FCC Chairman convinced by T-Mobile/Sprint concessions

FCC Chairman Ajit Pai has publicly stated he believes the concessions made by T-Mobile US and Sprint are enough to ensure the merger would be in the public interest.

Over the course of the weekend, rumours emerged over concessions the pair would have to make to get the support of the FCC, though rarely are sources so spot on. The merged business will now have to commit to a nationwide 5G deployment within three years, sell Sprint’s prepaid brand and promise not to raise prices during the rollout years, if it wants the greenlight of the FCC.

What is worth noting is this is not a greenlight just yet. Pai has said yes, though he will need a majority vote from the Commissioners. Commissioner Brendan Carr has already pledged his support, and we suspect Michael O’Reilly will in the immediate future also. The Democrats might want to throw a spanner in the works, but this would be largely irrelevant with O’Reilly’s support.

“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in a statement.

“This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

As you can imagine, T-Mobile US CEO John Legere certainly has something to say on the matter.

“Let me be clear,” Legere stated in a blog entry. “These aren’t just words, they’re verifiable, enforceable and specific commitments that bring to life how the New T-Mobile will deliver a world-leading nationwide 5G network – truly 5G for all, create more competition in broadband, and continue to give customers more choices, better value and better service.”

The first commitment made by T-Mobile US and Sprint is a nationwide 5G network. Considering Legere has been claiming his team would be the first to rollout a genuine 5G network for some time, it comes as little surprise the FCC will want to hold him accountable.

Over a three-year period, presumably starting when the greenlight is shown, the new 5G network will cover 97% of the population. 75% of the population will be covered with mid-band spectrum, while the full 97% will have low-band. This is a very traditional approach to rolling out a network, as it meets the demands of capacity and efficiency, though there is a sacrifice on speed.

Perhaps more importantly for the FCC, the plan also covers objectives to bridge the digital divide. 85% of the rural population will be connected during this period, increasing to 90% after six years. This is not to say all the farmers fields will be blanketed in 5G, though it does help provide an alternative for the complicated fixed broadband equation in the rural communities.

Moving onto the divestment, selling Sprint’s Boost prepaid brand seems to be enough to satisfy the competition cravings of Pai. What is worth noting is this will not be a complete break-away from the business as it will have to run on the T-Mobile US network. Unfortunately, MVNOs in the US are not as free to operate as those in Europe, as switching the supporting network would mean have to change out all the SIM cards.

This becomes complicated as you do not necessarily know who your customers are in a prepaid business model. The situation certainly encourages more competition, it will after all not be part of the T-Mobile US/Sprint family anymore, but it is far from a perfect scenario.

Finally, Legere has promised tariffs will not become more expensive during the deployment period, another worry for the FCC should the duo want to meet the ambitious objectives to compete with AT&T and Verizon. However, it does appear Legere is promising 5G tariffs will not include a premium either.

And now onto the other side of the aisle. Commissioner Jessica Rosenworcel has tweeted her opinions on the concessions and it appears she is not convinced.

“We’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”

Rosenworcel has also suggested the decision should be put out for public consultation. We suspect Pai will want to avoid this scenario, as it would be incredibly time-demanding; the Chairman will want the merger distraction off his desk as soon as possible.

Commissioner Geoffrey Starks is yet to make a comment, but DO NOT, I repeat, DO NOT go on his Twitter page if you haven’t watched the latest Game of Thrones episode.

We understand the Democrat and Republican Commissioners are going to be at each other’s throats over pretty much every decision, however trolling any innocent individual with a GoT spoiler is a low blow.

Starks and your correspondent are going to have some issues.

The reality of mobile SD-WAN – what 4G LTE made possible

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. This is the first of a two piece series in which Simon Pamplin, EMEA Technical Sales Director for Silver Peak, looks at some of the enterprise benefits of the latest generations of wireless networking technology.

5G, also known as the fifth generation of mobile wireless technology, is one of the hottest topics in wireless circles today. Indeed, you can’t throw a stone without hitting a plethora of titles, potential use cases and detailed explanations about 5G. While telecommunications providers are in a heated competition to roll out 5G, it is important to reflect on current 4G LTE (long term evolution) business solutions as a preview of what has been learned and what’s possible.

At the same time, the enterprise has experienced its own networking revolution. As cloud computing has become the norm, and more applications and services have migrated for enterprise convenience and flexibility, IT departments have realised that traditional wide area network (WAN) architectures – utilising multiprotocol label switching (MPLS) circuits and conventional routers – cannot keep up. As such, to achieve the highest levels of application performance and security, many organisations have turned to software-defined WAN (SD-WAN), the networking technology that connects users directly and securely to applications using any underlying transport, including 4G and broadband internet.

SD-WAN enables enterprises to shift to a business-first networking model, where the network enables the business, rather than the business conforming to the constraints of existing WAN approaches. Instead of being a constraint, the WAN becomes a business accelerant that is fully automated and continuous, giving every application the resources it truly needs, while delivering 10 times the bandwidth for the same budget – ultimately achieving the highest quality of experience to users and IT alike.

This is part one of a two-part article series that will explore the effect of 4G and 5G on enterprise networking, as well as the SD-WAN journey through the evolution of these wireless technologies.

Mobile SD-WAN is a reality

4G LTE commercialisation is continuing to expand. According to the GSM (Groupe Spéciale Mobile) Association, 710 operators have rolled out 4G LTE in 217 countries, reaching 83 percent of the world’s population. The evolution of 4G is transforming the mobile industry and is setting the stage for the advent of 5G.

Mobile connectivity is increasingly integrated with SD-WAN, along with MPLS and broadband WAN services today. The reason being is that 4G LTE represents a very attractive transport alternative, as a backup or even an active member of the WAN transport mix to connect users to critical business applications. In some cases, 4G LTE might be the only choice in locations where fixed lines are not available or reachable. Furthermore, an SD-WAN can optimise 4G LTE connectivity, and bring new levels of performance and availability to mobile-based business use cases by bonding multiple 4G LTE connections to deliver the highest levels of network and application performance.

Increasing application performance and availability with 4G LTE

Best in class SD-WAN solutions enable customers to incorporate one or more low-cost 4G LTE services into the WAN transport mix. Indeed, all the capabilities of the SD-WAN platform – including packet-based link bonding, dynamic path control, and path conditioning – can be supported across multiple LTE links. This ensures always-consistent, always-available application performance even in the event of an outage or degraded service.

With an advanced business-driven SD-WAN edge platform, IT can also incorporate sophisticated network address translator (NAT) traversal technology to eliminate the requirement for provisioning the LTE service with extra-cost static IP addresses. Holistic solutions offer management software that enables the prioritisation of LTE bandwidth usage based on branch and application requirements – active-active or backup-only. This kind of solution is ideally suited toward retail point-of-sale and other deployment use cases where always-available WAN connectivity is critical for the business.

Mobile SD-WAN: innovative connectivity solutions to real world problems

An example of an innovative mobile SD-WAN service is swyMed’s DOT Telemedicine Backpack, powered by an SD-WAN hardware platform. This integrated telemedicine solution enables emergency services first responders to connect to doctors and communicate patient vital statistics using real-time video anywhere, anytime, thereby greatly improving and expediting care for emergency patients. Using a lifesaving backpack provisioned with two LTE services from different carriers, the SD-WAN can continuously monitor the underlying 4G LTE services for packet loss, latency and jitter. In the case of transport failure or brownout, the SD-WAN automatically initiates a sub-second failover so that voice, video and data connections continue without interruption over the remaining active 4G service. By bonding the two LTE links together with the SD-WAN, swyMed can achieve an aggregate signal quality in excess of 90 percent, bringing mobile telemedicine to areas that would have been impossible in the past due to poor signal strength.

Prepare for the 5G future

The adoption of 4G LTE is already a reality. As well as evangelising SD-WAN to end-users, service providers have a vital and value-added role in the design, installation, deployment, repair, and ongoing monitoring of managed SD-WAN services. Indeed, service providers are already taking advantage of the distinct benefits of SD-WAN to offer managed SD-WAN services that leverage flexible and mobile 4G LTE to their customers.

As the race for the 5G gains momentum in the UK – with it expected to be available in multiple cities this year – service providers will no doubt look for ways to drive new revenue streams to capitalise on their initial investments. The next article of this two-part series will discuss the rise of 5G, and how SD-WAN will help service providers to transition from 4G to 5G, as well as enable the monetisation of a new wave of managed 5G services.

 

100508_Simon Pamplin_v1Simon Pamplin is the EMEA Technical Sales Director for Silver Peak and a regular speaker at events on topics ranging from the latest storage technologies and server virtualisation to the current shift in data networking towards SD-WAN, as well as the latest developments in the technology. With over 20 years’ experience in enterprise IT, Simon has worked for IP, SAN and hyper-convergent companies and is driven by new technology and the business benefits it can bring.

T-Mobile and Sprint ponder concessions to force through merger

T-Mobile US and Sprint are weighing up the sale of one of the pair’s prepaid brands in an attempt to woo decision makers into greenlighting the divisive merger.

Dating back to April 2018, you will be forgiven for forgetting this saga is still an-going debate in the US. With privacy scandals, the Huawei drama and BT’s dreadful logo stealing all the column inches, the debate over whether T-Mobile US and Sprint should be allowed to merge their operations has been relegated below the fold. But it is still a thing.

The countdown clock, the 180 days the FCC gives itself to approve mergers, spent a lot of time on pause, though the longer the process takes the more likely it appears the answer will be no. If the relevant authorities were looking at the information in front of them, an answer would surely have been given by now, but sceptics might assume the FCC is desperately searching for a reason to say no.

According to Bloomberg, the duo is prepared to make concessions to force through the deal. These concessions include the sale of one prepaid brand, a pledge to finish the rollout of a 5G network in three years and promises not to raise prices during this deployment.

In terms of the timeline, crunch day is fast approaching. The FCC 180-day review is set to come to a close at the end of June, though the deal also has to be signed-off by the Department of Justice. With decision time on the horizon, egos will have to be stroked and arguments set in stone.

The issue at the heart of this debate is focused on competition. Critics of the deal suggest consumers who are at the low-end of the tariffs scale will effectively be punished with higher prices in a market with only three providers. T-Mobile US and Sprint have suggested prices would be kept down in an attempt to compete with AT&T and Verizon, though more than paper-thin promises will be needed.

Selling off one of the prepaid brands would help to preserve competition in this segment, offering more choice for those consumers who do wish to, or cannot afford to, invest in postpaid contracts. It is believed Sprint’s Boost brand is the one facing the chop, with the Virgin Mobile and Metro brands to remain in the potentially merged operations.

Peter Adderton, who sold Boost to Sprint in 2006, has previously stated he would invest in the divested brand. Adderton has been a critic of the T-Mobile/Sprint merger, though if there is a chance to make money entrepreneurs have a way of changing their tune.

Reports have been emerging over the last couple of weeks suggest regulators are still concerned over competition despite assurances made by executives. The Wall Street Journal suggests the deal would not go ahead with the proposed structure of the company, a claim which T-Mobile US CEO John Legere rejects, suggesting there is still some stroking to be done.

Although trying to figure out which way this deal will go is little more than guess work at the moment, there is a feeling it is not going the way T-Mobile and Sprint would want. Rumours are only rumours, but the familiarity of the reports is starting to add weight. It does sound like T-Mobile and Sprint will have to make some considerable concessions to get the greenlight.

Senators call for 5G slowdown because weatherman won’t be accurate

Two US Senators have asked President Trump and the FCC to halt spectrum usage on the 24 GHz spectrum brands as it would decrease the accuracy of weather forecasts.

Democrat Senators Ron Wyden (Oregon) and Maria Cantwell (Washington) have jointly penned a letter for the Oval Office suggesting use of the 24 GHz spectrum brands should be blocked as it would interfere with the accuracy of weather forecasts. The pair claim accuracy of these forecasts could be impact by as much as 30%, similar to the guesswork offered in the 1980s.

“American advancement in 5G networks and devices is critically important to maintaining global leadership,” said Wyden. “It’s just as imperative, however, for our nation to do 5G right. If the FCC continues advocating for standards that fail to pass scientific scrutiny, their decision will lower America’s standing in this global race for 5G leadership and risk serious damage to our economy and national security.”

Although linking weather forecasts back to national security might cause some to scoff, the pair suggest this insight is used by the navy, military and coast guard to help plan operations. Some of these operations’ focus on warning and preparedness when it comes to dealing with tornadoes, hurricanes and typhoons.

“Millions of Americans live in areas under increasing threat from hurricanes, tornadoes, and other extreme weather events,” said Cantwell. “The US military and our aviation, maritime, and numerous other industries rely on accurate forecasting information every day to ensure safety and make crucial decisions.

“We can’t afford to undermine our data and set the quality of weather forecasting back to the 1970s. Instead of overruling or ignoring the experts, the FCC and the administration should look at the science, listen to experts, and take the time needed to get this right.”

While the Senators are seemingly jumping on the bandwagon in an attempt to generate PR inches, the concerns of the use of these frequencies have dated back to 2010. The National Academies of Sciences, Engineering and Medicine put forward a report in 2010 suggesting 30% of the data collected on the 23.8-gigahertz signal would eliminate 30% of all useful data, making a significant impact on the ability to forecast conditions accurately.

The US National Oceanic and Atmospheric Administration (NOAA) and National Aeronautics and Space Administration (NASA) have now completed an investigation, which is yet to be made public, on the effects of interference from usage in neighbouring frequency bands.

Water vapour in the atmosphere emit very faint signal which is used by probes to monitor energy radiating from Earth at this frequency. This data offers insight to humidity in the atmosphere below helping to predict how storms and other weather systems will develop over the short- and medium-term future. The 23.8 GHz frequency is used to measure water vapour, 36-37 GHz for rain and snow, 50.2-50.4 GHz for atmospheric pressure and 86-92 GHz for clouds and ice.

During the most recent spectrum auction, the FCC sold licences for frequencies in the 24.25-24.45 GHz and 24.75-25.25 GHz but set noise limits on the 5G network of –20 decibel watts. The FCC might suggest this is protection enough, however the European Commission put limits of –42 decibel watts for 5G base stations, and the World Meteorological Organization (WMO) is recommending –55 decibel watts.

While the two Senators are not necessarily complaining about the limits, the pair are asking the FCC to clarify a few different notes:

  • Provide details on investigations that support the FCC’s assumptions that emission limits will not negatively impact applications in adjacent frequency bands
  • Provide details on the FCC’s public interest analysis, including any cost-benefit analysis, which addresses the loss of investments made in weather-sensing satellites, the costs to public safety and national security, and to the nation’s commercial activities that rely on weather data
  • Plans if the International Telecommunications Union (ITU) does not accept the emissions limits in the 24 GHz band
  • How the FCC addressed the concerns of the NOAA, NASA and other bodies

It does appear the Senators are looking for a stick to swing as opposed to any specific objections. That said, these are some valid concerns.

Numerous businesses and industries rely on accurate weather forecast, not to mention the security and safety of US citizens. In Europe, we are not at the mercy of some severe weather conditions, or not to the degree the US is. You only have to look at the $65 billion in damages caused by Hurricane Irma in 2017 or the 3,000 lives claimed during Hurricane Maria in Puerto Rico to understand the importance.

Microsoft and Sony join up on AI and cloud gaming

Microsoft and Sony have signed a memorandum of understanding to jointly develop cloud systems for game and content streaming, and to integrate Microsoft’s AI with Sony’s image sensors.

This is another step on Sony’s journey to transform from a console and title seller to a game streaming service platform. Microsoft’s leadership in both cloud computing, its Azure cloud platform, and the global footsteps of its datacentres makes it an ideal partner to Sony.

The collaboration will also cover semiconductors and AI. Sony has been a leader in image sensors (among its clients is the iPhone including the latest XS Max model), and the integration of Microsoft Azure AI will help improve both the imaging processing in the cloud and on device, what the companies called “a hybrid manner”. Microsoft’s AI will also be incorporated in Sony’s other consumer products to “provide highly intuitive and user-friendly AI experiences”, the companies said.

“Sony has always been a leader in both entertainment and technology, and the collaboration we announced today builds on this history of innovation,” said Satya Nadella, CEO of Microsoft, in a statement. “Our partnership brings the power of Azure and Azure AI to Sony to deliver new gaming and entertainment experiences for customers.”

Kenichiro Yoshida, president and CEO of Sony agreed. “I hope that in the areas of semiconductors and AI, leveraging each company’s cutting-edge technology in a mutually complementary way will lead to the creation of new value for society,” he said.

Looking to the future of the PlayStation platform, Yoshida said, “Our mission is to seamlessly evolve this platform as one that continues to deliver the best and most immersive entertainment experiences, together with a cloud environment that ensures the best possible experience, anytime, anywhere.”

Gaming is following the trend of video and music from one-off ownership selling to access streaming. But gamers are more sensitive to the visual quality and, above everything else, lagging. So to provide good experience to convert gamers to long-term streaming subscribers, the platform needs to guarantee superb connection. This is where Microsoft’s datacentre footsteps and the upcoming 5G networks will fit well with the “game” plan.

Another key success factor, similar to video streaming market, is the content. Gamers’ taste can be fast changing and frivolous. That is why the companies also stressed the importance to “collaborate closely with a multitude of content creators that capture the imagination of people around the world, and through our cutting-edge technology, we provide the tools to bring their dreams and vision to reality.”

No information on the size of investment or the number of staff involved in the collaboration is disclosed, but the companies promised to “share additional information when available”.

Don’t ignore Huawei’s ban on buying US components

While everyone is focusing on the ban on selling in the US, the ban on buying US components is a much more interesting chapter of the Huawei saga.

President Donald Trump has dropped the economic dirty bomb on China and it’s dominating the headlines. Although Huawei, or China, are not mentioned in the text, the Executive Order is clearly a move to stall progress made in the telco arena. China is mounting a challenge to the US dominance in the TMT arena, and this should be viewed as a move to combat that.

There are clearly other reasons for the order, but this should not be ignored. The security argument, albeit an accusation thrown without the burden of concrete evidence, is a factor, but never forget about the capitalist dream which underpins US society.

However, although most are focusing on Huawei’s inability to sell components, products and services in the US market, there might be an argument the ban on purchasing US components, products and services is more important, impactful and influential.

“This action by the Commerce Department’s Bureau of Industry and Security, with the support of the President of the United States, places Huawei, a Chinese owned company that is the largest telecommunications equipment producer in the world, on the Entity List,” said Secretary of Commerce Wilbur Ross. “This will prevent American technology from being used by foreign owned entities in ways that potentially undermine US national security or foreign policy interests.”

While we will focus on the ban on purchasing US components, products and services for this article, it is worth noting the ban on Huawei selling in the US will have an impact.

Rural telcos in the US have mostly been against any ban on Chinese companies. In October 2018, Huawei made a filing with the FCC arguing its support for rural telcos is underpinning the fight against the digital divide and a ban would be disastrous for those subscribers. Michael Beehn, CEO of MobileNation, was one of those who argued against the ban, suggesting the cost-effectiveness of Huawei allowed his firm to operate. Without the advantage of nationwide scale, these organizations will always struggle when the price of networks is forced north.

While the US is a massive market, with huge opportunities to maximise profits, not being able to sell in the US is not going to have a significant impact on Huawei. Its customers are the rural telcos not the national ones. Huawei has not managed to secure any major contracts with the big four, therefore it is missing out on something which it never had. Huawei has still managed to grow sales to $105 billion without the US, therefore we believe this ban is not going to be a gamechanger.

However, it is the ban on purchasing US components, products and services which we want to focus on here.

Huawei is not outrightly banned from using US technologies and services, however, those companies who wish to work with the dominant telco vendor will have to seek permission to do so beforehand. The US can now effectively how strategically it wants to twist the knife already dug deep into Huawei’s metaphorical chest.

Although we’re not too sure how this will play out, Huawei’s business could be severely dented by this move.

Huawei recognises 92 companies around the world as core suppliers to the business. It will have thousands of suppliers for various parts of the business, but these 92 are considered the most important to the success of operations. And 33 of them are US companies.

Some are small, some are niche, some are more generic, and some are technology giants. The likes of Qualcomm, Intel and Broadcom all have interests in keeping the US/Chinese relationship sweet, though more niche companies like Skyworks Solutions, Lumentum and Qorvo have much more skin in the game. Firms like NeoPhotonics, who are reliant on Huawei for 46% of its revenues, might well struggle to survive.

Huawei will be able to survive this move, it has been preparing for such an outcome, but you have to wonder what impact it will have on its products and credibility.

HiSilicon, the Huawei-owned semiconductor business, has been ramping up its capabilities to move more of its chip supply chain in-house, while the firm has reportedly been improving the geographical diversity of its international supply chain. According to the South China Morning Post, not only has Huawei been moving more operations in-house, it has also been stockpiling US components in the event of the procurement doomsday event.

A similar ban on procuring US components, products and services was placed on ZTE last year and it almost crippled the firm. Operations were forced to a standstill due to the reliance on US technology. Huawei has never been as dependent on the US, though it seems the lessons were learned from this incident.

The big question is what impact a ban would have on the quality of its products.

Huawei might preach the promise of its own technology and the new suppliers it will seek/has sought, but there is a reason these 33 US companies were chosen in the first place. Either there is/was a financial benefit to Huawei in these relationships, or they were chosen because they were best in class.

Huawei is a commercial organization after all, it wants to make the best products for the best price. There will certainly have been compromises make during these selections, either paying more for better or sacrificing some quality for commercial benefits, and having to make changes will have an impact. Huawei, and its customers, will have fingers and toes crossed there is no material impact on the business.

The other aspect to consider is disruption to operations. ZTE found out how detrimental dependence on a single country can be, and while Huawei has mitigated some of this impact, it remains to be seen how much pain could be felt should the ban be fully enforced. Might it mean Huawei is unable to scale operations in-line with customer deployment ambitions? Could competitors benefit through these limitations? We don’t know for the moment.

The ban on selling in the US might sound better when reeling off headlines, but don’t forget about Huawei’s supply chain. We think there is much more of a risk here.

A look at how US suppliers have been hit by Huawei news

President Trump’s Executive Order and the decision to place Huawei on the US ‘Entity List’ is going to dominate the headlines over the next couple of days, but what will be the impact on US suppliers?

During the ZTE saga last year, where the firm was banned from using US components in its supply chain, several US firms faced considerable difficulty. With Huawei potentially facing the same fate, the next few days will certainly make for uncomfortable reading for some.

Although the main focus of the news has been on the Executive Order banning any Huawei components or products in US communications infrastructure, the entry onto the ‘Entity List’ should be considered as big. This is effectively the commerce version of a dirty bomb, and some might suggest it is being used to disrupt Huawei’s supply chain and dent its ability to dominate the telco vendor ecosystem.

But what is the impact of losing a major customer? What are the realities these US firms will face if the Secretary of Commerce turns down their application to work with Huawei?

Speaking to members of the financial community, it could be pretty severe.

Losing a customer which accounts for 2-3% of total revenues would be a concern but nothing major. For 5% of revenues, this is a headache, but something the spreadsheets could most likely tolerate. When you start getting to 10% the panic button needs to be hit.

A customer which accounts for 10% of total revenues is a major prize. Losing this revenue would result in a complete rethink in how the business operates, as this could effectively wipe out any profit for the year. If you are in the services industry, it isn’t as much of an issue, but when it comes to manufacturing and components, there are so many different implications.

For example, in the first instance you have to consider how this hits budgets, forecasts, resource allocation and manufacturing strategy.

Sales staff are probably the safest here, as the lost revenues will have to be replaced as soon as possible with new customers, but what about the marketing strategy? Do you want to replace the lost capacity with short-term customers (i.e. quicker) or long-term customers which may offer larger orders?

On the R&D side, does a company have dedicated resource working on projects for that customer? What will these staffers do now? Can those projects be re-orientated for another customer?

Finally, on the manufacturing side, there are all sorts of issues. How will the loss of revenue impact the resource recovery plan? How are the manufacturing facilities configured – do you have to close plants?

Another consideration is on your own supply chain and procurement strategies. When supplying products to said customer, you will have to source your own raw materials. Will the loss of this customer result in contracts with suppliers having to be re-negotiated? Will this mean quantity discounts are now impacted?

These are all the considerations when you are losing a customer worth 10-15% of total revenues. Anything above this and you would have to question whether the company can survive, or at least face a major restructure.

Share price of US suppliers to Huawei
Company Share price
Qualcomm -3.18%
Xilinx -4.1%
Western Digital -1.12%
Marvell Technology +0.5%
Seagate Technology +0.43
Texas Instruments +0.045
Skyworks Solutions -4.56%
ON Semiconductor -0.99%
Qorvo -5%
NeoPhotonics -12.9%
Flex -1.13%
Finisar -2.05%
II-VI -2.86%
Maxim Integrated -0.99%
Analog Devices -2%

All share prices at the time of writing (UK: 16:20) – in comparison to market close on 15 May 2019

Looking at Qorvo, executives at semiconductor supplier might certainly have something to worry about. Huawei is features in the ‘top three’ customers for the firm, while on the most recent earnings call, the team discussed the success of Huawei’s smartphone division and in particular the ‘P’ series as a contributor towards a successful quarter. Some have suggested 11% of Qorvo revenues are dependent on Huawei.

Skyworks Solutions, another semiconductor company, has been suffering in recent years. With large parts of the business reliant on smartphone shipments, the global slowdown has been tough. The team work with Huawei on both the mobile and infrastructure side, and while it does work with many tier one firms in both segments, the market is clearly worried about a competitive field and an inability to work with one of the largest telco vendors worldwide.

Both Qorvo and Skyworks supply radiofrequency chips to Huawei, which might have an effect on the Chinese vendors ability to manufacture devices. That said, the supply chain disruption will not be anywhere near as damaging to Huawei as it was to ZTE as it has HiSilicon which manufacturers many of its components.

Xilinx is another which seems to have worn the news quite negatively. The team work with Huawei’s enterprise business unit, helping with video streaming challenges. This might be the smallest business group at Huawei, though the 5G euphoria is set to offer considerable opportunities. Xilinx share price has been recovering after a 17% drop in April, though this has proved to be another set-back.

NeoPhotonics is a company which should be seriously concerned. As a customer, Huawei accounted for more than 46% of the total revenue across 2018. The executive team is relatively open with investors regarding this fact, and this might have been factored into any decision to invest, though this is a massive loss for the business to absorb.

Lumentum is another business which is somewhat reliant on Huawei. While we were not able to nail down specific numbers, the firm supplies fiber optic components to Network Equipment Manufacturers (NEM) and considering there aren’t many of them to supply to, losing Huawei will be a headache.

At Finisar, Huawei described as one of the company’s major customers, though it has seemingly been diversifying its customer base in recent years. In 2017 and 2016, Huawei accounted for 11% and 12% of the annual total respectively, though the percentage is not listed for 2018. This is because the percentage has dipped below 10%, though we were unable to ascertain what the figure now is.

We might have to wait a few weeks to understand the full extent of the impact, and how stringently the US will enforce Huawei’s entry onto the ‘Entity List’, but we suspect there will be some very stressful meetings taking place in numerous offices throughout the US.

Monetize 5G with New Business Models

Communication service providers (CSPs) that want to become digital service providers (DSPs) need to be able to innovate in digital time. That starts by putting the right business support systems (BSS) in place so they can engage with new partners and tap into the new use cases business models that will be made possible by 5G.

In the lead-up to 5G’s deployment, CSPs who start evolving their monetization solutions today will be in a much better position to capitalize on and monetize new opportunities right out of the gate — and also gain the scalability and agility needed to generate more revenue from existing sources now.

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Samsung confirms UK launch-date for Galaxy S10 5G

Although it is easy to get lost in the 5G hype, this is an important announcement to take note of; Samsung’s 5G device will be available in the UK from June 7.

According to the latest statistics from Strategy Analytics, Apple is leading the smartphone market share rankings, while Samsung sits in second place. The duo has created a clear gap between everyone else, collecting just over 60% of all smartphone shipments over the final quarter of 2018.

Samsung and Apple are the two most trusted and popular brands in the UK. There might be other 5G smartphone buzz floating through the news, but Samsung has the weight of credibility in the eyes of the UK consumer; people might start paying much more attention to 5G now.

“The Galaxy S10 5G unlocks an entirely new mobile experience to prepare consumers for a world of possibilities: a larger 6.7-inch Dynamic amoled display; a new 3D Depth Camera with Live focus video; and the biggest battery available in the Galaxy S range, the Galaxy S10 5G is a visionary, ultra-premium device for those looking to stay ahead of the curve,” said Kate Beaumont, Director of Innovation, Technology and Services at Samsung.

Featuring enhanced display, upgraded camera features and an improved 4,500mAh3 battery, the traditional play on hardware is present to justify the price, though tribute has been paid towards the usecases of tomorrow. A 3D depth sensor has been introduced for the benefit of augmented reality.

Pricing for the handset has not been released just yet, though customers will be able to pre-order through Samsung experience stores from May 22. The devices will also be made available through EE and Vodafone, the later of which has confirmed the launch of its 5G network on July 3. EE is yet to announce a date to launch its own 5G network, though we suspect the Vodafone news will spur some activity before too long.

Although much of the 5G news will appear as somewhat of a blur for consumers in many markets, this Samsung announcement could cut through the noise. Apple and Samsung hold very trusted positions in the UK and also have the marketing budgets to make an impact. With Apple not launching its own 5G device until 2020, and other available devices having little credibility in the eyes of the consumer, Samsung could make the 5G euphoria real.

What is worth noting is that initial experiences are unlikely to meet the lofty expectations. The device might not be up to scratch, nothing is perfect first time around, while the coverage offered by EE and Vodafone will be incredibly limited. During the first phase of the launch, nine cities will be covered by both of the operators, though this will not be city-wide coverage. The likely scenario is going to be small pockets of busy traffic and transport hubs.

We’ve been waiting for quite a while and now it seems 5G is finally becoming real.

UK is the tech start-up centre of Europe – research

A new report from Tech Nation has crowned the UK as the European hotspot for technology start-ups, and fourth worldwide for scale-up investment after US, China and India.

While the US led the rankings by a considerable margin, the UK managed to attract 5% of global high-tech scaleup investment, with capital investments in UK firms topping £6.3 billion for 2018. Digging down into the details, Tech Nation estimate the fintech firms are doing even better, attracting £4.5 billion of investment between 2015 and 2018, with the UK leading the world.

“The UK continues to exceed all predictions when it comes to tech growth,” said Gerard Grech, CEO of Tech Nation. “This report shows how the UK is a critical hub when it comes to global technology developments, with scale-up tech investment being the highest in Europe, and only surpassed by the US, China and India. This is a testament to the innovation, ambition and tenacity of tech entrepreneurs across the UK.”

The claim itself is based on various datasets, including information from PitchBook. By identifying the number of scale-up companies in each of the determined countries, and the value of investments made into these companies, Tech Nation has drawn-up the ranking. Scale-up companies are identified as those which have either achieved employment or revenue growth of 20% for two consecutive years and have a minimum of 10 employees.

The US is leading the rankings, which will come as a surprise to few considering the dominance of Silicon Valley on the technology industry, with China coming in second and India coming in third. US firms attracted 49.3% of the world’s scale-up investment, while China accounted for 20.4%.

The total scale-up investments made in UK firms was also 2.5X the value of what would be expected for a nation the size of the UK. In fact, tech scaleup deals delivered £5 billion of the £6 billion investments made in tech companies in the UK across 2018. AI seems to have taken the crown, accounting for £1.3 billion of the total.

Critically, this demonstrates the work which has been done to attract and encourage innovation, investment and start-ups in UK society is working. Perhaps there is some method to the government madness. Looking forward, all the signs seem to be heading in the right direction. With 5G networks on the horizon, the catalyst for growth is about to emerge.

5G will not necessarily change the world overnight, but the power of the networks has the potential to foster the unicorns of tomorrow. This is a network which will deliver new services in the same way as 4G did, demonstrating the importance of being one of the first to scale the connectivity boom.

The US led the deployment of 4G networks did not spur the economy into any great revolution, but the tools offered allowed innovation. Companies like Uber scaled because evolution of the networks, while an entire new segment of the economy was allowed to flourish. Without the connectivity tools to play with, these companies would have not had the potential to scale; the same can be said about 5G.

5G offers an opportunity to create new products and services. Artificial intelligence, cyber security, latency, MEC and high-consumption/speed data-applications can all exist without 5G, but they are more attractive, practical and viable with the next evolution of the network. Uber could have existed without 4G, but it is a disruptive success because of it. Joe Bloggs cannot conceive what products and services will be available over the next couple of years, but the right tools have to be in place to ensure the innovators can scale them.

5G won’t change the world, but it will offer the opportunity for innovators to create value for themselves, customers and the national society which fosters them.

What might be a hurdle before too long are the deployment plans of the UK telcos. Having a test-bed to create these products and services in the first instance is all well and good, but soon enough these start-ups will need customers to scale the business. The faster networks are deployed, the quicker these start-ups can get to market, engage customers, tweak the proposition and potentially create the Uber of the 5G generation.

The UK Government has been looking for ways to shore-up defences against the future, hoping to give the economy and society the greatest opportunity to thrive. This is why fibre rollouts, or mobile coverage gains are so important now even if there is no immediate benefit; it’s all about making the country future-proof, ready for the unknown and resilient to the future challenges. And cultivating start-ups is a critical component.

Not only does this have the potential to address the questions surrounding wealth in-equality, it removes the UK dependence on the financial sector. Tech is the dominating growth sector in the global economy, and the best way to reap the rewards is to create an environment suitable for start-ups, the companies who could steal the headlines in the future.

The UK Government has been preaching about the world it is doing to encourage innovation and start-ups over the last couple of years; perhaps this report is vindication of the work which has been done.