Openreach dares to contemplate retiring its copper network

UK fixed-line wholesaler Openreach has launched an industry consultation into the switch to ‘full fibre’, which would involve retiring the legacy copper one.

There’s not a lot of point shelling out for a fibre network covering the whole country if a bunch of people don’t use it. Furthermore the cost of maintaining two parallel networks would be prohibitive, so Openreach seems to be saying full fibre will only happen if everyone is fully committed to it. The purpose of this consultation seems to be to chuck that idea out there and see what the rest of the industry, including the government and Ofcom, has to say about it.

“…we’re consulting with broadband providers to decide how and when we upgrade customers to even faster, more reliable and future-proof, full fibre broadband,” said Katie Milligan, MD for Customer, Commercial and Propositions at Openreach. “We believe this consultation is crucial to that process, and it will support further investment from across the industry. We’re really ambitious about upgrading the UK to the fastest, most reliable broadband there is.”

These are the three main areas Openreach wants feedback from UK CSPs on:

  1. How it builds the new network
  2. How the industry should migrate customers smoothly onto the new network
  3. How Openreach should eventually retire the existing copper network

Getting buy-in from the CSPs is vital, of course, because they and their customers are ultimately the ones that will pay for this network. The above points are all essentially about money: how are we going to pay for this network and make everyone use it? On top of those Openreach flagged up a few more specific ‘guiding principles’ that also need to be considered:

  • Building contiguous footprints within its exchange areas to avoid creating new not-spots
  • Working closely with CPs to upgrade every customer in those areas quickly once the new network is built
  • Offering a compelling, simple portfolio of products that supports new retail voice and broadband services
  • Upgrading the large majority of people voluntarily, whilst developing an industry process for late adopters
  • Withdrawing copper-based services progressively
  • Developing a consumer charter with industry and Ofcom that encourages transparent communications to homes and businesses affected, and includes protections for vulnerable customers

In other words those pesky ‘late adopters’ would eventually be given no choice but to upgrade. This is what Openreach had to say about the copper situation: “The process would start with a ‘no move back’ policy for premises connected with FTTP, followed by a ‘stop-sell’ of copper services to new customers, and ultimately a withdrawal in full.”

It seems a bit authoritarian, but if the economics of maintaining the copper network don’t add up then it’s hard to what alternatives there are. The danger of forcing consumers to take a service is that CSPs could take that opportunity to over-charge, so Ofcom will want to keep an eye on that side of things. The government, as ever, will ride on the coat-tails of the process in its never-ending search for cheap political capital.

“We’re building a Britain that’s fit for the future, and our plans for a national full fibre broadband network underpin our modern industrial strategy,”  said Minister for Digital Margot James. “Upgrading to gigabit capable connections will benefit homes and businesses all across the UK. I welcome Openreach’s consultation on how to make this process as simple and efficient as possible whilst ensuring a competitive market is in place for all consumers and infrastructure providers.”

Openreach also recently announced Salisbury is going to become the UK’s first place to get FTTP across an entire town, which will be complete in April 2020. It seems to be setting this up as an exemplar of how great everything can be if we all cooperate on this stuff and reap the consequent connectivity rewards. This consultation will be open until 3 May, after which Openreach will let us know how it went.

UK government grapples with bias in artificial intelligence

Artificial intelligence (AI) has enormous potential for good, but with applications processing data faster than we can comprehend, how do you protect against bias?

To address this issue, the Department of Digital, Culture, Media and Sport (DCMS) has unveiled the Centre for Data Ethics and Innovation, with one of the first project focusing on the idea of programmed or learned bias in the algorithms which power AI.

“Technology is a force for good and continues to improve people’s lives but we must make sure it is developed in a safe and secure way,” said Digital Secretary Jeremy Wright. “Our Centre for Data Ethics and Innovation has been set up to help us achieve this aim and keep Britain at the forefront of technological development.

“I’m pleased its team of experts is undertaking an investigation into the potential for bias in algorithmic decision-making in areas including crime, justice and financial services. I look forward to seeing the centre’s future recommendations to help make sure we maximise the benefits of these powerful technologies for society.”

First up, the new centre will partner with the Cabinet Office’s Race Disparity Unit to explore potential for bias in crime and justice. As more applications emerge for use in the world of policing, assessing the likelihood of re-offending for instance, a lack of research on the potential of bias makes for a very dangerous scenario.

The algorithms which are in place might not demonstrate any bias at any point in the future, but implementation without understanding the risk is incredibly irresponsible. When these applications are used to inform decisions about policing, probation and parole, there is a very real-world consequence. Proceeding without such safeguards for bias in place is leaving developments down to chance.

This is of course just one application of AI, though the increased use of AI is becoming much more common. In recruitment, computer algorithms can be used to screen CVs and shortlist candidates, or in financial services, data analysis has long been used to inform decisions about whether people can be granted loans. The idea of unconscious bias can be applied to both instances with vert detrimental outcomes. In the recruitment case, there have already been reports circulating of gender bias.

Technology giant Amazon is one of those firms which got caught unawares. In 2014, Amazon began building an application which would review the CVs of the thousands of applicants it gets every week, giving each CV a rating between one and five stars. In 2015, it realised the application was not assessing the CVs in a gender-neutral manner, favouring male applicants for more technical roles.

The complication perhaps arises when machine learning applications search for attributes which are traditionally associated with roles. For a computer, data is everything and stereotypes are there for a reason, therefore it would appear to be a very logical decision to make.

This type of conundrum is one of the main challenges with AI. As these machines are driven by data and code, it is very difficult to translate ethics, morals, acceptable tolerances, nuance and societal influences into a language it understands. These are also limited applications, built for a single purpose. In the recruitment case, it looks at past attributes to decide, but does not have the ability to understand context. In this instance, the context would be sexism is not acceptable, but as the machine does not have the general knowledge or understanding of a human, how would it know?

This is the finely balanced equation which both industry and government have to assess. Without slowing the wheels of progress, how do you protect society and the economy from the known unknowns and unknown unknowns?

What is developing is the perfect catch-22 situation. The known challenges are known, but without a solution progress is a risk. Then you have the unknown challenges, those which might be compounded through progress but without anyone being aware until it is a complete disaster.

The Centre for Data Ethics and Innovation is an excellent idea to benefit society in numerous ways. But, it faces an almost impossible task.

Germany pushes back against US Huawei threats

It tried scaring her, to convince her with niceties, the diplomatic approach and finally threats, but the US cannot seem to break the will of German Chancellor Angela Merkel over Huawei.

Speaking at the Global Solutions Summit this week, Merkel has continued to defy the desires and demands of the US over China and its telco champion Huawei. Germany is not only standing resolute against the political propaganda, but this message seems to be more of a push back against the White House.

“There are two things I don’t believe in,” Merkel said during the interview. “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.”

This has been the on-going message from Germany and it seems the US threat of intelligence exclusion has landed on deaf ears. Germany wants proof of nefarious activities, and it will not make a knee-jerk reaction to punish a company (or a country for that matter) when the drivers are political and economic.

While there is of course a threat of espionage from the Chinese Government, this on-going narrative is one chapter in the wider US/China trade saga. Threats should of course be assessed and mitigated in a reasonable fashion, but you must consider all branches of the storyline. And Germany isn’t buying into US chest beating.

In terms of what has actually been said, there are five key takeaways:

  • Sensitive security issues should not be discussed on the public stage
  • Punishing a single company is not the right way to ensure security
  • Targeting China due to its economic success is unfair
  • Security requirements should be across the ecosystem to mitigate risk
  • The same security requirements should be escalated to a European level

Each of these points made by Merkel this week, and various German government agencies for months, are completely fair, reasonable and pragmatic. But fair, reasonable and pragmatic does not help the US.

Why is Germany resisting?

The simple answer is that it doesn’t make sense to ban Huawei.

Firstly, from a competition perspective the telco industry is not flush with vendors, especially ones which can offer the same scale as Huawei. Removing Huawei, and Chinese vendors across the board, reduces the number of vendors available for telcos to choose from. This weakens the negotiating position of the telcos and, theoretically, slows down the deployment march.

Secondly, a Huawei ban would impact some European nations more than others and Germany is one of them. Huawei has deep relationships with German operators, with equipment embedded into 4G networks. Banning Huawei would potentially result in kit having to be ripped and replaced, slowing down progress, while backward compatibility becomes more difficult also, again, slowing down progress.

With the world increasingly being defined by wireless, Europe’s largest economy cannot afford to slip too far behind in the 5G race. According to data from Opensignal, Germany has been falling behind numerous European nations when it comes to average 4G speeds.

While it might not have a massive impact on what we associate with connectivity today, primarily consumer smartphone applications and entertainment, with 5G promising a revolution in the way connectivity influences enterprise and the economy, this could become much more of an issue in Germany.

In short, Germany cannot afford to stomach the consequences of banning Huawei.

The turning tide of momentum

The anti-China rhetoric from the US has been consistent and loud over the last couple of months, though it does not seem to be gathering the same support as during the initial propaganda assault.

After Australia, Taiwan, South Korea, Japan and New Zealand seemingly turned against Huawei and China, the ear-whispering has not been as successful in Europe. The European continent has been a successful arena for Huawei in recent years, and such is the dependence of telco infrastructure on the vendor, it is unsurprising these nations are resisting the call to ban Huawei.

While individual states have been pushing back against US ambitions, this leaves the governments in slightly precarious positions. Such is the power and influence of the US economy, individually European nations will be in a frustrating negotiating position when defying US requests. However, escalating to a European level changes the dynamics.

This is perhaps why Merkel is keen to escalate this discussion to European Commission level. The power of the collective against US ambitions is an excellent way to mitigate risk on an individual level. Sovereign nation states often begrudgingly hand over power to the Brussels bureaucrats, but in this instance, it might prove to be a very pragmatic idea.

The European Commission was reportedly looking into new rules which would effectively ban member states from purchasing equipment from Chinese companies (although China would not be mentioned specifically), but we can’t see this carrying through. Brussels would face a huge amount of backlash when seemingly contradicting the wishes of the majority of its member states.

That said, should the US be able to produce concreate evidence of Chinese espionage and collusion with Huawei, attitudes could shift incredibly quickly.

What does this mean for Huawei?

This is neither good or bad; it’s pretty much maintaining the status quo.

Being banned in the US won’t really impact the prospects of the business, it never really cracked this market, while it will continue to maintain its healthy position in Asia. Europe is a key battle ground though.

Europe is in a difficult position. It needs to tread carefully to ensure it can still use equipment from the vendor. European governments will not want to ban Huawei and this continued resistance is a good sign for Huawei. Germany and the UK, two influential voices across the bloc, are both preparing frameworks to allow Huawei’s business to continue, and should such ambitions be escalated to the European Commission, these trends would likely continue.

Due to on-going security concerns, some of which are not fairy tales despite a lack of evidence, and telcos desires to introduce more diversity in the supply chain, Huawei is unlikely to dominate the 5G world in the same way it did 4G. This is far from a secured position, politics has a way of U-turning occasionally, but the anti-Huawei brigade is starting to run out of puff.

US warns UK on efforts to cage Huawei

The UK Government feels it is capable of mitigating any risk associated with Huawei 5G equipment, but the US is not so sure.

According to the Financial Times, a US delegation has reached out to the UK Government warning its means of testing and monitoring Huawei equipment will not protect it against any curious eyes from the Chinese Government. How this warning is received could dictate the US/UK relationship over the coming months.

The UK, and generally Europe on the whole, has taken a much more pragmatic approach in dealing with the potential threat of Chinese espionage. While the US was quick to banish any Chinese equipment from critical infrastructure, European governments are implementing new regulations and conditions to heighten security requirements, theoretically mitigating risk while also allowing telcos the luxury of increased choice.

This might sound like a perfectly logical way to manage a potentially nefarious situation, but the US is not happy. Perhaps this is evidence of the eroding influence which the US has on the world and a shift in the geo-political landscape. Once upon a time, US politicians might have been able to whisper in the ears of the European political elite and achieve their aims, but this does not seem to be the case anymore.

US officials fear that because 5G networks will be software-orientated, any equipment which is embedded into communications networks could altered at a later date, creating virtual backdoors at will. Theoretically, this is a genuine risk, however, nefarious individuals at any juncture of the supply chain, in any country, for any vendor, could also create the same vulnerability.

Although the National Cyber Security Centre is yet to respond to the comments from the US, CEO Ciaran Martin played down fears during a conference speech last week.

“Huawei’s presence is subject to detailed, formal oversight, led by the NCSC. Because of our 15 years of dealings with the company and 10 years of a formally agreed mitigation strategy which involves detailed provision of information, we have a wealth of understanding of the company. We also have strict controls for how Huawei is deployed. It is not in any sensitive networks — including those of the government. Its kit is part of a balanced supply chain with other suppliers.”

While the US has been visiting various countries around the world in an attempt to convince governments to ban Chinese companies, successes are becoming less frequent. European governments in particular have seemingly been very resistant to the idea, with the US reportedly threatening Germany with consequences; should the Germans allow Huawei into their networks, German intelligence agencies would not be granted access to US intelligence databases.

This plea to the UK Government seems to be setting up a similar timeline; should the UK not react in the same manner, the US might well start thumping its chest and stamping its feet, threatening a similar exclusion.

What is worth noting, is that while the US is preaching the benefits of a total ban on Huawei and other similar Chinese vendors, it has not done so itself. Chinese companies are barred from providing products and services in most critical and sensitive products, but the White House has not gone as far as a complete ban. Perhaps the worry is over repercussions from the Chinese, though it does not seem to care whether China punishes its allies.

BT shared rural network snub is not as it seems

Everyone agrees that there needs to be some sort of collaboration to meet the extra-ordinarily difficult coverage objectives of the Government, but BT is snubbing rivals’ latest plans?

According to The Times, O2, Vodafone and Three have tabled a plan which would see all four of the UK MNOs pool resources to tackle the digital divide. Shared infrastructure would reduce the financial burden of investing in geographical regions which offer little potential for ROI, due to the sparse or non-existent population.

At a breakfast briefing in London, Vodafone UK CTO Scott Petty laid out the concerns in a relatively simple fashion; sheep don’t pay phone bills. This is the challenge the telcos are currently facing; the vast majority of the UK’s population have coverage, but geographical demands of the government are a different kettle of fish (or herd of sheep). When no-one lives somewhere, what is the incentive to invest in infrastructure to provide coverage?

While this might seem like a reasonable approach, BT is reportedly taking issue with the plan, at least according to The Times.

“BT has already invested heavily to create the widest 4G coverage in the UK, and we are keen to collaborate with Government and industry to extend rural coverage into areas where there is none today,” BT said in a statement. “To this end, we have recently proposed a new model for consideration over the coming weeks.”

It has been widely reported BT is snapping the olive branch put on the table from rivals, but BT suggests this is just PR spin.

Reading into this statement, BT is not objecting to the idea of collaboration, the spin which has seemingly been played over the last few days, but suggesting a different approach. And from our perspective, it is a completely reasonable objection to make.

When you look at different coverage surveys and 4G connectivity analysis reports, EE is regularly crowned the best performer overall, and takes top-spot for most of the regional measurements as well. There is a simple reason for this; EE has spent more money improving its geographical coverage than its competitors.

While this is an achievement which should be applauded, the idea of rural roaming and generic shared infrastructure would erode this competitive advantage which it has been building towards. Don’t forget, EE has not been building out this 4G network because it is run by people who are just nice guys and want to help everyone in the UK. This investment has been made to give the team something to shout about and create an advantage when attempting to secure more customers.

EE wants to be able to go to potential customers and tell them they won’t only have better signal in all the normal places, but everywhere they could possible think of going. It’s a long-term strategic decision to put it in a stronger position than its rivals. Should there be any surprise EE does not want its rivals to benefit from the hard work, foresight and investments it has been making for its 4G networks?

Reading between the lines, this is what the objection is based around. BT is prepared to have discussions on collaboration to provide coverage in areas where there is none but allowing competitors to piggy back on its investments is a commercially idiotic idea. Why would it give away such a competitive edge in an industry where profits are so difficult to come by? It has made investments in commercially unattractive areas, so its rivals should have to as well.

From BT’s perspective, this is simply an attempt for rivals to increase connectivity coverage, but not having to pay for the achievement. Collaboration should be focused on areas where everyone is facing complications, not those where everyone aside from BT has an issue.

Another point to consider is whether a shared network would actually work from a differentiation perspective? The telcos are fighting for subscriptions, but if they are all using the same network in the rural markets, it becomes nothing more than a race to the bottom, eating away precious profits and marching towards utilitisation.

Finally, does such a broad-brush approach to geographical coverage actually work? Does the discussion about generic rural network sharing detract from the critical point, which should be focus on areas which have zero coverage, instead of those which have partial coverage? This is a six of one, half a dozen of the other argument, as while it sounds reasonable to concentrate on the areas which are complete data black spots, try telling that to Joe Bloggs who is potentially being screwed by only having a single provider to choose from.

This is an incredibly complicated argument, most of which has not been considered by the initial blame game which has been building over the last few days. When you take the nuances into consideration, there is no right answer, and neither are any of the suggestions wrong. In truth, something has to be prioritised, and not everyone is going to be happy with the final decision.

It might be easy to hurl blame towards BT/EE for its objection to a collaboration plan, but to do so without considering the commercial realities of the telco industry is incredibly lazy. BT/EE is objecting to this proposal, not to the idea of collaboration, but so would any other business which had built this position.

Is the VR market primed to pluck?

For all the promise of virtual reality (VR) the consumer appetite remains as somewhat of an unknown. Theoretically the technology could revolutionise the entertainment space, but we’re currently in a bit of a waiting game.

HTC is ready to gamble the consumer appetite, supporting ecosystem and product portfolio has evolved to such a position to provide the fuel for a subscription-based library of premium VR content.

“We have built a new model for VR that shines a light on the great library of VR content this industry has developed and gives users a reason to spend more time in headset than ever before,” said Rikard Steiber, President of Viveport.

“At the same time, we’re increasing developer reach and potential revenue as more developers can monetize a single Infinity user. We believe this model matches how consumers want to experience VR”

In pursuit of simplicity, Viveport is effectively a ‘Netflix for VR’. Customers can either pay $12.99 a month or $99 a year to access a VR content library with more than 600 titles already listed. As with other subscription models such as Netflix for content and Spotify for music, customers will have unlimited access to all content hosted on the platform.

However, you still have to answer the question as to whether the VR segment is ready to deliver the much-anticipated riches.

For the profits to be made, three criteria have to be satisfied. Firstly, is there an ecosystem which is creating enough volume of content, wide enough variety and immersive enough experiences. Secondly, is the hardware priced to allow the opportunity to generate mass market penetration. And finally, is there enough demand from the consumer.

With 600 titles already listed on the platform, this would suggest there is a large enough ecosystem in place to create the content. HTC is promising more titles, as well as some co-ordinated launches such as ‘Angry Birds VR: Isle of Pigs’. Secondly, the price of VR headsets has been coming down recently, and while it is still expensive, it is not prohibitively so. Consumers can spend thousands at the top end, but then again Google Daydream View can be purchased for £69. The breadth of products is now available to make this segment potentially viable.

The final criterion is the consumer appetite. This is incredibly difficult to gauge without launching a product, but as long as there are early adopters it is a good time to launch. Let’s not forget, Netflix was not an immediate success, it took time to develop the monstrous subscription base it has today, but it steadily attracted more and more thanks to it being first to market, while also offering an affordable (and very good) experience. Much of this was done through word of mouth.

Another lesson which HTC will have to learn is that enough is never enough. Netflix has maintained it position as the leader in the content world because it is constantly driving for more. Last year, the team spend almost $8 billion on content acquisition and creation, a number which will drastically increase this year. Not only is Netflix funding bigger-budget productions, but it is also expanding the local content libraries around the world. With Viveport, HTC could do the same, but it needs to ensure it is constantly expanding.

HTC has crafted itself a leadership position in the VR world, and the raw materials are currently in place to make this a profitable segment. Add improved connectivity with fibre penetration increasing and 4G constantly improving to the above three criteria, and HTC could be onto a winner.

Who knows, maybe in a few years’ time we’ll be referencing Viveport as the heavyweight of the entertainment space, not Netflix.

Huawei CEO tries to deflect cybersecurity spotlight onto Ericsson and Cisco

It was just a matter of time before Huawei played the whataboutism card and Founder/CEO Ren Zhengfei couldn’t resist in a recent interview.

Chatting to CNN in Shenzhen Ren said the following when referring to the US ban on Huawei gear: “They have to have evidence. Everybody in the world is talking about cyber security and they are singling out Huawei. What about Ericsson, what about Cisco, don’t they have cybersecurity issues? Why has Huawei been singled out? There’s no Huawei equipment in the US networks but has that made the US networks totally safe? If not how can they tell other countries that your networks will be safe without Huawei?”

When Huawei announced its lawsuit against the US government we figured it would have a pop at Cisco sooner or later, but Ren decided to involve Ericsson for good measure (but not Nokia). He has a bit of a point, we suppose, but there are a couple of flaws in this fallacious approach. Firstly, if he thinks any other vendors might be a security risk then he is subject to the same burden of proof he is applying to the US. Secondly, even if they are dodgy that doesn’t mean Huawei isn’t.

The main theme of this resumption of the Ren roadshow was to augment the points Huawei made when in its lawsuit. Ren stressed he would rather shut the company down than let the Chinese state muck about with it and said US tactics will result in scaring away investment in the country. He also tried playing the martyr card, insisting that what doesn’t kill Huawei will make it stronger and even suggesting this aggro represents a timely wake-upcall for complacent Huawei employees.

Ren’s media tour coincides with parallel attempts to win hearts and minds among US allies, but it looks like those are being trumped by a more direct approach from the US. A recent report from Bloomberg reveals German spooks think Huawei is just too dodgy to be allowed into the country’s 5G networks.

Apparently the German intelligence officials remain unconvinced by Ren’s vows never to collaborate with the Chinese state and are also worried about upsetting the US. “It’s above all a matter of trustworthiness and of the impact on our relationship with our allies,” a Foreign Ministry official told some parliamentary committee.

On top of that the EU has recently been publicly expressing concerns about Chinese 5G kit in general so, for the time being at least, momentum seems to have swung back in US favour. Ren’s attempt to metastasise the aggro to other networking vendors must be causing some alarm, not least because it raises the prospect of them being caught in the orbit of the law suit. If we’re on a Huawei to hell, we’re taking you with us, seems to be the message.

 

EE takes step towards content aggregator model

Content is a tricky topic to discuss around EE and BT, such is the scale of the disaster over the last few years, but a tie up with Amazon Prime and MTV Play is a step in the right direction.

The new content offer will see EE customers receive six-month memberships to both Amazon’s Prime Video service and MTV Play. The news starts to make a more comprehensive content platform for the MNO, with customers already able to access Apple Music and BT Sport, all of which is covered under the EE Video Data Pass, a zero-rating initiative available to all customers.

“It’s our ambition to offer our customers unrivalled choice, with the best content, smartest devices, and the latest technology through working with the world’s best content providers,” said Marc Allera, CEO of BT’s Consumer division.

“In offering all EE pay monthly mobile customers Prime Video and MTV Play access, in addition to BT Sport and Apple Music – we’re providing them with a wealth of great entertainment they can experience in more places thanks to our superfast 4G network, and soon to be launched 5G service. So, if they want music on a Monday, telly on a Tuesday, films on a Friday or sport on a Saturday, we’ve got something for them.”

While the content play over the last couple of years have been pretty dismal this is an approach to content and diversification which we like. It allows the telco to leverage the scale of their customer bases, while also adding value to the existing relationship with said customers.

Content fragmentation is an irk for many customers, not only because of the various apps which need to be installed, but also the number of different bills. EE doesn’t seem to be addressing the first issue but consolidating bills to a single provider might well be of interest to some customers. It also has the advantage of making EE a ‘stickier’ provider, perhaps having a positive impact on churn.

“Content is a key differentiator for telcos,” said Paolo Pescatore of PP Foresight. “However, consumers are now spoilt for choice resulting in too much fragmentation. Telcos are very well placed to aggregate content, integrate billing and provide universal search. Whoever achieves this first will have a significant advantage over their rivals.”

Sky is one of the companies which has had a good crack at addressing the fragmentation challenge, Sky and Netflix content is available on the same platform and through the same universal search function, though EE’s push on the mobile side would certainly attract attention. Consumers no-longer consider entertainment as simply for the living room, new trends show more preference for on-the-go content.

While this is a step in the right direction for EE, this is only one step. The content options need to offer more depth to meet the demands of the user, while streamlining all the content into a single app would be a strong step forward. It would certainly be difficult to convince partners to hand over customer experience to a third-party, Netflix has shown much resistance to this idea making the Sky tie-up all the more impressive, though whoever nails this aspect of the aggregator model would certainly leap to the front.

Almost half of UK value streaming video over pay TV

A report by EY showed 44% of UK households think they get better value from streaming services than from any pay TV operators.

This is one of the key findings from “Zooming in on household viewing habits”, a follow-up deep-dive on the annual survey EY conducted last September, which covered 2,500 UK families. This message from the UK consumers was also corroborated by a separate, US-focused research by Deloitte, where nearly half of all pay TV subscribers said they were dissatisfied with their service, and 70% felt they were getting too little value for their money.

One of the key themes coming out of the deep-dive into the UK family’s media consumption habits is the ascendency of the consumption of content over the Internet, at the expense of pay TVs. Despite that cord-cutting has not yet hit the UK hard, 54% of all families are already spending more time on the Internet than in front of the traditional TV, including two-thirds of young users primarily watch content on streaming platforms.

“It’s no surprise the UK is becoming a nation of streamers, but our research shows just how enthusiastically households have embraced it. Over the next 12-18 months we will see the launch of new streaming services to further sate the UK’s appetite for content,” said Martyn Whistler, Global Lead Media and Entertainment Analyst at EY. “However, reports of the demise of traditional TV seem a little premature. Our research shows their popularity is undiminished, with viewers watching them more now than in previous years.”

Although this could spell even more bad news for the pay TV operators, when the consumers do watch broadcast TV, 51% of households mainly just watch the five traditional “free” channels (if you did not count the £150 TV licence as “pay”), up from 46% in 2017.

In general consumers are much more tolerant towards pay TV carrying ads than streaming services do. But, still, more consumers are also willing to pay for the content they like. For example, Netflix ranked number one on the table of apps by consumer spending, according to App Annie. And the Deloitte report showed that in the US, a consumer would subscribe to up to three on-demand streaming services at the same time. The willingness to pay has even extended to catch-up watching, especially to get rid of the ads, according to the report. 18% surveyed would be happy to pay more to stream ad-free catch-up TV, up from 16% in 2017.

Another trends that stood out in the report is the diversification of content consumption platforms and its problems. A third families stream video on multiple screens, while 62% of the 18-24-year olds do so. Meanwhile, a quarter of all households have found it hard to track the availability of their favourite content across different services, apps and platforms. This number went up to 39% among the 18-24-year olds, which should be more tech-savvy.

These trends combined can have some implications for how content is produced, distributed, and monetised. For example, if consumers will most likely binge watch content on streaming services (e.g. the average Netflix user would stream two hours a day), the idea of “episode”, which has worked on broadcast TV, will be less relevant. Or should a long series be released all at once on a streaming platform, or making it available episode by episode as the conventional TV broadcasting does? How should pay TV services improve not only its users’ account management, but also the content’s ID management, to provide more pleasant experience for cross-platform and cross-device users?

As Praveen Shankar, EY’s Head of Technology, Media and Telecommunications for the UK & Ireland, put it: “Our survey demonstrates that audiences are struggling to keep track of their favourite content across various platforms and they are confused by the choices available to them. Technology, Media and Telecoms (TMT) companies need to move away from programme guides and big budget marketing and build artificial intelligence (AI) enabled recommendation engines to push content. This will improve user experience, reduce costs and maximise assets.”

On-demand video streaming has surely gained more impetus again in the last few days. CanalPlus has just launched its own streaming service Canal+ Séries, and Apple is widely expected to unveil a version of video on-demand service on 25 March at an event on its own campus.

US reportedly pressures Germany over Huawei

After diplomacy failed to convince those pesky Europeans Huawei should be banned, the US has reportedly moved onto the tried and tested tactic for getting its way; being a bully.

It was never going to be long before the blunt hammer of political persuasion came out, and according to the Wall Street Journal, the White House is huffing, puffing and about to start swinging. The German Government has reportedly been told to ditch Huawei kit or it will be barred from accessing US intelligence databases.

Should the reports prove to be true, this would be the first time the US has threatened allies with direct consequences for ignoring the anti-China propaganda. That said, it should come as little surprise. The US is a political power not used to being told no, especially with the narcissistic President Trump acting as puppet master. Being nice can only get you so far, and the White House has seemingly had enough of those pesky Europeans making their own decisions.

While Huawei remains a company under scrutiny, the European nations has so far resisted any knee-jerk reactions. It has been rumoured Germany was preparing new security requirements which would protect itself and its citizens, but also allow Huawei to continue operating in the country, and last week was confirmation. The release of a draft bill, outlining the new security requirements laid out the German position; Huawei looked safe in Germany.

Germany is of course a large economy and a key trading partner of the US, though it is also a heavyweight amongst political featherweights in the European Union. In drafting these new security requirements, other countries across the bloc might follow suit, such is the influence of Berlin. Perhaps this is a situation which the dented-ego of the US would not allow, especially considering its lobby efforts have largely been ignored across the European continent.

With Europeans taking a more proportionate response to the threat of foreign actors, the US will of course not be happy. The bully of yesteryear is beating its chest, and collateral damage from the US/China trade war could be about to get much wider.