have also had in mind the special needs of the disabled. I 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 me of any changes to the 826 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.
My second announcement concerns the two cellular radiotelephony networks run by Cellnet and Racal-Vodafone. Strong growth in demand has led to congestion on both networks during peak periods, in particular in the area bounded by the M.25.
I am 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 constraints, over the whole area embraced by the M.25. Together with the operators' own further investment this should help to ease the difficulties which users have experienced particularly in outer London. I am most grateful to my right honourable friend the Secretary of State for Defence for his co-operation on sharing the spectrum. I hope that, as technology permits, other sharing schemes will be possible.
These measures will reduce cellular network congestion and allow continuing rapid customer growth. They will not of themselves add to 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 spectum.
My third announcement is that I am 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 Libraries of both Houses.
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 gigahertz. 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.
I shall be looking for innovative ideas to be put to us during the three-month consultation period that will follow today's Statement and shall wish to consult widely both in the UK and in the rest of Europe before finalising the details. Even so, depending on the outcome from the consultation period I 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 me on the merits of the claims being put forward. I shall 827 make a further announcement on that matter after we have decided on the ideas put forward.
I believe that these decisions I am 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 with 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 that your Lordships will welcome this not only in its own right but also because it will strengthen the UK's position as a world leader in telecommunications.
§ 3.30 p.m.
§ Lord Williams of Elvel
My Lords, the House will be grateful to the Secretary of State for making the Statement. I hope that he will be grateful for the fact that I am about to welcome his Statement. Apart from a few questions that I should like to ask, I believe that it is a right and sensible move towards the goal which we all share: that the United Kingdom should become a leader in technology of this type.
There are a few questions which I must ask the noble Lord and I hope that the House will bear with me as I do so. I hope also that the House will grant me indulgence because the Statement is extremely complex. As is common practice, I received it at 3 o'clock this afternoon and I have not had time to digest the technical problems involved in the noble Lord's proposals.
We welcome the advance in Telepoint. By what criteria was the judgment made to select the consortia that the noble Lord has announced? In his Statement he used the expression "based on the advice from". Does that mean that in some way he departed from the advice given by the director general; or did he accept it wholesale? Which parts of the advice, if any, did he reject? His answer may shed light on the criteria which were used to select the successful consortia.
There has been a great deal of worry about the participation of British Telecom in the new system. We welcome its participation but cannot avoid saying that had British Telecom not been privatised the problems of additional safeguards, controls, and so forth, might have been avoided. The noble Lord spoke of additional safeguards. What are they to be? He also spoke of appropriate safeguards which will apply to Mercury. What will be the appropriate safeguards for Mercury?
The noble Lord then spoke of the special needs of the disabled. We welcome the fact that the Government are paying attention to those special needs. Nevertheless, the Statement refers only to those whose hearing is impaired. There are other forms of disablement. People who are physically disabled are perfectly able to handle a telephone and they should be treated on the same basis as those whose hearing is impaired. The noble Lord will remember that at the end of our dealings on the Copyright Bill an amendment was tabled to cater for 828 those who are otherwise physically handicapped. It was in addition to the Government's provisions dealing with people who have only hearing problems. Are the Government prepared to concede that the special needs of those who have problems other than hearing should be catered for?
As regards cellular telephony, we welcome the somewhat dilatory move to extend and unblock what has become an extremely difficult situation for those using such telephones. Consumer dissatisfaction in that area is quite high. I note from the Statement that the 400 extra channels which the Ministry of Defence will make available should help to ease the difficulties. Will that ease the difficulties and cater for extra growth? How will that change work out in practice? Will the director general monitor the situation? Will he be given instructions to ensure that as he monitors it we do not have the problems which occurred during the past few months? They were problems of blockages and unavailable networks which led to extreme dissatisfaction.
In the past, cellular frequencies were allocated on an ad hoc basis. Is it now right for the Secretary of State to institute a review of how the frequencies are allocated? Should we not try to achieve a sensible and co-ordinated basis so that in the future we can allow for the growth which the noble Lord anticipates and also avoid congestion and overcrowding?
As regards the publication Phones on the move, we must read what the noble Lord has placed in the Library and make our response accordingly. My only question relates to the criteria by which a selection of successful consortia would be made. We know from the Statement that it would be as a result of a competition on similar lines to Telepoint, with Professor Sir Bryan Carsberg as assessor. He will advise the noble Lord on the merits of the claims being put forward. What are the real rules of the game? It comes back to the question of the criteria which were used in the selection of Telepoint.
We on these Benches endorse what the Secretary of State said. We welcome the Statement not only in its own right but because it will strengthen the UK's position as a world leader in telecommunications. It is in that constructive spirit that I have asked those questions.
§ Baroness Seear
My Lords, we on these Benches thank the Secretary of State for making the Statement in this House this afternoon. Our position might have been a little easier if the Statement had been provided earlier. However, I do not know whether on a technical subject a little more time would have made me much better informed.
We welcome the Statement. It is a highly desirable development because it is the kind of industry of which the United Kingdom ought to be in the forefront. Unless it is taking part in such schemes it will lose the leadership to other countries. I should like to thank the Secretary of State for his reference to help for people with difficulty in hearing to use the systems. I suspect that it may have derived directly from the noble Lord, remembering his great personal interest in help for the disabled.
There are one or two questions which I should like to ask. The Statement says that British Telecom has 829 been given a minority interest. Perhaps the noble Lord could tell us how large that minority interest is. Many of us feel that the Government's avowed enthusiasm for competition was not well demonstrated when British Telecom was set up. Any further advantage which might be given to British Telecom is something which we should view with considerable suspicion. Perhaps that point could be explained.
We welcome the fact that the noble Lord referred to the sharing of the MOD provision, which has undoubtedly contributed to the blockage on the M.25. He talks of the possibility of further sharing. Perhaps he could say a little more about that. Are other groups still absorbing a considerable amount of the available space, or is he talking of something purely for the future? Obviously it is highly desirable that there should be as little control as possible by particular groups over the available opportunities.
There is also reference to the pan-European system. By the time this is all under way, it is likely that it will be 1992. Obviously it is of the greatest importance that there should be complete compatability and that there should be no problem in communicating between the systems we have here and the systems in Rome, Bonn and elsewhere. How far has development gone along those lines? Can the Secretary of State assure us that there will be no problems whatever as to the ability to link in with the Continental European systems. It is of the greatest importance that that should be taken into account.
§ Lord Young of Graffham
My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, for his welcome of the Statement. I am sure that the noble Lord and indeed the noble Baroness, Lady Seear, will accept that in market-sensitive cases like this the advance notice must be limited. I shall certainly answer the detailed questions which have been put to me, although the noble Lord may feel that there are other ways in which we can explore the technicalities.
The criteria against which Professor Sir Bryan Carsberg judged this were set out in the general duties in the Telecommunications Act. They include such matters as 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 compete when overseas. Some 11 or so companies submitted applications. He made recommendations to me which I was happy to accept.
The noble Lord, Lord Williams, asked me about the safeguards built into the BT licence, as did the noble Baroness. Because of British Telecom's overwhelming position of strength in the market-place, we have said two things. Indeed, parallel restrictions will apply to Mercury, as it is now one of the main fixed link providers. It will have to have a minority interest and, secondly, there will have to be a complete separation of businesses. That means that there must be arm's length arrangements for matters like accounts, billing and marketing and for other commercial information and for personnel, and indeed the British Telecom Consortium cannot use British Telecom. That is to promote level playing fields and equal competition among the four groups.
830 We believe that to be very much in the interests of competition.
The noble Lord, Lord Williams, and the noble Baroness referred to the disabled. We have made provision for those with impaired hearing. We must look at other degrees of disablement. However, these receivers, by their very nature, are light—two or three ounces in one case and slightly more in another—and I suspect that they will lend themselves very much more easily to those who have movement difficulties. However, we shall certainly look into that and that is no doubt a matter which the various consortia will take on board.
The question of spectrum sharing was raised, as was the matter I have announced of the 400 extra channels. We have seen an explosive growth in these Cellnet telephones. I remember well back in 1981 when I was working for Sir Keith Joseph and it was first decided to go ahead with this. At that time our first estimates were that by the end of the decade we might have 100,000 of these telephones in use. I attended the party for the 100,000th telephone, and during my time in this office I have attended the party for the 250,000th telephone and recently for the 500,000th telephone. There are now some 520,000 telephones and the problem of overloading is considerable, particularly at around four o'clock on the M.25. I believe that these arrangements will help to provide a better quality of service. How much further it will grow—and I suspect it will—will bring problems as regards the spectrum. As Mark Twain said: "They don't make any any more". Spectrum is a scarce resource. We shall have to look at different aspects of that, but it is an ongoing matter at which my department is continually looking.
Also I believe there may well be ways in which we can share part of the spectrum, perhaps between emergency services and non-emergency users. We can perhaps look at ways in which outside broadcasting links which use part of the spectrum can share it in order to allow better communications, but that depends very much on the future growth. We can possibly also look at ways in which the Telepoint system will lift some of the load because we expect a very substantial expansion in the use of Telepoint which may alleviate the other problem.
As regards telephones on the move, that will be a digital system, as is Telepoint. That may well lend itself to fax so that one could have a portable personal fax transmitter. I suspect that there is the horrible prospect ahead that before too long we shall have personal telephone numbers and never be able to get away from the telephone. I wish this all due speed, but I also look forward to my retirement.
§ 3.45 p.m.
§ Viscount Hanworth
My Lords, I only received a copy of this Statement five minutes before the Minister rose to speak. Of course this is a highly technical paper which deserves much consideration. I should have thought that when there was no immediate political urgency something better could be arranged to give us at least a couple of hours to consider the matter. None of us disagree with the Minister that the 400 extra channels now allotted to Cellnet and Vodafone are, if anything, long overdue 831 and very welcome because they are not working well at the moment.
My view of the Telepoint system is probably rather jaundiced. I should have thought that as against the other two systems—Cellnet and Vodafone—the Telepoint system is of relatively little importance. I am afraid that it will be used as an excuse for providing fewer public telephones and thereby will combat the problem of vandalism. However, it will mean that everyone who wants to use that sort of thing has to buy a little black box. I am very worried that that might be so.
We later hear that there will be two other mobile teleoperators. I am sure, and I agree, that competition is good. If it means going straight into the digital system to link with the Continent, again that is good. Nevertheless, in this area I feel that it is possible that one could have too many firms chasing after the business and in the long run that might not act for the benefit of the consumer and none of the companies would be able to operate as they could do if there were fewer of them.
§ Lord Young of Graffham
My Lords, I am grateful to the noble Viscount. I assure him that with more competition in this field we shall see a great increase in the provision of supplies. I do not take his view that Telepoint is not important because we shall find that the sales will be substantial—perhaps they will considerably outnumber even those of Cellnet so far—and will provide an extra service to the consumer. When we did not have a service in 1981 there were precisely 12,500 mobile telephones in the entire country.
§ Lord Molloy
My Lords, the noble Lord will be aware that he has announced one of the most exciting methods of communication, both nationally and internationally. We hope that during his administration and during that of those who succeed him this system will be made available to everyone in the land as well as elsewhere.
However, is the noble Lord aware that recently in the press and on television there have been severe criticisms of some cellular installations which do not work and which cannot be relied upon, either in cars or carried in the hand? If a call is made which cannot be connected, a charge is still made. Such criticisms could blight the magnificent possibility outlined by the noble Lord. People will not be impressed if they find that in their estimation there has been insufficient technical and scientific advancement and they are still charged despite not getting their calls put through. I ask the Minister to consider that aspect so that the position can be corrected before these exciting proposals become a reality for the benefit of us all.
§ Lord Young of Graffham
My Lords, the 400 extra channels are available to relieve congestion during peak periods. I have been well aware of the position, as has the director-general, Professor Sir Bryan Carsberg.
Telepoint is a British development. It is made in this country. It is an exciting venture because it could well set a European if not a world standard. We are 832 to be congratulated because in this case they are British made telephones.
§ Lord Merrivale
My Lords, my noble friend the Secretary of State referred to French Telecom. Can he explain why—if necessary by writing to me—the French have been able to reduce charges for telephone calls, even in peak periods, by up to 30 per cent.? Why has British Telecom not been able to reduce its charges? I assume our technological advances are equal to the French.
§ Lord Young of Graffham
My Lords, I know that my department covers a wide span of occasionally troublesome matters but, happily for me, French Telecom is not one of them. It is very much a matter for the French.
§ Lord Wigoder
My Lords, having borrowed a copy of the Statement from my noble friend Lady Seear, may I ask the Minister a question in regard to the paragraph at the bottom of page 3? Does that mean that the 400 channels previously reserved for MoD use have been reserved except in the area of central London, or does it mean that in future the 400 channels will be made available except in the area of central London?
§ Lord Young of Graffham
My Lords, my understanding is that they have been used in the centre of London but now they will be used in the area of greatest congestion, within the ring formed by the M.25. They will be relieving the congestion there, where they are most required.
§ Lord Orr-Ewing
My Lords, may I put this quick question in the interests of consumers? Some people do not realise that when using mobile telephones, or in the future Telepoint, the cost is considerably more than for the normal public sector telephone network. In Switzerland and in other countries the duration of the call is brought to the attention of consumers by a steady tick, tick, tick, as each unit is purchased. Surely it is good for our wives, as well as ourselves, our children and grandchildren, if we are reminded that it is an expensive method of telephoning.
In this country we used to have the three-minute pips to remind us that a further charge had to be paid. All that has gone in this country, though it has rightly persisted on the Continent. Can this be looked at by the Department of Trade and Industry because it is a great consumer protection which has been maintained by other countries but which we seem to have abandoned?
§ Lord Young of Graffham
My Lords, I shall take my courage in both hands and say that if I thought it would really work I might even consider installing a special system at home, but I have a feeling that it would not have the effect of shortening telephone conversations.
I am told that under Telepoint the cost will be not much more than from existing callboxes. Of course we are aware that Cellnet telephones, which have the facility to receive calls—Telepoint can only make outgoing calls—are more expensive but there are different rates for different times and they are settled by agreement with the director-general.
§ Baroness Phillips
My Lords, when we were going through the protracted business of effectively privatising British Telecom—it is no good the Chief Whip looking at me like that because I intend to go on.
§ Baroness Phillips
My Lords, perhaps the noble Lord was looking at the clock.
When we went through the tedious business of what was virtually the privatisation of a nationalised industry we were told not once but many times that competition brings increased efficiency and a saving in costs. The implication was that privatisation was cheaper. I am an unfortunate user of British Telecom both in the office and at home. The calls have never been more expensive, there have never been more breakdowns and it has never been so difficult to get new lines installed. Perhaps the Minister can assure us that these marvellous new technological advances will at last bring us some of the advantages originally promised by British Telecom.
§ Lord Young of Graffham
My Lords, that question is somewhat wide of the Statement, but I invite the noble Baroness to table a Question and I shall be happy to provide the information.
However, over the past five years we have seen progress not only from British Telecom. The point of my Statement is that other parties are now offering competition and have made substantial reductions in costs. There was a time not long ago when a mobile telephone which you could take out with you cost £3,000. I have recently seen them advertised for £695. That is a substantial reduction in a short period of time. I understand that Telepoint telephones will start at around £150 to £200 and I hope that they will become very much cheaper as the system expands. I have seen a vast increase in the range of services over the past few years to the time when British Telecom is becoming very much more competitive, thanks to the competition available.
§ Lord Molloy
My Lords, can the Minister tell us, perhaps in the not too distant future, whether the emergency method that we now enjoy of dialling 999 for the police or the ambulance service will be compulsory for the new systems so that we can continue to use that emergency service?