BT streamlining continues with reported £100m Dutch infrastructure sale

UK telco group BT is reportedly flogging £100 million of infrastructure assets in The Netherlands as its new CEO strives to make it a leaner operation.

BT doesn’t seem to have said anything official yet, but the Sunday Times got the scoop regardless. Apparently this is part of an attempt to streamline the struggling Global Services business, as BT currently uses its own infrastructure, such as towers and cables, to connect its Dutch business customers.

There’s not much more to the report other than a claim that, while BT is also looking to streamline its Global Services operations in other regions, including Ireland, Spain and Latin America, it doesn’t plan to completely abandon specific countries.

The report also refers to a previous Sunday Times scoop that BT is also flogging a legal software service called Tikit. It’s reasonable to ask what the hell BT was doing in the legal software business in the first place and if this is indicative of the kind of wild tangents the Global Services business has gone off on in the past, we can expect many more such disposals.

This news comes just days after it was revealed that BT was forced to hand over a bunch of cash to Ofcom due to its historical accounting incompetence. In addition BT announced last week that it was delisting from the New York stock exchange and earlier in the month decided to flog BT Fleet Solutions. Sadly for CEO Philip Jansen, none of this tweaking seems to have won over investors, with BT’s share price down by over 30% since he took over at the start of the year.

Ofcom fines BT for suspect accounting

Ofcom has fined BT £3,727,330 for reporting inaccurate financials to the regulator, leading to the telco paying lower administration fees to the regulator for five years.

One of the ways in which Ofcom funds its activities is to charge certain companies an annual administration fee. This fee is determined by the total revenues generated by the company. As BT reported inaccurate results between 2011 and 2015, it paid lower administration fees throughout this period.

BT has not contested the fine, and the full sum had been paid to Ofcom on July 29.

“BT’s cooperation with Ofcom in relation to this investigation has been extensive and productive,” Ofcom said in the report.

“Upon discovery of its error, BT informed Ofcom and committed to remedying the consequences of its error. BT has also undertaken extensive work to ensure that its final resubmitted turnover is complete and accurate; had Ofcom had to carry out this work itself, it is likely to have required significant resource and time to complete.”

Although BT does not have the most glimmering record when it comes to accounting in recent years, the telco did own up to the error rather than Ofcom being informed by a whistle-blower.

The error seems to have been identified by BT Group CFO Simon Lowth, who had only been in the role for a year at the time. In September 2017, documents were submitted to Lowth to review the submission of annual turnover for 2016. Upon reviewing the document, Lowth ordered an investigation into the previous submissions dating back to the original General Demand for Information in 2011.

BT believes the oversight was down to human error, an employee misunderstanding the data sources used, though it still does not the most complementary light on the accounting practices of the business.

Aside from this oversight, BT is still reeling from the Italian accounting scandal which was unearthed in 2016. The fraud cost the company more than £530 million, with £8 billion being wiped off the telcos market value in a single day. US investors, represented by law firm Robbins Geller Rudman & Dowd, have recently announced a lawsuit to recover some of the losses.

The £3,727,330 fine might be considered a relatively lenient one, though generally regulators are kinder to the guilty party if it admits to wrong-doing without prompt. The sum was calculated by adding the deficit to interest payments. The Bank of England base interest rate during the 2011-15 period was increased by 1% to get the total.

It is difficult to blame the current management team and workforce for this error, it would have been prior to the tenure of many employees, though it does not reflect well on a company which is attempting to prove it is a successful business.

BT sells fleet management business and diversification opportunity

Just as almost every telco is searching for new ways to diversify and target non-core revenues, BT has decided to sell its Fleet Solutions business unit.

Financial details of the transaction have not been unveiled, but asset management group Aurelius have purchased the fleet management services business from BT. The telco has suggested the transaction will enable the team to focus investments and attention on more core activities. However, this divestment seems to fly in the face of trends, with telcos looking to secure additional revenues beyond the traditional.

“The acquisition of BT Fleet Solutions by Aurelius is an exciting and significant step forward in its development and will deliver for its customers, people and the BT Group,” said Gerry McQuade, CEO of BT’s Enterprise unit.

“Over the past five years, our Fleet business has grown into a multi-award-winning market leader in the sector. The unrivalled expertise and experience of its people in managing and maintaining complex fleets has been key to this success.”

With 65 in-house garages, 500 partner facilities and 950 employees, BT Fleet Solutions manages more than 80,000 vehicles for over 26 blue chip customers across the UK. Although this is business which is far removed from the core business of telecommunications, it could have been viewed as a path for the telco to offer services above and beyond traditional enterprise connectivity, especially as more fleets look to IOT to manage operations more effectively.

Fleet management is an area which has been suggested as one which could benefit from the spreading wings of connectivity and the blossoming world of IOT. More vehicles are being connected and monitored year-on-year, presenting an opportunity for telcos to expand revenues and expertise beyond traditional battle-grounds. This is where we are slightly confused by the transaction.

Of course, fleet management is more than connectivity. The nuts and bolts of the business are nuts and bolts, a completely different segment than where BT’s heritage lies. However, this was a foot in the door, an established presence in an enterprise vertical which the connectivity business could build on and offer customised solutions. Telcos are looking for ways and means to validate connectivity in new applications and services, and this could have been a way to do so.

However, it does seem the telco is doubling down on core business activities as opposed to exploring new options to diversify.

“With BT’s renewed focus on investing in the best fixed and mobile networks in the UK, and with BT Fleet Solutions well positioned to achieve further growth, the time is right for the business to find a new home,” said McQuade.

This is where the transaction becomes more understandable. BT, and all the other telcos for that matter, are under considerable pressure to boost the connectivity foundations of the UK. Money will have to be spent on deploying new infrastructure, both fixed and mobile, to ensure networks can meet the standards set forth by ambitious government targets. You only have to look at Prime Minister Boris Johnson’s recent objective of 100% full-fibre coverage by 2025, potentially cutting eight years off previous targets, to understand this pressure.

We understand the short- and mid- terms demands on BT, as well as the financial pressures it is currently facing, however we can’t help but feel this is a missed opportunity.

Telcos are searching for ways to engage the verticals with solutions which go beyond traditional connectivity solutions, and the BT Fleet Solutions business unit looked to be the perfect foundations to aggressively seek new revenues with customisable solutions built on IOT, AI and edge computing.

BT CEO calls for more state assistance after delivering flat numbers

UK operator group BT reported a small revenue decline in Q2 2019 and once more fished for public help with its network investment.

In his comments accompanying its quarterly earnings announcement, Chief Exec Philip Jansen acknowledged that BT needs to raise its game across the board and said all the right things about Prime Minister Boris Johnson’s bold ambitions for the fibre rollout. But he also maintained his predecessor’s stance of indicating that he expects the government to materially contribute to the effort.

“In building a better BT for the future we need to be even more competitive,” said Jansen. “We will continue to take decisive action, including on price, to further strengthen our customer propositions and market position, both to respond to any short-term market pressures and to capitalise on longer-term opportunities.

“On network investment, we welcome the government’s ambition for full fibre broadband across the country and we are confident we will see further steps to stimulate investment. We are ready to play our part to accelerate the pace of rollout, in a manner that will benefit both the country and our shareholders, and we are engaging with the government and Ofcom on this.”

The numbers themselves were nothing to write home about, with both revenues and EBITDA declining by 1%. “BT delivered results in line with our expectations for the quarter, with adjusted EBITDA declines in Consumer and Enterprise partly offset by growth in Global,” said Jansen. “We are on track to meet our outlook for the full year.”

It seems that investors were hoping for a bit more, however, with BT’s shares down 4% at time of writing. New Prime Minister Boris Johnson has indicated a greater inclination to spend big than his predecessors and Jansen seems to be challenging him to put his money where his mouth is.

BTQ2 2019 table

Unlimited data is inevitable with 5G, but try telling operators that

We’re quickly moving into the 5G era and many assume the concept of unlimited data bundles will be commonplace, but how will the telcos fare in this new world?

As it stands, the telcos are under pressure. This is not to say they are not profitable, but many shareholders will question whether they are profitable enough. Tight margins and a squeeze on core revenue streams are common enough phrases when describing telco balance sheets, but this could get a lot worse when you factor in unlimited data packages.

As Paolo Pescatore of PP Foresight pointed out, when you offer unlimited data you are effectively killing off any prospect of revenue growth per subscriber in the future. In some markets, there are still fortunes to be made, but in some, such as the UK where 4G subscription penetration is north of 100%, where are you going to make the growth revenues from when consumers are demanding more for less?

More consumers are seeking unlimited or higher data allocations but are not willing to pay for the experience. Some MNOs might be able to resist, but the more rivals who offer such tariffs the more the rest will be forced into line. It’s the race to the bottom which is profitable in the short-term, but growth will end quickly. The price per GB is only heading one direction and unlimited data allocations will end the prospect of upgrading customers.

O2 fighting for air

This is the conundrum which the telcos are facing in the UK right now. All four have announced their 5G intentions and all four are promising big gains when it comes to the next era of connectivity.

Starting with O2, the only one of the four MNOs not to have released 5G pricing to date, this is a telco which looks to be in the most uncomfortable position. Over the last few quarters, the management team has boasted of increased subscriber numbers, but this can only go on for so long in the consumer world. Soon enough, a glass ceiling will be met and then the team will have to search for new revenues elsewhere.

This is of course assuming it plans to go down the route of unlimited data, it might want to stick with the status quo. That said, if everyone else does, it will not be able to fight against the tide for fear of entering the realm of irrelevance.

The issue here is one of differentiation. The idea of attracting new customers by offering ‘bigger, meaner, faster’ data packages will soon end and telcos will have to talk about something else. O2 does have its Priority loyalty programme, but with rivals launching their own version this USP will fade into the noise.

Differentiation and convergence are two words which have been thrown around a lot over the last few years, though O2 has thus far resisted. Last year, CEO Mark Evans suggested he was not bought into the convergence trend and would continue as a mobile-only telco, though this opinion does seem to be softening.

If O2 is going to be competitive in the almost inevitable era of unlimited data, it will have to source growth revenues from somewhere. It is making a push into the enterprise connectivity world, which will bring new profits to the spreadsheets, though does it want its consumer mobile business to stand still?

Bundles of fun

This is where the other telcos in the UK have perhaps got more of a running start in the 5G era. EE has its connectivity assets in broadband and wifi to add value, as well as a content business of some description. Three is already known as the data-intensive brand, while its FWA push will take it into some interesting connectivity bundling options. Vodafone also has FWA, a fibre partnership with CityFibre and is arguably the leader in the enterprise connectivity market. The rivals are offering more than mobile connectivity as a stand-alone product.

Looking at Vodafone to begin with, the recent announcement is certainly an interesting one. The innovative approach to pricing, tiering tariffs on speeds not data allocation, will attract some headlines, while it is also super-charging its own loyalty programme, VeryMe. It has secured content partnerships with the likes of Sky, Amazon, Spotify and gaming company Hatch, while its FWA offering also includes a free Amazon Alexa for those who sign-up early enough.

Combining the FWA product or its fibre broadband service, courtesy of CityFibre, also gives them the ‘connectivity everywhere’ tag, a strength of BTs in recent years, to allow them to communicate and sell to customers in a different way. Perhaps it is missing a content play to complete the convergence bundle, but it is in a strong position to tackle the 5G world and seek additional revenues should the unlimited craze catch.

The same story could be said of Three. With the acquisition of UK Broadband, it has forced itself into the convergence game and kicked off the ‘race to the bottom’ with an unlimited 5G data offer. As long as you have a Three 4G contract, you can get 5G for no additional cost, assuming you have a 5G compatible phone of course.

Three’s strength and weakness lies in its reputation. It is known for being the best telco if you have an insatiable data appetite, this works very well for the 5G era, though it is also known for having a poor network. Three regularly features at the bottom of the network performance rankings, especially outside of the big cities where it has not done nearly enough to satisfy demands.

This will of course change over the next couple of months. Three is working to improve its network with additional sites and a new Nokia 5G core, however it will have to do a lot to shake off the reputation is has acquired over the last few years.

EE is perhaps the most interesting of the four. It has lost its position as the market share leader when it comes to 4G subscriptions, but it does have the reputation for being the best in terms of performance throughout the country. It is regularly the fastest for download speeds, but its 5G pricing is by far the most expensive to be released so far.

That said, with the BT assets it has for wifi and broadband, as well as the content options, there is plenty for the consumer to be interested in. Should BT be forced to readdress the pricing conundrum, it might not have the fear regarding a glass ceiling on revenues as there are plenty of other products to engage the consumer. It will be able to find additional revenues elsewhere.

MVNO no you didn’t

Outside of the MNOs, you might also start to see some competition. MVNOs are nothing more than ‘also rans’ today, but Sky has officially entered the 5G race. This is an interesting competitor, one who could cause chaos to the status quo.

Firstly, understand mobile is not the primary business for Sky. This is an add-on, where it is seeking to drive additional revenues and attract more customers through bundled services. It is the leader in the UK when it comes to premium content and has a thriving broadband unit also. Sky can add services on top of connectivity to make itself seem more attractive than the traditional mobile service providers.

Then again, there are only a couple of MVNOs who can pose this challenge. Sky is one, while there are persistent rumours Amazon wants to get involved with the connectivity game and Google has its own Fi service. These are also companies who are at the mercy of the MNOs in terms of the commercial agreement with the MVNOs, so damage is likely to be limited unless one network owner decides to go down the wholesale infrastructure route.

But you cannot ignore these companies. They are cash-rich, constantly searching for new ways to make money and have incredible relationships with the consumer. They are also the owners of platforms and/or services which are very attractive to the mass market; bundling could be taken into a new context with these firms.

Diversity is our strength

This is of course only looking at the services which are common throughout telco diversification plans today, there are other options. Orange has launched a bank, has experimented in energy services and is making a move towards the smart home in partnership with Deutsche Telekom. Over in Asia, gaming is an important element of many telcos relationships with consumers and this trend is becoming much more prominent in the European markets also.

Elsewhere, the smart home could certainly offer more opportunities for telcos to add-value to an emerging ecosystem, while the autonomous vehicles offers another opportunity and so does IOT. The issue which many of these telcos are facing is competition from the OTTs. Arguably, the battle for control of the smart home might already have been won by the OTTs, though the same could be said for autonomous vehicles and IOT.

In many of the emerging segments, telcos will remain a connectivity partner though they certainly need more than that. This will remain a consistent stream of revenue, though it will also sleepwalk telcos to utilitisation. In IOT, as an example, the major cloud players are crafting business units to engage enterprise businesses for edge and IOT services; this is a market which the telcos would love to capitalise on for both enterprise and consumer services.

Security is another which is increasingly becoming a possibility. The concept of cybersecurity is generating more headlines and consumers are becoming more aware to the dangers of the digital world. Arguably, the telcos are in the strongest position to generate revenue from this segment; there is trust in the brand and they have largely avoided all the scandals which are driving the introduction of new regulation.

Unlimited data is certainly not commonplace today, but with the services of tomorrow promising to gobble up data at an unfathomable pace, it would surprise few to see more people migrating to these tariffs. The question is how you make money once you have migrated everyone.

Diversification and the acquisition of new products is not a simple task, but then again, it is becoming increasingly difficult to imagine how single revenue stream telcos will be able to survive in the world of tomorrow.

 

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BT faces another Ofcom probe

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

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

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

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

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

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

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

BT Mobile waiting until later in the year to jump on EE 5G network

UK operator BT, which duplicates the EE network via its own-branded MVNO for some reason, is waiting until the autumn to offer 5G to its subscribers.

Amid great fanfare BT-owned EE formally launched its 5G network at the end of May, but it has taken until July for BT to announce its own move. The only guidance BT is offering its subscribers is that they can expect to have access to the wonders of 5G sometime in the autumn. This implies the launch is likely to slip towards November as otherwise you’d expect a more precise commitment.

“We’re bringing together the best fibre and mobile connections to help keep our customers connected, both on the go and at home,” said CEO of BT’s Consumer division (which includes EE) Marc Allera. “Launching 5G for BT customers will give them the opportunity to experience the fastest mobile speeds in the busiest areas of the UK, and our BT Plus customers will have the first opportunity to sign up for 5G.”

So not all BT subscribers will have access to even this delayed offering, with BT apparently concluding 5G might be an effective carrot to entice its customers to upgrade to a premium service. Alternatively they could just switch to EE, get the same mobile network straight away and save themselves the premium. Intriguingly BT doesn’t seem to be using its new stripped-down logo for this 5G announcement. Perhaps it fears it will put people off.

High road or blind alley? BT’s campaign for “open access” to street furniture

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article Antony Tomlinson, CEO of network builder Ontix, which has a concession agreement with the council in Westminster, shares his views on the concession model, addresses BT’s suggestion that they’re the wrong way to go, and explores what we should do to accelerate the roll-out of next-generation networks.

Local councils who want their street furniture to host telecoms equipment have generally chosen to agree concession contracts with wholesale infrastructure providers (or “WIPs”). The WIP takes on the work and the business risk, paying a license fee to the council and charging a wholesale fee to the operators.

BT was party to several such concessions, but now it is opposed to them.  In March, it called for “open access” to street furniture: indeed, it now believes that concessions are a barrier to investment, and it is proposing an alternate model in which operators engage separately and directly with the council.

BT has started an interesting discussion at a pertinent time, now we’re starting to see small cells being deployed in volume. However, if we want more small cells – plus WiFi and other technologies as well – then we can’t expect the operators to build all of it. We need more collaboration, with WIPs providing infrastructure which they can then all share. Unfortunately, BT’s proposal would prevent the collaboration that we now need more than ever.

The BT narrative

BT’s press release was cleverly framed.  It focused squarely on the concession model, as if there couldn’t really be any other reasons why more small cells have not been deployed to date. It chose targets that would resonate: councils, red tape, middlemen. It said it was now clear that concessions were a barrier.  Luckily, BT had the solution: “open access”. There wasn’t much detail on how it would work in practice, but that was for another day. The key message – a proven crowd-pleaser – was that it would “take back control”.

The reaction was interesting. Some readers found it ironic: BT hadn’t shown much enthusiasm for “open access” when other providers wanted to access BT’s ducts and poles. And was BT really negotiating here as it prepares to engage – and maybe displace – incumbent WIPs? However, a number of commentators were cautiously positive, including Jamie Davies in his article for this site (“BT pleads for open access to street furniture”).

We need small cells on street furniture.  Deployment hasn’t happened at the rate we would want to date (although we can see some significant deployments now), so we should absolutely debate what needs to change. But let’s frame our debate right. Unfortunately, BT’s narrative doesn’t do this. Their basic statements simply don’t bear scrutiny, for example:

  • There is no evidence to suggest that concessions have been a barrier to small cell deployment. On the contrary, most – if not all – of the small cells that have been deployed to date have been deployed under concessions, including in the City of London, Hammersmith and Fulham, and Aberdeen.
  • Concessions are “open”: a WIP is incentivised and contractually obliged to provide access and services to all operators on a fair and non-discriminatory basis. It is simply wrong to imply that concessions grant a single player “exclusive access to council-owned street furniture”.

It really isn’t credible to suggest that the reason there are no small cells in Carlisle and Plymouth is because of the concession, as BT has implied. We need to reframe the discussion more realistically, or we will direct friendly fire at the wrong targets.

Reality check

There are some very basic reasons why more small cells haven’t been deployed to date. The operators have been focused on macros, and upgrading them for 5G. Some operators are only just piloting small cells now. Moreover, the vendors are only just starting to produce versions of their small cells that are optimally small. Previous generations of units were often too big and heavy for our street furniture, especially if they also needed separate housings and external antennas.  Maybe we should be more realistic about why we are where we are.

There is nonetheless a more fundamental challenge that won’t fix itself.  Small cells provide less coverage and less capacity than macros, so the TCO and the lead time needs to be reduced proportionately if they are ever going to be a default solution. Unfortunately, the cost and complexity of small cell deployment doesn’t scale down easily due to several factors:

  • Deployment remains complex and costly if an operator has to do it all by itself, ie. building relationships with lots of councils, and resourcing and managing large numbers of small deployments – especially if councils have limited resources to streamline and support the process.
  • Connectivity is a major blocker if an operator needs its own fibre connection to every post.

What do we do?

Fundamentally, the operators need someone independent to deploy and manage shared infrastructure that they can license, so they don’t have to build their own “DIY”.

BT’s proposal cannot help here: it leaves operators doing it all DIY.   But the concession model can help – and it really does. In Westminster, where Ontix has a concession with the council, we are building a hybrid fibre/microwave network (“Metrohaul”) to provide high capacity / low latency / low cost connectivity to connect street furniture across the borough for different operators and different technologies – and on lead times that would otherwise be unthinkable. We are also planning a new shared antenna solution in Oxford Street, so that different operators can use the same new street furniture when the area is redeveloped. These are things that wouldn’t happen in a model that left operators to deploy on a DIY basis.

Of course, the concession needs to be set up right. The council’s priority should be the public benefit: and the WIP should be neutral.  But if it’s done well, a concession can unlock potential that would be lost in a DIY model, where operators would spend their time and money trying to landgrab assets and then build duplicate infrastructure because there was no larger strategy.

We aren’t suggesting that concessions are the only answer, or that every council should do exactly the same thing. It takes time to run a tender for a concession like Westminster. A “concession lite” might be more appropriate for a town where there’s less demand but the council wants to contract resource instead of building up its own team. Maybe some councils don’t need a concession at all. But we are suggesting that, far from being void, the concession model is very relevant.

The councils themselves are really best placed to determine their own approach, so let’s encourage them to do something – but give them the latitude to decide what to do and how to do it.

UK telcos ask for clarity sooner rather than later over Huawei – report

The UK’s largest mobile operators are reported getting tired of Government indecision, drafting a letter to Cabinet Secretary Mark Sedwill requesting clarification on the situation.

The BBC is claiming to have seen a draft in which a decision has been urged. As it stands, the MNOs are in the telco version of purgatory. The 5G world is fast approaching, but with the Government getting comfortable on the fence, no-one will want to make any investment decisions, a wrong-turn could prove to be very expensive.

In response to the rumours of such a letter, the UK Government has asked for patience.

“The security and resilience of the UK’s telecoms networks is of paramount importance,” said a Government spokesperson. “We have robust procedures in place to manage risks to national security and are committed to the highest possible security standards.

“The Telecoms Supply Chain Review will be announced in due course. We have been clear throughout the process that all network operators will need to comply with the Government’s decision.”

What is worth noting is the BBC coverage perhaps reflects a sense of urgency which is not felt by the telcos. Having reached out to contacts in the industry, the tone of urgency which has been reflected in the article does not seem to represent the climate for the telcos. It is a sensitive issue, and the message seems to be clear; we’re not going to force the hand of the Government into a speedy decision.

“We do not comment on draft documents,” said a Vodafone spokesperson. “We would ask for any decision regarding the future use of Huawei equipment in the UK not to be rushed but based on all the facts.”

“We are in regular contact with UK Government around this topic, and continue to discuss the impact of possible regulation on UK telecoms networks,” said a BT spokesperson.

That said, a decision needs to come sooner rather than later.

Currently the MNOs are in a bit of a bind. Money needs to be spent and networks need to be built to ensure connectivity in the UK meets the standards demanded of the digital economy. However, as there are so few vendors in this segment of the industry clarification on the Huawei situation is critically important.

Without Huawei, the threat of decreased competition might lead to less attractive commercial terms, which could lead to increased prices for the consumer as telcos drive ROI. Telcos will want Huawei to be included in these talks. Right now, no decisions can be made. If the telcos go forward without Huawei, they might be missing a trick, but if they do and the Supply Chain Review bans the firm, the cost of ‘rip and replace’ would be painful. The telcos are just sitting and waiting.

The outcome of the review has already been potentially leaked, suggesting Huawei would be given the greenlight. This leak from the National Security Council led to former-Defence Secretary Gavin Williamson being sacked, though this is not to say the leak is accurate. Last week, the UK hosted US President Donald Trump, and while there was no eureka moment, who knows what was discussed behind closed doors.

The US is sticking by its anti-Huawei position and has even suggested with-holding access to security data from countries who are exposed to the vendor.

That said, there might have been no material conversations held on this topic over the course of the visit. Theresa May is no-longer the political leader of the UK and Trump might have thought it nothing more than a waste of hot-air. This is perhaps one of the biggest issues which the country is facing at the moment; who knows who is going to be leading the Government over the next couple of months.

The Tory party members are going to be choosing the next leader of the Conservative party over the next few weeks, and the tone of 10 Downing Street might change. May seemed to have a much more internationalist approach to politics, though certain candidates are much cosier with the White House. Bookies favourite Boris Johnson is certainly chummier than most with the US President, though others will be in deeper conversations with US delegations than some. This could have an impact on the relationship with China in the long-term, and subsequently, on any decisions made surrounding Huawei.

The consequence of this decision is not only impacting the future of networks in the UK, but also the past. Yes, telcos are reluctant to spend now, but any decision banning Huawei would result in ‘rip and replace’ programmes. Vodafone has already stated it has Huawei equipment on 38% of base stations around the UK and having to replace RAN equipment would set its 5G ambitions back two years. Telcos would also have to consider 4G investments made over the last couple of years.

Although the other telcos have not been as forth-coming with their exposure to Huawei equipment, it would be a fair assumption the vendor’s kit is scattered throughout the network. This is not just a challenge for Vodafone or EE alone, this is an industry-wide worry.

This is not to say the UK would turn into a massive not-spot, but it would have severe implications on the connectivity ambitions of the country.

Some might have expected a decision from the Supply Chain Review in May, but we are still waiting. External factors have perhaps taken priority, the next Prime Minister and the Trump State Visit for example, but that will come as little consolidation for the telcos who are prepping investments.

The UK should not rush this decision, but the longer it leaves the telcos in purgatory the more the country slips behind in the 5G race. Uncertainty is the enemy of telcos and who knows which way this decision will go.

Broadband universal service becomes a thing in the UK

UK telecoms operator Ofcom has officially launched something called the broadband ‘universal service obligation, that supposedly entitles everyone to decent broadband.

The minimum download speed required of a broadband connection under this scheme is 10 Mbps, which really shouldn’t be that much of a problem for Openreach, especially considering the obligation doesn’t kick-in until March of next year. Having said that there are apparently 600,000 homes and businesses that still don’t have broadband up to that standard.

Despite the fact that it’s the dominant broadband supplier in the UK, BT still seems to thing being chose by Ofcom to deliver this bare minimum is a big deal. “BT is very pleased to have been chosen by Ofcom to deliver the government’s promise to connect the UK,” said BT boss Philip Jansen. “It’s great news that the majority of homes and businesses in rural areas can choose a fixed wireless service from EE to solve the problem of slow broadband and get speeds way faster than 10Mbps.

“Through Openreach we are now extending our fibre broadband network to reach an additional 40,000 premises within the USO area for whom FWA is not the answer. We’ll continue to drive discussions with Ofcom, Government and industry to explore alternative options to connect up every property in the country and ensure no-one is left behind.”

“Connecting the UK with decent broadband is absolutely key to ensuring that Britain’s digital infrastructure is fit for the future,” said John Lamont MP, Chair of the All-Party Broadband and Communication Group. “Fixed Wireless Access is already transforming people’s lives, providing a fast and reliable service that means they can do everything from everyday online tasks like banking or shopping to streaming films or playing games. There’s still lots more to be done, but this is a positive step forward in the right direction.”

It’s interesting that even the MP is banging on about FWA, presumably having been asked to do so by BT. It makes sense that BT would favour this as a cheaper way of connecting remote locations, but it still reckons over 100,000 of those will be too costly to connect to qualify for this broadband USO without chipping in themselves. So, in summary, around half a million locations that don’t currently have at least 10 Mbps broadband will be able to demand it of BT next year.