Telecoms boss calls for more support from the Government

The increasing popularity of smartphones with mobile broadband applications has led to an explosion in demand for network capacity, with volumes doubling and even trebling in parts of Yorkshire over the last year.

O2 is planning to boost investment in its network by 25 per cent to 500m in 2011 and is working with industry rivals to increase efficiency in the way that content is delivered to users, but the Spanish-owned operator also wants help from the Government.

Chief executive Ronan Dunne told the Yorkshire Post: "There has to be public-private cooperation. One of Britain's strengths is we have lots of competition in the telco space. Competition is good – that drives more and more investment."

Market forces alone will not be enough though, warned Mr Dunne, who urged ministers to provide certainty in public policy, which is vital for his company's 10-to-15 year investment timescale.

He has also called for Government support in getting access to rural areas and public land for new mobile phone masts and grants for network improvements in remote areas, where there is no economic case for investment.

Mobile phone operators typically face opposition from residents when they apply for planning permission to build new masts. This week's Localism Bill is likely to fuel a rise in opposition to new applications at a time when the industry needs more support from local communities, according to O2.

Mr Dunne added: "I had 40 letters from MPs this year. Four were asking for better coverage, but 36 were saying local residents did not want cell sites in their areas. The Government is talking about more access to digital economy in rural areas. If we cannot build a site, we cannot deliver."

Ministers have said they want to "deliver a revolution" in the digital economy and prevent a growing divide between urban and rural communities.

In response, Mr Dunne said: "The Government needs to make sure there are no unnecessary obstacles in the way of improving our network. If it becomes harder to find sites for our infrastructure that could seriously hamper progress in some areas."

Mobile phone operators will soon be able to buy additional airwaves – known as spectrum – following the switch from analogue to digital TV.

This will help them keep up with demand for data usage. Ofcom, the industry regulator, plans to auction the airwaves in the first half of 2012, which means they should become available from 2013.

Spectrum, however, is a finite resource so operators are having to resort to new methods and increasing cooperation between rivals.

For example, O2 and Vodafone have entered into an agreement called Cornerstone to share infrastructure, which reduces the need for new mobile phone masts.

Mr Dunne said the footprint of the two companies would move closer as the joint venture progresses.

O2 is also working with fixed-line operators, broadcast networks and gaming companies and other content providers about the best way to deliver content.

To illustrate the point about data usage, watching a YouTube video on a smartphone uses the same amount of data as 500,000 text messages.

In the last year, data usage in Leeds has doubled, while Sheffield has seen a threefold increase. Mr Dunne said: "Now data has taken off we have to move very wisely to make sure we don't run out of capacity."

Smartphone unit sales are expected to rise by about 50 per cent this year, outpacing an expected increase of about 30 per cent in the mobile market as a whole.

Industry estimates show there are around 13m smartphone users in the UK.

While the rise of the smartphone has created challenges, it has also created opportunities for operators. O2 has launched technologies in smart metering, contactless payments and telehealth.

Mr Dunne said: "Everybody knows that our sector can help cut costs and deliver great services – we see it in our lives already in the way we use mobiles and smartphones to make our lives easier and our work more efficient. But there is a real opportunity now for the Government to bring about a step change in the way we deliver public services."

Confidence key to recovery

When it comes to the state of the UK economy, Ronan Dunne is a self-confessed glass half-full man.

He said: "There's a danger we talk ourselves down. The underlying economy in the UK is in reasonable shape. What we need to have is consumer confidence to keep things going."

Mr Dunne added: "I don't think it will be easy next year. Unemployment is probably going to peak in 2011.

"When I look out across our shores to other countries I think we are in reasonable shape. It could be an export-led recovery as some of the other markets take off."

O2 is the largest single-site employer in Leeds, with more than 2,200 staff.