Europe unveils its digital grand plan

The EU reckons Europe can be a digital leader so long as it does what the European Commission tells it to.

To be fair to the EC this is a pretty ambitious project as it seeks to define the rules, parameters and scope of all the digital ambitions for the entire bloc. It encompasses the European data strategy and its rules for the development of artificial intelligence in such a way that it helps the continent out, but doesn’t result in a Terminator-like dystopia.

“Today we are presenting our ambition to shape Europe’s digital future,” said President of the Commission, Ursula von der Leyen. “It covers everything from cybersecurity to critical infrastructures, digital education to skills, democracy to media. I want that digital Europe reflects the best of Europe – open, fair, diverse, democratic, and confident.”

Democratic eh – who elected you then Ursula? Anyway, the collateral associated with this announcement is predictably encyclopaedic, but if you want you could start here, or here, or here. As if the scope of the project wasn’t broad enough the EC seems to be trying to reconcile a bunch of other trendy political issues like diversity and green stuff while it’s at it.

“We want every citizen, every employee, every business to stand a fair chance to reap the benefits of digitalisation,” said Executive Vice-President for A Europe Fit for the Digital Age, Margrethe Vestager. “Whether that means driving more safely or polluting less thanks to connected cars; or even saving lives with AI-driven medical imagery that allows doctors to detect diseases earlier than ever before.”

“Our society is generating a huge wave of industrial and public data, which will transform the way we produce, consume and live,” said Commissioner for Internal Market, Thierry Breton. “I want European businesses and our many SMEs to access this data and create value for Europeans – including by developing Artificial Intelligence applications. Europe has everything it takes to lead the ‘big data’ race, and preserve its technological sovereignty, industrial leadership and economic competitiveness to the benefit of European consumers.”

It’s hard to know what to make of such a massive initiative. This was clearly the sort of thing Vestager’s role was created for, but what does it mean on the ground? AI clearly needs some kind of global supervision and Europe has plenty of catching up to do with its geopolitical rivals when it comes to the digital economy. We’ll probably have a better sense of how effective this initiative has been in a decade or so.

DT reportedly tells Nokia to raise its 5G game, prompting a non-denial

A report claiming one of Europe’s biggest operator groups has demanded Nokia get its house in order when it comes to 5G has not really been refuted by either of them.

Reuters grabbed the exclusive with the headline ‘Fearing Huawei curbs, Deutsche Telekom tells Nokia to shape up’. The reporter had not only spoken to the ubiquitous anonymous source who reckons they know a thing or two, but got hold of internal documents too. They paint a picture of DT having a low opinion of Nokia’s 5G offering, resulting in the vendor being ditched by most of the countries in which it operates.

All the fuss around Huawei, however, especially the EU’s recent guidance, seems to have forced DT to have another look at Nokia, albeit with a heavy heart. It looks like DT has put the ball in Nokia’s court and told it there’s business to be had it if can raise its game. This doesn’t seem especially contentious since Nokia openly admits to having dropped the ball on 5G and DT wouldn’t have dropped it as a supplier without good reason, you assume.

But for some reason the two companies felt compelled to address the story nonetheless. “We have been a long-term partner of Deutsche Telekom and have been proud to work with them extensively over the years, providing leading network technology and services,” said Federico Guillén, President of Customer Operations, EMEA & APAC, Nokia. “We continue to work extensively with Deutsche Telekom which is one of our most significant customers, both in Europe and the U.S.”

“As one of the major European manufacturers, Nokia is of strategic importance to Deutsche Telekom,” said Claudia Nemat, Board Member Technology & Innovation, Deutsche Telekom. “It is well known that Deutsche Telekom is pursuing a multi-vendor strategy so that we are not dependent on just one supplier. This is an elementary part of our security philosophy. However, as in the past, Deutsche Telekom will not comment on individual contractual relationships and strategic purchasing decisions.”

So why bother with the announcement at all then? Nothing in either statement comes close to addressing the claims in the story, one way or the other, and the whole thing just comes across as a lame attempt at damage limitation, presumably driven by Nokia. But the good news for Nokia is that it’s first in line to get some scraps off the Huawei table if it can get its 5G act together.

Tinder comes under the scope of Irish GDPR watchdog

Dating apps have forever changed the way millennials find relationships (for however long they last…) but Tinder has found itself under the scrutiny of the Irish regulator.

The dating trailblazer has found itself alongside serial privacy offender Google as the focal point of an investigation from lead-European GDPR regulator the Irish Data Protection Commission. The question is whether MTCH Technology Services, the parent-company of Tinder, complies with GDPR in terms of processing user data.

“The identified issues pertain to MTCH Technology Services Limited’s ongoing processing of users’ personal data with regard to its processing activities in relation to the Tinder platform, the transparency surrounding the ongoing processing, and the company’s compliance with its obligations with regard to data subject right’s requests,” a statement from the regulator said.

Interestingly enough, a recent investigation from the Norwegian Consumer Council (NCC) suggested several dating apps such as Grindr, OkCupid, and Tinder might be breaking GDPR. The investigation suggested nine out of ten of the most popular dating apps were transmitting data to ‘unexpected third-parties’ without seeking consent from users, potentially violating GDPR.

As these applications collect sensitive information, sexual preferences, behavioural data, and location, there could be quite the backlash. The Irish Data Protection Commission will investigate how this information is processed, whether it then transmitted onto third parties and if the developers are being transparent enough with their users.

Alongside the Tinder investigation, the Irish watchdog is also investigating a regular for the privacy enforcement community, Google.

Once again, transparency is the key word here, as it so often is when one of the Silicon Valley residents are placed under the microscope. The authority will hope to understand how Google collects and processes location data, while also seeing whether it has been effectively informing users prior to collecting consent.

Google is seemingly constantly under the scrutiny of one regulator or another due to the complex web that is its operations. No-one outside of Google genuinely understands every aspect of the business, therefore a new potential privacy scandal emerges every so often as the layers of complexity are pulled back. In this investigation, it is not entirely clear what product or service is the focal point.

What is worth bearing in mind that any new privacy investigations are most likely to focus on timelines which were initiated following the introduction of GDPR in 2018. Anything prior to this, for example the Equifax leak or Yahoo hack, would not have been subject to the same financial penalties.

For the Tinder and Google investigations, any wrongdoing could be punished with a fine up to €2 million or 4% of total annual revenues, whichever is greater. We haven’t seen many of these fines to date because of the timing of the incidents or investigations, but regulators might well be looking for a case to prove there is a bite behind the regulatory bark, a means to scare corporates into action and proactive security measures.

An excellent example of this enforcement concerns Facebook and the Cambridge Analytica scandal. The investigation into potential GDPR violations takes into account several different things; the incident itself, security procedures and features, transparency with the user and assistance with the investigation, to name a few. Facebook did not cover itself with glory and was not exactly helpful during the investigation, CEO Mark Zuckerberg refused to appear in front of a Parliamentary Committee in the UK when called upon.

As this incident occurred prior to the introduction of GDPR, the Information Commissioner’s Office in the UK was only permitted to fine the social media giant £500,000. Facebook’s annual revenue for 2013, when the incident occurred, was $7.87 billion. The maximum penalty which could have been applied under GDPR would have been $314 million.

Although the potential fines have been well-documented, until there is a case to point to most companies will push the boundary between right and wrong. Caution is generally only practised when the threat of punishment is followed through to make an example.

UK telcos are potentially helpless in the European roaming debate

Brexit is now a reality for the UK, and despite the telcos asserting their commitments to the roaming status quo, the financial burdens could become too great to swallow.

With the January 31st deadline come and gone, the UK Government has started to warn its citizens of what Brexit actually means. Very little will change over the next 11 months, but come December 31st, the ‘grace period’ will have concluded and change will be a reality.

New passports might have to be ordered, the European Health Insurance Card (EHIC) will no-longer be valid, an international driving permit (IDP) might have to be sought and the Government cannot guarantee you won’t be charged a small fortune for cruising down the digital highways.

While it might seem like another era, EU roaming regulations were only introduced in 2017. Some telcos had built ‘roam like at home’ features into tariffs already, but this was a market reaction to impending regulation. Until the EU started making a fuss, the telcos and the GSMA were more than happy to charge ludicrous amounts and attempt to justify them in a truly laughable manner.

Using data when travelling to Europe has become almost second nature to UK consumers nowadays and few would want to return to the days of huddling around the wifi hotspots. The UK telcos have been keen to point out there are no intentions to return to the dark days of ‘bill shock’, but soon it might be out of their control.

“At O2, we are committed to providing our customers with great connectivity and value when they travel outside the UK,” an O2 spokesperson said. “We currently have no plans to change our roaming services across Europe. We will be working closely with the UK government to try to maintain the current EU ‘Roam like at home’ arrangements once the UK leaves the EU.”

Vodafone and Three have also confirmed Brexit will not have an impact on EU roaming for their customers, while BT/EE are yet to provide comment.

The issue which is at the heart of this debate is how much control the UK telcos actually have.

As it stands, termination fees on international networks are strictly managed and limited by the European Commission. This will no-longer be the case for UK telcos come January 1st, 2021; European telcos will be free to charge whatever termination fees they see fit for their network.

In the years passed since the introduction of EU roaming rules, telcos have effectively seen reciprocal revenues for roaming, as it was simply a case of any individual is equal to any other on a different network, irrelevant of destination or origin. However, should some nations decide to raise the termination fees, the telcos will have to decide whether to absorb these costs or raise prices for consumers to compensate and maintain profitability. This is a ‘doomsday’ scenario, though we suspect it wouldn’t take long for telcos to realise absorbing the cost in some areas is not feasible.

As you can see from the table below, the numbers do not add up.

Country Visitors from UK Visitors to UK
Spain 15.6 million 2.53 million
Germany 2.8 million 3.26 million
France 8.6 million 3.69 million
Netherlands 2.7 million 1.95 million

The question which remains is how much European telcos will decide on charging for termination fees for UK customers and how the UK telcos will react. For any telco, simply watching costs go up and doing nothing is not an option. If there are more visitors from the UK than going the other direction, termination fees will start to add up.

What is worth noting is that some telcos in the UK are more at risk than others. As part of the Telefonica Group, O2 could be protected in some European nations, as would Vodafone, but the risk cannot be completely mitigated. There is no-such thing as a genuine pan-European network, and partnerships might well be tested.

Some might suggest there is an opportunity for the UK and Europe to strike a deal, and while this might be the case, there is one significant argument against it; why would Europe want to help a post-Brexit Britain?

Brexit has looked like a painful procedure to anyone watching. What the material impact will be is anyone’s best guess for the moment, but there are some aspects we already know. The legislative agenda has slowed due to a disproportionate amount of time being spend debating Europe. Relationships have been damaged. Corporations face a restructure of some degree. Travel to Europe will be different for consumers.

We do not know how this will impact our day-to-day lives exactly, but Europe will only help to a degree. If they help too much or it looks attractive, leaving the European Union might become an option for some nations. This is a very cynical view to take, but it is probably also true.

The other factor you have to consider is the work some countries will put in to protect valuable tourism industries. The Spanish, Greeks and Portuguese will not want to lose the money which flows from the UK into their own economies and might be in a position to negotiate their own localised deals.

This is very much crystal ball gazing at the moment. There might be a deal to protect the UK consumer, but it is just as likely that there will not. The European powers control the roaming fate of the UK consumer, not the UK telcos.

UK warns free European roaming may end in 2021

The UK government has published guidance on how travelling to Europe will change when we properly leave the EU at the end of this year.

Most of it is mundane, commonsense bureaucratic stuff to do with passports, driving licenses, etc. Irritatingly for the Brexit catastrophists is the news that there will be no need to apply for a visa for normal visits to any European country. So it looks like the Côte d’Azur, Costa del Sol and Tuscan villages won’t be rid of us as easily as expected.

One real issue we will have to deal with when we leave, however, is the matter of mobile roaming. The EU was responsible for forcing operators across the continent to stop charging extra for roaming on their networks, which has been very handy for things like checking the footie scores on the beach and publishing evidence of how much better your trip is than everyone else’s.

Freed from the EU’s benign tyranny, there’s no obligation for continental operators to play nice with UK ones and the opportunity to fleece our tourists will present itself once more. That doesn’t mean they’ll have to take it, of course, but that won’t stop the alarmist news stories predicting mass bankruptcies resulting from bill shock being written.

“From 1 January 2021, the guarantee of free mobile phone roaming throughout the EU, Iceland, Liechtenstein and Norway will end,” warns the site. “Check with your phone operator to find out about any roaming charges you might get from 1 January 2021. A new law means that you’re protected from getting mobile data charges above £45 without you knowing. Once you reach £45, you need to opt in to spend more so that you can continue using the internet while you’re abroad. Your phone operator will tell how you can do this.”

Since the mechanisms for free roaming are already in place, European operators would have to actively change them to start charging again. This looks like a great opportunity for businesspeople and politicians to sort something out in the coming months to ensure our relationship with the continent is undiminished by us leaving its mega-bureaucracy. If the last three years are anything to go by, however, the chances of them doing so are slim.

Boris Johnson is starting to look short of friends

Transatlantic conflict was to be expected following the Supply Chain Review decision, but Downing Street could soon become the battleground for some ‘blue-on-blue’ warfare.

Secretary of State Mike Pompeo is en route, presumably to sit in Downing Street before huffing and puffing, but it is enemies closer to home which might case the most immediate of problems. Alongside the enthusiasm for the Huawei compromise, there have of course been just as many critics.

The House of Commons proved to be somewhat of a tough test for the Supply Chain Review.

“The Prime Minister has gone for the cheapest, least secure option, but it does not take a genius to work out why Huawei is so competitive in cost,” said John Nicolson, an MP representing the Scottish National Party. “It is the Chinese Communist party branded as a company, and the Conservative Government have chosen low cost over security.”

“I cannot work out whether it is naivety or arrogance that prevents the UK Government from seeing the high risk presented to our national security by Huawei,” said Carol Monaghan, another SNP MP. “This is a company financed by the Chinese Communist party, and we are giving it an open door to our security.”

And unfortunately for Prime Minister Boris Johnson, there are also vocal critics within his own party.

“It was founded by a member of the People’s Liberation Army. Even if it were not an arm of the Chinese Government, the 2017 law requires that it take instruction from the Chinese intelligence agency,” said Conservative MP David Davis. “In the future, the size and complexity of the problem we are trying to protect against will be enormous. Huawei alone—forget the rest of China—has tens of thousands of researchers working on this, and I am afraid that the only way to protect our safety is to ban it.”

“I have spoken at length to security officials, who will always say that defending in cybersecurity is a game of catch-up – always catching up with the next algorithm change, and we can never guarantee that we spot it sometimes until too late,” said another Conservative MP Sir Iain Duncan Smith.

Criticism from the other side of the political aisle is part and parcel of the game, but internal sniping, blue-on-blue warfare if you will, could cause damage. With Brexit still a potential hot spot for Downing Street, Johnson could use as much support as possible internally.

That said, the impact of the Supply Chain Review on European relations might be somewhat positive, though this is a long-shot.

The UK stance on Huawei and relationships with China now looks much more aligned with the Europeans than the US. In 5G security guidance offered to member states, the European Commission has suggested nations air on the side of caution, but it has made no direct links to Huawei or China as a state. The dangers have been identified, but the finger of accusation has not been pointed.

There are also European nations who are looking to the UK. Germany and France, amongst others, might well be buoyed by the decision. Numerous EU member states have been distancing themselves from a complete ban, and the UK might well be the first domino to fall in favour of Huawei. Despite the Brexit fracas, the UK is still an influential voice; if Huawei is considered safe for London, it might well gain traction elsewhere on the bloc now.

This is of course the polar-opposite position from the US, where the reaction to the Supply Chain Review has been varied.

“Allowing Huawei to build the UK’s 5G networks today is like allowing the KGB to build its telephone network during the Cold War,” said Senator Tom Cotton.

Cotton is one of the most strident opponents of Huawei, who’s attitudes towards China flirt with the line of xenophobia, so it is hardly surprising to hear such statements. Although President Donald Trump has been relatively quiet on the announcement, Cotton has effectively been a White House puppet over recent months, very enthusiastically portraying the party line.

“British decision to accept Huawei for 5G is a major defeat for the United States,” said Newt Gingrich, a former-Speaker of the US House of Representatives. “How big does Huawei have to get and how many countries have to sign with Huawei for the US government to realize we are losing the internet to China? This is becoming an enormous strategic defeat.”

This is perhaps what the UK and the US will have to accept over the coming months; the special relationship is coming to an end. In dismissing demands and threats from the White House with regard to Huawei, the UK is effectively distancing itself from the US. This is a strained friendship already, and we suspect the White House does not like to be ignored.

The issue with many compromises is that no-one is entirely satisfied. This decision from the UK Government looks to be the most logical and proportional response to genuine concerns on both sides of the argument, though as it is a half-way house, it has been opened-up to political dissection.

With disagreements in the Conservative Party and contradiction to US policy, the Prime Minister is losing friends. In aligning the telecoms policy with the European Commission, he might look to the continent for allies, though considering the on-going Brexit conflict, this will also be a tricky sell. Downing Street is looking like a very lonely place.

1&1 Drillisch trials with ZTE seemingly up-and-running

ZTE might not get much media attention nowadays, though some might think of this as a blessing, but it seems to be getting along just fine with Germany’s newest telco, 1&1 Drillisch.

With reports being traced back to a YouTuber named Tobias Dirking, 1&1 Drillisch is seemingly trialling 5G technology with the lesser criticised but arguably more controversial Chinese vendor ZTE. While this is only a trial for the moment, ZTE equipment has been spotted on the roof of the telcos offices in Karlsruhe and Montabaur.

According to Dirking’s video, the network technology has been supplied by ZTE, while the 4×4 MiMo antenna is from CommScope. No LED lights can have seen flickering from the equipment, so it would be fair to assume it is not yet switched on.

1&1 Drillisch has said this is not an indication of a decision for its 5G suppliers, but it is working to trial all available options.

While ZTE is a well-known name in the industry, success in the European markets has been relatively low-key. The firm has a relationship with Wind Tre in Italy, as well as several smaller telcos such as JT in Jersey, though it has not experienced the triumph of its domestic rival Huawei.

Interestingly enough, if the more successful ZTE becomes in the European market, the more enflamed the relationship between European nations and the US might become. If the White House is enraged by tenuous claims of a link between Huawei and the Chinese Government, Senators are now calling it the ‘intelligence-gathering arm of the Chinese Communist Party’, it is hardly going to be enthralled by a state-owned entity supplying RAN equipment.

After being founded in 1985 as the Zhongxing Semiconductor Company, the firm now describes itself as ‘state-owned and private-run’. Xi’an Microelectronics and Aerospace Guangyu are two of the largest shareholders of the business, controlling five of the nine board seats, and are subsidiaries of state-owned organisations in China. This is a much more obvious link than what has been suggested between Huawei and the Chinese Government.

ZTE has largely escaped the spotlight in recent months, perhaps due to the fact it does not dine at the top table like its domestic rival Huawei does. The ZTE business sees greatest success in Asia and Africa, though if it does start to gain traction in Europe, we can imagine White House aggression would be expanded.

What is worth noting is this is simply one of a seemingly endless list of unknowns at 1&1 Drillisch. Right at the top said list is the launch date, but before that can be established, the telco needs to sort out its spectrum portfolio.

Having acquired two blocks of 10 MHz in the 2 GHz band and five blocks of 10 MHz in 3.6 GHz during the spectrum auction last June, 1&1 Drillisch has also confirmed it has entered a relationship with Telefonica to lease two separate frequency blocks of 10 MHz in the 2.6 GHz band. This lease will run until 31 December 2025, though the remaining unknown is for the lower frequency spectrum.

Although the spectrum which has been collected is attractive for 5G services, there is still a requirement for the low-band spectrum, more suitable for coverage and propagation. 1&1 Drillisch is drawing a blank for these valuable assets, so will have to enter into a national roaming agreement with one or more of its rivals. This is far from ideal and will have to be sorted before any commercial services can be launched.

1&1 Drillisch is a very interesting company to keep an eye on, primarily because of the regulatory leg-up it has been offered by Germany, but its choices on the supplier side could cause some ripples in the political arena.

Orange proves convergence should be telco business basics

A decade ago, Orange started trialling convergence in the Slovakian market, but today the success proves it should be the foundation of every successful business.

“Europe is a success story and convergence is the jewel in our crown,” said Ramon Fernandez, Orange CFO and Head of Europe.

In fairness to the Orange business, it has a way of investing in ideas and leading innovation for the European telecoms industry. It wanted to diversify into financial services, so it bought a bank. It wanted to drive home convergence, so started investing heavily in fibre. The smart home, security and energy services are on the horizon, once again proving Orange does not wait around for industry consensus before making its move.

Convergence is a trend which has now seemingly caught fire in the telecoms industry, with Orange arguably the most advanced telco strategically worldwide, but perhaps it should no-longer be considered innovative. Any telco with any sense is positioning themselves for a convergence play.

In the UK, BT is making the ‘Halo’ initiative the centrepiece of the consumer business, while Vodafone’s purchase of Liberty Global’s cable assets in Germany, Hungary, Romania and the Czech Republic sets the telco in the same direction. Convergence is not innovative anymore, it is something that telcos just have to do to stay relevant.

Looking at the Orange business, Fernandez said the telco now has 10.6 million convergence customers across Europe; 5.8 million in France, 3 million in Spain and the rest split across the remaining territories in Europe. Convergence customers now account for 40% of revenues across Europe.

Territory Revenue to Sept 2019 Convergence customers
Romania 813 million 227,000
Poland 1.9 million 1.3 million
Belgium 1.2 billion Unknown
Slovakia 409 million 77,000
Moldova 103 million 27,000

In terms of Group revenues during the last period, Orange reported growth of 0.8% to €10.57 billion for the third quarter, adding to €20.57 billion brought in over the first half. While financial growth might not be eye-watering, the foundations being laid through the convergence strategy offer excellent opportunities in the future.

After years of investing in both mobile and fixed networks across Europe, Orange’s fibre deployments are progressing very effectively, the connectivity foundation is sound. Few telcos can compete with Orange in terms of assets across the bloc, but the customer retention benefits of convergence are allowing Orange to explore new services. Security products are being launched, connected objects are being sold, banking is expanding, energy services are being played with and the team is investing in a smart home platform. Orange is making the evolution through to Digital Service Provider, built on the foundation of connectivity convergence.

While this is an enviable position, it is not one which can be created overnight. Orange has been investing towards the convergence strategy for years, and now other operators are playing catch-up. With results proven, perhaps we should stop talking about convergence as innovation, and just the way telcos should do business.

Could Iliad Italia be a victim of Corporate Darwinism?

Iliad’s Italian business unit has lodged complaints with Italian and European regulators regarding network sharing deals, but could these objections be effectively ignored?

While network sharing is a proposition which offers great benefits to cash-strapped telcos in pursuit of the eye-wateringly expensive 5G connectivity dream, it is not without its opponents and critics. Some regulators have become very defensive about the progressive idea, while there are telcos being left out of discussions who are objecting also.

In Belgium, Telenet has raised concerns over a tie-up between Orange and Proximus, while the European Commission prevented O2 and T-Mobile from expanding an existing agreement to include 5G in the Czech Republic. Both of these network sharing partnerships have been halted in the pursuit of maintaining attractive levels of competition, but Iliad’s objections might fall on deaf ears.

Iliad is objecting to network sharing agreements between Wind Tre and Fastweb, as well as another between Telecom Italia and Vodafone Italia. Iliad is the only major telco in Italy not to be in a network sharing discussion. If these partnerships bear fruit, efficiencies will be realised, meaning competitor funds can be redirected elsewhere.

If this is a prediction of the future, Iliad will be in a weakened position to compete in the Italian market, and financial pressures could become too much to justify the venture. Iliad could become a victim of Corporate Darwinism.

The competition versus consolidation conundrum

Competition has been somewhat of a difficult topic of conversation between the regulators and telcos in recent years, primarily because of the polar-opposite opinions on market consolidation. The telcos would like to consolidate to achieve scaled economics, while the regulators want to preserve the number of telcos in each of the markets to maintain competition and encourage investment.

There are pros and cons on either side of the fence, though the regulators do not seem to be shifting. This argument has knock-on effects for network sharing agreements.

Ovum’s Dario Talmesio points out, network sharing could be viewed as consolidation through the backdoor. Combined assets reduces the number of independent networks in the market, and potentially reduces investments and competition.

In the Czech O2 and T-Mobile case, the European Commission suggested as there were only three major players in the market, further combination of assets between two of the parties would present too much of a risk of the third being squeezed out. The same case has been presented by Telenet to the national regulator in Belgium.

Regulators are sensitive to any propositions which would negatively impact competition in a market, but what about markets where the number of telcos could actually be reduced?

How much is too much competition?

While there is no official stance on the number of telcos in a market, the European Commission does not generally approve activities which would reduce the number of telcos below four. Vetoing the O2/Three merger in the UK, or Telia/Telenor in Denmark are two examples, but this might not be the case in Italy.

If regulators were to allow the network sharing agreements to proceed, Iliad would certainly be in a very precarious position, though there would still be four mobile service providers in the country; Telecom Italia, Vodafone Italia, Wind Tre and a Fastweb proposition enabled by its agreement with Wind Tre. This might be deemed enough competition in Italy to maintain a healthy market for the consumer and a financially sustainable one for the telcos.

The four telcos named above are venturing into untested waters here. This presents a new question for the regulators to answer on competition. Theoretically, suitable levels of competition are being sustained, and this network sharing dynamic has been approved by regulators in the past.

In the UK, Three and EE have formed MBNL, while Vodafone and O2 have CTIL. These are passive infrastructure sharing joint ventures, focusing on the rural environments. It is a similar situation which would be created in Italy, and the UK does have a sustainable telco industry. It is evidence that the dynamic could work, with or without Iliad in the mix.

Could this be a case of Corporate Darwinism?

Corporate Darwinism occurs when a market evolves to such a degree that players are either irrelevant or uncompetitive, and therefore go out of business.

The best example of this is Blockbusters. Once a dominant player in the movie rental business, as the distribution of content moved online the proposition of Blockbusters was no-longer relevant, therefore the company did not survive. This is an example of a market evolving to such a degree that the business was no-longer relevant.

The Iliad example is perhaps one where the market evolves to such a degree that the business is no-longer competitive.

If the four remaining mobile service providers have network sharing initiatives driving network deployment, investments can be more intelligently spend (a) on the network, or (b) in other areas of the business.

The shared networks might have a greater geographical footprint, have future-proofed technology and higher performance specs. Theoretically, Iliad would churn subscribers to higher quality rivals. Also, as less money is being spent on network deployment, tariffs could be lower, but profitability could be maintained. Or, more cash could be invested in value-add propositions for products. Rival offerings could look more attractive than Iliad products.

If regulators approve the network sharing agreements between Telecom Italia and Vodafone Italia, alongside Wind Tre and Fastweb, Iliad would find itself in a very difficult position. It become difficult to see the telco surviving in the long-term.

Unfortunately for Iliad, there is a coherent argument to approve the partnerships to drive towards a more sustainable telecoms industry, allowing the telcos to realise efficiencies ahead of the vast expenditure of 5G. The consumer would benefit, as would enterprise customers and the Italian economy on the whole. It might be a case of letting Iliad die out for the greater good of the Italian telecoms sector.