Huawei and Italy smartphone sales most heavily hit by COVID-19

The latest numbers from analyst firm Counterpoint reveal the European smartphone market shrank by 7% in Q1 2020, but there was considerable variation between vendors and countries.

Huawei took by far the biggest kicking among the top vendors, but that was probably more due to US sanctions, especially those restricting access to Android. Ironically other Chinese vendors, especially Xiaomi, were the major beneficiaries of Huawei’s struggles.

“Huawei declined a sharp 43% YoY for the quarter as the US trade sanctions continue to bite,” said Abhilash Kumar of Counterpoint. “Xiaomi has been the biggest beneficiary from Huawei’s decline as it grew 145% YoY capturing 11% share in the quarter.”

By far the most heavily hit among the European countries that Counterpoint tracks was Italy, which saw its smartphone market shrink by 21% year-on-year. Italy was the first European country to be heavily hit by the virus and consequently imposed a strict lockdown. The UK didn’t start locking down until the end of Q1 and Russia was hit even later, so it will be interesting to see how this data looks for Q2.

“Q1 is seasonally weak, but the coronavirus outbreak amplified this,” said Peter Richardson of Counterpoint. “The smartphone market decline was primarily due to COVID-19 outbreak across the region in the second half of the quarter. The biggest five markets in Europe entered lockdowns of varying severity at different points in March. Consequently, most of the offline stores were closed, though online remained open throughout. Also, the economic impact of the pandemic has led to lengthening replacement cycles as consumers withhold making discretionary purchases.”

A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


GSMA cosies up to O-RAN Alliance

The GSMA, the telco industry lobby group, has announced a new partnership with the O-RAN Alliance to accelerate the adoption of Open Radio Access Network (RAN) technologies.

Full story here


Europe backtracks on market consolidation opposition

The General Court of the European Court of Justice has annulled a decision made in 2016 to block the merger between O2 and Three in the UK, potentially opening the door for consolidation.

Full story here


Huawei CFO loses first legal battle in extradition case

Huawei CFO Wanzhou Meng, the daughter of Ren Zhengfei, has lost her first legal battle in Canada and will now have to face an extradition case.

Full story here


Data privacy is in the same position as cybersecurity five years ago

It has taken years for the technology and telecoms industry to take security seriously, and now we are at the beginning of the same story arc with privacy.

Full story here


Indian telco association pushes for ‘floor tariffs’ on data pricing

In an open letter to India’s telecoms regulator, the Cellular Operators Association of India (COAI) has pressed for quicker decision making on pricing restriction rules.

Full story here


UK’s National Cyber Security Centre launches another Huawei probe

The National Cyber Security Centre (NCSC) has confirmed it is attempting to understand what impact potential US sanction directed towards Huawei would have on UK networks.

Full story here


 

The con artists profiting from 5G conspiracy theories

When people are scared of something, there will always be a snake oil salesman on hand, and now there are products emerging to protect consumers from the dastardly 5G airwaves.

Despite there being mountains of evidence to the contrary, 5G conspiracy theories are continuing to influence behaviour today. According to Mobile UK, the association representing UK mobile operators, there have been 87 incidents of 4G/5G towers being vandalised, and more than 200 engineers who have been verbally or physically abused. This is the consequence.

And of course, when there is hysteria, confusion and fear, there will be the con artists who look to profit.

One company which has attracted attention this week is 5GBioShield. For a mere £283 you can purchase a USB stick with proprietary holographic nano-layer technology which will create a quantum biological shield around you and/or your home.

From the minds of Ilija Lakicevic and Jacques Bauer, two individuals who have not worked for reputable employers for years, the product supposedly works to balance the imbalanced electric oscillations arising from all electric fog induced by all devices. If that sounds remarkable, it might be a lot easier than some might have expected.

According to PenTestPartners, the product is nothing more than a standard 128GB USB memory stick with a sticker on it. Having broken down the product, there is literally nothing to distinguish it from a normal £5 memory stick, aside from a 1p sticker.

When asked by Telecoms.com, 5GBioShield did not respond to requests for additional information to support the claims such as research papers or a technology patent.

This is one company which has been attracting mainstream media attention, but anyone could do a quick Google and realise there are hundreds of companies out there looking to deceive the general public.

EMF Protection is one company which offers window protections, bed canopies and EMF radiation-protection paint. It is not entirely clear how the products actually work from consulting the website, and once again EMF Protection Founder Glynn Hughes responded but was less than forthcoming with an explanation. However, there is an explanation for the paint.

Through a combination of carbon fibre and graphite particles, the paint is 99.99% effective at not only blocking 5G, but also 2G, 3G, 4G and wifi. On top of all this protection, it is easy to apply, and is water based.

If you do have an interest in purchasing the paint, never forget, it must be earthed!

And there are hundreds of these con artists, relying on fancy words with no scientific substance out there.

EMF Home Harmony offers an EMF Protection Bracelet for £25 which looks exactly the same as every other rubber charity wrist band, but is powered by Orgone, a term coined by Wilhelm Reich for life force energy. DefenderShield provides shields and cases for devices to absorb and block EMF emissions.

A quick search on Amazon also brought up more than 2,000 results ranging from phone cases, diffusers to cleanse the air, immunity boosting pills and Electromagnetic Field Radiation Detector. There is no shortage of products to protect us from the dishonourable spectrum.

There are of course numerous reasons these products exist, and they still would without the conspiracy theories linking 5G spectrum to the creation and transmission of COVID-19, but this has heightened the issue.

But why do people believe in these products? One reason might simply be that the explanations are more accessible.

There is of course mountains of evidence to dispute the claims made by these companies, but it is often in the form of scientific papers or industry jargon, little of which is understood by the general public. The information being put forward by the con artists might be incorrect, but it is accessible; the general public can understand the language therefore it is embedded in the mind more successfully than the correct information.

Some in the industry are refusing to address these claims because of the absurdity. Yes, these conspiracy theories are ridiculous, but they are believed by at least a small proportion of society who are inflicting damage to infrastructure and engineers. The consequence is real, irrelevant as to whether the industry wants to address it or not.

So what should be done? The general public needs to be engaged, educated and taken on the same journey as those in the industry. And most importantly, the answers need to be explained in terms which are accessible.


Telecoms.com Daily Poll:

Is the industry doing enough to combat the 5G conspiracy theories?

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Europe backtracks on market consolidation opposition

The General Court of the European Court of Justice has annulled a decision made in 2016 to block the merger between O2 and Three in the UK, potentially opening the door for consolidation.

In 2016, Europe decided it was better for sustainable competition that the four operators in the UK remain independent, blocking the mega-merger between O2 and Three. This decision has set market precedent over the subsequent period, with the generally accepted rule that bureaucrats would not allow less than four independent mobile network operators in a single market. This ruling turns that presumption on its head.

“In our appeal, we argued that the Commission’s approach to reviewing the proposed merger, and European telecoms mergers more broadly, was guided by a misconceived default view that European telecoms markets are better served by having a minimum of four Mobile Network Operators in each EU Member State,” CK Hutchison, Three UK’s parent company, said in a statement.

“This approach ignores market realities, the clear evidence of successful market consolidation in Europe and across the world as well as the very significant efficiencies in terms of increased investment, network improvements and consumer benefits that can be achieved from mobile mergers.”

As soon as the decision from Europe was made to block the merger between Three and O2 was made, the agreement between the two parties was terminated. It will now always be a case of what could have been, as this decision will not reignite talks between the two parties.

“Telefónica notes the EU Court’s decision, but the company has moved on,” a Telefónica spokesperson said. “Telefónica recently announced a transaction that combines Virgin Media, the UK’s fastest broadband network, and O2, the country’s most reliable and admired mobile operator, into a 50:50 joint venture that will create a powerful fixed-mobile challenger in one of its core markets.”

As there will be no material impact on the proposed merger between Virgin Media and O2, which was announced in recent weeks, questions will now turn to more general market consolidation in Europe


How do you feel about market consolidation in Europe?

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Europe has always been against market consolidation if the result leads to less than four independent service providers in the mobile segment. If concessions are offered, like in the Netherlands for example, mergers would be allowed but this would result in a diluted version of what the merging parties would have wanted to achieve.

The ruling from the General Court changes everything.

In 2016, the European Commission considered the reduction from four to three service providers would have resulted in increased prices, decreased quality of service, hindered investment in infrastructure and would have had a detrimental impact on the MVNO segment also.

The ruling which has been made public today disputes the claim there would be negative impacts on competition. Negative experiences for the consumer has not been seen in other markets around the world where there has been consolidation, while there were several flaws during the assessment process. The original assessment also failed to demonstrate effectively that network infrastructure would be impacted also.

With the General Court annulling the decision to block the merger, it is effectively saying Europe would consider market consolidation should there be a good business case. This is a very interesting ruling and statement to make, as it is effectively a green flag to the industry. Could this spur the market’s imagination for consolidation?

KKR sets aside $1bn to muscle in on European data centre market

US investment firm KKR has outlined vague plans to fuel growth in the European data centre market with $1 billion for a build-to-suit and roll-up acquisition data centre platform.

While it is difficult to translate the overly enthusiastic PR and marketing language which dominates the press release, it does appear to be an effort to build more data centres in the European region.

“The data centre market in Europe presents a unique opportunity to invest behind the secular trend of increased cloud services adoption and demand for data,” said Waldemar Szlezak, MD of KKR.

The new company, which will be known as Global Technical Realty (GTR), will operate in two ways. First, a build-to-suit programme for the major cloud players. This segment will presumably have an anchor tenant dictating the location, before selling services on to additional cloud players.

Secondly, the team plan to execute a ‘roll-up’ acquisition strategy, a particularly effective business model when economies are facing tough trading conditions. This is a simple, albeit slightly predatory strategy, effectively identifying distressed assets for acquisition, before merging together in a single operation to benefit from scale.

“We are thrilled to have found an investor like KKR that shares our vision for the future of the data centre market,” said GTR CEO and founder Franek Sodzawiczny.

“KKR’s breadth of resources and tremendous expertise will allow GTR to fully participate in this growing market and provide a solid foundation for GTR’s future growth and success.”

Ultimately, KKR and GTR are attempting to capitalise on momentum towards the cloud. The major cloud players have their own data centre footprint of course, which is rapidly expanding, but there is only so much which can be done alone. The built-to-suit programme releases some of the risk associated with data centre investment, while the roll-up acquisition strategy is a quick win for a cash-rich company looking to muscle in on cloud momentum and create an immediate presence.

Today, trends are only heading in one direction. With more companies digitising business processes and workloads, the cloud computing segment is certainly benefiting from societal lockdowns and enforced digital transformation programmes. The big question is how many of these programmes will be returned as the world returns to some semblance of normality.

When we asked Telecoms.com readers how many thought their employers would retain remote working practices 50% said they would have to check into the office once or twice a week and 34% believed they would given the option to work as they please.

It does appear the enforced remote working dynamic has some sustainability in the long run, perhaps kick-starting a wider transformation programme. Nicholas McQuire, SVP and Head of Enterprise Research at CCS Insight told us there has been resistance to the cloud from traditional companies in the past, though once started it should provide a catalyst for greater things.

Aside from these very immediate and unusual drivers for cloud, trends have of course been gradually heading towards a more digitised and distributed world. Netflix, as an example, is very interested in caching as much content in edge data centres, to improve experience for customers, while cloud gaming could also provide greater demand for data centres.

Not only is the world become more digitised, super data centres will have to be supplemented by additional infrastructure to create a distributed cloud. This is an important element to reduce latency and remove choke points when attempting to improve customer experience.

The world is only heading in one direction though the pace of change is unknown for the moment. COVID-19 might have acted as an accelerator for digital transformation, and while this might only be temporary, this is an excellent time for KKR to be throwing money at data centre infrastructure.

Phoenix expands tower empire to Ireland

Phoenix Tower International has announced an agreement to purchase 650 wireless towers from Irish telco eir, expanding its infrastructure footprint to a new European nation.

With 9,000 towers spread across 15 countries, Phoenix is quickly turning into one of the major players in the telecom infrastructure game. The acquisition of these assets, 100% of eir’s tower portfolio, will further drive Phoenix into the European markets, following hot on the heels of a deal with Bouygues Telecom to acquire 4,000 sites in France.

“Ireland represents an important economic hub for Europe and the world, and we are proud to support eir on their ongoing build-outs across the country,” said Tim Culver, Executive Chairman of Phoenix Tower International. “This transaction further expands PTI’s global footprint and we are excited to be a long-term partner of eir.”

Although operations are primarily focused in the Americas, Phoenix is becoming a much more familiar name for European telcos, several of which are keen to explore ways to access more cash.

While it is certainly a more attractive position to own assets rather than lease off an outside party, the deployment of 5G networks and upgrading broadband to full fibre are two very expensive projects. With the price of connectivity contracts only going down, spreadsheets only tolerating so much debt and investors only able to cough up so much, alternative means to raise funds are needed. The sale of physical infrastructure, the passive part of the network is proving to be a popular way forward.

Phoenix Tower International is one company which realises the potential of asset with (theoretically) consistent demand and zero expiry date, but it is not alone. Cellnex is hoovering up assets across Europe, InfraVia is finding cash to invest, as is Brookfield, a Canadian alternative asset management company. All of these companies recognise that owning the passive infrastructure in a world which is increasingly defined by mobile connectivity is an attractive bet.

But what does this mean for the industry? The influence of the telco on the telco industry is being diluted.

If the telcos no-longer want to own or invest in passive infrastructure, they will have less influence on construction plans, as let’s not forget, companies like Phoenix will have multiple customers to consider. There are of course build-to-suit programmes, but new sites will have to be attractive to multiple telco customers, not just one.

This is a compromise which has to be made. The telcos need money, they have assets to sell, but they will have to accept that they are also trading a slither of control of their own fate. We suspect there will be criticism of this trend in decades to come, when the future leaders of telcos are finding their voices drowned out by other segments of the industry, but it is a case of needs must.


Telecoms.com Daily Poll:

Should privacy rules be re-evaluated in light of a new type of society?

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Privacy champion Schrems blasts Irish authorities over secret Facebook deal

Max Schrems, one of the central figures in bringing down the EU-US Privacy Shield, has penned an open-letter slams the Irish Data Protection Commission for not dealing with Facebook appropriately.

With his privacy campaign organisation, noyb.eu (none of your business) taking on the social media giant, Schrems has heavily criticised the regulator for a lack of action, shrouding investigations with mystery and secret meetings with the firm to create a ‘consent bypass’ situation.

“It sounds a lot like those secret ‘tax rulings’ where tax authorities secretly agree with large tech companies on how to bypass the tax laws – just that they now do this with the GDPR too,” noyb.eu Chairman Schrems said.

The ‘consent bypass’ was an agreement between the authorities and Facebook to switch its policy from ‘consent’ to an alleged ‘data use contract’, allowing the company to track, target and conduct research on users.

“It is nothing but lipstick on a pig,” said Schrems.

“Since Roman times, the law prohibits ‘renaming’ something just to bypass the law. What Facebook tried to do is not smart, but laughable. The only thing that is really concerning is that the Irish DPC apparently engaged with Facebook when they were designing this scam and is now supposed to independently review it.”

According to research quoted by the privacy advocates, only 1.6 – 2.5% of users were aware they were actually entering into a ‘data use contract’. Should these figures be anywhere near accurate, this should not be considered anywhere near good enough.

This entire saga is a bit of ‘he said, she said’ with mud being slung across the wall. On one side of the coin, it is not difficult to imagine secret meetings to figure out how rules can be circumnavigated, but it is also within reason to assume Schrems and his privacy cronies are exaggerating and making a mountain out of a molehill.

Schrems has stated his organisation filed complaints about Facebook during the first few hours of GDPR coming into action, however, the subsequent investigations have not been concluded. This is a fair complaint, these investigations do take time, but then again there has to be a limit. The Information Commissioners Office (ICO) in the UK has delivered dozens of rulings in this period while the Irish DPC celebrated completing the first of six steps last week.

Facebook is a very complicated business with operations spanning across almost every European nation, and while the Irish DPC has been designated lead regulatory authority for several high-profile names, it is not proving itself worthy of this responsibility yet.

Again, you have to take Schrems claims with a pinch of salt, but Silicon Valley is escaping without punishment. We find it impossible to believe all of its residents are acting perfectly within the rules. It would be more credible to blame overly complex bureaucratic processes, a lack of funding, steep workloads and people just not taking privacy as serious as they should; Silicon Valley’s residents at the top of the list.

OPPO signs up Vodafone for European expansion

Chinese smartphone vendor has partnered with pan-European telco Vodafone to offer its full-range of 4G and 5G devices.

As part of the agreement, Vodafone will become an OPPO partner in Germany, UK, Spain, Portugal, Romania, Turkey and the Netherlands. The Chinese smartphone brand has been very successful in its domestic market, though international ventures have been slightly more muted.

Leaning on Vodafone’s credibility and operations is one way to add some momentum to global ambitions, though as this is not an exclusive deal, OPPO is also free to work with rivals. The Chinese smartphone vendor could be eating its cake and having it too.

“OPPO is confident that our industry-leading products and technologies will enable Vodafone to win new opportunities in the 5G era,” said Alen Wu, OPPO’s President of Global Sales.

“Vodafone’s vision that ‘we connect for a better future’ aligns with OPPO’s value of ‘Benfen’ – to do the right thing and provide real value to customers. OPPO looks forward to solidifying a long-term win-win relationship with Vodafone to create a better future for our customers in the 5G era.”

Although there might be telcos around Europe which offer a market-leading position in their home markets, few can offer the breadth and depth Vodafone can offer.

Vodafone European presence
Market Subscribers (thousands) Market share
Germany 30,052 22.2%
Italy 19,245 19.8%
UK 18,042 18.5%
Spain 13,843 16.4%
Ireland 2,004 35.1%
Portugal 4,682 26.5%
Romania 9,296 34.7%
Greece 4,476 26.6%
Czech Republic 3,990 24.9%
Hungary 3,127 26.8%
Albania 1,618 42.3%
Malta 302 49.1%

Sources: Vodafone Investor Relations and Omdia World Information Series

This is the power of Vodafone. It might not be the most successful companies in the individual markets, but the sheer size of its European footprint is unrivalled. Let’s not forget what the objective of OPPO will be; exposure far and wide. Vodafone offers credibility and sales channels in numerous markets, though only a few will be included in the deal to start.

While Huawei has stolen headlines (positive and negative) over the last few years, it is always worth remembering there are other smartphone brands emerging from the country which are fighting for market share. Xiaomi is one which has proven successful, though OPPO, VIVO and OnePlus are just a few more which could make a splash in foreign waters.

According to estimates from IDC, OPPO has been successful in the international markets but growth has somewhat stagnated in recent quarters. During the final quarter of 2019, shipments accounted for 8.3% market share, though OPPO has fluctuated between 7.4% and 8.9% for the last few years. This is a successful business, but a catalyst might be needed to take it up a notch.

Finland joins the quest for quantum computing strengths

The Technical Research Centre of Finland is going to build the country’s first quantum computer, joining a growing European contingent to compete at the front of next generation computing technology.

VTT, Finland’s state-owned Technical Research Centre (Teknologian tutkimuskeskus VTT Oy) announced that it will design and build the country’s first quantum computer, in partnership with “progressive Finnish companies from a variety of sectors”, aiming to “bolster Finland’s and Europe’s competitiveness” in this cutting-edge technology.

“In the future, we’ll encounter challenges that cannot be met using current methods. Quantum computing will play an important role in solving these kinds of problems,” said Antti Vasara, CEO of VTT. Referring to the country’s challenge of post-COVID-19 recover, Vasara said “it’s now even more important than ever to make investments in innovation and future technologies that will create demand for Finnish companies’ products and services.”

The multi-year project, with a total cost estimated about €20-25 million, will run in phases. The first checkpoint will be about a year from now, when VTT targets to “get a minimum five-qubit quantum computer in working order”, it said in the press release. Qubit, or “quantum bit”, is the basic information unit in quantum computing, analogous to binary digit, or “bit”, in classical computing.

In all fairness, this is a modest target on a modest budget. To put the 5-qubit target into perspective, by late last year, Google claimed that its quantum computer had achieve 53-qubit computing power. It could perform a task in 200 seconds that would take Summit, one of IBM’s supercomputers, 2.5 days by IBM’s own admission. By the time of writing, VTT has not responded to Telecoms.com’s question on the project’s ultimate target.

When it comes to budget, the VTT amount is easily dwarfed by the more ambitious projects. Although the most advanced quantum computers in the world are developed and run by the leading American technology companies and academic institutions, for example the MIT, IBM, and Google. But other parts of the world are quickly building their own facilities, including businesses and universities in Japan, India, China, and Europe. One of the high-profile cases recently is IBM’s decision to build Europe’s first commercial quantum computer in German’s state-backed research institute in Fraunhofer, near Stuttgart.

In addition to getting closer to and better serving the European markets in the future, IBM’s decision to build a quantum computer in Europe is also to do with GDPR requirement. While European businesses can use IBM’s quantum computer located in the US, through the cloud, they may hesitate when sending user data outside of the EU. The Fraunhofer project has been personally endorsed by Angela Merkel, the German Chancellor. The federal government has pledged €650 million investment for quantum computing, though not in the Fraunhofer project alone.

When it comes to quantum computing applications in the communications industry, at least two areas it can have strong impact. The first is security. Quantum computing will enable new modes of cryptography. The second is new materials. Daimler, the carmaker, has already used IBM’s quantum computers to design new batteries for its electric cars by simulating the complex molecule level chemistry inside the battery cells. On top of batteries, another research topic in new materials in the communications industry is to find silicon replacement as semiconductor in extremely high radio spectrums.

Despite its modest scope, the VTT undertaking is significant. Not only does it give Finland the right to boast of being the first Nordic country to build its own quantum computer, the success of the project would “provide Finland with an exceptional level of capabilities in both research and technology”. Faced with the worst economic crisis since the collapse of the Soviet Union, the Nordic nation is looking to technology breakthroughs for sustainable revival and long-term competitiveness. Quantum computing capability of this project, if not pursuing supremacy, limited by its scope, may at least give Finland the table stake.

ETSI gets to work on new contact tracing app standard

With countries across Europe all trying to reinvent the wheel with their own contact tracing apps, standardization is long overdue.

The responsibility for this has been taken by the European Telecommunications Standards Institute, which has created a special group dedicated to developing a ‘standardization framework for secure smartphone-based proximity tracing systems’. It’s called the Industry Specification Group “Europe for Privacy-Preserving Pandemic Protection,” which is mercifully abbreviated to ISG E4P.

“By their nature smartphones are highly personal devices, carrying large amounts of data about individuals,” said ETSI Director-General Luis Jorge Romero. “In ETSI we are committed to support an international development community with a robust standardization framework that allows rapid, accurate and reliable solutions while winning the trust of the population at large.”

Point well made about trust Luis. The UK, for example, currently seems determined to give its National Health Service access to the data created by the national contact tracing app. Not only would this alienate Google and Apple, thus making the app a lot less effective, but it would almost certainly lead to far fewer people using it.

“A primary challenge is collecting, processing and acting on information about citizens’ proximity at scale, potentially representing tens or hundreds of millions of people,” says the ETSI announcement. “This must also be achieved without compromising users’ anonymity and privacy, and while safeguarding them against exposure to potential cyber-attacks.”

Again, Google and Apple seem to have this more or less covered, but there’s no way a mega public bureaucracy like the EU would ever concede the private sector might have the answer to a public problem. So ETSI will probably take weeks to come up with something very similar, at which time the EC will order all its members to use it regardless of any progress they’ve made independently.