5G street fight
Image credit: Image Source
Public and private interests are vying to control comms infrastructure on city streets, so they can profit when next-gen mobile arrives.
When the payphone business started collapsing around the turn of the millennium, New York City had to act. It had grown accustomed to making money by licensing call box operators and taking a share of their income, but mobile phones were becoming popular. And payphones were going bust.
The City authority instructed phone booth operators to sell advertising space on their call boxes and give it a share of that revenue, too.
It earned $26m that way in 2000. In the following decade, as 75 per cent of payphones in the US were scrapped, NYC kept its payphone income near $20m. A decade on, its ad income started going up, while its income from phone calls fell to near zero, and half again of all payphones in New York were scrapped.
NYC decided it was time to reinvent the payphone, to make it more of an advertising hoarding with a phone attached. And that is how the next-generation phone kiosk was born. The City would make $500m from call box adverts over the 12-year life of its next licence contract, Mayor Bill de Blasio said in 2014, shortly before awarding it to a consortium that dreamed up a next-gen phone kiosk called LinkNYC.
It wasn’t all about money, though. LinkNYC had been patched together from a medley of visionary designs submitted to a public competition the City held to “reinvent the payphone” in 2013. It embodied the public ethos as well, and ideas NYC had been pushing for around decade: a comms kiosk with a touchscreen web interface and local guides and services. Competition concept drawings imagined 10ft digital panels displaying not ads but sci-fi info-schematics.
Hurricane Sandy clinched the deal in October 2012, shortly after NYC officials defined how the payphone should be reinvented, and ahead of the last payphone contracts reaching the end of their 15-year terms. The old ones had been defamed, since it seemed no-one but vagrants used them anymore. Then Sandy knocked out all but the public phone network and people turned to payphones in their emergency. The reinvented ones would be free, high-speed wireless internet beacons as well, with emergency buttons. And, as de Blasio put it, all at no cost to taxpayers.
NYC could cover the cost with advertising and still take a larger cut. It cited a deal where it allowed a billboard firm to put adverts on municipal street furniture and took half the income. The phone deal it did in 1999 had got a third, and just a dime in every dollar spent on calls.
NYC told potential suppliers in 2012 what a next-gen phone kiosk should be: a slim panel like other street ad hoardings. Switching these with chunky phone boxes, NYC would declutter its streets, make them look smarter, and ease pedestrian flow.
This contrivance of public and private purpose was reflected in the consortium of companies that formed to produce the LinkNYC kiosk. At their heart was Intersection, a corporation formed from the merger of Titan, the largest US billboard operator, and Control Group, a tech studio that had designed public information kiosks for the New York subway. A sister of ad-funded tech giant Google put up money. Qualcomm, the comms equipment maker, along with other tech firms, contributed specialisms.
It was the same kiosk they brought to BT in the UK in 2017. But the business model was not the same at all. Public authorities didn’t control phone boxes in the UK, so they couldn’t make any money out of them. Many have consequently opposed the scheme.
BT had taken call fees from the UK’s classic red phone boxes when it was the national telecoms operator in the latter part of the last century, retaining the right after it was privatised in 1984. Laws held that phone boxes were a public good, so BT should ensure there were enough to meet public need.
That need declined so much last decade that Ofcom, the UK communications regulator, revised the rules to help local public authorities (LAs) stop BT and other operators scrapping phone boxes in places where, for example, poverty was so prevalent that people might depend on them.
Everything had changed by 2017 and LAs found cause to oppose the kiosk produced by NYC.
Smartphones had overloaded mobile phone networks in city centres with high demands for capacity. Comms firms proposed small cells: transmitters distributed along city streets to take strain off major mobile networks. Yet they would need favour from local planning authorities, and a network infrastructure.
Comms companies did deals with LAs to rent spaces on street furniture, such as lamp posts and CCTV columns, already linked with cable ducts. They offered to square public good with private greed in the New York model. LAs would get a cut of the money mobile operators paid to use the network infrastructure. Spare capacity would supply a free public Wi-Fi service, which LAs claimed would bridge the digital divide by ensuring anyone could get internet access, even if they couldn’t afford it. Wi-Fi would be basic and time-limited. Those who wanted more and faster would pay, and LAs would take a cut of that as well.
LAs hoped to make a lot of money. The London Borough of Camden – one of the first to act – was expected to earn £3.5m from a 10-year deal it signed in 2011 with Arqiva, a comms infrastructure firm that subsequently did most such deals. Sixteen other London boroughs joined on its terms. Camden valued the deal at £40m. The group estimated it would raise £20m.
Michael Snaith, a consultant at Regional Network Solutions, who helped engineer the ‘concession’ contract model the LA deals followed, with his colleague Callum Knowles, said they advised on more than 40.
“The aspiration was public Wi-Fi,” he says, “but the driver was: ‘We have these assets – how much can you pay for them?’.”
It became a problem, he said, that LAs thought it would be a “major income earner”, while the contractors promised too much. Camden’s income projection for its 2011 deal had become “unachievable”, it said last year, “due to the rising prevalence of other sources of free Wi-Fi and the availability of 4G”.
Officials in London’s Hammersmith & Fulham borough said in February they were renegotiating the 2013 Wi-Fi deal they did with Arqiva because it had underachieved. Another deal to rent council cable ducts for networking might be abandoned.
Southampton City Council cancelled its 2013 Arqiva concession, according to a director who asks not to be named. “It wasn’t delivering what we hoped. Take-up was almost nil. There was too much contention in the area. You have to stand extremely close to a transmitter if you are to avoid competing signals from surrounding shops and mobile,” he says. That contention was from Wi-Fi in places such as coffee shops.
Other LAs had similar problems. “The old market square is a very congested radio environment, with multiple Wi-Fi services being pushed out by shops,” says John Connelly, digital infrastructure manager at Nottingham City Council, which agreed a concession with BT in 2015.
“When BT did the initial survey, they told us there are lots of signals competing. And when signals compete, they knock each other out. With the contention, if you have 50 people near an access point, all trying to get on the system, it’s more difficult for the cell.
“It depends on the number of access points you have. The more you have, the better the service,” says Connelly.
BT addressed this in plans to install Wi-Fi in Glasgow, according to documents held by the City Council. It showed how LAs could spread uninterrupted Wi-Fi over central streets if they combined transmitters in phone kiosks with those BT put on lamp and CCTV posts under a concession it agreed with Glasgow in 2014.
Where neighbouring transmitters do not collaborate they contest, say public officials. David Oliver, solution architect for a Wi-Fi service Sheffield City Council set up last year under a 10-year concession, says it will not deliver a seamless service with InLinks BT is installing in the city as well. People would either log in to one or the other, or their phones might switch between them if they were subscribed to both, depending on which had the stronger signal.
Sheffield’s Wi-Fi signal has a 30Mbit/s capacity with blanket coverage, says Oliver. He has tried to find out from other LAs what is the typical speed of free public Wi-Fi, and thinks it is probably less than 10Mbit/s.
Paul Neville, digital director at Waltham Forest, says its concession delivers 4Mbit/s Wi-Fi, but the authority is working with Arqiva to double it.
Capacity makes all the difference when facing contention, and the underlying network determines the capacity, according to Nottingham’s Connelly.
BT has claimed InLinks deliver free Wi-Fi at 1Gbit/s speeds, based on a fibre network it puts in when it installs them in choice spots on its old payphone network, with the cost of the rollout covered by advertising.
LAs, government and concessionaires have all been striving to build fibre networks. Tower Hamlets, another London borough, made fibre a condition of the concession it sought to establish this year, with the cost to be covered by mobile phone operators who paid to use the network. It reckoned on making £3.5m on the deal.
LAs did not give up on concessions after the first deals failed. Nor did they abandon the idea of making money from them.
‘It’s not a failure. It’s an evolution. Because local authorities have released the assets, they have played an enabling role in the digital agenda.’
The City of London, authority for the financial district, reckoned it would make £18.5m from a concession it let last year to Cornerstone, a firm joint-owned by mobile operators Telefonica O2 and Vodafone.
Mobile operators’ demand for small cells is reportedly uncertain. Their 4G services were notoriously late rolling out. But the delivery of 5G mobile broadband phones in 2020 is planned initially for city centres where it could be economically viable to distribute the small cells required to support them.
Westminster City Council reckons it will make £22m from a 10-year deal it struck this year with Ontix Ltd, an unknown start-up.
Other LAs setting up similar deals in the last 12 months include Liverpool, Coventry, Kingston and Hackney. Most of them opposed BT’s InLink rollout by refusing all planning applications it made to install them. Whereas those LAs that had no such deal or had not recently reset them typically granted every InLink BT requested. Others, such as Southwark and Lambeth, have opposed significant numbers of InLinks while setting up deals of their own.
By examining records of 45 LAs where BT sought to install InLinks, and others significant by their concession deals or their being London boroughs, E&T found a confluence between self-interest and opposition to InLink.
E&T viewed the records of more than 1,000 InLink planning decisions, as well as contract records, elected council proceedings and cabinet and committee papers where public authorities set out multi-million-pound deals with comms companies. Most of them kept the financial details from public view.
Their opposition was based on legitimate reasons under planning law, according to their own records. UK planning rules give comms companies special rights to install network equipment on the basis of there being a great public need for it. They must still make applications for each bit of equipment. LAs can oppose only the particular places where comms companies seek to put it, so they have some say over where it goes and how it looks, but the law forbids them blocking a network installation.
It forbade them blocking the BT rollout, yet many claimed InLinks were impractical in every location BT proposed, forcing BT to pursue its rollout in appeals before the planning ombudsman.
Westminster took its opposition to the High Court in August, claiming phone boxes were such a nuisance that it should have power to refuse them. It chose for its contention an application by New World Payphones, another next-gen phone kiosk company previously owned by Arqiva.
The latter created coverage in Camden by combining access points on its kiosks with those on municipal furniture. Phone kiosks were likewise part of a concession bid it made in Waltham Forest last year.
Yet Camden wrote a public letter last month to Kit Malthouse, the government minister for housing and planning, asking for power to refuse kiosks when it believed there was no need. InLink UK, on the other hand, lobbied the London Mayor in March, begging power to stop LAs blocking its rollout because it had plans to put 5G cells in them.
Bristol City Council, which has licensed use of its street furniture to its ‘Bristol is Open’ joint venture with the University of Bristol, refused all 25 InLink applications this year. It has put £25.3m of government funding into the deal. Then last year it agreed a £5m street-advertising concession with JCDecaux, granting it spots on main roads where both ad-based kiosks and small-cell contractors vie for space. That is another form of concession LAs pursue. Camden had proposed forbidding its own concessionaire from displaying advertisements in order to protect revenue from its street advertising concessions.
Southwark said last year it might do a deal for JCDecaux to upgrade its billboards with Wi-Fi, while it prepared to put 5G small cells in street furniture. Islington was putting hotspots in benches. LAs up and down the country have been drawing up ‘smart city’ plans for networked street furniture and small-cell concessions. The reinvented phone kiosk has not appeared in their plans.
Snaith says LAs were losing interest in free Wi-Fi, while some contractors believe their concessions have been a waste of time.
Reflecting on the generation of concession deals that LAs did on the NYC model, which Camden took up in 2012, Snaith insists they did not fail.
“Some people would say they were a failure,” he says. “It’s not a failure. It’s an evolution. Because local authorities released the assets, they have played an enabling role in the digital agenda.”
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