Aussie regulator not in the ‘real world’ over Vodafone and TPG

Lawyers representing Vodafone Australia and TPG have suggested the Australian competition watchdog is not living in reality as it continues quest to force in a fourth MNO.

Last year, Vodafone and TPG announced intentions to merge operations in pursuit of creating a business which can offer comprehensive services in both the mobile and fixed segments. The pair were searching for ‘synergies’, seemingly a play to compete in the world of convergence, but the Australian Competition and Consumer Commission disagreed, blocking the merger four months ago.

The ACCC rationale was relatively simple; if the pair are forced to continue to operate independently, they could potentially fund their own fixed and mobile networks, broadening competition across the country. Vodafone and TPG suggest this is not the case.

“What TPG wants is for this merger to go through but when you step back and look at the options and approach it had before August 2018… it is entirely commercially realistic that TPG will return to rolling out a mobile network,” said Michael Hodge, representing the ACCC in court.

However, the opposition hit back.

“There isn’t a real chance that TPG will pursue the rollout of a mobile network. There is not a real chance that TPG will become Australia’s fourth network,” said Inaki Berroeta, Vodafone Australia CEO.

The dispute here is simple. The ACCC wants four, independent MNOs across the country. TPG made some noise about deploying its own network prior to the merger announcement, though these ambitions were seemingly quashed by the ban on Huawei technology in the country.

“TPG did try to build it, but it was thwarted by community objections, by technical difficulties but ultimately by the federal government’s security guidance,” Ruth Higgins, the legal representative of TPG, said.

Vodafone and TPG do not believe they can compete with Optus and Telstra without a merger, though the ACCC is under the impression a fourth MNO will emerge organically.

TPG did announce in May 2018 it was planning to launch its own mobile network, learning from the success of Reliance Jio in India. The idea to attract subscribers was to offer six months of data and voice services for free, though this idea was killed off due to two developments.

The first development was the merger between Vodafone and TPG. Why would it build its own mobile network when it could dovetail with Vodafone, bringing its own fixed network to the party to complete the convergence dream.

The second development was the banning of Huawei technology in Australia.

“It is extremely disappointing that the clear strategy the company had to become a mobile network operator at the forefront of 5G has been undone by factors outside of TPG’s control,” TPG Executive Chairman David Teoh said at the time.

Following the decision, TPG decided against building its own mobile network as Huawei was the main supplier to the firm. This is an instance which backs up the Huawei claims it will improve competition in the 5G vendor ecosystem, bringing down the price of equipment investment and speed of deployment.

The decision to end TPG investment in a mobile network might have been enough to convince the ACCC the merger could be approved, but it seems the competition watchdog is clinging onto the hope it would do so on its own. TPG statements should be taken with a pinch of salt, it wouldn’t be the first-time executives changed their minds, but it does run the risk of negatively impacting competition.

One thing which is not healthy for any market is a tiered ranking system. If Vodafone cannot compete with Optus and Telstra without the converged business model the TPG assets offer, it might well fall further behind. If it dwindles to the point of irrelevance, the Australian telco market will be in a worse position than it is today, or with the combined Vodafone/TPG company offering increased competition. The risk the ACCC runs is effectively creating a duopoly.

Realistically, there is no right or wrong answer here. We do not have a crystal ball, and we cannot read the minds of TPG executives. It might well pursue the deployment of a mobile network if the prospect of a merger is killed off all together, but then again, it might just double-down on fixed line investments. It does currently have an MVNO, but that is a poor substitution for a fourth MNO to increase competition.

The winners and losers of telecoms will be decided by convergence

There are still naysayers about the benefits of convergence, but those who ignore this trend will fast find themselves sleep-walking the path to utilitisation and irrelevance.

First and foremost, let’s have a look at what convergence actually is. This strategy is not the silver bullet which some telcos are seeking. A convergence strategy which not recapture the lost fortunes of yesteryear overnight, and it will not turn the traditional telco into the sleek shape of an internet giant. However, it does future-proof the business against the rising tides of utilitisation.

For those companies who are happy to be utilities, fair enough. There are profits to be made through the commoditisation of data services, though it is a very different type of business. But those who think they can be a value-add business, simply focusing on a single revenue stream are fooling themselves. Those companies shall remain nameless here, but it is pretty obvious who they are.

Convergence is about layering the business through multiple service offerings and diversifying the way in which telcos can engage consumers. It could be through multiple connectivity opportunities, and increasingly content has become a common theme, but there are numerous options open to the telco which demonstrates a bit of bravery.

According to recent research from OSS/BBS firm Openet, 73% of consumers are open to purchasing more digital services from telcos. The result of the introduction of these services is not only more revenue, but increased loyalty. 65% said the presence of more digital services would make them feel more engaged with their telco, while 79% said it would increase their loyalty.

Firstly, this is an opportunity to avoid the dreaded race to the bottom. If a telco can offer a positive network experience (not a given in today’s world however) and a reasonable price, as well as digital services, churn will also theoretically decrease. But what do digital services actually mean?

Content is the most obvious one to start with. If a telco is flush enough, this can mean owning a content segment, such as football rights in Spain for example, though partnerships with OTTs is an increasingly popular option. The telcos can be very valuable partners to the OTTs, either through their billing relationship with the customer or a trusted link in regions were direct customer acquisition is more difficult.

Numerous telcos are taking this approach, and it is proving popular with customers. Using the Openet research once again, 38% of respondents would switch their provider for better content options, while another 38% would be interested in changing should there be a zero-rating offer attached also.

But content is only the start, and this is an area which could become increasingly commoditised if/when these partnerships become commonplace. Looking beyond these content bundles, offering a broad range of niche features could be the next battle ground. Think of the Vodafone partnership with Hatch for gaming. This will not appeal to everyone, but it will attract interest from a niche. O2’s Priority loyalty programme offers early access to music venues and festivals. Again, a niche, but it will appeal strongly to some.

Looking further afield once again is where you start to see the real leaders in the digital world. Orange is a perfect example, with its security products. This is where the world of connectivity and digital services can be blended to attract completely new revenues. And of course, as more of the world become digitised, there are more opportunities to add value on top of connectivity offerings.

The smart home presents opportunities, as does the connected car. The telcos have a unique opportunity to capitalise on the digital world as few consumers today would leave their home without their smartphone. This is a direct, and constant, link to the consumer. There are not many other industries which can boast this advantage.

Interestingly enough, the telcos will not even be cannibalising their own revenues with these new products. For most consumers, the money spent on connectivity is different from that which is spent on entertainment or security. If you can help them spend less through bundled services, this is a bonus, but asking the consumer to spend money on entertainment as well as connectivity is not going to decrease ARPU. Quite the opposite.

The consumer wants to spend money on entertainment and digital services, but the question is who they are going to spend it with.

Ideally, we would like to see more telcos take the Google approach to business. In 2015, Google undertook a business restructure, separating the two functions into very distinct business units. On one side, you have the core search business. Google knows it can make money from this without really trying. On the other side, you have ring-fenced funds which are used to fuel the ideas which drive diversification on the spreadsheets.

Through this structure, one side of the business is not influenced by the other until the right time. Ideas are given the opportunity to flourish and be what they are intended to be, without the limitations of the traditional business. Fi is an MVNO which has emerged from the research side, as is Sidewalk Labs and balloon connectivity firm Loon. Without the separation, would these ideas have evolved to their full potential which is currently being realised?

This is the challenge which the telcos are facing. Convergence and the evolution into a digital services provider requires an internal disruption. It demands executives think about priorities different and invest in areas which are alien to the organization. It means being forward thinking and preparing to fuel ideas with long-term ambitions. And it needs to be done quickly.

You don’t necessarily have to be first to market, but you need to be a fast-follower at the very least. A convergence strategy encourages loyalty from subscribers after all, and once the dust has settled, it will become increasingly difficult to lure valuable postpaid customers away from rivals.

Not every telco will get it right. Not every telco will believe in the convergence buzz. And not every telco will evolve fast enough. However, there could be the creation of a tiered industry for too long. The winners at the top who nail convergence and become a valuable part of the digital economy, and the losers who continue to trudge the path to commoditisation.

DT inches towards the 5G dream

The German telecommunications industry is doing everything it can to dispel the stereotype of German efficiency, but Deutsche Telekom is making progress in the 5G world.

When it comes to the connectivity rankings, the Germans do not generally feature towards the top. This is evident in both mobile, with 4G coverage, and broadband. However, at IFA the management team has been pitching its progress, and in fairness, DT has beaten the majority of telcos to the 5G punch.

5G is now live in Germany, with six cities welcoming the connectivity euphoria. A total of 129 5G antennae are now transmitting the super-speed connectivity, though plans are to have 20 cities on the coverage map by the end of 2020. DT is not moving as quickly as some European rivals, the UK telcos for example, though it is progress.

Berlin’s Mitte district is the largest coherent 5G coverage area in Germany, at around six square kilometres, with 66 5G base stations. Currently, work is being done to increase the coverage footprint in five cities, with single, clustered locations being targeted. It does appear to be a slowly, surely approach to 5G, but few will argue with progress.

However, you have to measure this progress against European counterparts. In the UK, three of the four MNOs have launched 5G services. EE, the first to launch, has promised 15 cities by the end of 2019, claiming to add 100 5G base stations to its network each month. In France, although 5G has not launched, Orange is suggesting it now has 352 5G pilot sites around the country. In Spain, Vodafone launched its 5G services in June with base stations in 15 cities across the country.

There are of course pros and cons to the breadth versus depth conversation, but it is always worth placing some context into the situation.

The claim has been made at the IFA conference in Berlin, where DT has also been plugging its broadband ambitions.

“For the first time in many years, we have succeeded in surpassing the range of cable companies with a bandwidth of 50 Mbps,” said Michael Hagspihl, Head of Consumers at Telekom Deutschland.

Broadband is another area where the Germans have been sluggish compared to European averages. According to the FTTH Council Europe, Germany has a fibre penetration rate of 2.3%, considerably behind the leaders such as Spain, Latvia or Sweden, all of which have penetration rates north of 40%. However, progress is being made once again.

DT is claiming its fibre network is the largest in Germany, measuring over 500,000 km in length. It has said more than 30 million households can now access broadband speeds between 50 Mbps and 250 Mbps, with 1.1 million able to purchase connectivity which exceeds 1 Gbps. These numbers are of course houses passed rather than actual connections, but it is a better position than previous years.

Whether the slowly, surely approach is going to be a winning strategy when the awards are handed out in a few years remains to be seen, though Germany is starting to sort out its own house.

Orange hints it might be ready to take Romanian fixed assets off DT

Last week, reports emerged Deutsche Telekom had been given the green-light to sell its fixed network stake to Orange in Romania, and the French telco isn’t quashing the rumour.

With a 54% stake in Telekom Romania Communications, DT has a healthy position in the market, though it appears the country is no-longer part of the grand plan. Orange is reportedly in-line to purchase the fixed network stake, the remaining 46% is owned by the Romanian Government, and as you can see from the statement below, it is not denying the rumours.

“The Orange Group’s strategic ambition is to be a leading convergent fixed and mobile operator in Europe, and we are exploring all potential opportunities in Romania to further implement this strategy,” the company stated.

“Our analysis is still at a preliminary stage and no decision has been taken by Orange. In any case, such a decision would be subject to mandatory regulatory approvals.”

The reports in local press claim DT has received approval from the Romanian Government to sell its stake in one of the country’s biggest telcos. For Orange, this does look like it is a sensible move. It is the leading mobile provider in the country, though adding the fixed assets through such an acquisition would certainly make a more complete offering.

The convergence business model is one which is being firmly grasped across the Orange group. There are of course regional twists in terms of execution, though the over-arching strategy is fully-embracing convergence.

What is worth bearing mind is that there is enough nuanced language to add an element of doubt, but it does appear an announcement of some kind might be on the horizon in the not too distant future.

Openreach cuts costs by 75% to attract builders to fibre diet

Openreach will be slashing the cost of installing fibre wires in new residential developments of less than 30 plots, as it looks to tempt housing developers onto a fibre diet.

Although it might seem remarkable, house builders are not currently mandated by law to install fibre broadband infrastructure on new premises. Considering the aggressive rhetoric being spouted by the UK Government when it comes to laying future-proofed foundations for the digital economy, it does beggar belief the opportunity to cut corners and ignore fibre is still available to these developers.

The ‘Housing Crisis’ in the UK is one which does attract headlines. The severity of this ‘crisis’ does of course depend on who you are talking to, though in certain regions it is undeniable there is a shortage of properties. All you have to look at the price of a two-bedroom flat in London to understand the pickle some youngsters might be in.

This does present an opportunity for the housing developers to make a profit. During the last quarter, the Office for National Statistics estimated 42,870 new homes were completed, though not all took fibre as default. Around 88% of plots on new builds contracting with Openreach elect fibre, though this number increases to almost 100% for plots of over 30 premises.

However, there are still numerous developers which are not taking fibre as a default position. Openreach suggests 124,000 of the new homes constructed in the UK in 2018 still lack access to ‘superfast’ broadband speeds of 30 Mbps or more. The situation is gradually improving, though there still much work to do.

With this in mind, Openreach is looking to increase the attractiveness of installing fibre connectivity through cutting costs by up-to 75% for multi-dwelling housing developments up to 29 properties.

“Our existing offer already provides huge benefits to both buyers and builders alike, but we wanted to go further and make sure everybody moving into a new build property can enjoy the advantages of Fibre-to-the-Premises broadband,” said Kim Mears, MD of Strategic Infrastructure Development.

“Our new offer provides a low-cost option to housebuilders and we hope it will help encourage the adoption of this future-proof technology across smaller developments so that no-one’s left behind.”

Although internet speeds might seem like an after-thought to some, research from LSE and Imperial College Business School suggests home-owners in London are willing to pay up to 8% above the market value properties in areas offering very fast internet speeds. The benefits of fibre connectivity for housing developers is key, though there are still some who are demonstrating a preference for copper, presenting a problem to the likes of Openreach and Virgin Media; it would be far simpler to connect properties while they are in the construction stages.

The Future Telecoms Infrastructure Review (FTIR) concluded connectivity in new builds was not anywhere near the standard it should be, while the FTTH Council Europe estimates also paint a dreary picture. Fibre penetration is as low as 1.5% across the UK, woefully short of other nations such as Latvia (46.9% penetration), Sweden (43.6%) or Spain (43.6%). Even the lethargic Germany manages to beat the UK with 2.3%.

Moving forward, the Department of Digital, Culture, Media and Sport is set to publish its opinion from a recent consultation into the matter, with the intention of making it mandatory for developers to install gigabit-capable connections to all new build developments in the future. This is a step in the right direction, though it does surprise us it has taken until 2019 for such rules to be considered.

The consultation should result in a change to the rules, though whether this goes as far as some would want remains to be seen. It would also be a fair assumption that these new rules would not be implemented immediately.

Openreach might have to use the financial carrot for a bit longer while the slow-moving cogs of government click into place.

Vodafone challenges new Ofcom rules on leased line rates

Vodafone has lodged a complaint with the Competition Appeal Tribunal, challenging new rules which it believes will give Openreach too much opportunity to abuse customers.

Following the latest Business Connectivity Market Review rules published in June, Ofcom granted Openreach greater freedoms to charge customers more for leased lines. These leased lines underpin home broadband, cloud hosting and 5G, as well as services offered directly to the citizen, such as banking, healthcare, and local and central government online services.

“Ofcom has now changed its approach and is regulating based on what it hopes will happen in the future, rather than based on the evidence of how the market works now,” Vodafone said in a press release.

The relaxation of rules has been based on various investigations over the last few years, though Vodafone has found issue with a few points.

Firstly, the Business Connectivity Market Review suggests Openreach does not have significant market power in the London region. Vodafone disagrees with this, suggesting market share of between 60% and 70%, exceeding the levels defined as market domination by Europe.

Secondly, Vodafone disagrees about the removal of a cost-based price cap in favour of a flat rate price cap. The cost-based approach was much more fluid, moving with the real cost realised by Openreach. Vodafone suggests Openreach costs are only going down, therefore the wholesaler will benefit significantly from the change.

Finally, in some cities Ofcom expects competition to enter the fray, therefore pricing regulations have been loosened. From Vodafone’s perspective, the facts are simple; competition hasn’t yet entered the market, and the regulations should be kept in place until they actually do.

In some parts of the saga, Ofcom has perhaps acted slightly irresponsibly, though you always have to remember this is a PR assault from Vodafone. Weaponising the press, as Vodafone is trying to do here, is often accompanied by emotive language, exaggeration and quoted figures which push right to (or perhaps beyond) the edge of estimate ranges.

This is not to say they will not prove to be accurate, but it is always worth remembering the presence of massaging and manipulation.

Sky and Liberty Global allegedly in talks for full-fibre investment

Sky is reportedly in discussions with Liberty Global to add further fuel to the full-fibre machine which is engulfing the UK at an increasing rapid rate.

After a new company, Liberty Fibre Ltd, was registered with Companies House in the UK last week, parent company Liberty Global has allegedly entered talks with Sky UK to add additional investment to the scheme. According to the Financial Times, with Sky moving away from satellite connectivity for its content proposition, the team are seeking more attractive wholesales terms, with Virgin Media providing a potential alternative.

As it stands, Openreach is the incumbent wholesale partner to Sky. The wholesale giant has enjoyed market dominance in recent years, though numerous ‘alt-nets’ and alternative providers are creating a much more competitive market. Sky is supposedly in talks with Virgin Media to use its fibre network to deliver its broadband and OTT content service, and the creation of another wholesale fibre business would further lessen the dependence on Openreach in the rural locations.

The new company, Liberty Fibre Ltd, will aim to deploy full-fibre networks in locations outside of the main urban areas, the primary focus for the vast majority of network owners. Virgin Media will become the anchor tenant of the network, though should the rumoured discussions continue as planned, Sky would become an investor in the scheme and a second customer.

For Liberty Global, attracting Sky as a customer would be a significant win.

Although it does not own any of its own network assets (fixed or mobile), Sky is one of the most successful broadband providers in the UK. Although Sky has stopped reporting total subscription numbers, most estimates put the total number of broadband customers between 6.2 million and 6.5 million. This would give Sky roughly a 20% market share, even with Virgin Media and second behind BT. Currently, Sky has a fibre penetration of 38%.

The commitment of a heavyweight such as Sky would certainly lesson the financial burden of deploying a fibre network in areas where ROI projections are certainly less attractive than the dense urban environments. The attractiveness of Sky as a customer only increases when you consider the increasingly popular OTT video drive and aggressive fibre broadband marketing campaigns.

Although Sky is still primarily known for being the premium satellite pay-TV content provider in the UK, the OTT proposition, Now TV, is becoming increasingly popular. After being acquired by Comcast, Sky is likely to attract additional advertising revenues from the parent-company to further consolidate an attractive position in the UK.

After years of neglect, the full-fibre market in the UK is gathering momentum very quickly. It is still years behind other nations across the European continent, but the creation of a new fibre wholesale player will add more fuel to the blaze as glass sweeps across the isles. Liberty Fibre Ltd is an interesting idea, and if it can nail Sky as an investor and customer, its prospects will certainly head north.

Vodafone Spain rumoured to be considering fixed network sale

The rumour mill is churning at maximum speed as Vodafone Spain is reportedly considering a sale of its fixed network for €1.2 billion.

It would appear to be an unusual move. With many national business units shifting towards a convergence business model, divesting its fixed networks assets would take the Spanish unit the other direction.

According to Spanish news site Expansion, the business is currently undergoing a restructure, owing to difficult market conditions, and the sale of the fixed network could certainly add some much-needed cash into operations.

“Currently there is no project that is working on the complete sale of the network proactively, although possibilities are always being analysed and studied to find efficiencies and improve the profitability provided by assets, such as the possible partial sale,” a spokesperson said.

The Spanish market is a tricky one to master currently. After the management team deemed renewing TV rights for the Champions League and La Liga football competitions were deemed unprofitable, Vodafone Spain lost 71,000 TV customers almost immediately, though the mobile business did grow gradually over the course of 2018.

Looking at the most recent financial results, alongside Italy, Spain is proving to be the problem child of Vodafone’s European family. Year-on-year revenues declined by 9.3% for the second quarter of 2019, though tariffs have been overhauled to create a more competitive proposition.

However, alongside the new data tariffs, Vodafone’s rivals launched their own promotions which appear to be much more attractive. Over the three-month period, Vodafone lost two corporate accounts, 158,000 postpaid mobile subscribers, 49,000 fixed broadband customers and 24,000 TV customers.

Although these rumours are far from a sign anything will actually happen, we’ll wait for a potential buyer to make themselves known before investing too much energy, it does seem to be a strange move. Vodafone does of course need cash ASAP, though if it still wants to persist with the convergence strategy in Spain it would have to enter into a leasing agreement with one of the other network owners should the sale go through. It does appear to be somewhat short-sighted.

When Fixed Wireless Access makes sense

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece William Webb, telecoms industry consultant, explores the scenarios in which Fixed Wireless Access is most useful.

Getting copper, cable or fibre to homes and offices is tough. Typically, it requires digging up roads, paths and gardens, using expensive labour, taking months or years and overcoming multiple bureaucratic hurdles. It gets ever-harder as the better opportunities are addressed first, leaving areas where houses are further apart and the willingness to pay for high-speed broadband less clear.

With a take-up rate of 1/3rd and 10m home spacing, costs of providing fibre can easily be £2,000 per home connected. And with wholesale broadband prices at around £15/month that means a payback of over 11 years – a long time for investments that can easily run into billions. In suburban areas with greater home spacing and lower take-up, payback can extend towards 20 years.

Those difficulties have led many, over the last 30 years, to consider wireless as a way around the need to dig. Fixed wireless access (FWA) has been tried around the world with bespoke technologies, with WiMax, with cellular solutions and now with variants of 5G. To date, none have been particularly successful and wireless provides only a tiny fraction of the home broadband connections.

FWA has failed in the past because the economics were never as good as hoped. Often the range of the base station was less than expected and many homes within range were unable to get an adequate signal due to local blockage resulting in too few homes per base station. Self-installation of the customer premise equipment (CPE) rarely worked, leading to relatively expensive installation costs. And often the existing competition upped their game, providing higher data rates and lower prices such that the wireless solution became unattractive. All of these factors remain true, suggesting serious questions need to be asked about any FWA proposals.

The current US deployments by AT&T and Verizon look likely to fall into many of these traps. Base stations and masts are expensive so the operators try to push the range to the limit. This results in many homes not being able to get a good signal, and weaker signal conditions at some pulling down the overall cell capacity. Getting fibre to the masts is expensive and if that much fibre is being laid why not just extend it to the homes anyway? The amount of spectrum that they have is also limiting. While much greater than at cellular frequencies, it is insufficient to allow for many homes in a cell to have simultaneous Gbit connectivity and have some spectrum spare for wireless backhaul or repeaters. And the competition in the US is intense with most homes already being served by copper, cable and in some cases fibre.

But despite all that history and the pessimism, there may be a role for FWA. It could succeed in areas where:

  • Current broadband speeds are below around 20-40Mbits/s, such that for some homes the broadband speed becomes a limiting factor.
  • Fibre is expensive to deploy, perhaps because homes are farther apart, access rights are limited, or likely take-up rate for the service is low.

FWA has been helped by the availability of 60GHz spectrum. This brings three big advantages over other mmWave or FWA spectrum:

  1. The spectrum is unlicensed so there are no costs of spectrum acquisition, and deployment can start immediately.
  2. There is a lot of spectrum – between 7GHz and 14GHz in many countries. This allows for relatively profligate usage to homes and for wireless backhaul, keeping costs much lower.
  3. There is low-cost equipment, building on the back of chipsets developed for WiGig and on a growing global marketplace generating economies of scale.

But mmWave frequencies bring challenges of low range and the need for line-of-sight connections if Gbit rates are to be delivered. This inevitably means a lot of base stations. So the economics only work if the overall base station cost can be kept low. This requires:

  • Using existing structures for masts – lampposts are ideal as they also have power available.
  • Using wireless backhaul from the lampposts to avoid the need to run fibre down the streets anyway.
  • Using low cost fibre connectivity to a cluster of lampposts ideally by accessing existing ducts, removing the need to dig.
  • Using low-cost base stations (often called “access points” or APs) designed and built more like Wi-Fi routers than cellular base stations.

These conditions all need to be met – otherwise the economics of broadly one base station per eight homes will just not work. Barriers can include limited access to lampposts or excessive rent charging from local authorities. Initial experience suggests that there are many towns, villages and outer suburban areas where FWA can be made to work. Where it does, it not only lowers the through-life cost by 50% or more, it is much faster – deployment can happen in weeks rather than the months or years needed to bury fibre. That is good news for those awaiting broadband, for politicians keen to move up the broadband league, and not least for investors who start to see revenues almost immediately.

In a country like the UK, FWA could easily access 20% of the home broadband market. It will not succeed in urban areas where fibre is already deployed, or where the economics of fibre work. Gbit FWA will not work in rural areas where the range needed is too great (although other, lower speed solutions can be helpful here). But in between there are many homes and businesses who might otherwise have to wait a decade for fibre. It could be deployed by a new dedicated FWA operator or as part of a toolkit of solutions from fibre broadband players. It could be used as a way to provide service to areas before eventual fibre deployment, or as a long-term solution.

There is one other barrier to its success. Many have become fixated on “full fibre”. This is a technology obsession – what is needed is high speed broadband to the home not glass buried under the front driveway. This view has arisen because of the assumption that only fibre can provide the near-infinite bandwidths assumed to be needed in the future. But this is false because (1) there is little evidence of rapid bandwidth demand growth and (2) wireless can also provide extremely high bandwidths using ever-higher frequencies. If wireless can deliver what it needed more quickly and cheaply then why not use it? But for many, fibre has become something of a religion, and it is hard to shake those kind of beliefs.

 

William Webb smallProfessor William Webb is CEO of the Weightless SIG, the standards body developing a new global M2M technology. He is also Director at Webb Search, an independent consultancy, where he acts as a consultant for companies including Tutela. Previously, he was a Director at UK regulator, Ofcom.

Macquarie bags KCOM for £627 million

Macquarie Infrastructure and Real Assets (MIRA) has officially closed the acquisition of KCOM for £627 million.

While KCOM has a limited footprint in comparison to rivals, it has created a remarkable leadership position in the Hull and East Yorkshire region. KCOM has been of interest to a number of different suitors over the last few months, since a major profit warning was made last year, though MIRA wins out after an auction process.

“We are pleased to be partnering with an investor that has deep, global expertise in our industry,” said Graham Sutherland, CEO of KCOM. “We are confident that Macquarie Infrastructure and Real Assets will support our long-term growth ambitions whilst helping us maintain our strong local focus and presence.”

“We are looking forward to working closely with KCOM’s management team and workforce to increase fibre accessibility and reduce digital exclusion in the region,” said Leigh Harrison, Head of MIRA EMEA. “By investing to develop and expand KCOM’s networks, we hope to deliver the infrastructure that will underpin growth and innovation in East Yorkshire.”

Last November, KCOM not only issued a profit warning but also cut dividends and warned debts were 10% higher than during the same period of 2017. The news led to a 36% drop in share price and also peaked the interest of potential acquirers.

Virgin Media was first rumoured to be interested in the purchase, it would offer access to an entirely new market for the telco, though pension fund Universities Superannuation Scheme Ltd (USSL) was the first to table a bid. After MIRA got involved in the financial fracas, The Takeover Panel recommended an auction.

With KCOM entering the MIRA portfolio, the investment fund is bolstering its already healthy telecoms position. Aside from KCOM, MIRA is already an investor in Arqiva, and the owner of Danish telco TDC.