HC Deb 22 June 1989 vol 155 cc195-7W
Sir David Price

To ask the Chancellor of the Duchy of Lancaster whether there has been any further developments following the publication of the discussion document "Phones on the Move" in January; and whether he will make a statement.

Mr. Atkins

My right hon. and noble Friend the Secretary of State for Trade and Industry has considered carefully the responses to the discussion document in the light of our wish to select at least two operators to provide personal communications networks (PCNs) in the 1990s. We have also received advice from the Director General of Telecommunications.

The director general has advised us that the capacity of Mercury Communications Ltd., a subsidiary of Cable & Wireless plc, to provide the full range of telecommunications services in competition with British Telecom is limited by the lack of a mobile radio network to compete with Cellnet, in which BT has a majority stake. We have therefore accepted his advice that a consortium led by Mercury or Cable & Wireless should be a prospective operator and in due course be offered one of the licences to operate a mobile communications network within the frequency range 1.7–2.3 GHz. This is subject to the submission of an acceptable proposal, both in regard to the consortium and in business and technical terms, by 14 September.

On the advice of the director general, we intend to identify one, or possibly two, other prospective operators by the end of the year. We are issuing notes for the guidance of applicants today. Copies of these notes have been placed in the libraries of both Houses. The closing date for applications is noon on Thursday 14 September.

Applications may be made by any company, whether or not it responded to the discussion document. The exceptions are Cellnet and Racal Vodafone, their associates and main shareholders. Since the new networks are intended to compete with these companies' existing cellular radio operations, we have decided, on the director general's advice, that they should not be able to participate in their development or operation either in their own right or as a member of a consortium. We will, however, keep under review their needs for additional frequencies in the light of the progress they make on the pan-European cellular network and the development of competition in the United Kingdom.

We have also considered the choice of PCN technology, which will govern the appropriate technical standards. The two technologies which emerged strongly from the consultation period were those being developed for the pan-European digital cellular radio system and the digital European cordless telephone. it is our intention that the PCNs should operate according to a common technical standard, in order to ensure competition between the operators. It would be highly desirable for this to be based on a technology developed in Europe. Accordingly, we have decided that applications must be based on one or other of these technologies, and applicants may, if they wish, put in separate proposals based on each. The selected common standard will be announced when the choice of operator is made and will take account of developments in Europe.

We have also considered the major cost of linking the small radio cells needed to provide a true PCN. To aid the planning of these networks for the 1990s, we have decided that the operators will be able to provide their own radio-based network infrastructure between individual radio cells. However, the links to the public switched network, which provides the basic telecommunications service of conveying messages over fixed links, will still be provided by British Telecom or Mercury pending the outcome of the November 1990 duopoly review. In order to protect the position of the new entrants, any request by the existing cellular operators to provide similar radio links for their own networks will be considered in the light of their progress in implementing the pan-European cellular network but will in any event not be implemented until two years after both of the new PCNs have entered service, provided there are no undue delays in the introduction of the new networks.

We have been aware of the possible affect of this initiative on the four Telepoint operators we announced in January. We do not believe that the PCN initiative should significantly affect their prospects for success. The new networks will offer two-way call initiation aimed to compete with cellular radio, with its relatively expensive and sophisticated technology, and will not begin service until 1992 at the earliest. By contrast the inherently lower cost one-way Telepoint technology has already been developed and we expect it to be introduced into the marketplace well before the end of the year. We have, however, asked the director general to pay particular regard to any new ideas from the Telepoint operators themselves as to how the Telepoint concept could be further developed in the future and to advise us as necessary.

The "Phones on the Move" discussion document put forward our vision of the future in PCNs and companies responded to it with enthusiasm and imagination. We intend to maintain this momentum, and to encourage industry to make this vision a reality in the early 1990s. We do not anticipate any further major developments in new mobile telecommunications systems for some time. As a result of our announcement today and previous announcements on Telepoint, cellular radio, private mobile radio and paging, the Government have opened up new markets and provided for effective competition. We hope that all the companies involved in this field will continue to respond vigorously and to exploit the opportunities that have been created.