How UK operators are helping customers during the COVID-19 outbreak

With telecommunications now acting as the foundation for almost every element of society, how telcos react to the on-going coronavirus outbreak will be critically important.

Although the UK Government has stopped short of measures implemented on the continent, at least at the time of writing, this week has seen a much sharper response to the global pandemic. With movements becoming increasingly limited, the telecommunications networks will become more critical, but what are each of the telcos doing in reaction.

Each of the telcos have made slightly different concessions to customers, though we suspect the plans will looks remarkable similar in a couple of weeks. Each will likely learn from competitors as none will want to look like they are doing less for customers than rivals.

Vodafone

At Group level, CEO Nick Read announced a number of measures to be applied across the European footprint.

Capacity is being increased to deal with the new spikes in internet traffic, Vodafone has said it has seen a 50% increase already, while consumers accessing government-supported healthcare websites and educational resources will be able to do so without worry about data consumption.

In terms of working with the Government, Vodafone has said it will offer anonymised data, where legally permitted, to aid in tracking people’s movements and the spread of COVID-19. Government departments have also been offered the opportunity to deliver targeted text messaging where technically possible.

To assist its own supply chain, Vodafone has said European suppliers will be paid in 15 days, instead of the customary 30 to 60 days.

From a scientific perspective, Vodafone’s DreamLab, a specialist app that uses smartphones’ data processing capacity to help cancer research projects while users are asleep, will receive a £200,000 cash injection from Group to repurpose the app to support research into antiviral properties.

Elsewhere within the Group, Vodafone Italy Foundation has donated €500,000 to support the Buzzi Foundation and the Italian Red Cross, Vodafone Czech Foundation’s emergency app Zachranka is pushing out public health alerts to its 1.3 million users and the remaining business units are all creating initiatives to help young people gain access to their digital learning platforms.

Virgin Media

From March 23rd, Virgin Media’s postpaid customers will be offered unlimited minutes to landlines and other mobile numbers, as well as a 10 GB data boost for the month at no extra cost. For broadband, any data caps on legacy products will be lifted.

In terms of technicians and home visits, Virgin Media has now set-up procedures to protect its own employees. Three days before a scheduled visit to a customer’s home, a text will be sent to ask if anyone living at their property has been asked to self-isolate or has flu-like symptoms. If the answer is yes, the appointment will be re-arranged for two weeks later. 30 minutes prior to the appointment, the technician will phone the customer to ask the same questions.

Although this will come as little comfort to those customers who are in need of a technician, the precautions are completely understandable. In these cases, new customers will be sent a self-install QuickStart pack which will hopefully mean a technician is not needed. Vodafone has not responded to questions to what the plan is should a technician be the only option.

O2/Telefonica UK

Like many other telcos, O2 has said all NHS UK websites will be ‘zero rated’, meaning any data used on these sites won’t count towards a customer’s monthly allowance, while it will make efforts to help those who are not able to pay their monthly bill. Customers who are concerned about the impact coronavirus will have on their monthly income are urged to call 202 to discuss the situation.

Little has been said on what work will be done to ensure the network remains resilient during the period of heightened pressure. This seems odd, as the O2 network shut down in certain areas this week, not related to increased internet traffic or congestion. Some customers might want more reassurances considering the dependence on communications infrastructure over the immediate future.

Elsewhere in the Telefonica Group, the Spanish business unit has said it will add 30 GB of mobile data to all Fusion and Movistar convergence customers for the next two months.

BT/EE/Openreach

In response the potential of increased strain on the network, BT is seemingly not that worried; the following is an extract from the website addressing the immediate challenges:

We have more than enough capacity in our UK broadband network to handle mass-scale homeworking in response to COVID-19. Our network is built to accommodate evening peak network capacity, which is driven by data-heavy things like video streaming and game downloads, for example.

By comparison, data requirements for work-related applications like video calls and daytime email traffic represent a fraction of this. Even if the same heavy data traffic that we see each evening were to run throughout the daytime, there is still enough capacity for work applications to run simultaneously.

This is a confident position to take, though the team has also said it will prioritise emergency calls and systems supporting emergency services such as the NHS, Airwave and the Emergency Services Network (ESN), critical national infrastructure and vulnerable customers, should the network come under intolerable pressure.

The BT Group has not unveiled any new measures for consumer customers yet, though it has put in additional procedures for enterprise customers due to the increased demand for home working.

The enterprise business unit has said it will work with customers to provide short-term upgrades for network capacity, increased virtual private network (VPN) connectivity, additional conferencing and collaboration tools, as well as call routing/forwarding solutions to divert calls to home phones or mobiles.

Three UK

Although Three UK does not seem to have introduced any additional policies in respect to the coronavirus outbreak, it does already have several initiatives which could prove to be quite useful. For example, free home delivery for customers and Three Store Now, which is a live stream to connect customers to in-store assistants for demos or to discuss potential purchases.

Sky

In response to almost all major sporting events being cancelled, Sky has said it will allow customers to ‘pause’ Sky Sports subscriptions without any additional charges. With the Premier League being suspended until early April, England’s cricket tour of Sri Lanka cancelled and PRO14 Rugby postponed for the foreseeable future, there will certainly be a shortage of programming for this element of the premium TV offering.

On the broadband front, although Sky has reiterated it believes its service will be consistent, it does not need to make any announcements regarding data caps, like operators in the US, as these limitations are very rare in the UK market.

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

5G is good, but perhaps not worth upgrading just yet

New research is suggesting London 5G speeds are getting the promised boost, though the overall experience might disappoint a few.

Global Wireless Solutions, a US network benchmarking, analysis and testing firm, released its examination of the London networks of EE, Vodafone and O2, and while there is success evident in the first months, there is still plenty of work to be done.

“The spikes in the test data reveal that promises of faster speeds can be delivered, but ultimately, it’s the consistency and reliability that is most important to consumers,” said Paul Carter, CEO of Global Wireless Solutions.

“Based on the limited number of sites with 5G antennas combined with the distance constraints of higher frequency 5G signals, it’s going to be a challenge to get 5G access in buildings.

“Given that the mobile network operators have a significant rollout ahead of them to fully realise the potential of 5G, we might also benefit from a review of restrictions governing signal mast height and placement to allow more antenna sites in more convenient locations, rather than just placing them on rooftops.”

According to the analysis, the MNOs are delivering the high-speed download experience which has been promised through 5G, though only if you are standing in the right place.

At St Pauls Cathedral, EE’s network delivered instantaneous peaks of over 470 Mbps, while 330 Mbps from O2 at Victoria Station and 320 Mbps from Vodafone in Belgrave Square also demonstrated the eye-watering speeds of these networks. These are cherry-picked examples from numerous tests throughout the city, though the trend was encouraging; 5G is delivering remarkable download speed upgrades.

What is worth noting, it this is not the gigabit download speeds promised, though you have to bear in mind these networks are operating in the world of non-standalone 5G. More will be delivered in the future as the technology progresses and matures.

This is of course encouraging, however there are two elements which dampen the parade. Firstly, the availability of these download speeds and secondly, latency.

On the latency side, Global Wireless Solutions has indicated there is no meaningful upgrade from 4G connectivity. This is not entirely surprising, as without a 5G core the full-suite of latency services will not be available, though one might have expected an incremental upgrade.

Secondly, the team has noted the drop-off rate is high. By making use of higher-frequency airwaves for 5G connectivity, coverage will be shorter. There is no way around this, the laws of physics dictate the state of play here. However, as 5G is currently being built on existing passive infrastructure, designed for 4G spectrum with larger coverage cones, the problem is unavoidable.

Over the next couple of months, governments and regulators will have to be engaged to ensure the 5G experience can be delivered. Rules on the deployment of active infrastructure will have to be massaged, as relying on rooftop infrastructure to deliver connectivity will not work everywhere. This is a bureaucratic challenge, and one which is being discussed behind closed doors.

All of this presents an interesting challenge for the telcos; how do you engage the consumer with an experience which is wholly inconsistent?

The telcos will have to be very careful. Arguably, it is more damaging to steal a customer and not deliver on the experience than not to have the customer at all. Burnt bridges are very difficult to repair after all, especially with the core mobile connectivity offering becoming increasingly commoditised.

Ultimately, 5G will be a necessity for the consumer. Data consumption habits are aggressively growing and 4G will not be able to meet the demands, both in terms of speed and network congestion. That said, the 5G proposition does look hard to justify for the moment. Compatible devices are incredibly expensive, and the network experience looks very limited. It does not appear to be worth the extra expenditure just yet.

BT starts making noise about convergence with Halo launch

Convergence is a proven business model and now the slumbering giant of the UK telco market is starting to head in the right direction.

While there is already a convergence product available to customers, to date there has been questionable success. Unlike continental Europe, convergence has not really gathered steam in the UK, though BT is attempting to shift the status quo.

“I feel this is a once in a lifetime shift for BT in the UK,” CEO Philip Jansen said. “BT Plus has been a huge success, but this is a modest, first convergence product.”

The new convergence product will be known as Halo, available to both consumer and enterprise customers. The product will include the fastest available broadband service, unlimited mobile data, with the option to upgrade to 5G, a team of customer service agents which do home visits and access to the wifi presence throughout the country. Prices have not been announced just yet.

While this is a promising move forward, there are still challenges which need to be addressed.

Firstly, does the UK consumer understand the concept or benefits of convergence. And secondly, can a convergence product be successful when you have two distinct brands?

Starting with the concept of convergence, perhaps there is a misunderstanding about the definition and benefits because the telcos have not made enough, or the right, noises about it. Up until recently, BT was the only UK telco which had the assets to create a genuine convergent product portfolio. There was of course a significant advertising campaign behind BT Plus, the first iteration of convergence, though arguably this had limited success.

Before too long, more details will be unveiled regarding a brand advertising campaign. BT will have to be smart to communicate the benefits very clearly.

Looking at the BT business, this is where the team has a big decision to make; can convergence work when you do not have a single brand? EE is king of mobile, but questionable on broadband, while BT is the broadband leader with a suspect mobile offering. More has to be done to marry the two brands together.

An interesting announcement which has been made which will help to address this challenge concerns the high-street. The BT branding and customer service team will have a much more prominent presence in every high-street store moving forward. This will help tie the two brands together in the minds of the consumer, though you still have to question whether convergence can be successful with two distinct brands.

Ultimately, this is a good move forward by BT. There is still a sense more could be done and said, though it is heading in the right direction.

BT has an opportunity few others in the UK can compete with. It has the widest and best-performing mobile network, a dominant broadband network and a wifi presence with more than five million points of presence. Over the next couple of months, the TV service will be re-launched adding another element to the mix.

Should the team be able to create a product which is attractively priced, supported by a brand marketing campaign which clearly communicates the benefits, BT should be untouchable in the UK’s connectivity segment.

EE plugs transport hubs as priority for 5G

As telcos jostle for top-spot in the 5G stakes EE has added further colour to its network deployment plans, with the UK’s busiest transport hubs taking priority.

Having switched on, albeit very limited, 5G coverage in 20 cities around the UK, EE is surging ahead to expand the coverage of the high-speed airwaves. As is the standard approach to deploying a new network, the busiest hubs for connectivity are first on the agenda, with the green light lit in London Waterloo, Liverpool Street and Charing Cross train stations.

“Switching on 5G in more busy places will help to keep our customers connected to the things that matter to them the most,” said Marc Allera, CEO of BT’s consumer division.

“Our engineers are building new 5G sites every day and increasing capacity on 4G sites – all part of our ambition to keep all of our customers connected 100% of the time.”

Although some might be a bit irked that train stations are getting 5G exposure rather than their home or office, it does make sense for the telcos. These are areas which are subject to congestion and notable network strain during peak hours, and let’s not forget, 5G offers greater spectral efficiency to ensure more devices can be connected simultaneously. Addressing these network congestion challenges will be a key objective to improve customer experience.

Aside from the three stations named above, Highbury and Islington station, New Cross Gate Overground station and Shoreditch High Street Overground station are further London sites which will be given the 5G connectivity buzz. Outside of London, Market Street on Edinburgh’s Royal Mile, Belfast’s Great Northern Mall and City Hall, Cardiff’s St David’s shopping centre and Morgan Arcade and Albert Square in Manchester will also get the 5G upgrade.

The coverage map is gradually becoming more attractive for those considering a 5G contract, though there are still concerns about whether enough attention is being paid to 4G networks.

“5G will undoubtably unlock a range of exciting new consumer and business use cases,” said Ingo Flomer, CTO at Cobham Wireless. “However, there aren’t many 5G handsets available and in use today. Commuters still rely on 4G to access work emails or enjoy video streaming while on the move.

“Getting reliable 4G mobile coverage is still a challenge for commuters on lots of the UK’s most popular rail routes, as well as in stations, but it needn’t be such a hurdle. Solutions exist that can overcome the challenge of providing reliable voice and data coverage in stations and rail lines – an important part of the passenger experience.

“There will come a time when blanket 5G coverage is needed. Now, however, it is important to deliver adequate 4G mobile coverage to guarantee quality of service for consumers, and support business and operator growth in all areas in the UK.”

Flomer has a genuine point. Everyone who regularly uses public transport across the UK, or use stations outside of London, will have come across the same frustrations. Inconsistent and unreliable 4G connectivity.

According to the latest Ofcom Connected Nations report, only 66% of the UK landmass is deemed to have access to ‘good’ 4G data services from all four telcos. As you can see from the table below, EE is offering the best breadth of coverage, though there is still some work to do.

Telco Geographic coverage
EE 84%
O2 74%
Three 78%
Vodafone 79%
All four 66%

Those who live and work in the city will not realise some of these frustrations. The 4G coverage map has not been completely filled in yet, and some will still fall through the gaps created by the digital divide.

One of the promises of the connected world is mobility. The idea of improving accessibility to the internet and embedding connectivity in more devices is to make people more productive and enable more people to work anywhere. Employees and employers alike will certainly be interested in this message, though the network does have to be there to fulfil the promise.

Right now, there are still too many holes in the networks spread across the UK. Some communities are being left behind, while transportation links, not just the hubs, need to be given adequate attention.

In fairness to the telcos, this is a difficult equation to balance. Bank accounts do have their limit and some companies are being asked to spend across a range of different areas. Compromises have to be made, though some might question whether the telcos have found the right mix yet.

5G might be grabbing the attention, but it will be 4G which will be the most important networks for years to come. 5G smartphones will remain too expensive for many, while it will take years to get the 5G network coverage map anywhere near as extensive as 4G. It is promising to see EE’s network gathering momentum, but we need to ensure 4G expansion is still a priority for telcos.

EE forced to backtrack on 5G data tariffs

It does appear EE has been forced into a rethink on 5G data pricing, as the firm launches an unlimited data offering to keep pace with rivals in the UK.

Like hamburgers at breakfast, the 5G tariffs didn’t look right to start with. The price points were too expensive for today’s cash conscious consumer who expects the world for tuppence. EE might have been first out of the gate to capitalise on the growing 5G euphoria and earn the right to boast about being first, but it has been forced to backtrack a little.

The only issue with being first is that you give everyone else a taste of what is on the table. Even if EE had nailed the proposition and priced it perfectly, it left the door open to be embarrassed by rivals to be undercut. If the aim of the game was to secure post-paid subs and look to long-term ROI, EE left itself exposed to a cheap shot.

That said, it has now seemingly rectified the situation.

When it first launched in May, prices were tiered depending on download limits. Not only did it not look practical, limits would be reached relatively easily, it was expensive. Admittedly the price of 5G devices were factored in, but with rivals presenting options which were easier on the wallet, a new approach was needed.

“If you want an unlimited data plan, you should get it on the UK’s best network, with the coverage and speeds that let you make the most of it,” said Edward Goff, Marketing Director at EE.

“Our new unlimited range offers customers the ultimate smartphone experience in more places across the UK than any other network, all with no speed caps and great swappable benefits like Amazon Prime Video and BT Sport.”

What is worth noting is that the unlimited offer for 5G-SIM only plans is still expensive.

MNO Price
EE £44 a month
Vodafone £30 a month
Three £22 a month
O2 Unknown

Each of the telcos have taken their own approach to data pricing. EE offers 5G SIM-only contracts for £44 a month in the most traditional manner. Vodafone has offered tariffs on speed tiers with the £30 a month tier offering the ‘fastest available speed’, which might vary dependent on where you are. Three is offering 5G connectivity for free for anyone who has an unlimited 4G contract. The £22 a month deal is SIM-only.

O2 is the only one not to release pricing for its 5G data tariffs, being the last to market, though it certainly has taken the opportunity to undermine the promising progress made by rivals.

Although few in the EE offices will be happy to backtrack and have a rethink on the unlimited plans, it does now look to be in a very competitive position. It is the most expensive, but it does have the best network and most consistent, high download speeds. If performance is the measure of success in the consumers eyes, EE is certainly hitting the right notes.

Another factor to consider is the ‘swappables’ element of these deals. For those who sign-up to a 12-month SIM-only deal on 5G for £44 a month, three ‘swappable’ content deals will be included. Each month, customers will be able to elect which bundled content services they desire, ranging from zero-rated video data or music, additional roaming locations, BT Sport or Amazon Prime Video.

The team could probably do with negotiating a few more partnerships as it does look a bit thin on the ground, though it is a reasonable offer.

What we are yet to see from EE is an aggressive push towards the convergence game. Executives have been giving the same presentation at conferences for years, promising a seamless connectivity experience for customers through mobile, broadband and wifi assets, though there doesn’t seem to be much activity on the marketing front to link-up these elements in one conclusive offer.

Either there is something in the pipeline or this is a case of negligence. The combination of EE mobile and BT’s wifi and broadband assets would create a connectivity offering few could dream to compete with. Three and Vodafone are plugging into the convergence game with their own fixed wireless access (FWA) offerings, but EE seems to be lagging here. The opportunity to make noise is there but the team seem to be enjoying the uncomfortable silence.

EE is arguably the market leader in the UK, though thanks to O2’s MVNO relationships it can claim to be the network with the most mobile connections running across it. With the unlimited offer, bundles, biggest and best network coverage and BT’s wifi and broadband assets, EE has an opportunity to nail itself down as the top mobile provider in the UK.

Trying to pick out the winner in the UK’s 5G race is starting to get very difficult.

EE grasses on Three UK for its 5G advertising

Three UK has run an ad campaign claiming its 5G network is the only ‘real’ one. Unsurprisingly other 5G providers are unhappy about this and at least one had complained.

The UK Advertising Standards Authority has been forced to take precious resource away from enforcing gender politics dogma to look into Three’s 5G ad campaign. The ASA confirmed to Telecoms.com that it has received six complaints about an ad by Three claiming to provide the only ‘real’ 5G, with one of them coming from BT.

We contacted EE, which provided the following statement: “Three’s claim to be the only real 5G network is entirely false, and deliberately aimed at misleading consumers. Our customers have been using real 5G since we launched the UK’s first 5G network, back in May.”

And, of course, we also spoke to Three UK, which gave us this statement: “Our advert is to inform consumers that we will offer the fastest 5G network, based on Three having three times as much 5G spectrum as any other operator. We are also the only operator to have 100 MHz of contiguous spectrum. ITU considers this the gold standard for 5G, enabling consumers to take full advantage of what 5G has to offer.”

It all seems to come down this 100 MHz contiguous block of spectrum and the value the ITU places on it in the context of 5G. Here’s a slide from a Nokia presentation titled Minimum Technical Performance Requirements for IMT-2020 radio interface(s) [i.e. 5G] that clearly state “The requirement for bandwidth is at least 100 MHz.” However it also states “The bandwidth may be supported by single or multiple RF carriers.”

Nokia IMT 2020 requirements slide

That caveat would appear to undermine Three’s claim that only its contiguous 100 MHz chunk meets the ITU’s minimum requirements. But when we put that to Three their spokesperson countered that, since carrier aggregation isn’t currently supported by 5G chipsets, that stipulation is irrelevant.

Three reckons this complaint is evidence that its competitors are worried about Three’s strong position in 5G spectrum, which is wonderfully ironic when you consider Three has spent a decade moaning about the opposite imbalance in 4G spectrum. Three is presumably OK with the situation now that things have apparently swung in its favour, so much so it was happy to provide us with a few slides.

The first offers a look at the current UK 5G spectrum situation, following the 3.4 GHz spectrum auction last year. Most of Three’s 5G spectrum is in the 3.6-3.8 GHz band, however, and we’re not sure what the ‘future’ bar signifies, but Three does seem to be at a distinct advantage. So much so that its competitors have apparent been moaning to Ofcom too, as quoted in the second Three slide. The last one represents the results of some Three testing, which is designed to show the unique download speed benefits of having 100 MHz of contiguous 5G spectrum.

Thee 5G slide 1

Thee 5G slide 2

Thee 5G slide 3

To be honest we find it hard enough to keep track of who has what spectrum, and why we should care, so we’re certainly not in a position to critique Three’s claims on a technical level. However they do seem to serve as a plausible defense of any claim it might make to have at least the potential to provide greater 5G download speeds than its competitors.

Where we still have some sympathy with the ASA complaint, however, is with the use of the term ‘real’. If Three had simply gone with ‘fastest’, as it did in the above statement, then EE probably wouldn’t have a leg to stand on. But by instead using the term ‘real’ Three seems to inferring rival 5G services are somehow illegitimate.

It will be down to the ASA to sift through the 5G standard, including the above ITU parameters, to determine whether or not only a 5G service that is able to call upon at least 100 MHz of contiguous qualifies. Since the ASA seems more concerned with thought policing these days we have to question whether it has retained the expertise needed to perform its supposedly core function.

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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US is winning the 5G speed race

Although there is a lot more to 5G than ‘bigger, faster, meaner’ download speeds, the US has bragging rights currently when it comes to the fastest download speeds.

According to the latest analysis from Opensignal, 5G is boosting maximum downloads in all eight markets where the connectivity euphoria has been launched, aside from Australia that is. It’s a very crude measure of success, but it is something which the telcos will want to shout about.

As you can see from the graphic below, there is certainly an increase in speed, though this is hardly a good measure when you consider very few consumers even touch the maximum speeds promised.

Opensignal graphic

Leading the pack is the US with maximum downloads speeds of 1815 Mbps, and by somewhat of a clear margin, though both Switzerland and South Korea have entered into the holy land of gigabit speeds. Perhaps the strangest statistic to make note of is the decrease in maximum speeds in Australia.

The lead which the US has established should come as little surprise when you consider the spectrum being utilised. Telcos in the US are already able to use mmWave spectrum for 5G, whereas European counterparts are utilising the mid-band spectrum, which sacrifices some speed to improve geographical coverage.

Looking at the UK, which currently sits bottom of the rankings, there is perhaps something for Three to shout about. Opensignal suggests speeds here might be impacted by the fact EE only has 40 MHz of relevant spectrum. Three has been shouting about its 100 MHz of contiguous spectrum in the 5G bands, claiming it is best positioned to deliver the 5G experience, and this analysis perhaps supports this claim.

And to address some of the speed differences between Opensignal and the figures which are being quoted by the telcos, this analysis is being done in the real world. Consumers are asked to download the Opensignal app, allowing the team to assess speeds in the real-world, with a range of different devices (manufacturer and condition) and a variety of applications.

But you also have to take into account these speeds are not realistic whatsoever; its nothing but a PR plug for the ‘creatives’ in the marketing department to make use of. Let’s take Australia as an example.

According to this analysis, Australian telcos can achieve a maximum download speed of 950 Mbps for 4G. However, as you can see from the graphic below, reality is far from the maximum achieved in perfect test conditions.

Opensignal 4G graphic

Although we are comparing apples and pears here, the theory is the same. Real-world experience is entirely different from the maximum speeds which the telcos boast about; this has been true for the 4G world and it would be perfectly reasonable to assume the same for the 5G era.

Fundamentally, this means very little for the moment. Coverage is incredibly limited while reality will be very different when more users hit the network. You also have to take into account European operators do not have access to the high-band spectrum which will deliver the monstrous speeds promised.

That said, the variety of speeds perhaps give an indication of the success of deployment strategies. It is certainly early days in the 5G era, but the US has claimed the first accolade when it comes to the dated ‘bigger, faster, meaner’ mentality which has governed the telcos for years.

Vodafone UK edges in front with ‘wider pipe’ approach to 5G

It’s always difficult to offer a winning position before all hands have been shown, but Vodafone looks to have stretched a nose ahead in the UK 5G race.

For the moment, we can only really judge two of the four 5G propositions in the UK, though there have also been hints from Three. With EE launching its 5G assault last month, and Vodafone switching on this week, it does seem that the latter has re-found its mojo and could challenge leadership positions in the UK connectivity standings.

As it stands, O2 and EE are sitting very comfortably in the number one and two spots respectively. With 36% and 33% market share for mobile subscriptions, according to Ovum’s WCIS, Vodafone is a distant third with 20% and Three falls away with 11% in fourth. However, that can all change very quickly, it wasn’t long ago Vodafone was the clear market leader.

Looking at the current offerings from the UK MNOs, Vodafone does look to have a more attractive offering. On the subsidised handsets front, the two are pretty much on par with Vodafone being a little bit cheaper. However, the SIM-only offering might grab the attention of a lot of people.

This is a model which we think is much more suited in the 5G era. If you believe the technologists, delivering data over 5G networks is cheaper than 4G. This is down to efficiency gains on the spectrum front, as well as improvements to antenna and the introduction of new technologies such as Massive MIMO. If it is becoming cheaper to give data to the increasingly insatiable consumer, why not offer unlimited.

Tiering on speeds is a very interesting approach. Data usage is going up for every demographic, such is life as more aspects become digitised, but the variety of ways people consume that data is becoming increasingly varied. Some will only use the internet for browsing, some focus on video consumption and others are gamers. Each different experience can be satisfied by different speed limits.

What will need to be done over the next couple of weeks and months is educating the consumer. Most consumers think faster is always better, but sometimes this is not the case. The majority of consumers could get by with mobile connectivity of 10-20 Mbps, but many think they need the fastest possible connection.

If you are in an urban setting and not able to use the internet on your device properly, the immediate assumption is that speeds are not fast enough. This might be the case, but another explanation is that there are too many people attempting to connect through the same cell site. This is network congestion, its not necessarily anything to do with speed, but too many people are clogging up the digital highway.

This is where 5G can add benefits over 4G. Think of the ‘internet’ as a water pipe. Not only does 5G make the water flow faster, it makes the pipe wider to allow more water to flow through it. This should address the network congestion challenge in various places if more people are connecting more devices to the same cell sites.

With this concept in mind, Vodafone has built the speed-tiered options; all you have to do is work-out how you use your phone, decide on a suitable speed and then you never have to worry about using up your data allocation ever again.

The one criticism we have is the pricing, which you can see below:

Speed limit 2 Mbps 10 Mbps Fastest possible
Price £23 £26 £30

On the lower end of the scale, the 2 Mbps tier, we believe Vodafone has charged a bit too much. And on the upper-end, the telco probably could have charged more. The strategy appears to be gearing as many people as possible to the middle tier which effectively undermines the concept of having experience designed tiers in the first place.

The success of this initiative will entirely depend on whether Vodafone can educate the consumer on the basics on connectivity experience. The water pipe analogy is a good one to explain the difference between 5G and 4G, though it would also help to inform users of how much speed is required to do what.

How much do you need to use WhatsApp, watch YouTube or play Harry Potter; Wizards Unite, for example. The general consumer in the UK will not know the answer to this question, and unless they do, this Vodafone strategy will likely fail.