European tech ambitions might be hampered by regulation – Meeker

Mary Meeker is one of the most respected names worldwide when it comes to the internet, meaning her annual evaluation of the state of play is a much anticipated presentation. 2018 looks to be a bit gloomy though.

First of all, looking at consumer trends there are some very positive numbers. Internet usage continues to growth year-on-year, adults spend an extra 0.3 hours a day on the internet in 2017 compared to the 12 months prior, and there is strong evidence the rate of adoption is continuing to increase. While it took 80 years for US consumers to adopt the dishwasher, the consumer internet penetrated the mass market in less than a decade. For disruptive technologies lurking on the horizon, such as virtual reality, this is a very positive trend.

Brand Top 25Looking at the technology industry on the whole, this is another very positive development. The tech industry is continuing to play a more influential role in economies around the world, in the US for example, it accounted for 25% of the country’s capitalization in April. The percentage might not be as high in other nations, but the trends are heading that direction. Technology is fast becoming the driver of economies and society, which is perhaps a worrying sign for Europe.

One slide, which you can see to the right, pointed out the biggest names in the technology world, with not one of them being from the European continent. The US has eleven representatives while China has nine. The majority of these organizations were only created in the last 20 years, and while Europe might be trying to improve the landscape for start-ups, it is clear the ability to scale is not on the same level as the US and China.

Unfortunately for the European start-ups this might be a trend which will only worsen over the coming years, partly due to restrictive regulations. Regulating an industry where there are still so many unanswered questions, like the data economy, is a tight-rope walk. Too light-touch and the corporations take advantage, too heavy-handed and innovation is throttled. The pro-privacy bloc seems to leaning towards a red-tape maze.

Europe is a distant chaser as it stands, but GDPR and the up-coming e-Privacy regulation threatens to limit the exploratory nature of tech innovators. Other regions are granting more freedom to explore, which could impact Europe negatively in two ways. Firstly, companies in Silicon Valley, for example, create better products and services, therefore capturing global market share. And secondly, when choosing a base, entrepreneurs may choose to go to the freer markets as opposed to being shackled in Europe. Europe loses ground on the US and China in both circumstances.

“It’s crucial to manage for unintended consequences,” said Meeker. “It’s also irresponsible to stop innovation and progress, especially in a world where there are a lot of countries that are doing different things.”

Sharing DataWhat we should point out is that Meeker is biased. Meeker is a venture capitalist who invests in technology companies with the sole purpose of making more money. Regulations, while necessary, make it more difficult for companies to make money, so you have to take Meeker’s comments bearing this in mind.

That said, the digital economy is defined by data. Personalised services are developed by access to data, so are location-based services, the price of some are off-set by access to an individual’s data, engagement and experience can be improved as well. The US are the leaders in the internet world because companies are aggressive and forward-thinking. With the stringency of data regulations in Europe, you have to wonder whether the same culture and intent can be curated in the bloc.

Looking at the potential for tomorrows leaders, despite President Trump demonstrating the world cannot function without the US tech industry, prospects in China are looking promising. AI has been targeted as the catalyst for growth and with a population which is more open to sharing personal data than anywhere else in the world, the raw materials are available. Data provides the fuel for rapid development and advancement of AI. Europeans are generally very pro-privacy, which is of course good, but reluctance to share data is a direct contradiction of the AI ambitions of countries like the UK. Pro-privacy regulations, conscious consumers and a world-leading AI industry do not necessarily go hand-in-hand.

Regulation will always have a place in the world, evidence proves some cannot be trusted when money is involved, but it seems Meeker believes Europe is leaning too heavily on the technology companies, imposing restrictions which will not be beneficial to the growth of the digital economy. Changes needed to be made to the rules, but it doesn’t seem Europe has got it right this time.

GDPR seems to benefit Silicon Valley but harm US relations

The initial effects of GDPR seems to be that the biggest companies have benefitted but the US government thinks it’s harming relations.

The Wall Street Journal reports that Google and Facebook have had a significant advantage over all other digital advertisers as their size has enabled them to tick all the GDPR boxes at scale far more quickly than anyone else. In fact Google’s own DoubleClick Bid Manager is apparently sending more traffic towards Google’s own ad inventory as a result.

It’s far from surprising that a massive new layer of bureaucracy benefits the largest companies the most, as we previously observed. All the kinky talk of compliance and forced consent gives larger organisations a natural advantage as they’re able to devote more resources to ticking all the bureaucratic boxes and have more lawyers to protect them if they transgress regardless.

The European Union is, of course, one of the largest organisations of all and thus has much more natural affinity with the likes of Google than it does some relatively insignificant SME. That’s not to say the EU sought to deliberately favour a company it recently hit with a massive fine, just that the more it meddles with business, the more advantage it gives big companies.

While Google and Facebook might be quietly pleased with how GDPR is playing out, the US government is growing increasingly agitated. Writing in the FT US Commerce Secretary Wilbur Ross said “We in the US are deeply concerned about the way the EU’s new privacy guidelines, which came into effect last week, will force big changes in the way US and European companies do business.”

“GDPR creates serious, unclear legal obligations for both private and public sector entities, including the US government. We do not have a clear understanding of what is required to comply. That could disrupt transatlantic co-operation on financial regulation, medical research, emergency management co-ordination, and important commerce.”

If even the US government doesn’t know how to comply then what hope does some small business have? Furthermore there have been some reports that even the European Commission itself is struggling with compliance and may be looking to exempt itself from its own rules, which would be a classic EC move.

This public grumbling from the US government comes as trade tensions between the EU and the US have escalated after the two were unable to come to a compromise over the trade of steel and aluminium, which President Trump seems to think needs correcting in favour of the US. As a result the US has imposed tariffs on the import of these metals from the EU, creating the prospect of retaliatory tariffs and further escalation.

“I am concerned by this decision,” said EC President Jean-Claude Juncker. “The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules. This is protectionism, pure and simple. Over the past months we have continuously engaged with the US at all possible levels to jointly address the problem of overcapacity in the steel sector.

“By targeting those who are not responsible for overcapacities, the US is playing into the hands of those who are responsible for the problem. The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law.”

The EU is the joint biggest exporter of steel to the US along with Canada, according to the BBC. Canada and Mexico have also been hit with the same tariffs and the affected regions seem likely to slap tariffs on the import of bourbon, jeans and hot air. It’s not inconceivable that the GDPR moans are part of a broader negotiating strategy but it looks like things will get worse before they get better.

Teens prefer cat videos to online stalking – Pew Research

The Pew Research Centre has released new research which questions whether we can continue to call Facebook the king of social media.

The statistics show that only 51% of US teens aged 13-17 use Facebook, with only 10% saying it is their preferred social media platform. In comparison, YouTube was the most popular, with 85% of the teens stating they use the platform, 32% saying it is the most frequently visited, while SnapChat attracts the attention of 69%, with 35% of the respondents stating they use it the most. Interestingly, Facebook-owned Instagram was more popular than Facebook itself, with 72% of the respondents using the platform.

“This shift in teens’ social media use is just one example of how the technology landscape for young people has evolved since the Center’s last survey of teens and technology use in 2014-2015,” Jingjing Jiang and Monica Anderson said in a blog post.

“The social media landscape in which teens reside looks markedly different than it did as recently as three years ago. In the Center’s 2014-2015 survey of teen social media use, 71% of teens reported being Facebook users. No other platform was used by a clear majority of teens at the time: Around half (52%) of teens said they used Instagram, while 41% reported using Snapchat.”

Perhaps one of the reasons is the increase in smartphone penetration. This edition of the research found 95% of respondents own or have access to a smartphone, up from 73% when the research was conducted in 2014-15. Instagram and SnapChat are platforms which are mobile meaning that during the days of lower smartphone penetration, this was the only social media option. YouTube is of course popular on both desktop and mobile, however the explosion in video content over the last couple of years, as well as cheaper data tariffs, may go some way to explain the dominance.

A final interesting statistic is the amount of time teens are spending online. 45% of teens state they are online almost constantly, compared to 24% back in 2014-15 edition of the research, though only a small proportion feel it is having a negative impact. When asked what impact the online world was having on their live, 31% believed it to be mostly positive, 45% were neutral, while only 24% said it was negative.

The internet has been an important aspect of our lives since its inception, but looking at research focused on the future generations, it is starting to appear more dominant than important. Perhaps Facebook is one of those brands that peaked too early.

Senators challenge the accuracy of FCC’s rural broadband map

Senators have expressed concern over the accuracy of a map the FCC is using to plan the allocation of over $4 billion in subsidies to improve rural broadband.

Under the Mobile Fund Phase II plans, money will be redirected over the next decade away from where private capital is already being supplied, and instead used to help bring 4G services to Americans in under-served rural areas.

In an op-ed back in February,  FCC Chairman Ajit Pai wrote:

"Right now, the federal government spends about $25 million of taxpayer money each month to subsidize wireless carriers in areas where private capital has been spent building out networks. This is perhaps a textbook definition of waste: public funds being spent to do what the private sector has already done.

Three weeks from now [at the February 23 meeting], we will vote on redirecting that spending to something far more useful: bringing 4G LTE service to rural Americans who don’t have it today. I am proposing to couple our detailed coverage data with a robust challenge process to identify the areas most in need of service."

The areas identified as most in need are indeed being challenged.

A group of senators led by Sens. Roger Wicker (R-Miss.) and Maggie Hassan (D-N.H.) said the FCC’s map is significantly flawed. In a letter addressed to Pai, they are requesting the challenge window to be extended by another 90 days.

The signatories of the letter include senators from both sides of the aisle who claim the map shows areas in the states they represent that are said to be served by 4G; when first-hand experience shows that’s not the case.

Here is the letter in full:

"Dear Chairman Pai:

As you know, many of us have expressed concern about the accuracy of the Federal Communications Commission’s map of eligible areas for Mobility Fund Phase II Support (MFII). This map is intended to reflect areas that lack unsubsidized mobile 4G LTE service, but it unfortunately falls short of an accurate depiction of areas in need of universal service support. Therefore, the FCC’s challenge process will play an outsized role in determining appropriate eligible areas for MFII support. Communities in our states that are not initially eligible or successfully challenged will be ineligible for up to $4.53 billion in support over the next 10 years, exacerbating the digital divide and denying fundamental economic and safety opportunities to rural communities.

While you have noted that state, local, and Tribal governments can participate in the challenge process, absent additional direction, they may remain unaware or unprepared to do so. We appreciate and encourage additional outreach to state, local, and Tribal governments on how they can participate in the challenge process. However, with less than 100 days remaining and additional state outreach presentations not yet completed, MFII challengers will struggle within the current timeframe to provide requisite information that will correct significant flaws in the current map. Additionally, the parameters for challenges have already changed once during the existing challenge timeframe through the Order on Reconsideration on April 30, 2018, altering existing measurements for challenges.

In recent testimony before the Senate Appropriations Committee, you expressed that the FCC has ‘some flexibility [for] an extension of time’ to ensure sufficient time for state and local governments, as well as carriers and other potential challengers, such as state farm bureaus, to fully participate in the process. To provide this additional time and encourage participation in the challenge process, we urge you to extend the current challenge process window by 90 days.

The MFII process presents an opportunity to take significant steps to address the digital divide and preserve and expand mobile broadband in rural areas. We strongly urge you to ensure this opportunity is available to all communities deserving support through compiling accurate data that reflects our constituents’ experience, including providing additional time for challengers to submit data, conducting additional information sessions for state, local, and Tribal governments, and providing Congress with an update on final eligible areas before conducting an auction of support."

Also signing the letter includes; Sens. Brian Schatz (D-Hawaii), Roy Blunt (R-Mo.), Angus King (I-Maine), Cory Gardner (R-Colo.), Sherrod Brown (D-Ohio), Pat Roberts (R-Kan.), Jeanne Shaheen (D-N.H.), James Lankford (-Okla.), Ron Wyden (D-Ore.), Richard Shelby (R-Ala.), Tammy Baldwin (D-Wisc.), Cindy Hyde-Smith (R-Miss.), Patrick Leahy (D-Vt.), Ron Johnson (R-Wisc.), Amy Klobuchar (D-Minn.), Todd Young (R-Ind.), Thom Tillis (R-N.C.), Christopher Coons (D-Del.), Claire McCaskill (D-Mo.), Kamala Harris (D-Calif.), Tina Smith (D-Minn.), Tom Udall (D-N.M.), Catherine Cortez-Masto (D-Nev.), Tammy Duckworth (D-Ill.), Doug Jones (D-Ala.), Edward Markey (D-Mass.), and Deborah Fischer (D-Neb.).

The eligibility map for Mobility Fund II can be found here.

Do you agree the FCC should extend its challenge window? Let us know in the comments.

Brits wasting £480mn a year on landlines apparently

For some reason there are still people in the UK who insist on having a landline, and it is costing them £480 million a year according to one of those consumer studies.

According to comparethemarket.com’s research, 24% of households have an unused landline, while only 35% of consumer aged younger than 34 actually use one. With the almost ubiquitous penetration of smartphones you really have to wonder what the point is anymore. Just give grandma a feature phone and do away with the pointless bit of kit lurking in the hallway.

“The death of the landline is ‘hopefully’ upon us. Smart phones are slowly but surely making landlines obsolete, and generations Y and Z will likely ensure its final demise,” said Peter Earl, Head of Utilities at comparethemarket.com. “As mobile coverage improves across the country, the number of people who will used a fixed line will inevitably decrease.

“The market is to blame partly for this as a package that includes phone can be cheaper than buying broadband on its own. However, it seems that a huge number of people are currently wasting money with landlines that they never use or have connected in their home. The biggest cost of a having a landline is the line-rental charges – which are often required to have broadband – but the costs of operating that landline are sometimes charged on top.”

There might be a few who are clinging to the idea of a home phone number, though considering youngsters are becoming less likely to communicate verbally nowadays, the writing might be on the wall for the humble landline. In fairness, it is probably the manufacturers fault; you can’t even play Snake on it.

Operators need to look beyond connectivity to grab share of IoT revenue pie, says GSMA

The GSMA has sounded a warning to operators: connectivity will only comprise 5% of the total IoT revenue opportunity by 2025, so more revenue streams are needed.

New data from GSMA Intelligence suggests that the global IoT market will be worth $1.1 trillion in revenue by 2025 – this is because the market has shifted from connectivity to platforms, applications and services.

Owing to the growth in the Industrial IoT, there will be more than 25 billion IoT connections (both cellular and non-cellular) present by 2025. Moreover, the APAC region is predicted to be the largest global IoT region in terms of both connections and revenue.

Though connectivity revenue is expected to grow over the aforementioned period, it will account for only 5% of the total IoT revenue. This will generate a need for operators to expand their capabilities beyond connectivity in order to cover a bigger share of the market value. This is the issue that is already being taken care by a number of operators who are creating dedicated IoT business units and service lines.

In the meantime, the platforms, applications and services segment will continue to grow as a share of overall IoT revenue by bagging 68% of the total by 2025. System integration, managed services and consulting are some of the IoT professional services that is likely to account for the remaining 27% share of total IoT revenue by 2025.

Earlier this month, another report from the GSMA explored how mobile IoT technologies will prove to be an essential part of 5G. It said that the mobile IoT technologies are usually Low-Power, Wide Area (LPWA) and include NB-IoT and LTE-M. These technologies are central to the development of ‘massive IoT’ that the GSMA sees as one of 5G’s three core use cases — alongside critical communications, and enhanced broadband. Mobile IoT networks will support deployments of smart meters, smart logistics, and smart environmental monitoring. The 3GPP’s standards will ensure support for such low cost and data use applications that require long battery lives and the ability to operate in remote and hard-to-reach locations.

Nokia disposes of Withings and yet another Technologies President

Nokia has indicated that Gregory Lee’s main job was to get rid of Withings, so now that process is complete he’s moving on.

When Lee was poached from Samsung Electronics North America less than a year ago the messaging was that his consumer electronics expertise would take Nokia’s re-entry into the consumer space to the next level.

“Gregory’s passion for innovation and operational excellence, along with his proven ability to build and lead global consumer technology businesses, make him well suited to advance Nokia’s efforts in virtual reality, digital health and beyond,” said Nokia CEO Rajeev Suri at the time.

Withings, which had only been acquired the previous year, was clearly meant to be a cornerstone of this consumer tech effort, so imagine Lee’s dismay when, at the start of this year, Nokia announced it was ‘reviewing strategic alternatives’ for its digital health division. By the start of this month that process concluded flogging it back to the bloke they bought it from was the best strategic alternative, which kind of called Lee’s position into question.

“Gregory came to Nokia, made a clear-eyed assessment of our consumer business and incubation activities, and took the bold decision to refocus Nokia Technologies on licensing,” said Suri. “As part of that effort, he assessed strategic options for Digital Health, which led to the sale of that business. Given that, we have agreed that his work at Nokia is done. He leaves the company with my great appreciation and thanks.”

So the official line is that the guy they brought in to head up its consumer tech business quickly concluded Nokia shouldn’t be in the consumer tech business. OK, fair enough, but that’s a pretty strange narrative. A simpler explanation would be that, by the end of 2017, Nokia realised (once more) that it couldn’t hack it as a standalone devices player and that Lee just had the misfortune to be in the wrong place at the wrong time.

Nokia’s confusion about what to do with the devices IP it kept hold of when it flogged the handset division to Microsoft seems to have manifested itself in turmoil at the top of the Nokia Technology division. Ramzi Haidamus was brought in from Dolby in 2014, oversaw the brand licensing idea, but cleared off after two years, just after the acquisition of Withings, indicating he maybe disagreed with the move.

They then brought in Brad Rodrigues, but only ever named him as ‘Interim President’ of Nokia Technologies and he lasted a year or so before moving on not long after Lee came on board. Now, were told, current Nokia Chief Legal Officer Maria Varsellona has been handed this poisoned chalice, a move that makes sense if the division is reverting back to patent trolling, which seemed its most likely strategy from the start.

We all make mistakes. Nokia thought it could re-enter the devices market in a narrower, more targeted way through Withings and at the same time position itself to capitalise on consumer IoT when it starts to take off. It then had to be reminded the hard way that devices are no longer a core competence and Lee has been unfortunate to be at the helm during that process.

Ericsson lands €250mn 5G loan from European Investment Bank

The European Investment Bank has signed a €250 million loan agreement with Ericsson to boost the vendors R&D efforts in 5G.

The cash will be made available through the European Fund for Strategic Investments (EFSI), a joint initiative between the EIB and the European Commission, with the focus on development of hardware and software for the Radio Access Network (RAN). Most of the R&D activities will take place in Sweden, with minor parts also being carried out in Ireland, Spain and Poland.

“The development of 5G technology is easily one of the most important innovation initiatives for the telecom industry in the coming years. Ericsson has been one of the defining contributors to what mobile telephony is today and I think we can only be proud to support this,” said Alexander Stubb, Vice-President of the EIB. “Apart from supporting European technology, this project will also make sure that thousands of highly-skilled jobs will stay in the EU.”

“When it comes to developing 5G technology, we need to up our game in Europe,” said Jyrki Katainen, European Commissioner for Jobs, Growth, Investment and Competitiveness. “I am proud that Ericsson – a European company – is investing heavily in preparing for 5G with the EU’s financial backing. Being a leader in telecoms is crucial to maintain our competitiveness on a global stage so sufficient investment in 5G is strategically important for Europe.”

Looking at the investments being made by Ericsson, the loan will certainly help the vendor in the quest for 5G glory. During the course of Q1, Ericsson invested just short of €900 million in R&D programmes, which accounted for roughly 20% of net sales for the period. In terms of comparison, Nokia invested €1.1 billion, or just over 23% of revenues brought in over the three months.

With early deployments set to kick-off towards the end of this year, and the majority to be set in motion by 2020, a €250 million loan will certainly help the Swedes prove their 5G credentials.

AI startup SenseTime just getting greedy as it bags another $620mn funding

Just one month after raising $600 million in a Series C funding round, Chinese AI facial recognition startup SenseTime has announced a further $620 million investment taking the total valuation of the firm to $4.5 billion.

With the Chinese Government on a mission to dominate the world of artificial intelligence, SenseTime is seemingly leading the charge, maintaining its position as the world’s most valuable AI company a total financing of more than $1.6 billion to date. Fidelity International, Hopu Capital, Silver Lake and Tiger Global led the investment, though Qualcomm Ventures was confirmed to be involved as well.

The vast majority of companies are looking into the potential for artificial intelligence, though the SenseTime success is seemingly off the back of an obsession from the Chinese government. Over the last three years, SenseTime boasts to have a growth rate of 400% year-on-year, with the snooping government one the major customers.

Aside from using the facial recognition technology to power its national surveillance system, processing data captured by China’s 170 million CCTV cameras as well as smart glasses worn by police offers on the street, the team also has a contract with Shanghai Shentong Metro Group, the largest subway operator in China, to deploy AI solutions for metro traffic monitoring. Other customers include China Merchants Bank, Huawei, Oppo, Vivo and Xiaomi.

Although the team has not explicitly mentioned what the new funds would be used for, aside from the generic R&D plug, during the Series C funding round last month the team stated increasing the international footprint was a big focus.

“Our Round C funding will maximise these advantages by accelerating the development of a global footprint with a larger ecosystem incorporating both domestic and overseas partners,” said Li Xu, SenseTime CEO. “The funding will also help us widen the scope for more industrial application of AI, thus increasing the value of SenseTime’s global ecosystem.”

Australian MP is next to call for a ban on Chinese 5G equipment

Australian Labor MP Michael Danby has become the latest politician to call for a ban on buying 5G network equipment from Chinese firms claiming they are ‘controlled’ by the government.

Speaking to parliament last night, Danby requested Prime Minister Malcolm Turnbull take a similar stance as in his tenure as communications minister when he barred Huawei from bidding for the National Broadband Network (NBN).

Mr Danby said:

“Now he [Malcolm Turnbull] and his government must resist the blandishments of commercial interests backed by apparently incompetent advice from bureaucrats who don’t understand the implications of the sale of the 5G network to state-owned enterprises or China-based companies who are effectively controlled by Beijing, and I’m talking about Huawei and ZTE.

Whatever instructions might be issued for Australian sovereignty by Australia after the fact, it will be compromised if we sell the construction of our new central communications 5G network to companies effectively controlled by an authoritarian government whose leader has recently been made dictator for life.”

Mr Danby goes on to cite a warning from ASIO Director-General Duncan Lewis that the level of foreign interference in Australia has never been higher.

“Huawei and ZTE must report to a communist party cell at the top of their organisations,” he warned. “Let me issue a clarion call to this parliament, to the media and to the Australian public: Australia’s 5G network must not be sold to these telcos.”

A Rekindled Debate

Telecommunications is vital, so it’s understandable to be wary of the players involved in providing the equipment to support it. The debate is far from new, but it’s been rekindled in recent months.

A renewed debate started when Trump’s administration banned ZTE from operating in the U.S. citing violations of export restrictions and making repeated false statements. It caused the company to cease operations and estimate around $3 billion in losses.

Trump’s ZTE ban has since been reversed saying it was “reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi [Jinping]”.

The shift in policy faced stiff opposition and was not without its own controversy over possible ulterior motives.

A risk to UK national security that could not be mitigated effectively

As Telecoms reported yesterday, U.S. Republic Senator Marc Rubio raised further concerns after claiming a bill to stop Chinese telecoms companies from operating in the U.S. completely would garner super-majority support in Congress.

Here in the UK, there’s wariness about the use of foreign equipment in vital infrastructure — but measures have been taken to ensure their safety rather than implement an outright ban.

Equipment from Huawei, for example, is willingly examined for backdoors and threats by UK intelligence services at the dedicated Huawei Cyber Security Evaluation Centre (HCSEC) before use in critical infrastructure.

Huawei has invested £1.3bn expanding its operations in the UK over the past five years.

However, the National Cyber Security Centre recently wrote to UK telecoms companies warning that using gear from ZTE "would present a risk to UK national security that could not be mitigated effectively or practicably".

It’s hard to ignore the innovation of Chinese telecoms companies, but there are security implications to consider. The HCSEC in the UK is a great example of how a middle-ground can be reached without resorting to a ban or disregarding security concerns entirely.

Do you think Chinese telecoms equipment should be banned? Let us know in the comments.