Estonia is best digital home away from home, report says

Expats voted Estonia to the top of their digital life quality list in a new survey.

InterNations, a social network for expats, recently conducted a global survey to gauge the perception of digital lives enjoyed by those living in a foreign country. 68 countries were featured. Although most of the findings confirmed the conventional wisdom, the report also threw up a couple of surprises.

Overall, the Nordic countries ranked high, with Finland, Norway, and Denmark all in the top 5 best countries for digital life table. But topping the list is Estonia, which ranked exceptionally high on the e-government index, with 94% of all expats surveyed feeling satisfied with the availability of the country’s administrative services. Estonia also topped the table of unrestricted access to online services. The country, similar to other Baltic and Nordic countries, adopts a light-touch approach towards Internet. Following Estonia on the e-government satisfaction list is Singapore, with Norway coming second on the unrestricted access to online service table.

Unsurprisingly, South Korea, which leads the world in broadband access, also tops the league of high-speed internet at home, followed by Taiwan and Finland. Expats were also asked to rate their experience of cashless payment. The four Nordic countries took the top 4 positions, with Estonia rounding off the top 5. Finland was ranked in the first place, with 96% expats saying they are happy with the experience.

A question that is particularly relevant to expats is how easy it is to get a local mobile number. Here we see a bit surprise. Myanmar, which ranked at the bottom of the overall Digital Life table, came on top in this list, followed by New Zealand and Israel.

On the other end of the tables, China was only beaten by Myanmar to the bottom of the overall Digital Life table and sat comfortably at the bottom of “Unrestricted Access to Internet”, thanks to the all powerful Great Firewall. This is particularly pertinent for expats who would have a stronger need for the global social networks more than the local residents, to communicate with their home countries. 83% of all expats were unsatisfied with their access to social networks from China, followed in the second from bottom by Saudi Arabia, where 46% said they were unsatisfied.

The ranking may not be a big surprise, but the margin between the bottom two countries may be. The only table that China was not in the bottom 10 was the one on cashless payment. But, maybe surprisingly, with all the fanfare about the contactless payment experience enabled by companies like Alibaba and Tencent, expats living in China did not manage to take the country to the top 10 table either.

Best and worst countries for Digital Life

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.

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.

Loyalty penalties for broadband, mobile and TV finally tackled

Ofcom has introduced rules which will aim to tackle ‘penalties’ imposed on renewing customers by broadband, mobile and content providers.

As part of the new rules, providers will have to inform customers 10 to 40 days prior to the end of the customers contract, the period where financial penalties would be applied for changing providers. In the notification, customers will be told the end date of the contract, differences in contract pricing moving forward, termination conditions and availability of cheaper deals.

Although customers will still have to be proactive in contacting rival competitors for better deals on the market, the hope is a more transparent approach with spur consumers into finding the best possible option. Telcos will have a year to ensure the right business processes and technologies are in place to action the rules.

“We’re making sure customers are treated fairly, by making companies give them the information they need, when they need it,” said Lindsey Fussell, Ofcom’s Consumer Group Director.

“This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.”

The initial idea was put forward back in December, with the belief as many as 20 million UK consumers have passed their initial contract period and could be paying more than necessary. The Department of Digital, Culture, Media and Sport escalated the issue in February with a public consultation aimed at moving the industry towards a position where loyalty was rewarded, ending aggressive cultures towards customer acquisition.

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. Research commissioned by Broadband Genie has found many over 55s could be paying too much for their broadband service but lack the knowledge or confidence to choose a new package.

“Pre-emptive alerts and information about broadband and TV contract periods are good news for consumers since many have in effect been paying a premium for their loyalty once out of contract,” said Adrian Baschnonga, EY’s Telecoms Lead Analyst. “Today’s rules pave the way for a more proactive dialogue between service providers and their customers, which can unlock higher levels of satisfaction in the long term.”

While it will certainly take some work to bed in, such rules have the potential to move attitudes in the industry to prioritise customer retention over acquisition to meet profitability objectives. Much research points to this being a more rewarding approach to business, though few in the telco space practice this theory.

“uSwitch’s research found that the aggregate cost of out-of-contract charges to telecoms consumers is £41 a second,” said Richard Neudegg, Head of Regulation at uSwitch.com. “This is why time is of the essence – everyday spent waiting for these notifications to be rolled out, another £3.5 million is overspent on these services – meaning that more than £350 million has already been wasted since the consultation closed in February.

“While it has been a long time coming, this is an important step by the regulator to address what has long been a clearly unacceptable gap in the rules, penalising consumers to the tune of millions.”

This is a step in the right direction, but it will take more to ensure telcos shift their culture. The idea of customer acquisition over retention is deeply engrained in every aspect of the business and will define how the business operates. That said, progress is progress.

BT reports flat full year numbers but feels bullish about fibre

UK telecoms group BT revealed flat revenue growth on its full year 2018 report, but its new CEO said all the right things about investment.

Revenues were down a percent, but earnings per share were still up 6 percent. Of the business units only the biggest – consumer – showed any growth, with all the B2B units showing small declines. BT expects the 2019 financial year to deliver more of the same, because reasons. It said it has raised its capex guidance to £3.8 billion, but it ended up spending almost £4 billion in the 2018 financial year despite guiding £3.7 billion a year ago.

BT FY 2018 table

“BT delivered solid results for the year, in line with our guidance, with adjusted profit growth in Consumer and Global Services offset by declines in Enterprise and Openreach,” said new Chief Exec Philip Jansen.

“We need to invest to improve our customer propositions and competitiveness. We need to invest to stay ahead in our fixed, mobile and core networks, and we need to invest to overhaul our business to ensure that we are using the latest systems and technology to improve our efficiency and become more agile.

“Our aim is to deliver the best converged network and be the leader in fixed ultrafast and mobile 5G networks. We are increasingly confident in the environment for investment in the UK. We have already announced the first 16 UK cities for 5G investment.

“Today we are announcing an increased target to pass 4m premises with ultrafast FTTP technology by 2020/21, up from 3m, and an ambition to pass 15 million premises by the mid-2020s, up from 10 million, if the conditions are right, especially the regulatory and policy enablers.”

Those infrastructure ambitions are laudable, and were echoed by Openreach CEO Clive Selley, but don’t seem to tally with previous statements on the matter. A year ago Selley said “This year we’ll double our FTTP footprint and by 2020, we will have built it to 3 million homes across the UK. We want to reach 10m premises by the mid-2020s, and believe we can ultimately fully-fibre the majority of the UK under the right conditions.”

So the mid-2020s bit is fine but the 4m promise now has a revised deadline of April 2021, a year and a quarter later than the previous 3m promise. Now we might be missing something here but rather than increasing the target, all BT/Openreach seems to have done is insert another milestone a bit further down the line, which feels a bit deceptive.

“In cut throat market like the UK, there are few opportunities to grow,” said telecoms analyst Paolo Pescatore. “Moves to accelerate plans for its fibre broadband rollout, 5G and cross selling existing services can help increase the group’s bottom line but also require significant investment. The lack of any significant shift in strategy is unsurprising as it’s still early days for Philip Jansen.”

BT is hardly alone in hedging any investment pledge, however vague, with the caveat that it all depends on the regulatory environment. At least it has stopped openly begging for public money, for now. But the barely adjusted capex outlook implies even that pledge is trivial and Jansen might need to test his own investors’ patience with a more aggressive approach once he’s fully up to speed.

When FWA starts to make sense

Fixed Wireless Access (FWA) attracts a huge range of opinions, but at Light Reading’s Big 5G Event, Starry put forward an interesting case.

Starry Internet is a fixed wireless broadband Internet service provider, founded in January 2016, operating across a small number of US cities. What makes Starry different from many of the other cable providers is an exclusive focus on FWA.

As a technology, FWA has certainly split opinion. Some see it as a 5G usecase which could justify the vast expenditure on the future-proofed networks, while others believe it is a distraction from what should be the ultimate goal; rolling out full-fibre broadband to all premises.

While we can see there are some niche usecases for FWA, we do not believe it is a viable alternative for fibre-based broadband solutions, the Starry proposition makes a valid case which will be attractive for some broadband challengers.

“People are dying for choice,” Starry COO Alex Moulle-Berteaux said during his keynote session.

Over the first 18 months of Starry’s existence, the firm managed to set up a FWA network which covers two thirds of Boston premises. Although Moulle-Berteaux hasn’t unveiled subscription numbers, the progress has been solid enough to fuel expansion into other US cities.

What is remarkably impressive is Starry managed to deploy this significant FWA network in Boston for less than $5 million.

Moulle-Berteaux also claims the firm has experienced a 20% uptake when connecting a multi-dwelling residence in the first 60-90 days. Promising 200 Mbps, down and up, the team are targeting the cord cutters, offering internet connectivity exclusively, potentially reduce monthly out-goings.

This is why the FWA case is attractive to some. Low cost of entry, Moulle-Berteaux highlighted the use of unlicensed spectrum is helping here, the ability to deliver high speeds and speak to a generation of customers who are increasingly becoming sick of the traditional relationship with connectivity and content providers.

That said, while this is an attractive proposition, we can’t see around the idea that FWA is incredibly short-termist.

Yes, the speeds delivered now are promising and there are certainly prospects to increase further, there will be limitations. Mobile connectivity is always going to be second-best when measured against fibre-based broadband, because physics.

Fibre is the fastest and most reliable connection. It works by emitting and receiving a light signal through the cables that represents binary code. FWA can deliver speeds faster than copper-based broadband, but it’s airborne and a little more prone to external factors. FWA is an alternative, but telcos can get distracted by short-term gains leading to long-term pain. Just look at the BT decision to prioritise G.Fast over fibre. It’s a similar business decision.

However, the US is a market where there might be a valuable role for FWA propositions. As Moulle-Berteaux highlighted, customers like choice and due to the lack of competition in the broadband market, are becoming frustrated with their current providers. This frustration will explain why Starry has been successful in hoovering up subscriptions.

We’re still not convinced by the FWA promise. Fibre is a long-term solution which all providers should be striving towards and there is a risk FWA will become a distraction. However, there are cases where the value is incredibly high. In the US, where many customers are becoming frustrated with a lack of competition, we might have a validated usecase.

BT gets personal on speed guarantees

BT has announced a new initiative, Stay Fast Guarantee, which will aim to hyper-personalise speed guarantees for new and re-signing customers.

When a new customer signs-up for BT’s broadband service, or an existing customer renews a contract, they will be given a bespoke speed guarantee for their home based on the estimated capability of the line. Should the service fall below these expectations, the customer will be able to apply for a £20 refund.

The initiative also promises that if it is believed a broadband customer could get a faster line speed, BT will first remotely optimise broadband performance, or an engineer will be dispatched to improve performance.

“With our new Stay Fast Guarantee, we don’t just guarantee customers’ broadband speeds, we constantly check and optimise them, so they’ll get reliable broadband speeds all day every day,” said Kelly Barlow, Marketing Director at BT.

“If a customer’s broadband falls below their personal speed guarantee then we have an expert team of service agents on hand to get things back to normal as soon as possible – ensuring they get the best and most personal broadband experience.”

While it does sound like a promising initiative, as with all these glorious promises the fine print has to be examined.

Firstly, BT is giving itself an exceptionally wide-berth to fix any faults. Customers will only be eligible to receive the £20 refund should BT not be able to fix the fault within 30 days of it being identified. Whether this is considered a reasonable window is open to debate, though for us BT should perhaps hold itself more accountable to deliver the promised performance; 30 days is a long-time for a customer to wait for the service he/she has paid for.

Secondly, customers can only apply for the refund four times a year. If problems persist, customers are left in the lurch until the end of their contract.

Finally, ‘outages, connection faults and home wiring outside of BT’s control’ will be excluded from the refund. Although this is commonplace for all telcos when offering some sort of refund, the generic and all-encompassing nature of the language offers a lot of wiggle room.

Where BT should be congratulated is on the attempt at personalisation. Catch-all statements and promises generally fail to deliver, therefore such a granular approach to performance and customer satisfaction should be applauded.

Slowly the telcos are staggering towards what would be deemed acceptable customer service. This is a good example of such initiatives. More of the same please.

Broadband speeds are up but UK’s fibre is still lagging

Ofcom has proudly proclaimed the majority of UK can now access ultrafast broadband at home and at work, but its fibre diet still leaves much to be desired.

According to the watchdog’s latest Connected Nations report, 53% of UK properties, residential and commercial, can access broadband speeds of 300 Mbps, often referred to as ultrafast. While this might sound impressive, Ofcom also slipped in that fibre connectivity is now up to 7%, a 1% increase from the last report in September.

“For the first time, a majority of homes and offices can now get ultrafast broadband – which allows people to work, stream and shop online at the same time,” said Ofcom CEO Sharon White.

“We’ve also seen the number of homes that can’t get broadband fall by a third in the last year. I think that progress is really encouraging, but it’s vital we keep it going. So, we’re working with the Government to bring in the new universal broadband service, which will give everyone the right to request a decent connection. We’ll announce who’ll deliver the scheme in the summer.”

As it stands, roughly 95% of the population can access superfast broadband, speeds of 30 Mbps, while 53% can achieve ultrafast speeds, more than 300 Mbps. Only 619,000 premises throughout the country cannot get what is deemed ‘decent’ speeds, more than 10 Mbps, though soon these users will be able to request appropriate connections under the Universal Service Obligation (USO), which is supposedly getting underway in the next couple of months.

Having finished its consultation in February, Ofcom proposed that BT and KCOM should be designated as the Universal Service Providers, though the final decision is set to be published in the summer. This, in theory, should bring the final 2% of premises into the world of ‘decent’ broadband speeds.

Although the availability of ultrafast broadband has increased quickly over the last couple of years, ultrafast connections were available to less than 2% of the population in June 2016, progress on fibre has been sluggish. Since May 2017, fibre availability across the country has increased from 3% to 7%.

While progress is progress, one would have to assume it would have to speed up should Ofcom want to meet government ambitions. The aim here is to have 15 million homes fed a fibre diet by 2025, with the whole country covered by 2033.

Looking at the fibre connectivity conundrum, the results are quite varied. In England and Wales, fibre penetration sits at the average of 7%, while it up to 16% in Northern Ireland and down at 5% in Scotland. Unfortunately for the Scots, 4% cannot access 10 Mbps either, while 5% are living in the slow lane in Northern Ireland.

Looking at how this compares to other countries, it is a bit of a mixed bag and questions the claim as to whether the UK is the leading digital nation politicians often so proudly proclaim.

Austria Targeting 99% coverage for all by 2020 for ultrafast broadband. Fibre penetration of 1.5%
Bulgaria 100% coverage with at least 30 Mbps until 2020, and 50% take-up rate for 100 Mbps. Fibre penetration of 32.2%
Cyprus At least 30 Mbps for all households and businesses by 2020
Denmark 100 Mbps download and 30 Mbps upload speeds available for all households and businesses by 2020. Fibre penetration of 19%
Finland By 2025 all households should have access to at least 100 Mbps connections. Fibre penetration of 25.6%
Germany 50 Mbps for all households by 2018. Fibre penetration of 2.3%
Hungary 100 Mbps take-up for 50% of the households by 2020
Italy Availability of services above 30 Mbps for all by 2020
Lithuania 100% coverage with 30 Mbps by 2020. 100 Mbps subscriptions for 50% of households by 2020. Currently has fibre penetration of 46.9%.
Malta Already achieved 100% broadband coverage with 30 Mbps
Poland 50% of households should have internet connectivity of 100 Mbps by 2020. Forecasts 100% of households should have access to internet connectivity of at least 30 Mbps by 2020. Only has 5% fibre penetration
Romania By 2020, 80% of households with access to over 30 Mbps broadband and 45% of households with subscriptions over 100 Mbps
Slovenia 100 Mbps to 96% of households by 2020
Sweden By 2020, all households and companies should have access to broadband at a minimum capacity of 100 Mbps and by 2025. Currently has fibre penetration of 43.6%
Belgium Aim is to provide speeds of up to 1 Gbps to half of the country by 2020
Croatia 100% coverage with 30 Mbps and 50% take-up rate for 100 Mbps until 2020. Fibre penetration of 1.9%
Czech Rep 30 Mbps for all households and at least 100 Mbps for 50% of the population by 2020. Fibre penetration of 14.6%
Estonia Full coverage with connections of at least 30 Mbps by 2020 and aims to promote take-up of ultra-fast subscriptions with at least 100 Mbps with the objective that these account for 60% or more of all internet subscriptions by the same year
France Targets of ultra-fast broadband access for all households by 2022
Greece 100% broadband coverage with minimum speeds of 30 Mbps with at least 50% of households benefiting from 100 Mbps by 2020
Ireland 77% coverage of high-speed broadband by the end of 2018 and 90% coverage by 2020
Latvia 100% coverage with 30 Mbps and 50% household penetration with 100 Mbps by 2020. Currently leading the European race for fibre with 50.3% fibre penetration
Luxembourg National broadband plan aims for networks with ultra-high-speed rates, more precisely 1 Gbps download and 500 Mbps upload for 100% of the population in 2020
Netherlands Currently, almost 98% of urban and rural areas in the Netherlands have been covered with 30 Mbps
Portugal 30 Mbps for 100% of the population and a coverage of at least 100 Mbps for 50% of all households until 2020
Slovakia 30 Mbps for 100% of the population and a coverage of at least 100 Mbps for 50% of all households until 2020
Spain 100% coverage of 30 Mbps and 50% take up of 100 Mbps and more of households by 2020. Currently has 44% fibre penetration

This is where you have to be a bit more careful when reading the statistics and claims. Ofcom numbers are suggesting 7% fibre across the country, but this is 7% of premises who have the availability of fibre. The figures in the table, from the FTTH Council Europe, are looking at the number of actual subscribers. For the UK, the FTTH Council Europe estimates the UK has a fibre penetration of 1.5% when you count subscribers.

That said, it is easy to be very doom and gloom here. Ofcom can only force the hand of availability, it cannot force consumers to upgrade to the best available service. As mentioned before, progress is being made, though it is always useful to place these figures into a bit of context.

“While the number of households which can access superfast and ultrafast broadband continues to grow, uptake of these faster speeds remains the challenge for the broadband industry, with fewer than half of broadband users subscribing to the better services,” said Richard Neudegg, Head of Regulation at uSwitch.com.

On the mobile side, coverage is also looking perfectly suitable for the moment. Using crowdsourced data from consumer handsets, Ofcom estimates the signal levels needed to meet targets are available at least 95% of the time.

78% of the UK’s geographic area is now covered by all four operators for calls, up eight percentage points from June 2017, however, 5% of the UK’s geographic area is served by no operators. Outdoor access to decent quality data services through 4G has also increased from 48% to 67% over the same period, varying dependent on the telco. Not-spots in total have decreased to 8% of the UK from 21% in June 2017.

Looking at indoor coverage, 78% of UK premises can now receive a decent 4G signal from all operators, up 14 percentage points from June 2017. This again varies depending on the individual regions, Wales and Northern Ireland are below the national average at 73% and 59% respectively, though the numbers are steadily heading in the right direction.

Finally, the transport network. 57% of all A and B roads now have 4G coverage from all operators, while 4% are designated not-spots. This is for data services however the number drops to 2% when you are looking at calls.

A weak France overshadowed Orange’s Q1

The telecom operator Orange reported a flat Q1, with a weak performance in its home market partially compensated by the strength in Africa and the Middle East.

Orange reported a set of stable top line numbers in its first quarter results. On Group level, the total revenue of €10.185 billion was largely flat from a year ago (-0.1%), and the EBITDAaL (earnings before interest, tax, depreciation and amortisation after lease) improved by 0.7% to reach €2.583. Due to the 8% increase in eCAPEX (“economic” CAPEX), the total operating cash flow decline by 10.2% to €951 million.

Orange 2019Q1 Group level numbers.pdf

Commenting on the results, Stéphane Richard, Chairman and CEO of the Orange Group, said that “the Group succeeded in maintaining its high quality commercial performance in spite of a particularly challenging competitive context notably in our two principal countries of France and Spain. Our strategy is paying off since EBITDAal is continuing to grow while revenues remain stable, allo wing us to reaffirm our 2019 objectives”

On geography level, France, its home and biggest market is going through a weak period. Despite registering net gain in the number of customers, the total income dropped by 1.8% to €4.408 billion, the first quarterly decline in two years. The company blamed competition, a one-off promotion of digital reading offer towards the end of the quarter, and “a weaker performance on high-end equipment sales in the 1st quarter of this year”. The move to “Convergence” was positive, but not fast enough to offset the lose in narrowband customers. The competition pressure is still visible. The Sosh package (home broadband + mobile) Orange rolled out to combat Free is gaining weight among its broadband customers, which resulted in a decline of revenues despite the growth in customer base.

Orange’s European markets, including Spain and the rest of Europe, reported modest growth, with strength in Poland (+2.6%) and Belgium & Luxembourg (+3.8%) offset by a weaker Central Europe (-1.9%). The bright spot was Africa and Middle East, which registered a 5.3% growth to reach €1.349 billion revenue, taking the market’s total revenue above Spain and just marginally behind the rest of Europe. The company’s drive to extend its 4G coverage in Africa is paying off, with mobile data service contributing to 2/3 of its mobile growth. Orange Money also saw strong enthusiasm, with the revenue up by 29% and total number of monthly active users totalling 15.5 million.

Both the Q1 results and outlook to the rest of the year spelled mixed messages for the wider telecom market and Orange’s suppliers, but negatives look to outweigh positives. On the consumer market side, the slowdown of high-end smartphone sales and prolonged replacement cycle has once again been demonstrated in the weak numbers in France. On the network market side, Orange predicts more efficiency. This includes both the network sharing deal signed with Vodafone Spain, which is expected to deliver €800 million savings over ten years, and an overall reduction in CAPEX this year.

As the CEO said, “while the level of eCapex for this quarter is higher, it should reduce slightly for 2019 as a whole, as predicted, excluding the effect of the network sharing agreement with Vodafone in Spain announced on 25 April.” This means, to achieve the annual target of reduced CAPEX, the spending will drop much faster in the rest of year. There is no timetable to start 5G auction in France yet, but it will be safe to say that any expectations of 5G spending extravaganza will be misplaced.

On the positive side, Orange has seen its efforts to diversify its business gaining traction, especially in IoT and smart homes. But these areas, fast as the growth may be, only make a small portion of Orange’s total business.