Is the secondary mobile device market ready for a 4G device deluge?

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Alan Bentley, President, Global Strategy at Blancco, looks at anticipated 5G device sales forecasts and considers the impact that they could have on the secondary device market.

The global device market has been under criticism in recent years. Many industry commentators have bemoaned slowing levels of innovation when it comes to new smartphone functionality. Global OEMs have been trying to maintain high prices for premium high-end devices, despite minor improvements in features and technology. While on one hand, device prices have sustained themselves, on the other, consumers are keeping their old devices for longer and global smartphone shipments and sales have started to decline.

Global OEMs and operators have been looking to accelerate their sales figures. Both have pointed towards 5G as the catalyst to build much healthier pipelines and grow revenues. 5G promises greater capacity, richer content and faster processing speeds. The hope is that it will excite mobile consumers in new ways and persuade them to part with more money for the privilege of consuming it.

5G device demand is looking strong

The good news is that industry predictions seem to support these hopes. Only last week, industry analyst Canalys predicted that 1.9 billion 5G smartphones will ship over the next five years. Global volumes will increase from an anticipated 13 million devices this year, to a daunting 774 million by 2023. This suggests that the current period of smartphone upgrade inertia we’re experiencing will end.

However, the success of the secondary mobile device market will be a significant contributing factor to the success of 5G devices and network service uptake. Over the past few years, it has helped improve consumer affordability for high-end devices, while helping OEMs sustain high prices. In other words, if OEMs and operators hope to sell high volumes of 5G devices, they must also be ready to collect almost the same number of used 4G smartphones.

Secondary strain from primary market pain

There is a clear link between the success of the new smartphone market and the secondary device ecosystem. If the primary market stalls, so will the secondary market. The affects of this link have been felt over the past year. According to Counterpoint Research, the secondary market grew just 1% in 2018, compared to around 13% the year before. The primary reason was the 11% drop in new smartphone sales in the same period. If consumers aren’t upgrading, old devices simply can’t be collected. However, the secondary market still grew. Consumer appetite for 5G is reflected by the 5G device shipment forecasts and there is also increasing comfort for engaging in the secondary market, assuming data security standards remain high. This will lead to a deluge of 4G devices hitting the secondary market in the next 12-18 months and the supporting ecosystem needs to be ready.

Is the secondary market ready?

The commitment from every stakeholder within the secondary market ecosystem is clear. OEMs, operators and the logistics providers that manage buyback and trade-in programmes on their behalf, are investing significant time and money to scale secure device collection. While Canalys predicts that 582 million 5G smartphones will ship in 2022, Counterpoint Research predicts that less than half, just 220 million devices will be collected in the same year.

Canalys smartphone forecast

This feels conservative. Operators and OEMs are marketing buyback ad trade-in programmes very hard. Earlier this year, Apple’s Tim Cook openly stated that its iPhone buyback programme was central to its strategy of stimulating device sales and maintaining premium pricing. Several of the world’s largest operators are known to be predicting or expecting significant revenue from used device collection and resale this year (and in future years).

Most now advertise their buyback programmes on their website homepages and include the ability to trade-in used handsets for all new device purchases. There is also strong consumer incentive to engage in the process. Recent statistics from HYLA Mobile suggest that the secondary market returned more than $2 billion to US consumers that traded in their devices in the US last year alone. All secondary market stakeholders have significant incentive for the entire ecosystem to deliver.

More devices, more speed, more risk

The significant increase in 4G devices hitting the secondary market will drive greater efficiency enhancements across an increasingly complex supply chain. Mobile device processors will be judged according to a variety of factors. Perhaps the main one is speed – of device diagnosis, repair and resale. Technology advancements, including the use of AI and automation continues to drive through mobile device processing efficiencies. Mobile devices can now be processed in seconds, rather than minutes. This is vital in retaining as much of the latent value held in used devices as possible.

However, with greater speed comes greater risk, especially given the importance of maintaining consumer trust in data management practices tied to the secondary market. If consumers lack the confidence in operators, OEMs and logistics companies to keep their data secure, they won’t trade-in their old devices. What’s more, upgrade inertia will continue.

The mobile industry is dependent on 5G to grow revenues. This requires a healthy device upgrade cycle. It’s time for all parties in the process to play their part in ensuring that the secondary device market is booming, for a strong and secure future.

 

alan-bentleyAlan Bentley is President, Global Strategy at Blancco. An industry veteran, he joined the company in October 2016, and has worked closely with Blancco’s many customers and partners to implement data erasure solutions to mitigate security risks and ensure regulatory compliance. This gives him a unique insight into the market and business requirements driving the needs of today’s businesses.

Jio surges forward with subs and profits

Reliance Jio has unveiled its latest quarterly figures and, surprise surprise, subs are once again on the up as well as profits.

Monthly ARPU might have be on the decline, down to $1.77, a trend which is not showing signs of slowing, but scale seems to be the answer for Jio. The firm now has a subscriber base of 331 million, adding 24.5 million over the last three months and 116 million during the last year.

“Growth in Jio mobility services has continued to surpass all expectations,” said Mukesh Ambani, MD of Reliance Industries, Jio’s parent company.

“In less than two years of commercial operations, Jio network carried almost 11 Exabytes of data traffic during the recently concluded fiscal quarter. Jio management is focused on giving unmatched digital experience at most affordable price to every citizen of the country, and accordingly expanding the network capacity and coverage to keep pace with demand.”

The progress which has been made by the firm over the course of the last two years is remarkable and perhaps demonstrates how under-developed the Indian market actually was. Although India has been seen as a growth economy, part of the now old-fashioned BRICs group, it wasn’t until Jio shook up the market the digital revolution took hold.

Average consumption of data is now up to 11.4 GB a month, with Jio suggesting customers used 10 exabytes over its network during the quarter. The Indian consumer certainly has an appetite for data and they don’t seem to be satisfied whatsoever.

Looking at the financials, these are also very promising. Early criticism of Jio was that it was negatively impacting competition in the market as there was little profit being made by the firm. This is generally seen as a negative, as running loss leaders to kill off competition very rarely works for the greater good in the long-term, though the numbers speak for themselves.

Quarterly revenues increased 44% year-on-year, while the firm collected profits of $119 million, a 45% year-on-year boost. These numbers are attractive for the moment, but profitability currently looks to be reliant on scale and subscriber growth. Sooner or later, this growth will slow, and the team will have to look at the worrying rate at which ARPU is declining.

Period Q1 2019 Q3 2018 Q1 2018
ARPU (Indian Rupee) 122 130 154

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.

We need #4GForAll before we turn to 5G

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Mark Bridgeman, Deputy President of the Country Land and Business Association (CLA), argues that we need to finish 4G before we get carried away with 5G.

A quick browse of this website and one is immediately struck at how important 5G is. It is clear, even to an ‘outsider’, that this has the potential to revolutionise both the mobile industry and the user experience – and consumers are beginning to feel this excitement as they start to access 5G services themselves.

Indeed, some of you may even be using the burgeoning network to read this in one of the limited number of cities where it has launched. While you enjoy browsing the internet on the go in lightning speed, please spare a thought for those living in rural communities who are barely able to receive a signal, yet alone 4G.

There are more of us than you might think. Despite living on the cusp of the 5G era, according to official statistics only 67% of the “geographic UK” is currently able to receive 4G from all the mobile operators. Coupled with poor fixed speeds – Ofcom states some 619,000 homes and offices still don’t get “decent” broadband – this means we’re left with a stark urban/rural digital divide.

The Country Land and Business Association (CLA) has long-rallied against this divide and, most recently, this has taken the form of its #4GForAll campaign. The campaign has brought politicians, rural stakeholders and those who live in the countryside together to argue for a better mobile deal.

In the modern age connectivity is crucial. Of course, on one level it’s about streaming and social media – why shouldn’t those who live in the countryside be able to watch Netflix?  –  but on another it is fundamental to rural businesses of all shapes and sizes. For example, holiday lettings that don’t offer adequate connectivity won’t be able to compete for urban customers used to being continuously online. Farms cannot invest in next generation technology without a robust connection to the cloud. Businesses are unable to fulfil basic administrative tasks which are increasingly digital only – for example, accessing online banking or sending in VAT returns to HMRC. Meanwhile, proposals to help the NHS deliver its services more effectively and to more people through video consultation, will remain an aspiration rather than a reality.

These were some of the messages I took to Parliament recently when I was called upon as a witness to the Environment, Food & Rural Affairs (EFRA) committee on rural connectivity. There I was questioned by MPs on the difficulties for rural businesses, the issues users in the countryside face, and why the current plans by mobile operators to bridge the divide are, to put it simply, inadequate. I also highlighted my own frustrations at a lack of connectivity affecting my own tourism business in Northumberland.

This appearance, and our ongoing work promoting the campaign, is building political support for our cause. Just last week more than 50 MPs and Lords joined the CLA at our Celebration of Rural Business event. Many voiced the concerns of their rural constituents living with poor mobile reception and shared their support for our campaign across social media.

The mobile industry has long argued that it should not be footing the bill for expanding coverage in areas where it is not economical to install masts. Meanwhile, Ofcom has attempted to rally the industry behind common goals and taken a practical approach to improving coverage. Firstly, by suggesting that upcoming spectrum auctions could offer price reductions for industry improvements in 4G coverage. Secondly, by suggesting a range of options for improving coverage, including allowing rural users to share networks if their own was not available, also known as ‘rural roaming’.

To my mind, these are perfectly sensible ideas and with additional reporting and transparency and by ensuring targets are legally binding, could become a workable and cost-effective solution towards increasing geographic coverage. Indeed, these could easily be worked up to become formal and legally binding coverage obligations, which would be the industry’s first since previous obligations expired in 2017.

However, in the last few weeks, the industry have responded to these ideas with proposals of their own, the first time that the four British networks have worked collectively to come up with a firm proposal. They argue that they can increase coverage through the creation of a joint company to build new masts and the sharing of equipment on existing pylons.

The CLA, along with other countryside groups and consumer group Which?, responded by writing to Jeremy Wright MP, Minister for the Department for Digital, Culture, Media & Sport (DDCMS), outlining the four key tests that are needed: 1) legal obligations for improved coverage; 2) for this to be delivered as soon as possible; 3) robust monitoring arrangements by Ofcom; and 4) a requirement for operators to publish a roll-out plan, as is the case with broadband today.

To my mind we are nearly there. For perhaps the first time, we have rural users and businesses, the mobile industry and the regulator all proactively seeking practical solutions to increasing rural coverage. We have the industry working together to work up cross-industry proposals and responses. On behalf of our members and rural users, we have argued for additional robustness on proposals put forward to date. We have repeatedly done this because we know that the countryside cannot afford any additional delay; we have been waiting for far too long already.

 

CLAlondonmarkBridgeman01cMark Bridgeman is Deputy President of the Country Land and Business Association (CLA) which represents rural landowners and businesses in England and Wales. It has been campaigning for better rural mobile connectivity through its #4GForAll campaign.

US is winning the 5G speed race

Although there is a lot more to 5G than ‘bigger, faster, meaner’ download speeds, the US has bragging rights currently when it comes to the fastest download speeds.

According to the latest analysis from Opensignal, 5G is boosting maximum downloads in all eight markets where the connectivity euphoria has been launched, aside from Australia that is. It’s a very crude measure of success, but it is something which the telcos will want to shout about.

As you can see from the graphic below, there is certainly an increase in speed, though this is hardly a good measure when you consider very few consumers even touch the maximum speeds promised.

Opensignal graphic

Leading the pack is the US with maximum downloads speeds of 1815 Mbps, and by somewhat of a clear margin, though both Switzerland and South Korea have entered into the holy land of gigabit speeds. Perhaps the strangest statistic to make note of is the decrease in maximum speeds in Australia.

The lead which the US has established should come as little surprise when you consider the spectrum being utilised. Telcos in the US are already able to use mmWave spectrum for 5G, whereas European counterparts are utilising the mid-band spectrum, which sacrifices some speed to improve geographical coverage.

Looking at the UK, which currently sits bottom of the rankings, there is perhaps something for Three to shout about. Opensignal suggests speeds here might be impacted by the fact EE only has 40 MHz of relevant spectrum. Three has been shouting about its 100 MHz of contiguous spectrum in the 5G bands, claiming it is best positioned to deliver the 5G experience, and this analysis perhaps supports this claim.

And to address some of the speed differences between Opensignal and the figures which are being quoted by the telcos, this analysis is being done in the real world. Consumers are asked to download the Opensignal app, allowing the team to assess speeds in the real-world, with a range of different devices (manufacturer and condition) and a variety of applications.

But you also have to take into account these speeds are not realistic whatsoever; its nothing but a PR plug for the ‘creatives’ in the marketing department to make use of. Let’s take Australia as an example.

According to this analysis, Australian telcos can achieve a maximum download speed of 950 Mbps for 4G. However, as you can see from the graphic below, reality is far from the maximum achieved in perfect test conditions.

Opensignal 4G graphic

Although we are comparing apples and pears here, the theory is the same. Real-world experience is entirely different from the maximum speeds which the telcos boast about; this has been true for the 4G world and it would be perfectly reasonable to assume the same for the 5G era.

Fundamentally, this means very little for the moment. Coverage is incredibly limited while reality will be very different when more users hit the network. You also have to take into account European operators do not have access to the high-band spectrum which will deliver the monstrous speeds promised.

That said, the variety of speeds perhaps give an indication of the success of deployment strategies. It is certainly early days in the 5G era, but the US has claimed the first accolade when it comes to the dated ‘bigger, faster, meaner’ mentality which has governed the telcos for years.

Orange gears up for the Tour de France but no mention of 5G

This weekend will see the Tour de France begin in Belgium and while it might be a chance for some to enjoy a tipple in the sun, for Orange it is a monstrous task. But it does seem to have forgotten to plug 5G.

Delivering a connectivity solution for this spectacle is somewhat of a difficult task. The race covers 3,460km over 21 stages, starting in Brussels, winding through 219 municipalities in France before ending in Paris. Four stages will be held in the Pyrenees and another four in the Alps, while numerous see the race snake through rural France. These are not necessarily the easiest environments to provide connectivity in.

The other factor you have to take into account is this is not necessarily a ‘build once’ concept for network infrastructure; the tour route changes every year, making permanent infrastructure redundant in numerous areas. That said, it does provide the commercial drive to bridge the digital divide in some rural environments.

In some places, it makes just as much commercial sense to rollout permanent infrastructure to the small towns as it does to make it temporary in the more secluded areas. This year, 11 locations will benefit from a permanent fibre installation, while 37 municipalities visited by the Tour and 182 municipalities located within 10km of race will also benefit from 4G upgrades.

This is not to say Orange should wait for the Tour de France to pass through a village to address the digital divide, but it is a nice by-product for some communities.

One massive omission from any of the materials is 5G. With 5G buzzing in almost every corner of the connectivity world, it would be a fair assumption it would be here as well. In other sponsorship properties Orange owns, Roland Garros for example, 5G has been the focal point of communications, but it has been missed out here.

Admittedly, this is a different and more complicated environment to deliver the super-fast ‘G’, but it does seem to an oversight; there are various different usecases which could be plugged by the telco here. This is not to say Orange should wait for the Tour de France to pass through a village to address the digital divide, but it is a nice by-product for some communities.

In 2017, we had a behind-the-scenes tour of the event, with Orange offering some insight into the efforts made to deliver connectivity. And its not as easy as it sounds. Alongside the Orange technical team which has to move with every stage of the tour, the telco has to provide connectivity for roughly 120 trucks housing various broadcasters, shifting 20km of fibre and 65km of power cables each day.

The figures quoted above were accurate two years ago, now you have to take into account consumers are more digitally defined, using a broader range of apps and digesting more data on a daily basis. Here’s a bit of a taste of the complications Orange faces this year:

  • 7,000 hours broadcast by 190 countries worldwide
  • 10 to 12 million spectators on the roadside
  • 8 million unique visitors to the website
  • 32 km of cables deployed at the finish line during the event
  • 350 temporary phone lines
  • 32 mobile 3G/4G mobile relays to strengthen mobile network coverage
  • 250 km of specifically deployed optical cables

In the ‘village’ at each stage of the Tour, Orange has said it will deploy eight separate wifi networks, with an equivalent rate of 200 Mbps and able to handle more than 10,000 simultaneous connections. This is the easy part, the village doesn’t move all day, but providing continuous connectivity while the race is progressing is a different challenge.

This is a marketing opportunity for Orange, it gets to show how wonderful it is at solving complicated problems, but there is certainly an upside for some in the rural communities who could see a connectivity boost. Assuming the race passes through your quaint village of course.

Three UK has a great 5G opportunity but needs to do some growing up first

Three is positioning itself to fully exploit the 5G opportunity, but you have to wonder whether it can deliver the high standards it is setting itself by just repeating what it has always done.

“We are going to take 5G by storm, we believe it is ours to own,” said Shadi Halliwell, CMO of Three UK, at a London briefing this week.

There is certainly an element of truth to this statement; the UK connectivity market has pleasantly evolved into the environment which will allow Three to flourish. Data is king as we head towards 5G and with the on-going challenges in delivering broadband which meets consumer expectations, the conditions are ripe for disruption.

Three has always sold itself as a brand designed for the data-intensive consumer and this is the promise of 5G for the moment. Without Release 16 from the 3GPP, 5G is little more than upgraded 4G, but this won’t matter for Three. The brand proposition is already well established and 5G allows the team to double-down on this position.

There are a lot of other factors which will help the team here also. The telcos has never been shy about hyping its contiguous 100 MHz of spectrum, or that it is has a greater horde of assets than its competitors. Being late to market also might help, taking a bigger picture approach than rivals seeking to win the ‘first’ tagline.

But if Three is going to be a serious competitor, it has to evolve its image.

Chasing after the data-intensive consumers is all well and good, but this is only one segment. Presenting itself as a challenger to the status quo is all well and good, but it doesn’t create a sense of robustness and heritage. Colourful marketing campaigns and undermining competitors with cheeky messaging is all well and good, but it doesn’t appeal to more conservative consumers.

If Three wants to compete with the big boys of the UK telco industry it has to present itself as a brand which is robust, dependable, reliable, competitive, consistent, mature and creative. It might be ticking a few of these boxes at the moment, but not all of them. And until it ticks more, it will remain a brand with a niche appeal.

Make-The-Air-Fair-1

In the UK, we like quirky, we like imagination and we like the underdog, but only to a certain degree. We also like brands we can trust and rely upon, especially when we are going to be paying for a service which is increasingly dominating more aspects of our lives. We’re conservative, especially when dealing with money.

At the moment, Three is like that mate you like going to the pub with. He’s fun, adventurous and there will never be a dull moment as you set the world to right. However, the other telcos are dependable friends which you can go to with real-world problems. When it comes to spending money, most UK consumers will want to side with the dependable friend.

This is evident in the market share statistics over the last couple of years, which have remained largely static. Using Ovum’s WCIS, O2 leads the UK for mobile subscriptions with 36%, EE sits in second with 33% and Vodafone holds 20%. Three is in a distant fourth with 11% market share of mobile subscriptions in the UK.

Three has created an interesting brand identity, and it has worked in attracting some customers, but this is a niche. If Three wants to steal subscriptions from its competitors, it has to be more than a plucky outsider, it has to grow up and evolve its offering.

This is not to say Three does not have an excellent opportunity.

As mentioned above, 5G is going to encourage consumers to use more data than ever before. This will be the case over the coming months, and these trends will gather momentum as designed-for-5G services and applications emerge. Three is in a good position here, both in terms of the brand heritage and the spectrum assets it controls.

What is also worth noting is the focus is not only on 5G. Three is refarming huge swathes of 3G spectrum into 4G and a £2 billion investment in the network will also help 4G speeds improve across the country. However, with this article focusing on 5G, you can see from the image below the telco is certainly creating a more stable foundation to grow in the future.

rhdr

The constant issues with broadband has created an environment which is ripe for disruption. Just look at the progress alt-nets are making in the fixed world. With its UK Broadband acquisition, Three can offer FWA solutions to broaden the portfolio of services it can offer customers.

Looking at the FWA offering, there is a great opportunity for Three to enter the world of convergence. If priced correctly and the right data allowances offered, bundled FWA and mobile contracts could challenge BT in its pursuit of providing a seamless connectivity experience everywhere and anywhere.

Perhaps the most interesting aspect of this product is the plug-and-play nature. In theory, customers should be able to open the box, plug in the router and away it goes. No more waiting for engineers, it’s the simplicity which will sell it. A beta test is underway in Camden to ensure the reality of plug-and-play lives up to the promise, but this is a very interesting approach.

And finally, onto pricing. Being last to market offers Three a chance to see what rivals are going to charge. Yes, the rivals might be able to attract early adopters, but undercutting competitors on price could work very well, especially as 5G enters the mainstream. Both EE and Vodafone have unveiled very expensive tariffs, so it will be interesting to see how Three approaches this dilemma.

The new text-to-switch initiative from Ofcom will also help here. No-longer will customers have to endure the painful process of hopping around a call centre to cancel a contract, it is now (theoretically) a simple SMS.

Three does have a genuine opportunity to make substantial headway in the 5G era, but it needs to evolve its image and offering. Albert Einstein once said ‘the definition of insanity is doing the same thing over and over again but expecting different results’; if Three’s approach to 5G is the same as 4G, it might make gains, but it would not be a surprise to see the competitive landscape in the UK remain the same.

We would not like Three to ditch the image which has created, it clearly works with some demographics, but it needs to have more than one string to the bow if it is going to improve on an 11% market share.

Ofcom adds some colour to ‘fairness’ campaign

It might sound like a political punchline, but the ‘Fairness Framework’ from Ofcom is starting to take shape, though whether it forces telco transparency remains to be seen.

The Fairness Framework is effectively incremental progress to address what some would suggest is an unfair dynamic between buyer and seller in the wider communications industry. While there is a gluttony of comparison websites which bill themselves as a means to cut-through the white-noise generated by the telcos, it is still an arduous campaign to find the best deal available, and then subsequently get out of current contracts.

Most would consider themselves above the risks and pitfalls of suspect and nefarious contracts, though campaigners believe this is not the case. In September last year, the UK Citizens Advice Bureau (CAB) launched a super-complaint with the Competition and Markets Authority (CMA) suggesting service providers over-charging renewing customers to bring in an extra £4.1 billion a year.

In today’s announcement, Ofcom has provided more detail on the ‘Fairness Framework’.

Firstly, Ofcom has be conducting a review as to how to create a mechanism to ensure clearer, fairer deals for people who pay for mobile services and handsets together. Final proposals will be made public over the next couple of weeks.

Secondly, the team is currently reviewing broadband pricing practices, attempting to understand why some pay more than others for similar or exactly the same services. Vulnerable members of society are the ones who at the greatest risk here. Another initiative ties into this area, attempting to force the telcos to provide clear, honest information for broadband shoppers. Ofcom is also attempting to introduce rules which will compel service providers to be more transparent when their initial contract is up and explain their best available deal.

Another initiative will allow mobile phone customers to switch provider with a text message, while there are plans underway to introduce a new compensation scheme to provide money back for broadband and landline customers when things go wrong.

For the moment, the majority of this announcement should be attributed to the ‘work in progress’ column. Some of these initiatives will be written into regulation sooner rather than later, though most will still have to be cast out for public consultation. This is a mid-year report card more than anything else.

That said, it’s not a bad thing. In opposition to the stance of the telcos, Ofcom is attempting to be as transparent as possible with its work.

This is the objective of Ofcom here; transparency. For years, the telcos have operated partly behind a curtain of obscurity. Contracts were complicated due to a lack of transparency, and this is what Ofcom is looking to tackle. It is nice to see progress is being made, but we’re not quite there yet.

Mobile dampening desire for fixed broadband – Pew Research

The Pew Research Centre has unveiled research suggesting home broadband products are becoming less attractive as mobile wins the digital hearts and minds of the US.

Although the laws of physics suggest fixed connectivity, at least when you have a fibre connection, will always be the best gateway to the digital world, progress in the mobile world seems to be dampening consumer enthusiasm.

According to the research, 37% of US adults say they mostly use a smartphone when accessing the internet. For those aged between 18 and 29, 58% of the respondents to the survey suggest mobile devices are the primary gateway to the internet. The numbers are less striking as the ages increase, though all of the demographics demonstrated an increase. Mobile is increasing becoming the primary access point to the digital world.

Pew Research

Although this will be encouraging to MNOs, those telcos who offer fixed products, or a converged service, might be slightly worried.

27% of the respondents to the survey claim they do not subscribe to a home broadband service, with more and more suggesting the reason for this is do to mobile. If they can do everything they need to do through a mobile tariff, why would they double down and make their connected experience more expensive by paying for a home broadband service as well?

45% of those who do not have a home broadband service suggest it is because of mobile, this is a notable increase from the 27% who cited this reason in 2015. 80% of this segment have also said they do not have any interest in purchasing a home broadband service in the future. 17% of US consumers now only have a mobile broadband subscription, increasing from 8% in 2013.

Although some might simply shrug at these data points, what it worth noting is that the smartphone-only users are generally from the lower-income demographics. If there was more of an even spread across all demographics, this would be an interesting trend worth keeping an eye-on, however as it is largely limited to low-income families this is evidence of the digital divide in action.

Interestingly enough, these trends can also be applied to the various different education levels. 26% of adults who have a high school education or less are smartphone only internet users, a number which drops to 16% with some college experience and only 4% of graduates feature in this category.

Although there is a drive from the FCC and government to improve accessibility and affordability of home broadband services in the US to counter the digital divide, research like this suggests the initiatives are not have the desired impact.

Maine gets tough on telcos over data economy

Maine Governor Janet Mills has signed new privacy rules into law, demanding more proactive engagement from broadband providers in the data-sharing economy.

While the rules are tightening up an area of the digital world which is under-appreciated at the moment, it will have its critics. The law itself is targeting those companies who delivering connectivity solutions to customers, the telcos, not the biggest culprits of data protection and privacy rights, the OTTs and app developers.

The rules are applicable to broadband providers in the state, both mobile and fixed, and force a more proactive approach in seeking consent. Telcos will now be compelled to seek affirmative consent from customers before being allowed to use, disclose, sell or permit access to customer personal information, except in a few circumstances.

As is on-trend with privacy rules, the ‘opt-out’ route, used by many to ensure the lazy and negligent are caught into the data net, has been ruled out.

There are also two clauses included in the legislation which block off any potential coercing behaviour from the telcos also:

  • Providers will not be allowed to refuse service to a customer who does not provide consent
  • Customers cannot be penalised or offered a discount based on that customer’s decision to provide or not provide consent

This is quite an interesting inclusion in the legislation. Other states, California for example, are building rules which will offer freedoms to those participating in the data-sharing economy if the spoils are shared with those providing the data (i.e. the customer), though the second clause removes the opportunity to offer financial incentives or penalties based on consent.

This is not to say rewards will not be offered however. There is wiggle room here, zero-rating offers on in-house services or third-party products for example, which does undermine the rules somewhat.

It is also worth noting that these rules only pertain to what the State deems as personal data. Telcos can continue to monetize data which is not considered personal without seeking affirmative consent, unless the customer has written to the telco to deny it this luxury. Personal data is deemed as the following categories:

  • Web browsing history
  • Application usage history
  • Geolocation
  • Financial
  • Health
  • Device identifiers
  • IP Address
  • Origin and destination of internet access service
  • Content of customer’s communications

What is worth noting is this is a solution to a problem, but perhaps not the problem which many were hoping would be addressed.

Firstly, the telcos are already heavily regulated, with some suggesting already too much so. There are areas which need to be tightened up, but this is not necessarily the problem child of the digital era. The second point is the issue which we are finding hard to look past; what about the OTTs, social media giants and app community?

The communications providers do need to be addressed, though the biggest gulf in regulation is concerning the OTTs and app developers. These are companies which are operating in a relative light-touch regulatory environment and benefiting considerably from it. There are also numerous examples of incidents which indicate they are not able to operate in such a regulatory landscape.

Although it is certainly a lot more challenging to put more constraints on these slippery digital gurus, these companies are perhaps the biggest problem with the data-sharing economy. Maine might grab the headlines here with new privacy rules, which are suitably strict in fairness, but the rule-makers seem to have completely overlooked the biggest problem.

These rules do not add any legislative or regulator restraints on the OTTs or app developers, therefore anyone who believes Maine is taking a notable step in addressing the challenges of the data-sharing economy is fooling themselves. This is a solution, but not to the question which many are asking.