Facebook buys into Jio’s disruptive mission

Reliance Industries has announced Facebook will invest roughly $5.7 billion for a 9.9% stake in its telecoms and tech business unit.

Facebook is an internet company which is still overly reliant on a direct correlation between userbase and revenue growth, and India is a market with a substantial number of unconnected individuals. As one of the fastest growing telecoms and technology businesses in the second most populous country in the world, this is a smart bet.

If $5.7 billion is table stakes to get involved in the Indian market, it could be viewed as a fair price for Facebook to grow its userbase from roughly 300,000. With an estimated population of 819 million aged between 15-64, there is massive potential for growth for the social media giant.

And as a disruptive, fast-growing telco, with side-bets in smartphones, IOT devices, cloud, edge computing, AI, big data and healthcare, Reliance Jio certainly has the ambition which could match Facebook.

Changing fortunes in Indian telecoms market (2018-2019)
Telco Market share** Subscriptions* Year-on-year
Reliance Jio 32.14% 370,000,000 24.3%
Bharti Airtel 28.43% 287,591,000 (1.2%)
Vodafone Idea 28.89% 304,000,000 (27.3%)
BSNL 10.26% 118,025,372 3.2%

* Omdia World Information Series

** Telecom Regulatory Authority of India data

In the press materials, Reliance Jio has stated the focus will be India’s 60 million micro, small and medium businesses, 120 million farmers and 30 million small merchants, suggesting WhatsApp could play a significant role. As a country which lacks wide-spread traditional banking facilities, alternative digital payment platforms are a hotbed of potential.

While Google, Apple, Tencent and numerous others are already eyeing this opportunity, this tie-up with Reliance Jio could provide a material advantage. For example, as part of the partnership Jio Platforms, Reliance Retail and WhatsApp will enter into a commercial partnership agreement to further accelerate the JioMart platform. This direct link to existing Jio customers is a very attractive proposition for the WhatsApp enterprise team.

“When Reliance launched Jio in 2016, we were driven by the dream of India’s Digital Sarvodaya – India’s Inclusive Digital Rise to improve the quality of life of every single Indian and to propel India as the world’s leading Digital Society,” said Mukesh Ambani, Chairman and MD of Reliance Industries.

“All of us at Reliance are therefore humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India for the benefit of all Indians.”

As an investment, this transaction fits in perfectly with the overarching Facebook mission to ensure more individuals are brought into the digital society.

While Reliance Jio is a mainstay of the telecoms fraternity nowadays, it wasn’t long ago it was a major disruption to the Indian telco industry, offering radically reduced data tariffs to the masses. It democratised connectivity for Indian consumers, set against a backdrop which had become a very stagnant industry. Like investments in the Telecom Infra Project (TIP), the Libra digital currency and Peruvian telco Internet para Todos Perú (IpT Peru), the objective for Facebook is to bring connectivity to more people.

The TIP mission is to commoditise network infrastructure to bring down the price of deploying equipment in developing markets and rural environments, while the Libra stablecoin creates an entry point to the digital economy for those who lack traditional banking facilities, and IpT Peru is bringing the internet to unconnected communities with OpenRAN infrastructure. Reliance Jio is another company which is helping to connect the unconnected, but why should Facebook care so much?

Facebook revenue streams (2016-2019, year-end)
Year Advertising Other Split (%)
2019 69,655 1,042 98.5/1.5
2018 55,013 825 98.5/1.5
2017 39,942 711 98.2/1.8
2016 26,885 753 97.2/2.8

Facebook investor relations (revenues in millions USD – $)

Although Facebook has been attempting to diversify its revenue streams, the majority is still attributable to the core advertising business. This is a unit which relies on the userbase; there are only so many ads which can be served to an individual before the experience is impacted. To ensure revenues grow but users are not irritated by an overly commercialised platforms, new users need to be attracted to the platform.

In the developed markets, Facebook is reaching saturation point. It will have to add additional services in these markets to continue growing revenues, as well as attract users to the platform in the developing markets.

The financial growth which Facebook has demonstrated year-on-year is quite remarkable, though this is largely due to the core advertising business. The social media giant has largely failed to drive into new markets, with many acquisitions still waiting to pay dividends. The $16 billion WhatsApp acquisition is certainly one, but with the Reliance Jio partnership there is an opportunity to add a greater enterprise and payments venture into the mix.

Although the primary mission is most likely to expand the userbase for the core social media platform, the ambitious nature of Reliance Jio and embryonic stage of the Indian digital economy offers Facebook a significant opportunity to develop new ventures. This is a market which could act as an incubator for the diversification Facebook has been attempting for years.

UK’s £1 billion Shared Rural Network is going ahead

The Shared Rural Network is an innovative idea from the UK Government, and now it is ready to roar forward, promising 95% geographical coverage by 2025.

The agreement will be signed by the CEOs of the four UK MNOs today, cementing down a £532 million investment from the telcos which will be bolstered by an additional £500 million from the UK Government. As well as eliminated total ‘not spots’ in the connectivity landscape, the Government has also said the deal will improve connectivity for 280,000 households and 16,000km of roads across the country.

“For too many people in the countryside a bad phone signal is a daily frustration,” said Digital Secretary Oliver Dowden. “So today we’re delivering on the Prime Minister’s 100-day promise to get a £1 billion landmark deal signed with industry to end poor and patchy mobile rural coverage.”

While this is not the first example of a Government pushing through shared infrastructure to improve connectivity coverage, it is a heavy financial commitment. The £1 billion will be used to construct and maintain the network over the foreseeable future and is a win for the bureaucrats. There aren’t many governments around the world who have been this successful in convincing fierce rivals to play nice alongside each other.

That said, there were rumours about a splinter group over the last few weeks. Although the telcos have seemingly been very open-minded about the collaboration, rumours emerged to suggest BT was being an awkward partner.

As the telco with the widest coverage across the UK, BT/EE has the most to lose should telco neutral infrastructure become more widespread. As part of the Shared Rural Network negotiations, the telcos were supposed to be opening-up their own infrastructure to rivals though some sort of compensation would be part of the agreement. BT has been negotiated hard, to such a degree a splinter group between the other three MNOs was suggested, to create a shared network without BT.

With the signatures soon to be on this agreement, it seems the bickering has been negotiated out, though it demonstrates how delicate a procedure this initiative was and is.

Nevertheless, this should be taken as the gold standard for collaboration, not only for intra-industry benefits but also public-private relationships. It is an excellent example of a government understanding the pain-points of an industry and responding with a logical solution which not only benefits the industry but consumers and businesses.

The success of this venture could also have interesting ripple effects in other regions around the world.

Africa is a continent which has always struggled in the digital economy, aside from a few small areas. Low ARPU and increasingly expensive demands for network deployment paint a difficult picture when it comes to commercial feasibility, though telco-neutral networks could be an option. We suspect there will be moneymen across the world watching the UK experiment closely with an eye on replication for profits in developing nations.

Of course, it is not only the developing nations who could benefit from such initiatives. The US, for example, is a vast nation with some very sparsely population regions. The digital divide can be as dramatic here as other less economically fruitful nations, and this could be an interesting solution.

Aside from the financial and societal benefits, this initiative could also create opportunities for more embryonic technologies in the telco world.

“Network sharing is a relatively new concept to operators, and they need the tools to enable them to successfully create infrastructure that doesn’t compromise on performance,” said Steve Papa, CEO at Parallel Wireless.

“OpenRAN (radio access network) is a new approach to building networks, being trialled today by major operator groups, which can make technology from different suppliers work together, and reduces overall complexity and costs. Operators and the government will need to strongly consider new approaches such as OpenRAN, if they want to accelerate their vision of building affordable shared networks, to close the digital divide.”

Although there is excitement about the prospect of OpenRAN as a disruptive force in the industry, few telcos want to drive forward aggressively with the technology being at such an early stage of development. With the Shared Rural Network, some of the risk might be mitigated, however.

The Shared Rural Network is designed to tackle connectivity in some of the more sparsely populated areas. The telcos should view this as an opportunity; is there a better time to trial a technology which could go wrong when there are likely to be very few customers around?

Industry Comments:

Mark Evans, CEO of O2

I’m proud of the work we’ve done to secure the Shared Rural Network agreement, ensuring customers living in rural areas will be able to get the fast and reliable coverage they need and deserve. The collaboration between the industry, government and Ofcom should be seen as a leading example of how to deliver infrastructure investment and we look forward to now rolling the Shared Rural Network out as quickly as possible

Philip Jansen, CEO of BT

High-speed mobile connectivity is a central part of modern life whether you live and work in a city centre or in the countryside. Building out fast and reliable access to 4G across the country is a national mission and we’re playing a leading role, collaborating with government and the other mobile network operators in the UK, to make this happen. The Shared Rural Network is something we can all be proud of

Dave Dyson, CEO of Three

The Shared Rural Network is a game-changer for the country with coverage from each of the four operators expanding to at least 90% of the UK’s geography

Nick Jeffery, CEO of Vodafone UK

A rural postcode should not be a barrier to receiving a decent mobile signal. Together, we have created a programme that is unmatched anywhere in the world. It will mean an end to mobile ‘not spots’ for people in the more remote areas whether they are at home, at work or on the move. We will now get on with the job of delivering it

World Bank continues mission to make Africa more investable

The World Bank has selected Progressus to head-up the second phase of its ambitious African Regulatory Watch Initiative (RWI).

The African RWI is an interesting and unique project, aiming to tackle some of the more unique challenges faced across the African continent. Despite progress being made in the connectivity field, there are still some very difficult hurdles to overcome to close the digital divide on the continent, as well as place Africa on a level playing field with more developed regions.

The RWI will aim to tackle some of these challenges, such as licensing, spectrum allocation, taxation and tariffs, as well as appropriate regulatory oversight and accountability.

“This is an extremely exciting project,” said Olivier Jacquinot, who heads up RWI at Progressus. “RWI Phase 1 managed to identify some key regulatory levers that pushed forward the development of broadband in some countries. Phase two will deliver an even greater level of analysis – and help keep the African telecoms industry moving forward.”

Despite being managed by the World Bank, the financiers are staying pretty quiet regarding their own drivers and ambitions. That said, it might not be difficult to guess, these are moneymen after all and have some very obvious objectives.

One objective might simply be confidence. Bankers and venture capitalists are always looking for new investments, and the telecommunications industry is proving to be increasingly popular. An initiative which provides an improved and standardised regulatory environment across the continent might well be an important step to providing confidence to invest in the African telecoms and infrastructure industries.

Despite there being great potential for investors on the continent, Africa has several unique challenges. Accessibility, both financial and technological, is a significant one, though an incredibly fragmented and varied regulatory landscape across the continent is an issue.

At AfricaCom in November, MTN CEO Rob Schuter used the acronym CHASE to indicate the major challenges on the continent; Coverage, Handsets, Affordability, Service bundles and Education. Some of these challenges can be addressed through industry initiatives, such as the RWI, though others need much bigger thinking. Making the economics of network deployment or handset accessibility is a significant barrier.

On numerous occasions, more nefarious challenges such as government and regulatory corruption are raised as barriers also. Such rumours will always make investors nervous.

The first phase of the initiative was launched in 2017, and due to the success, the second phase will be launched imminently. 22 regulators have signed up so far, perhaps demonstrating how desperate some of these nations are for external investment; no-one likes being told how to govern or regulate their own sovereign nations after all.

In the second phase, Progressus will introduce the RWI Index. This ranking system will benchmark each of the nations involved in the RWI. The Index will be based on spectrum management, Universal Service Funds management and other Government support measures and regulatory governance.

Africa is a unique continent with some very unique challenges, and this initiative should provide a stable route forward. It isn’t the most revolutionary idea, but there is no need to reinvent the wheel sometimes.

Loon claims second customer win in Amazon rainforest

Google-owned balloon connectivity firm Loon has officially signed its second customer, Internet para Todos Perú, to deliver the internet to remote regions in the Peruvian Amazon.

The agreement between Loon and Internet para Todos Perú will kick-off in 2020, providing connectivity to 200,000 people in the Peruvian Amazon. This is the second commercial agreement signed by Loon, and the first sustained, non-emergency use of the technology in South America.

Owned by Telefónica, Facebook, IDB Invest and CAF, Internet para Todos Perú is an open access wholesale rural mobile infrastructure operator, aiming to deliver the internet to regions which are considered commercially unattractive. Although Internet para Todos Perú is telco neutral, this agreement with Loon will be to deliver connectivity to Telefonica’s customers in the first instance.

“Internet para Todos was born with the purpose of connecting millions of Latin Americans, including 6 million Peruvians without adequate access to mobile internet,” said Teresa Gomes, CEO of Internet para Todos Perú.

“This challenge involves reaching difficult access areas with innovative and sustainable technologies that allow us to overcome geographical, technological and economic complexities.”

For those not familiar with Loon, the business is a graduate of Google’s Moonshot Labs. A seemingly ridiculous idea to use hot air balloons to float radio technology above the worlds’ most difficult to reach regions. These are the areas where laying traditional connectivity infrastructure is not a viable option, ROI would be far too low, so the absurd ideas are considered.

The balloons, floating 20km above sea level, will house 4G radio equipment. Signals from ground infrastructure will be distributed between the network of floating cell sites before relaying to 4G devices on the ground.

Discussions with Telefonica have been on-going for months, though Loon seemingly proved its worth by answering calls from the Peruvian Government and Telefonica following a magnitude 8.0 earthquake in May. The team had already been in the process of laying infrastructure in the region, and it took less than 48 hours for the balloons to arrive and start delivering 4G to users below.

While permanent contracts with telcos will of course be more lucrative to the Loon business, assistance in disaster situations is another element. In various regions throughout the world, the Loon team will be laying infrastructure for the worst-case scenario, though it does give the team a head-start when negotiating with the local telcos.

This is not the first time Loon has reacted to natural disasters in the region. In 2017, Loon worked with Telefonica to support efforts in flooded regions in Peru, and a few months later, AT&T and T-Mobile US after Hurricane Maria impacted Puerto Rico. In the aftermath of such natural disasters, Loon’s assistance was critical to replace damaged communications infrastructure, but the business does have to be more than an emergency services tool.

This agreement is a positive step forward, but it is only the second. At some point, the Loon team will have to start making news headlines more often. There is a huge amount of potential for Loon, though at the moment it doesn’t appear to be more than a quirky idea.

Telekom Kenya and Telefonica clearly see the benefits of the technology, but there are hundreds of telcos across the world who fit the customer profile. The vast majority will be in the larger developing markets, where low ARPU inhibits the deployment of traditional connectivity infrastructure, but there are also niches in the developed markets. Australia or the US for example, where vast landscapes and remote communities present the same ROI challenges.

Telefonica is an excellent customer win, this is one of the largest telcos worldwide after all, and there will be plenty of opportunity to cross-sell to other national business units. However, at some point Loon will have to prove it is more than an interesting idea and announce more contracts.

Handsets are now the biggest hurdle to adoption in Africa – MTN CEO

Connecting the African continent is always going to be a complicated job, but the availability of handsets is now the biggest challenge according to MTN CEO Rob Schuter.

When most people visit the continent of Africa, they are likely drawn to touristic countries such as Morocco, South Africa or Tunisia, and while some scenes might jar, the picture is misleading. These countries might not be as advanced as those in Europe or North America, but they are not a fair representation of the wider continent either, as Schuter highlighted at AfricaCom 2019.

MTN has roughly 220 million subscribers across the region, though only 87 million are mobile broadband customers. Like traditional banking, only a third of the African continent is connected to the internet. Deployment of connectivity infrastructure might be motoring along, but adoption of these services is not.

There is of course a myriad of reasons for this, but according to Shuter, the affordability of handsets is at the top of the list.

Average monthly earnings in Africa are as little as $100 a month. ARPU is $4, which is perhaps on the steep side, though most entry level smart-feature phones cost $40. This is where it becomes difficult for an individual to take the step into the digital economy; how many individuals can justify 40% of their monthly income to purchase a device?

That said, the situation is not as dire as it used to be. MTN has launched the Smart S device, a hybrid device with the appearance of a feature phone but with some internet services capabilities, Vodacom has launched a number of different alternatives such as the Vibe 4G or the Smart Kicka 3, while Nokia and Alcatel have debuted their own devices as well. But despite the efforts to decrease price, more work needs to be done.

During one of the keynote panel sessions, Shuter’s point was echoed by Schalk Visser, CTO of Cell C, a challenger MNO in South Africa. Visser said there as still a remarkable number of unconnected individuals in the connected areas. Infrastructure has been deployed, addressing one of the key barriers to digital inclusion, though it is clear only a fraction of the problems are being addressed.

But while this is a significant challenge, it should also be noted the African connectivity conundrum is a tapestry of complication.

CHASE is a useful acronym to bear in mind here. Coverage, Handsets, Affordability, Service bundles and Education. The mobile ecosystem cannot exist with infrastructure to provide the coverage, handsets to act as the interface, affordable tariffs, and ecosystem of services and individuals who are educated in the ways and means of the internet economy.

Digital inclusion is of course a significant challenge for anyone based on the African continent, but affordable and reliable handsets are now the top challenge.

Is the UK’s Shared Rural Network a ploy to extinguish spectrum obligations?

The UK government and operators have pledged to spend £1 billion on rural coverage, but is it enough to convince Ofcom to drop the deeply unpopular coverage obligations placed on the 700 MHz and 3.6 GHz spectrum licences?

Next year Ofcom will auction licences for valuable spectrum assets in the 700 MHz and 3.6-3.8 GHz bands, and while these airwaves are incredibly attractive to the telcos, the attached coverage obligations are not. This has been a point of conflict in the industry over the last few months, with Vodafone being particularly critical.

Sources have suggested to Telecoms.com that the Shared Rural Network is an effort to appease the demands of the UK regulator. Over the coming months, we are likely to see a consultation from Ofcom, and perhaps it will be tempted to drop the universally unpopular coverage obligations which have been attached to the 700 MHz and 3.6-3.8 GHz spectrum auctions as a result of the Shared Rural Network.

Looking at the obligations, the MNOs who profit from securing the valuable spectrum assets would have had to dig even deeper in the pockets to fund the obligations. Not only would geographical coverage have to be increased to 90%, an additional 500 sites would have to be built and the winning telcos would have to provide good quality service outdoors for at least 140,000 premises to which it currently does not.

One of the issues with these obligations is that there is no consideration to how they might individually influence each other. An auction winner might not have to build an additional 500 towers or add an extra 140,000 premises to the coverage cone to get to 90%, but that didn’t matter. The money and effort would have to be spent in any case.

Telcos generally do not like being told how to spend their money, and these obligations were met with widespread criticism. Ofcom created a common enemy to unite the telcos, which is no easy task, to figure out a way around these demands. This appears to be the driver for the Shared Rural Network; invest in rural together, to rid the landscape of what is perceived by private industry as unreasonable coverage obligations.

As you can see from the statement below from Ofcom, the plan seems to have been successful, though we will wait for the ink to dry.

“We warmly welcome these commitments, which follow detailed discussions between Government, Ofcom and the mobile operators,” said an Ofcom spokesperson.

“These improvements will make a real difference to mobile customers across the UK, and we’ll ensure they’re legally binding by writing them into operators’ licences. We will also monitor and report on companies’ progress in achieving better coverage.

“Separately, we will shortly set out revised plans to release more airwaves for mobile services next year. In light of today’s agreement, we are no longer proposing to include coverage requirements in our auction process. We will now press ahead, with industry, on the urgent task of getting better mobile services to people wherever they are.”

These are promising noises being made by the regulator, but the Shared Rural Network is only a proposal for the moment, and Ofcom can still go back on the suggestion it will remove coverage obligations. However, the telcos should view this as a win.

The UK Government and the four MNOs have finally come to an agreement to fix the digital divide with a £1 billion shared rural network.

With £530 million being contributed by the MNOs and an additional £500 million being squeezed out of the UK Government, the aim is to increase geographical coverage of 4G networks to 95% of the UK. Part of this will involve reciprocal agreements between the telcos to share existing infrastructure, but the plan will also include joint investments to build telco-neutral sites for the total not-spots.

“Brokering an agreement for mast sharing between networks alongside new investment in mobile infrastructure will mean people get good 4G signal no matter where they are or which provider they’re with,” said Digital Secretary Nicky Morgan.

“But it is not yet a done deal and I want to see industry move quickly so we can reach a final agreement early next year.”

While the digital divide in the UK is no-where near as apparent as some places around the world, it does still exist. In recent months, this has also become a mainstream, politically charged issue and this is not a reversible change. The telcos will be under continued pressure to deliver connectivity in the nooks and crannies of the UK, though for it to be commercially viable this initiative will be crucial.

As it stands, only 67% of the UK landmass is covered by all four MNOs, while 7% are deemed total not spots, with zero coverage from anyone. Under the new plans, each of the MNOs will bring their own geographical coverage up to 92%, which when brought together, will bring 4G coverage to 95%.

Looking at the total not spots, although this is a secondary objective of the shared rural network, addressed further down the line, the aim is to bring this 7% of the UK which gets zero 4G coverage down to 3%.

“There is no other scheme like this in the world,” said Vodafone UK CEO Nick Jeffery.

“It will spell an end to annoying mobile ‘not spots’ for hundreds of thousands of people living, working and travelling in the more remote parts of the UK. By working together, we will deliver better coverage while offering more choice for consumers and businesses using far fewer masts.”

This is a good scheme, which should go someway to addressing some of the challenges which are being faced across the UK’s connectivity landscape. What is worth noting however, is this is not an overnight fix. To get to the 95% threshold suggested in this statement, it make take five to six years.

What is also worth pointing out, is the contributions by the telcos are unlikely to be equal. Those who have the most to gain from a shared rural network will likely be asked to contribute more to the CAPEX column, while the OPEX of these sites will be split evenly between the four MNOs.

And there are of course other questions which remain, such as, how will this process and mechanism be managed? The most logical answer would be for the four MNOs to create a joint-venture, invite Government stakeholders to sit on the board, to manage this process commercially. That said, we suspect Ofcom and the Department for Digital, Culture, Media and Sport will want to have more skin in the game and may well push for this management function to be an offshoot of an existing public sector body.

That said, the proposal is a promising one to address Government demands to meet coverage obligations and MNOs needs for investments to be commercially viable. But who gains the most from this initiative?

Looking at the 2018 Connected Nations report from Ofcom, O2 would have the most to gain and EE the least:

Operator Geographical coverage
EE/BT 84%
O2 74%
Three 78%
Vodafone 79%
All MNOs 66%

While these figures are a little bit dated, we can’t imagine the rankings have changed too significantly. One aspect which we were surprised about was the city-centric Three pipping O2 on geographical coverage across the entirety of the UK.

Just taking the figures at surface level, EE might be a bit irked with the Shared Rural Network as it erodes a competitive edge. EE can sell its services to customers with the promise of having the most widespread network across the UK, and the holding-hands approach to bring everyone up to 92% might undermine this. However, there are some advantages.

Firstly, 92% coverage will not appear overnight. It will take years to get to this number, allowing EE to maintain its competitive edge for some time. The other element you have to consider is the work it will take to get to 92%.

Although the pain of building passive infrastructure will be shared between the four MNOs, not evenly however, the purchase and installation of active equipment will be down to each of the telcos. EE does not have as much of a gap to bridge to reach 92%, freeing up time and resource. This could be spent on improving networks in the cities to reduce network congestion or improving connectivity on the transport links throughout the country. It might seem like a negative, but it can be turned into a positive.

While many in the industry will complain about the mountains of red-tape which is constructed through the aisles of the telco industry, this is an example of a forward-looking, collaborative initiative. It marries the coverage demands of the Government which are set forward in campaign promises, while being sensitive to the CAPEX and OPEX requirements of private industry.

Governments and regulators around the world should look at these proposals and take inspiration. The digital divide is not as great in the UK as elsewhere, though this is certainly a step forward.

Vodafone first to take advantage of spectrum sharing rules

Vodafone has announced it has entered into a three-year agreement with StrattoOpencell to share the use of it 2.6 GHz spectrum assets to deliver connectivity in Devon.

Following adjustments to spectrum license rules by Ofcom earlier this year, Vodafone becomes the first telco to share out the valuable airwaves. As part of the agreement, StrattoOpencell will deploy 4G small cells to deliver connectivity services to a holiday site in Devon.

“Vodafone has a long history of innovation, from sending the first text message to conducting the first 5G holographic call,” said Vodafone UK CEO Nick Jeffery. “We are delighted to become the first mobile company in the UK to share some of our spectrum to extend rural coverage.

“By offering some of our 4G spectrum to StrattoOpencell, we are helping to extend fast and reliable mobile network access for people in rural communities. Mobile connectivity in rural areas is just as important as it is for those in towns and cities, which is why we continue to work with others to help improve rural connectivity for all.”

Earlier this year, Ofcom made some amendments to allow for spectrum assets to be licensed off to third-parties by the telco which owns the airwaves. The changes are designed to more efficiently make use of the valuable assets. Vodafone is currently using the 2.6 GHz spectrum band in urbanised areas, though not in the rural communities. The high-capacity is attractive in the cities, though the shorter-range is less so when dealing with the rural areas.

This looks to be a very good example of proactive and forward-thinking regulation. If Vodafone is not making use of the spectrum in certain areas, why shouldn’t someone else? It is after all an asset which Vodafone is entitled to monetize in any (legal) way it sees fit.

Should a telco find a partner it would like to license its spectrum assets to, it has to seek permission from Ofcom detailing the band, location, bandwidth and power required. The regulator looks at it with a positive outcome in mind, though it will look for potential interference. The applications are dealt with on a case-by-case basis.

“Our new sharing approach aims to help more people access the airwaves they need to create local networks around the UK, including improving connections in rural areas,” said Philip Marnick, Group Director of Spectrum at Ofcom.

“Vodafone and StrattoOpencell are the first to take advantage of this. We look forward to seeing how others use our new spectrum access approach to support innovation and enable local communities to have better connections.”

Although this is only in Devon for the moment, the spectrum policy has been altered to enable more creative connectivity solutions in areas where fixed-connectivity is not an option. This might be difficult to reach places, or areas where permanent connectivity is not required. The success of the idea will be dependent on adoption, so it will be curious to see whether EE, O2 and Three elect to join the sharing scheme.

EU public WiFi program has met strong enthusiasm

The EU’s third round call for tenders to build public wifi networks has received over 11,000 applications in one day from municipalities across the Union.

The latest round of the WiFi4EU programme, which has 1,780 ‘vouchers’ to offer, was over-subscribed by more than six times during the one day window. More than 2,000 municipalities and municipality groups sent in their applications within two seconds of the opening of the call on 19 September, the Innovation and Networks Executive Agency (INEA), the EU Commission’s executive agency in charge of implementing the WiFi4EUEU said in a statement. The winners would be selected on first-come first-served basis, but geographical distribution would also be considered. Each member state has a minimum guarantee of 15 vouchers and a maximum cap of 142.

WiFi4RU was designed to build free, high speed, and secure wifi connections to the internet in public spaces across the member states, for example in parks, squares, libraries, public buildings, for residents and visitors alike. The recipients of the ‘vouchers’, each of which is worth €15,000, will then choose their subcontractors to build the access network, not in duplication with other existing free public or private wifi networks. The municipalities should commit to provide free internet access for at least three years, including free from advertising.

The total budget for WiFi4EU is €120 million, which is handed out in batches. After the first two rounds of applications, which took place in November 2018 and April 2019, a total of 6,200 vouchers have been awarded, worth a total value of €93 million. With €26.7 million earmarked for the current round of applications, the budget is all but spent. However, the INEA announced there will be new opportunities to apply in 2020.

The public-funded free internet access will be welcomed by municipalities that receive large numbers of tourists, especially from outside the EU, to whom roaming charges would be high. It would also be good news for entrepreneurs or freelance workers that need to meet in small groups and work on their computers. Despite that 4G and even 5G connection is becoming more ubiquitous, very few computers, where heavy computing is being done, will be equipped with cellular connection in the near future. Public libraries, for example, would become ideal places for such meetings. It is already a common practice in places like Finland’s public libraries.

The programme will be a small negative for some ‘start-up incubators’, which are barely more than a place that leases a work desk and a high speed internet connection. It may even be a minor negative for places like the coffee shops, where many individual entrepreneurs would go for the internet connection, at the price of a coffee.

In 2016, the European Union published its digital vision, titled “Connectivity for a Competitive Digital Single Market – Towards a European Gigabit Society”, by which it aimed to achieve internet access downlink speeds for all European households of at least 100 Mbps. The current WiFi4EU program is a good complement for the out-of-home environment, despite that there is no speed guarantee.

UK Government does not understand digital divide – committee report

A UK parliamentary committee has unveiled a report that suggests while rural connectivity is improving, it is still not keeping pace with the urban environments.

The report from the Environment, Food and Rural Affairs Committee has suggested the digital divide is persistent. Steps forward have been made though the committee does not believe the Government has fully grasped the extent of the problem, the scale of the challenge, or the wider cost of poor connectivity for the rural economy.

“Despite improvements in coverage since our predecessor’s Report, our inquiry has shown that poor broadband and mobile data services continue to marginalise rural communities, particularly those living in hard to reach areas,” said Neil Parish, Chair of the Environment, Food and Rural Affairs Committee.

“Digital connectivity is now regarded by many as an essential utility, with many in rural areas struggling to live a modern lifestyle without it. There continues to be a lot of frustration felt by those living or working in rural areas– and rightly so.”

While the committee has conceded positive steps have been made by the Government is recognising the challenge, Parish does not feel it fully grasps the depth and breadth of the challenge.

“However, the Committee is not confident that the Government has fully grasped the scale of the challenge currently faced and is sceptical as to whether the Government will meet these ambitious new targets without considerable and potentially controversial reforms,” Parish said.

The Government has of course set very ambitious targets to close the digital divide, though it does appear the action plan to meet these targets has not been set in place. If the gains are only being dwarfed by progress in the cities, is this is a genuine solution?

Although it might sound like a first-world problem, the idea of connectivity should no longer be seen as a luxury; it is a fundamental part of the UK’s society.

This is the attitude some will take. You can’t get fast enough broadband, so outside and kick a ball instead of watching Netflix. However, if you consider many banks are now taking a digital-first approach, closing smaller branches in the countryside, connectivity becomes critical. At risk patients no-longer have to be limited to a ward if they can be effectively monitored at home. Agriculture can be revolutionised with technology also. There are certainly more benefits than simply removing buffering.

Another interesting element to this argument, aside from empowering businesses outside the major towns and cities, is the impact on well-being.

This is a very important aspect on improved connectivity and an element of the evolution of many forward-looking businesses. Trends are moving towards a flexible-working relationship between the employee and employer, with more companies being open to work-from-home environments. It improves the happiness of the employee, potentially increasing retention, and also allows the company to access new talent.

However, it does depend on consistent, reliable connectivity throughout the country.

Interesting enough, a sluggish approach to the broadband challenge could also have an impact on the fast-growing mobile economy, bolstered by the emergence of 5G.

“With 5G on its way, it is also crucial to ensure the background infrastructure (the fibre highway) is in place, using techniques such as fibre cabling directly to the outdoor antennas, combining fibre with power to the huge number of new ‘small cells” that will be required and leveraging existing fibre-to-the-home (FTTH) construction to add in extra 5G connection points along the way,” said Phil Sorsky, VP of the international business at CommScope.

The digital divide might not be as apparent in the UK as it is elsewhere, though it is still a persistent problem for British citizens. BoJo’s target of full-fibre coverage by 2025 might sound good, however it does appear there is a lack of thinking behind the execution of the strategy.

FWA is starting to gather momentum in UK

The idea of Fixed Wireless Access (FWA) has been belittled in the past, but it is moving beyond ‘flash in the pan’ territory and becoming a genuine alternative across the UK.

Some have been harping on about the benefits of FWA for years, while others have snubbed the concept for more traditional means of broadband connectivity, but there is growing interest in the technology throughout 2019. The latest to join the hype is Macquarie Capital, yet another private investment company looking to capitalise on the sluggish telco segment. Here, the team is backing the rollout of FWA solutions in rural communities.

“The roll-out of superfast and ultrafast broadband has too often focused on the UK’s urban centres – leaving untapped investment requirements in the UK’s rural communities,” said Oliver Bradley of Macquarie Capital.

“We believe that using Macquarie Capital’s unique principal investment and development expertise there is a significant opportunity to work with Voneus to accelerate the deployment of UK rural broadband, this will help unlock significant economic and social benefits for the UK.”

Working alongside emerging ‘alt-net’ Voneus, Macquarie Capital will invest £10 million initially and an additional £30 million through various different build-out phases. FWA will be the tip of the spear, as Voneus looks to focus on 900,000 homes across the UK countryside who still don’t have access to Superfast broadband services.

“Macquarie Capital’s backing is a huge endorsement of Voneus’ business model and vision, as well as an indication of how much work still needs to be done to connect the many homes and business across the UK that still do not have access to decent broadband services,” said Steve Leighton, CEO of Voneus.

While the only option for genuine 100% future-proofed broadband connectivity is fibre, the FWA revolution does offer considerable benefits. Firstly, it is faster to deploy as last-mile connectivity is over-the-air, removing the complications of civil engineering. Secondly, it is cheaper to deploy raising the interests of the telcos. And finally, it satisfies the need for the moment.

FWA could be viewed as half-way house on the road to full-fibre deployment as it offers the connectivity speeds which are required today. Some Government targets for broadband infrastructure are non-sensical as they focus on technology not the desired outcome. If the immediate desire is to deliver relevant download speeds in the home, this can be done through FWA solutions. There is no reason why FWA can’t address the immediate challenge, assuming of course there are on-going plans to rollout fibre infrastructure over a reasonable period of time simultaneously.

This is what Voneus is proposing. It will deliver FWA connectivity in areas which have largely been ignored by the traditional providers, while also working the business case to deploy full-fibre broadband in the future.

This approach might irritate some of the traditional telcos in the UK, but there are cases around the world where it has been proven a success. Over in the US, Starry is a FWA ISP which is rapidly expanding. Although it is focused on multi-dwelling units in major cities, the theoretical business model, and customer appetite has been proven.

Closer to home, Three and Vodafone have also launched their own FWA propositions for 5G. It will be interesting to see how these convergence strategies play out, but Three already has 800,000 home broadband subscribers through its acquisition of UK Broadband. This is an area of great potential for these two broadband challengers, especially should the reliability of FWA be proven as 5G rolls out across the country.

The idea of a fibre spine and wireless wings is not a new one, but it is certainly one which has merit. Here, Voneus could certainly gain traction in areas which have been neglected by the traditional player because of the high-cost of deploying infrastructure. FWA can be a good idea, just as long as its not the final goal for the ISP in question.