Opinion: Preparing to properly price 5G

Digital consumers have come to expect what they want, when they want it, and with a very clear indication of what it will cost at the moment of purchase. Costs are rarely a barrier to a transaction, consumers have proven time and again that reliability, personalization and real-time availability can trump cost, especially if the expense is transparent.

This new digital marketplace has proven successful, except, it seems, where it matters most - the network. Connectivity is central to every other digital experience and while it’s no surprise that data comes at a cost, the issue lies in trying to untangle its complexities. 

Every network, regardless of the type or speed, provides a specific capacity for fixed investment along with ongoing maintenance costs. Think of this as cost per Gbps, this is the metric for how providers price their service. While the industry may agree on the need for simple pricing, this has only resulted in one or two subscription model-variants, designed to appease the largest subset of consumers. This pricing strategy is little more than a blunt instrument when trying to extract real value from data, though to date it hasn’t proven a large enough pain point to dispense with the competitive pricing wars and do something different.

5G, however, is set to change all that, shining a giant spotlight on the problems associated with simple pricing models as networks seek to roll out new and more differentiated services.   

Setting these new 5G services aside for a moment, consider the vast array of elements that can be individualized now when it comes to pricing data plans:

  • Backhaul Capacity 

  • Last Mile Access Type

  • Contention Ratio

  • Quality (QoS)

  • Customer Care Agreement

  • Peak or Off-Peak Time Used

  • Availability

  • Download Allowance

  • Free Content

  • Contract Length

  • Bandwidth/Latency/Quality of Service

A basic level consumer, for example, might want just enough connectivity to send the occasional email or surf the web. On the extreme opposite, you have a heavy business user who salivates at stronger and faster data speeds, willing to pay the highest premium for lightning-fast downloads and superior remote support. As a user who falls into the latter category, I often feel frustrated that I can’t get the superior connectivity I crave, not because it doesn’t exist, but because the telco can’t price it in such a way for it to make sense to offer it to a small contingency of users. 

Going back to the 11 pricing options I listed above, imagine a wide variety of combinations that allow every single subscriber to have their own personalized plan and experience. It sounds like madness when considering the traditional BSS approach to telco billing, which could never cope with the processing demands of such a reality. Telco’s legacy-infrastructure environment is the reason this idea has been cost-prohibitive. Yet if the operator could simply adjust various pricing levers in real-time, or let subscribers change their minds and their plans with a swipe of their finger, the scope by which the network could utilize its assets grows exponentially. 

This isn’t pie-in-the-sky thinking - other industries do this really well. Hotels and airlines are just two examples of consumer-facing services that price according to demand and are able to encourage usage during low utilization or maximize revenue in peak opportunities. 

How can telcos take advantage?

Pricing usage for data can and should be carried out in real-time, giving a subscriber visibility into what they are being charged and complete transparency into what they could be charged. 

For example, let’s say I want 50Gbps of unlimited bandwidth in the next hour. I should know and understand that my rates will be higher given that it is 2pm on a workday afternoon when the network is heavily loaded. Conversely, I should be able to choose a different time to add that unlimited bandwidth based on visibility into less expensive pricing options during times of lower usage. 

The problem with a scenario like the one I described above is that, traditionally, pricing has been solved via a BSS system using a sequential process that allows for very little flexibility. This leads to a long and unpredictable code path or IFTTT on steroids because every single scenario requires pre-configuration! As you might imagine, this creates a pricing model that is unmanageable and impossible to change without extensive regression testing and, unfortunately, the consumer impact is an unpredictable experience. Just imagine trying to implement this sequential approach to variable pricing across 5G network slices - it’s enough to make you want to give up connectivity forever. 

Trading on tradition

This is why operators have to move to a digital BSS model and away from the traditional structure, which does little to serve them now and will be utterly useless in the face of 5G. If monetization holds the key to 5G ROI, then the pricing engine behind it must be extremely fast, predictable and capable of working equally as well in complex multi-dimensional pricing scenarios as it does for simple subscription charging. This approach enables operators to provide a subscriber experience that includes any number of tailored solutions to fit their needs, while also delivering a charging model based on demand.

Just imagine the results! 

  • A holiday home user could pay a basic connection charge and then set the bandwidth they want on an hourly or daily basis; 

  • A consumer with friends visiting could boost their bandwidth for the evening; 

  • A business user could elect for a high QoS plus premium support; 

  • Promotions could be pushed to incentivize usage when bandwidth congestion is low; 

  • Companies could sponsor connections, offering perks or incentives for watching promotional content

More intuitive, adaptive 5G pricing scenarios open the door to hundreds of possibilities for utilizing the network more efficiently and generating additional revenue. Operators can innovate now, in preparation for 5G, and distinguish themselves from their competitors rather than being dragged down into a no-win competition on the lowest possible subscription price.

Interested in hearing industry leaders discuss subjects like this? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo, and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London, and Amsterdam.

Parliamentary Intelligence Committee piles pressure on Huawei decision

The Parliamentary Intelligence and Security Committee has unveiled a statement to rubbish delays put on the Supply Chain Review, demanding a decision ASAP.

In the same week as the Chair of the Science and Technology Committee suggested there are no technical reasons to ban Huawei, the Intelligence and Security Committee has demanded a sharp decision or risk losing a strong position in the digital economy.

“5G will transform our day to day lives – if it meets its full potential – and it could be key to our future prosperity,” a statement from the Committee reads. “Such an important decision therefore requires careful consideration. However, the extent of the delay is now causing serious damage to our international relationships: a decision must be made as a matter of urgency.”

While the UK fell drastically behind the norm when it came to adopting 4G, progress has been much more promising for 5G. While calling oneself a global leader usually means little coming from the mouths of groomed politicians, in this case the UK is a genuine leader in the 5G race. There are only a handful of nations who launched ahead of the UK and the opportunity to scale nationwide rapidly is certainly is present.

However, the Intelligence and Security Committee, chaired by Dominic Grieve, feel this is a position which is becoming increasingly vulnerable. The longer this review continues, the slower 5G expansion plans will be, and the greater the opportunity for fast-followers to catch-up.

That said, perhaps the biggest revelation from the Intelligence and Security Committee seems to be the implications to national security.

“However, the telecoms market has been consolidated down to just a few players: in the case of 5G there are only three potential suppliers to the UK – Nokia, Ericsson and Huawei,” the reports states. “Limiting the field to just two, on the basis of the above arguments, would increase over-dependence and reduce competition, resulting in less resilience and lower security standards.”

Despite many critics of Huawei suggesting inclusion of the firm in critical infrastructure would compromise national security, Grieve’s opinion is that reducing the number of available vendors would create more problems. Not only would the networks be more expensive to build, but resilience would be dampened as well.

As you can imagine, Huawei are relatively pleased with the report from the Committee.

“We agree that diversity improves resilience in networks,” said Victor Zhang, Vice-President of Huawei. “We’ve been a part of UK networks for 18 years. 5G is critical for the UK and is the foundation of tomorrow’s digital and mobile economy. Quite simply, it will improve people’s lives. Our priority has only ever been to deliver world-leading technology to our customers.”

This is the problem the Department of Digital, Media, Culture and Sport (DCMS), the National Cyber Security Centre (NCSC) and the wider Government, is facing. Not only does DCMS have to recruit a new Digital Minister after the resignation of Margot James, deal with Brexit and select a new Prime Minister, it has to come to decision on the role of Huawei in the 5G era.

This statement and the report from the Science and Technology Committee is piling up the pressure. The message is relatively clear, these distractions should not undermine the importance of coming to a conclusion on Huawei.

At some point, the UK Government is going to have to hurt someone’s feelings. Either the relationship between the UK and the US or China is going to be impacted. With Brexit around the corner, the UK needs to nurture relationships outside of the European Union, but unfortunately it is unavoidable here.

The pressure is mounting and soon enough the Government will have to make a decision. It has been able to procrastinate, but the more influential groups who press for a conclusion, soon enough the Government will have to show some progress.

Brits to get the internet on the Tube

Transport for London (TfL) has announced consumers will have another way to avoid eye contact on the London Underground from next year.

Starting on the Jubilee line from March 2020, 4G data services will be introduced to the cramp and sweaty tunnels which move millions of Londoners around the city each day. For those who dread the prospect of talking to somebody else during the morning commute, this will be another way to avoid any contact with humans.

“The London Underground network is an incredibly challenging environment in which to deliver technological improvements, but we are now well on the path to delivering mobile connectivity within our stations and tunnels,” said Shashi Verma, TfL’s CTO.

“We have begun the complex work to allow our customers to be able to get phone reception within our tunnels from March 2020, with more stations and lines coming online during the coming years.”

This is of course an immensely complicated job when you consider the environment and the fact most of the underground infrastructure was designed in the years before the internet was even a concept. That said, TfL has now laid hundreds of miles of cables to enable the connectivity and is currently in discussions with the telcos to deliver connectivity underground.

“I’m delighted that we will be introducing mobile connectivity to the London Underground from next March,” said London Mayor Sadiq Khan. “This is a really important step for the millions of people who use the Tube each year.

“Introducing 4G and, in the future, 5G will help Londoners and visitors keep in touch and get the latest travel information while on the go. London is the best place to live, visit and work – and projects like this will help make it even better.”

TfL is currently trialling 2G, 3G and 4G mobile services along a section of tunnels between Westminster and Canning Town, with the next stage of procurement for the concessionaire beginning shortly. TfL plans to award the connectivity contract by next summer.

ITV and BBC to launch yet another streaming service

The streaming segment is already looking pretty crowded, but ITV and the BBC have decided to pair up to add another premium option into the mix with BritBox.

Priced at £5.99 a month, the service will launch in the final quarter of 2019, undercutting digital rivals who have been making life so difficult for the traditional players these last few years.

“We have a world beating TV industry with outstanding content,” said BBC Director General, Tony Hall. “The BBC and ITV are at the centre of that. Together, we have been responsible for delivering the majority of ‘must see’ moments on British TV over the last decade. That ‘must see’ content will now be on BritBox.”

“The agreement to launch BritBox is a milestone moment. Subscription video on demand is increasingly popular with consumers who love being able to watch what they want when they want to watch it,” said Carolyn McCall, CEO of ITV. “They are also happy to pay for this ease of access to quality content and so BritBox is tapping into this, and a new revenue stream for UK public service broadcasters.”

Although negotiations did seem to be on rocky ground occasionally, the BBC did appear to be showing a preference to its own iPlayer service, it might attract interest from various different segments of the UK population. The BBC has attracted plaudits for its programming over the last few years, especially around multi-series boxsets, where this service will focus.

BritBox will now become the home for all BBC and ITV programming once they fall off the streaming services which are already in place. Although ITV is free to put its programming on the ITV Hub for as long as it wants, it is believed Ofcom will force the BBC to make its programming available for a year on the iPlayer.

Bearing in mind both of these organizations already have streaming services for free, some might question what the point of this new service actually is, though there is an opportunity to combine forces and drive original programming exclusively for BritBox. Details are relatively thin on the ground, but the team will take the same approach as Netflix and Amazon, creating exclusive original content to attract subscribers.

Microsoft profits soar on back of cloud

Microsoft has unveiled it earnings for the quarter ending June 30 and it has certainly given investors something to smile about.

Revenues for the fourth quarter stood at $33.7 billion, a year-on-year increase of 12%, while net income increased by 49% at $13.2 billion. For the full year, revenues totalled $125.8 billion while net income was $39.2 billion, a 137% increase on the previous year. Investors certainly seemed happy with the results, with Microsoft’s share price increasing 3.4% in pre-market trading.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said CEO Satya Nadella.

“Every day we work alongside our customers to help them build their own digital capability – innovating with them, creating new businesses with them, and earning their trust. This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”

With Nadella at the helm and cloud computing driving momentum, Microsoft has reaffirmed itself as the most valuable company on the planet, with market capitalisation now standing at $1.05 trillion.

Although the cloud business segment will steal the headlines, the More Personal Computing unit, the legacy shunned child of the Microsoft family, drove year-on-year growth of 4% for the final three months of the year.

Looking at the growth segments of the business, Productivity and Business Processes, featured the LinkedIn and Office products, bolstered revenues by $11 billion, a 14% year-on-year increase. The Intelligent Cloud unit brought grew 19% accounting for $11.4 billion.

There might have been some mixed headlines across the last couple of days, Teams overtaking slack was balanced by the Office 365 ban in schools in Germany, but Nadella and his cronies will certainly be sleeping comfortably.

Softbank aims for drone-delivered internet and IoT connectivity by 2023

Japanese telecoms giant Softbank aims to use drones for delivering internet and IoT connectivity by 2023.

Softbank is teaming up with US drone builder AeroVironment for the project. The pair’s first drone, the HAWK30, is powered by solar energy.

Using the stored power, 10 electric motors will enable the HAWK30 to fly 12 miles (65,000 feet) above sea level – around twice as high as commercial aircraft.

The high altitude helps to provide a steady current for the drone’s operations while also enabling more widespread coverage of LTE and 5G.

Softbank claims one of the HAWK30’s base stations, called High Altitude Platform Stations (HAPS), has the potential to provide service over 125 miles. Around 40 HAPS could provide coverage across Japan’s islands.

The aim of the project for Softbank is to provide a connectivity solution that isn’t so likely to be affected by natural disasters. Earthquakes, for example, often damage traditional wired or radio-based assets.

“Smooth handovers between networks provided by terrestrial base stations and by HAWK30 will also be possible,” SoftBank says. “As a result, communication disruption will not occur even when a person using a smartphone moves from a base station covered area to a HAWK30 covered area.”

Beyond internet connectivity, supporting IoT devices is also being explored.

HAPSMobile, Softbank’s subsidiary running the infrastructure side of things, wrote on its website: “HAPSMobile will support telecom standards for IoT to accommodate various IoT solutions”.

Softbank and AeroVironment’s project is a fascinating look at how the future of reliable connectivity may be delivered, especially in emergencies. Telecoms will keep you updated on any developments.

Interested in hearing industry leaders discuss subjects like this? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo, and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London, and Amsterdam.

BT faces another Ofcom probe

Ofcom has kicked-off an investigation to determine whether BT has complied with regulations concerning Excess Construction Charges (ECCs).

The ECCs are effectively charges for extra work BT-owned Openreach has to do to meet customer-specific network construction requirements. After the first £2,800 in excess cost, BT has been allowed to balance the spreadsheets with a standard connection charge for all relevant business connectivity services. BT has admitted it may not have applied the charge correctly and could be in-line for some wrist-slapping from the regulator.

“BT has provided Ofcom with information indicating that it may not have correctly applied the ECC exemption to a number of relevant business connectivity orders since the beginning of the ECC exemption regime,” an Ofcom statement reads.

“Having considered the information provided by BT, we have decided to open an investigation to examine whether there are reasonable grounds to believe that BT has failed to comply with its obligations under the following SMP conditions from 16 May 2014.”

Although some might suggest that a wholesaler such as Openreach should wear the cost of constructing its own assets, there are some exceptions. Occasionally, when delivering a new high-capacity leased line, for example, additional costs need to recouped by Openreach. This would be considered reasonable business practice, assuming Openreach plays fairly and by the rules.

Thanks to a prior Business Connectivity Market Review conducted by Ofcom, pricing controls have been placed on Openreach. Since 16 May 2014, the firm has been under these pricing restrictions in the pursuit of fairness.

As with most of these statements from Ofcom, there is little information for the moment. However, as BT informed the regulator of the potential over-charging, it would appear this is a case where judgment has already been reached. All Ofcom has to do now is understand the severity of the non-compliance and dish out a suitable penalty.

Europe takes another chunk out of Qualcomm profits

The European Commission has announced it will once again fine Qualcomm for market abuse, with the investigation this time focusing on 3G baseband chipsets.

It seems time does not heal all wounds as this investigation focused on market abuse between 2009 and 2011, and a concept known as ‘predatory pricing’. In short, Qualcomm used its dominant market position to sell products to strategically important customers, below cost price, to effectively kill off any competition before it had a chance to gain momentum.

“Baseband chipsets are key components so mobile devices can connect to the Internet,” said Margrethe Vestager, the Commissioner in charge of competition policy. “Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.

“Qualcomm’s strategic behaviour prevented competition and innovation in this market and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million.”

Although the European Commission affords the opportunity for companies to use market advantages to seek profits, but when it becomes anti-competitive the bureaucrats draw a line. This is what has happened in this instance.

At the time, Qualcomm controlled roughly 60% market share of the UMTS baseband chipset segment, three times as great as the nearest competitor, though this position was used to kill competition before it had a chance to emerge. Using its relationships with Huawei and ZTE, Qualcomm sold products at low enough prices no-one could compete.

This is the challenge with segments which have such high-barriers to entry, key customer accounts are critically important, such are the investments which need to be made in R&D. Qualcomm effectively created a loss leader of these products to stem the critical flow of funds into any competition which could develop from the smallest glimmer of hope. In this case, the firm in question was Icera, which was eventually acquired by Nvidia.

The fine in this case represents 1.27% of Qualcomm’s turnover in 2018 and will hopefully deter companies from engaging in anticompetitive activity in the future.

For Vestager, this is another parting shot as she wraps up her tenure in the competition policy office, a position she has held since 2014.

The Commissioner has built a reputation of taking on big tech who make a habit of practising in anti-competitive activities. Qualcomm has been a frequent combatant of Vestager, though she has got plenty of experience dealing with the likes of Google and Amazon also, the latter of which is the subject of the latest probe.

Assuming the tech giants will be happy to see the back of her would be very reasonable, though it remains to be seen who will replace the feisty and combative Vestager.

Vodafone gets the green light from Europe for Liberty Global acquisition

The European Commission has given the all-clear for Vodafone’s €18.4 billion acquisition of Liberty Global’s cable operations in Germany, Hungary, Czech Republic and Romania.

There are of course conditions which Vodafone will have to adhere to, but the telco is now claiming to be Europe’s largest converged operator, with 116.3 million mobile customers, 24.2 million broadband customers and 22.1 million TV customers across 13 European countries.

“With the European Commission’s approval of this transaction, Vodafone transforms into Europe’s largest fully-converged communications operator, accelerating innovation through our gigabit networks and bringing greater benefits to millions of customers in Germany, the Czech Republic, Hungary and Romania,” said Vodafone Group CEO Nick Reid.

“This is a significant step toward enabling truly digital societies for our customers.”

Of course, Vodafone has not got it all its own way. One of the concessions relates to the German market where Vodafone has agreed to open up the cable network to Telefonica Deutschland, allowing the rival to deliver TV and broadband services. Telefonica Deutschland has been discussing ways in which it can enter into new service segments, though this concession will certainly be welcomed by the bean-counters.

On the broadcasting side, Vodafone has also agreed it will not restrict broadcasters from distributing their content also via OTT services. This concession has been designed to counter fears that the newly merged entity would inhibit the growth of OTT services across the various geographies.

Following the approval, Vodafone expects the transaction to be completed by 31 July, though not everyone will be happy with the deal.

Yesterday, credit rating agency S&P entered Vodafone onto its CreditWatch list in a negative capacity, suggesting the firm has been too adventurous on its recent spending spree. This acquisition is deemed as a significant outlay, though the firm is also exposed to several spectrum auctions in key markets, as well as operating in some areas where trading conditions are less than perfect. S&P has said it will downgrade Vodafone to BBB on approval of the deal.

Elsewhere, other analysts have been pointing to negative performance in the stock markets since the introduction of Reid as CEO and the announcement of the Liberty Global transaction. Since these two news snippets hit the headlines, Vodafone’s share price has declined by more than 30%. Vodafone might be more competitive in some European markets now, but it seems some are worried by the financial commitments.

AT&T gets Microsoft and IBM to help with its cloud homework

US telco AT&T has decided it’s time to raise its cloud game and so has entered into strategic partnerships with Microsoft and IBM.

The Microsoft deal focuses on non-network applications and enables AT&T’s broader strategy of migrating most non-network workloads to the public cloud by 2024. The rationale for this is fairly standard: by moving a bunch of stuff to the public cloud AT&T will be able to better focus on its core competences, but let’s see how that plays out.

IBM will be helping AT&T Business Solutions to better provide solutions to businesses. The consulting side will modernize its software and bring it into the IBM cloud, where they will use Red Hat’s platform to manage it all. In return IBM will make AT&T Business its main SDN partner and general networking best mate.

“AT&T and Microsoft are among the most committed companies to fostering technology that serves people,” said John Donovan, CEO of AT&T. “By working together on common efforts around 5G, the cloud, and AI, we will accelerate the speed of innovation and impact for our customers and our communities.”

“AT&T is at the forefront of defining how advances in technology, including 5G and edge computing, will transform every aspect of work and life,” said Satya Nadella, CEO of Microsoft. “The world’s leading companies run on our cloud, and we are delighted that AT&T chose Microsoft to accelerate its innovation. Together, we will apply the power of Azure and Microsoft 365 to transform the way AT&T’s workforce collaborates and to shape the future of media and communications for people everywhere.”

“In AT&T Business, we’re constantly evolving to better serve business customers around the globe by securely connecting them to the digital capabilities they need,” said Thaddeus Arroyo, CEO of AT&T Business. “This includes optimizing our core operations and modernizing our internal business applications to accelerate innovation. Through our collaboration with IBM, we’re adopting open, flexible, cloud technologies, that will ultimately help accelerate our business leadership.”

“Building on IBM’s 20-year relationship with AT&T, today’s agreement is another major step forward in delivering flexibility to AT&T Business so it can provide IBM and its customers with innovative services at a faster pace than ever before,” said Arvind Krishna, SVP, Cloud and Cognitive Software at IBM. “We are proud to collaborate with AT&T Business, provide the scale and performance of our global footprint of cloud data centers, and deliver a common environment on which they can build once and deploy in any one of the appropriate footprints to be faster and more agile.”

Talking of the US cloud scene, the Department of Defense is reportedly looking for someone to provide some kind of Skynet-style ‘war cloud’ in return for chucking them $10 billion of public cash. Formally known as the Joint Enterprise Defense Infrastructure (yes, JEDI), this is designed to secure military and classified information in the event of some kind of catastrophic attach, contribute to cyber warfare efforts and enable the dissemination of military intelligence to the field.

It looks like the gig will be awarded to just one provider, which had led to much jostling for position among the US cloud players. The latest word on the street is that either AWS or Microsoft will get the work, which has prompted considerable moaning from IBM and Oracle and reported concern from President Trump, prompted by politicians apparently repaying their lobbying cash. Here’s a good summary of all that from Subverse.