Attracting investment to Africa is not the issue, keeping the value is

Europe has been rubbing the White House up the wrong way with the diabolical intention of reforming regulation, and now it appears Africa might be heading the same direction.

Digital regulation and policy are turning into sticky topics nowadays. With the likes of Amazon, Google and Facebook generating almost thinkable profits, while playing hide-and-seek with the taxman, numerous nations are hitting back. New regulatory regimes are being created, much to the irritation of the US, to ensure value is retained in the country it is created and this trend is making its way across to Africa.

“We need to dictate the rules to the technology giants if they want to apply their technology,” said Nanjira Sambuli, Senior Policy Manager at The Web Foundation, at AfricaCom.

Founded by Sir Tim Berners-Lee, The Web Foundation has tasked itself with creating a more evenly distributed digital economy, ensuring the benefits and value of the internet are fairly shared across the world. In turn, Sambuli leads the Web Foundation’s policy advocacy to promote digital equality in access to and use of the web.

Herein lies the issue which is challenging regulators and policy makers in Africa currently; attracting foreign investment dollars to African start-ups and incubators is not necessarily an issue, but retaining the value created certainly is.

Although Africa might not be the most attractive of regions to some multi-national corporations, there is certainly plenty of opportunity. With only a third of the continent connected to the internet, there are some 800 million individuals who are sitting outside the digital society. And with 60% of the population under the age of 24, there are profits to be made once the digital revolution generates more momentum.

During the opening keynote sessions at AfricaCom, MTN Rob Shuter highlighted the next three years could see a surge in the adoption internet adoption across the continent, and in turn, profits will be generated as these new users get sucked into the same digital rabbit holes.

But like Europe, Sambuli highlighted the African governments and regulators are keen to see the value, both societal and financial, retained in the economies which create it. Silicon Valley might dictate the speed of the revolution, but it seems it will not wield the financial freedoms of yesteryear.

That is worth noting, is this is not just a Non-profit organisation posturing for attention. Sitting alongside Sambuli on the panel was Stella Tembisa Ndabeni-Abrahams, the Communications Minister for South Africa. Echoing the statement, Ndabeni-Abrahams suggested new policies were on the horizon to ensure South Africa’s entry role in the global digital economy is on South Africa’s terms.

For the moment, this is nothing more than rhetoric. Bureaucrats around the world have found it is incredibly difficult to hold Big Tech accountable, and the Silicon Valley lawyers are as slippery as ever. This is a bold statement though. Ndabeni-Abrahams and Sambuli both highlighted investments to create immediate value will no-longer appease rule makers. The free-wheeling residents of Silicon Valley might have more regulatory headaches to account for.

UK’s Zen Internet gets a £20 million overdraft to take on the incumbents

Independent UK ISP Zen Internet wants to take on the big operators and has secured £20 million in credit from the NatWest bank to help with that.

The announcement is full of fairly vague, generic pledges to invest the money in growth and that sort of thing. Among those investments will be Zen’s network infrastructure, but no specifics were offered. Zen’s ‘independent network’ currently covers less than a third of the country, so the most obvious area of investment would be to increase that coverage, although even £20 mil won’t get you that far.

“This is a very exciting time for everyone at Zen, including our customers and partners,” said Paul Stobart, CEO of Zen Internet. “As an organisation we will continue to focus on sustainable growth, rather than short term profit, ensuring that we do the right thing by our people, customers and partners.

“A portion of the funding will be used to refinance debt, whilst the balance will be reinvested into our network infrastructure, people and product offerings. We believe that through our exceptionally dedicated people, award-winning services and leadership, we are in a great place to do things differently and achieve our ambitious business targets over the next few years.”

Zen also got a few city types to say how great it is that it can now borrow more cash. Around half of it is apparently earmarked to install Zen gear in 250 exchanges, which will bring its total number of exchanges to 700. Some reports have said that will cover 80% of the country but Zen itself only claims to cover 500,000 of the 1.7 million postcodes. Either way it’s good to see indies giving the big four a run for their money.

FCC allocates $20bn to close US digital divide

One of the genuine risks of the accelerated journey towards the digital economy is the widening digital divide, though an extra $20 billion from the FCC could help even the landscape.

Although the US is one of the most advanced digital nations in the world, the difference between the haves and have nots is quite staggering. If you were to compare the connectivity options for a millennial in San Diego to a farmer in rural Ohio, you wouldn’t assume it was the same country. Some might see it as a first world problem, however with the benefits of connectivity being applied to areas such as education and healthcare, it is irresponsible to allow this divide to continue.

This is the conundrum which the FCC has faced in recent years. It is of course commercially attractive to drive connectivity options in the densely populated urban areas, but such are the sparse and environmentally challenging regions across some of the US, vast numbers of people are being left behind.

Here, the FCC is proposing the establishment of the Rural Digital Opportunity Fund, which will direct $20.4 billion towards closing the digital divide.

“In short, we’re proposing to connect more Americans to faster broadband networks than any other universal service program has done,” said FCC Chairman Ajit Pai.

“I’m excited about what this initiative will mean for rural Americans who need broadband to start a business, educate a child, grow crops, raise livestock, get access to telehealth, and do all the other things that the online world allows. And I look forward to kicking off this new auction next year.”

This fund will have a broader scope than the previous Connect America Fund (CAF), and will aim to assist regions which are not currently able to access download speeds of 25 Mbps and upload speeds of 3 Mbps, significantly higher than the caps placed on the CAF funds.

The funding will be allocated in two phases. Firstly, using data which has already been collected by the FCC, a reverse auction will be implemented to hand out the funds. Alongside this auction, a new data collection tool will be implemented to offer greater depth to the insight. In the second phase, the intelligence gathered through this tool will help allocate funds as well as to those communities which missed out in the first phase.

With what will be known as the Digital Opportunity Data Collection initiative, the FCC will aim develop more granular broadband deployment data. This initiative will aim to collect geospatial broadband coverage maps from fixed broadband ISPs, and also develop crowd-sourcing portal that will gather input from consumers as well as from state, local, and Tribal governments. Through crowd-sourcing the data, the FCC will hope to validate the information put forwards by the ISPs.

This is a sensible approach from the FCC, as while the ISPs will have the biggest treasure troves when it comes to data, they have also shown themselves to be misleading in the past. With such a tool at its disposal, the FCC can become a more intelligent organization, taking proactive steps towards fixing the digital divide as opposed to simply signing blank cheques for the telcos to cash.

“I appreciate the hard work that went into this item to fix the Commission’s broken mapping process,” said FCC Commissioner Michael O’Reilly.

“Like some of the very laudable mapping bills being considered by Congress, including those by Chairman Wicker and Senator Capito, this item takes important steps in creating a more accurate and useful picture of broadband coverage, which should allow the Commission’s universal service policies to better focus on those millions of Americans left behind without access to broadband service today.”

And while this might sound like a positive step-forward, Commissioner Jessica Rosenworcel, a political opponent of Pai and O’Reilly, has found something to be irked about. Rosenworcel fears the maps might be replaced by a difficult to find URL and handing control of data collection to the administrator of the funds is not the best way forward.

Although we should not be surprised by the objections, they are incredibly weak. Rosenworcel has said she likes the idea, though her objections are seemingly just trying to be awkward, playing the childish role of political opponent wherever possible. While we rarely have anything positive to say about Pai and his cronies in the FCC, this is a sensible move forward and Rosenworcel seems to be finding objections purely because it adds to the theatrics of politics.

What is incredibly difficult to understand is how severe the digital divide actually is in the US. The FCC suggests there are 21 million US citizens who cannot access acceptable broadband speeds, though Rosenworcel has quoted a report which claims the digital divide is as high as 162 million.

This outlandish claim pays homage to a report from Microsoft which should be taken with a bucketful of salt. Let’s not forget, Microsoft is a firm which will benefit from stoking the fire and attracting additional funds to fuel connectivity deployments in the rural community.

This in itself is one of the significant problems when attempting to tackle the digital divide; no-one actually knows what the starting point is. Depending on your commercial aims and political allegiance, the number of underserved citizens will vary wildly. How can one address a problem when the variables remain unknown? It is nothing more than shooting in the dark, hitting the mark occasionally but likely to miss the most important targets.

Alongside these changes in funding connectivity, the FCC has also released a statement which will address how funding for telehealth services is allocated.

This is where the idea of connectivity can be more than simply a means to access entertainment, taking the digital divide beyond the realms of first world problem. There are communities in the US who are underserved by medical services thanks to doctor shortages and hospital closures. The Rural Health Care Programme aims to address these challenges, making use of connectivity to ensure all US citizens have access to medical services as and when they need them.

The latest proposal is another reform to how funds are allocated, attempting to identify the regions which are most severely underserved. Funding will be increased by 43% to $571 million.

Toob joins the UK alt-net revolution

Portsmouth start-up Toob is the latest to cash in on the consumers fibre appetite with £75 million of initial funding, backed by Amber Infrastructure.

Focusing on Portsmouth, the firm will aim to build a network to support 100,000 fibre connections by 2021, with the first to be hooked up by the end of 2019. The start-up was founded by former Vodafone executives Nick Parbutt, who will act as CEO, and Mike Banwell, CFO, while experienced executive Charles McGregor will act as Chairman.

“We are delighted to be partnering with Amber Infrastructure and to have secured Charles as Chairman. toob now has the right people, the right plan and the right funding in place to capitalise on the exciting opportunity ahead of us,” said Parbutt. “We want to enable families, businesses and communities to live, work and play in ways which are only made possible with the advent of gigabit broadband.”

“The amount of internet data used by people in the UK is growing by around half every year,” said Jonathan Oxley, Ofcom’s Competition Group Director. “So, we’ll increasingly need full-fibre broadband services like this to provide faster, more reliable connections and capacity to our homes and offices. These plans are another example of full-fibre being used to build broadband that can support the UK’s digital future.”

The alt-net revolution is starting to roar, and the signs are looking much more positive for fibre-enthusiasts across the UK. Although the UK is currently one of the least equipped to handle the blossoming digital economy, despite what politicians say to you, the industry is starting to get itself into shape. The alt-nets can claim some of the plaudits for this progress.

Although CityFibre developed a reputation for being a bit of a victim in years gone, the proposition was ahead of its time. Few other operators in the UK considered fibre as a priority, though CityFibre focused on developing fibre spines in large towns and cities across the country and is now reaping the benefits. The success has spurred confidence in other alt-nets such as Hyperoptic and Gigaclear, though more are emerging every year.

The issue some of these businesses might face in the future is scale. Fibre is an expensive segment to operate in, and the demanding nature of the UK consumer is forcing the price of connectivity down each year. CityFibre is in a strong position, the tie up with Vodafone is important as are other enterprise relationships, while Hyperoptic and Gigaclear also have established businesses now. Those who are late to the party, might have trouble achieving scale when the price and civil engineering complications are considered.

While the alt-nets are critical in accelerating the pace of change and rollout of fibre across the UK, there might need to be some consolidation should more small providers emerge in the future. This of course will not matter to the UK Government however, which has been searching for ways to entice the industry onto a fibre diet.

Back in 2015, the then Chancellor of the Exchequer George Osborne floated the idea of a new fund for alt-net providers, perhaps realising there was a need to force change through competition and the threat of loss. What should be worth noting is Openreach’s decision last week to launch an industry consultation on the switch to full-fibre, the first step in retiring the legacy copper network.

The alt-nets have been a contributing factor to the changing of the status quo, demonstrating there is a consumer appetite for fibre connectivity, but also highlighting the poor position of Openreach.

There are of course those who would suggest fibre connectivity is not necessary, though a decade ago who would have said we would have been craving the speeds of today. The issue is not whether we need the speeds fibre promises, but readying business and people for the usecases of tomorrow. Who knows what wonderful ideas will emerge, but when the creatives and innovators get their hands-on fibre connectivity speeds, but they will design products and services for these speeds. Fibre connectivity today is more about readiness.

For those who are desperately preaching the case for fibre connectivity, the alt-nets seem to be a perfectly suitable catalyst for change. The UK is still miles behind the rest of Europe, data from IDate suggest fibre penetration in the UK is only 1.3% compared to 44% in Spain, but there does seem to be progress being made.

President Trump’s unexpected ally: Finland kick-starts 6G

A few days after Donald Trump tweeted about 6G, when he was roundly ridiculed, Finland’s scientists proved that he had a point by announcing their plan at MWC 2019 to embark on the journey towards 6G.

The researchers in Finland expect 6G to take shape in about 2030. To gain the leadership by that time, the so-called “6Genesis” has been selected as the country’s flagship high-tech project for an eight-year period 2018-2026. The project is hosted by the University of Oulu, ranked a top 3 university globally in radio access engineering.

Professor Ari Pouttu, who leads the project, introduced the vision and key technology streams at the event. 6G will satisfy the expectations not yet met by 5G as well as new expectations fusing AI inspired applications with ubiquitous wireless connectivity, Professor Pouttu said. Specifically, he foresaw four technology trends that are fundamentally different from earlier generations.

“Wireless Connectivity” in 6G means disruptive radio access deployed on 5G core networks, enabling Tbps speed and deliver unmanned process. “Devices & Circuits” means that the current semiconductors will not be able to operate on super high-frequencies. When communication takes place on frequencies above 500GHz or even at terahertz level, new materials will be needed to replace silicon. “Distributed Computing” refers to moving the computing power to the extreme edge. For example, instead of conducting computing from the “brain” of the robot, in 6G environment computing will need to be moved to every limp tip of the robot to enable time critical and trusted apps. “Service & Applications” refers to the disruptive value networks enabled by multidisciplinary research across industry verticals, in contrast to the siloed approach to research and development now.

The Finnish government has already granted 6Genesis €25 million through the Academy of Finland. Five co-founders have signed up, including Nokia, VTT (Finland’s technology research centre), Aalto University, Oulu University of Applied Sciences, and BusinessOulu (local business promotional agency). The total funding of the project so far, including contribution from these partners, other national and EU grants, plus the Academy of Finland grant, amounted to €251 million. Professor Pouttu quipped, while speaking to Telecoms.com, that this amount is for science fiction, not science. He may be on the conservative side with his estimation for science fiction though. “Avengers: Infinity War”, a recent sci-fi blockbuster, cost nearly $400 million (€350 million) to make.

Improving funding is clearly one of the reasons why the project was calling for more companies and institutions to sign up. The fact that the announcement was made during MWC could only mean that global partners are also being sought after. Professor Pouttu could consider pushing a tweet to President Trump directly.

The world’s first 6G Wireless Summit will be held in March in Levi, a ski resort in Finnish Lapland.

VCs are spending more on less, how will that impact innovation?

CB Insight has released its latest quarterly report on venture capitalist funding claiming new records are being spent in terms of total cash, but trends are leaning towards the bigger players.

Over the course of the last 12 months, US venture capitalists spent a total of $99.5 billion funding businesses, though the number of deals stood at 5,536, the lowest since 2013. Later-stage mega-deals pushed annual funding to its highest level since 2000, though you have to wonder whether there will be any material impact on innovation, a worrying though when you consider the emerging potential of 5G for disruption.

Although the majority of the segments are relatively stable, as you can see from the graph below seed-funding has been gradually eroding for some time.

CBI Graph 2For those with the cash to spend, these trends make a lot of sense. Why would you take a risk on a start-up which might fail in the next couple of months when you could invest in a company which has scaled, secured customers and revenues and has a stable foundation? There are so many medium sized technology companies out there looking for financial fuel to go to the next level makes perfect sense.

However, the impact on the future might be damaging for the US on the whole if it wants to maintain its position at the top of the technology rankings table.

Here’s our point; not all innovation comes from start-ups or garages hidden away in suburbia, but a notable number of the significant disruptions do. If funding is being more prominently directed towards the established players, is a trick being missed?

Let’s dissect that point for a second. The larger companies certainly do search for innovation, but the search is for a purpose. Nokia, for instance, wouldn’t allow their researchers to run wild without any tethers whatsoever as there are limited R&D funds available and commercial considerations have to be factored in. The search for innovation is almost certainly tied to a current commercial objective or with specific ambitions to exploit an emerging segment.

This is not a bad way to do business of course. R&D has to be conducted with a purpose; these organizations have a responsibility to investors and shareholders to spend money reasonably, with the objective of making more money in the future. It certainly is sensible, but it is a restricted approach to innovation. Start-ups don’t necessarily have these burdens of responsibility, they can explore the unknown.

5G has been billed as a revolution. It will change the ways businesses operate and open a host of new connectivity possibilities to everyone in society. But like 4G, the best ideas are ones we haven’t thought of yet. They are probably businesses which do not exist. How many people would have thought of an idea such as Uber before 4G was a reality. This idea only came to be because the right conditions were in place and a creative inventor thought of it. Throughout the 4G era many of the better ideas emerged from start-ups which either scaled or were bought by one of the major players.

The world of 5G is not upon us quite yet, therefore it is a bit of a pre-emptive point right now. Innovation needs to be encouraged at every level if the US is to hold off the Chinese challenge to its technology leadership position. The trends are currently leaning away from seed-funding, which is certainly sign.

SoftBank plans massive IPO for its Japanese telecoms business

Tech conglomerate SoftBank wants to raise a few trillion yen by offering some of its Japanese operator up for public consumption.

Around a third of SoftBank Japan’s shares will be served up in an initial public offering that is expected to raise around 2.4 trillion yen (21 billion bucks). If things go really well it could even challenge Alibaba for the biggest ever IPO, which would come in handy for a group that is especially exuberant in its spending.

“Through the listing of SB shares, SBG expects that the respective roles and valuations of the two companies will be clear,” said the announcement. “SBG is accelerating investments on a global scale, while SB is a core company to the Group’s telecommunications business. It is hoped that each of the two companies will be able to provide information regarding their businesses to the market with greater clarity and thereby better respond to the various needs of investors.

An alternative way of looking at it is that SoftBank Group is a bit short of cash and has decided that a sport of equity release from one of its subsidiary companies is the best way to get hold of the kind of cash it needs. As well as big acquisitions such as ARM, the group seems more concerned with general tech investment these days. This IPO seems to have been on the cards for a while, but it remains to be seen how much, if any, of the cash raised will be reinvested in SoftBank’s, Japanese network.

Former Cisco boss thinks tech leaders are too cocky

John Chambers, who ran Cisco for 20 years, reckons the leaders of tech companies need to dial down the arrogance a bit.

He made the comment to Yahoo Finance in the context of the tech venture capital business he started up since stepping down from Cisco. “I worry about our industry – it’s a tug-of-war between overconfidence, bordering on arrogance, among some of the leaders,” He said. “It’s hard to get that arrogance out of them.”

Chambers’ major issue with this mindset is that arrogance can prevent the people running tech startups from continuing to learn and grow, which makes them less attractive investment prospects. “For the companies I select, if they are arrogant I don’t touch it,” he said. “I have developed a criteria. If the CEO doesn’t want to be coached, if they don’t know what they don’t know, and truly if the chemistry is off, I don’t touch them.”

The VC business is called JC2 Ventures, so named because Chambers runs it with his son. Showing the kind of humility he expects of his fellow tech moguls Chambers named his son after himself and JC2 Ventures apparently has 12 companies in its investment portfolio.

Siris Capital makes half a billion bucks in 10 months with Intralinks sale

Private equity firm Siris Capital is selling Enterprise collaboration software vendor Intralinks for $1.5 billion, having bought it for a billion less than a year ago.

It’s starting to look like Siris Capital is pretty good at this capitalism business. In November 2017 Siris agreed to buy Intralinks from crisis-hit mobile software and services company Synchronoss for $1 billion. Synchronoss itself, which also accepted a further strategic investment from Siris, had only bought Intralinks less than a year previously.

Ten months of patient incubation later, with Intralinks now positioned as ‘a leading financial technology provider for the global banking, deal making and capital markets communities’, financial software company SS&C Technologies has decided it’s now worth 1.5 billion. It will pay Siris a bil in cash and half a bil in SS&C stock.

“Intralinks brings a wealth of expertise and a leadership position in the data sharing and collaboration technology space,” said Bill Stone, CEO of SS&C. “Intralinks and SS&C share many of the industry’s largest customers and together we are well-positioned to meet the needs of major banks, alternative funds and other corporations seeking to automate document-centric, collaborative workflows.”

“I have been privileged to lead Intralinks through an exciting period in which we refocused the business on delivering innovative technology to the financial services sector,” said Leif O’Leary, CEO of Intralinks. “Intralinks’ acquisition by SS&C is a testament to the progress we have made toward our strategic objectives, and we are excited to deliver even more value to our customers as a combined business.”

“My colleagues at Siris and I recognize the tremendous work the Intralinks team has done to deliver on its strategic vision and generate profitable growth under our ownership,” said Frank Baker, a Co-Founder and Managing Partner, Siris Capital.  “We believe that the combination of Intralinks and SS&C will benefit customers, employees, partners and investors.”

Siris has emerged as a pretty significant player in the telecoms and tech private equity scene. Not only did it rescue Intralinks from a failed marriage and trouser half a billion bucks in less than a year for its troubles, it’s heavily involved in the resurrection of Synchronoss and also owns Mavenir and Polycom.

Nokia gets half a billion euros from Europe to get better at 5G

Finnish kit vendor Nokia has been granted a €500 million loan from the European Investment Bank to help with its 5G R&D efforts.

The EIB is part of a larger ecosystem of pan-European financial services bodies that allocate public money in order to pick private-sector winners within the bloc. The over-arching concept is the Investment Plan for Europe, which the EU fawningly refers to as the Junker Plan after its dear leader. Within that is yet another group called the European Fund for Strategic Investments, which is apparently ‘supporting’ the EIB in handing over this cash.

The terms of the loan are unstated (Nokia says it ‘extends its debt maturity profile’), but are presumably more benign than just going to the open money markets which, of course, Nokia is free to do whenever it needs a few euros to help it with its 5G R&D efforts. For the EU this is an easy way to demonstrate it’s supporting 5G in the European bloc without actually doing anything, so it looks like a win-win for everyone except tax-payers who would like to see their cash spent on other stuff.

“5G is happening fast, faster than most people even expected,” said a startled EIB VP Alexander Stubb, who is responsible for lending in Northern Europe, which is apparently very different from lending in Southern Europe. “It’s anticipated that it will enable entirely new business cases, while dramatically enhancing existing wireless applications. I think bringing 5G to the market will definitely improve people’s lives, as the motto for the EIB’s 60th anniversary states.”

“Ensuring that Europe embraces and benefits from new technologies requires sustained investment,” concurred EC VP Jyrki Katainen, who is responsible for jobs, growth, investment and competitiveness. “That is where the Investment Plan for Europe can play a crucial role. I am delighted that, with today’s agreement, the Plan is contributing to Nokia’s research and development activities across multiple European countries to advance the development of 5G technology.”

It may be a coincidence but Katainen is Finnish. It may also be a coincidence that the last press release issued by the EIB before this one was on 16 August and entitled ‘EU funding for growth of Finnish companies’. “I am delighted that, with today’s transaction, the Investment Plan will allow Finnish firms to benefit from EUR 100 million in financing opportunities,” said Katainen at the time.

“We are pleased to land this financing commitment from the EIB, who shares our view of the revolutionary nature of 5G – and the realisation that this revolution is already underway,” said Nokia CFO Kristian Pullola. “This financing bolsters our 5G research efforts and continues the broader momentum we have already seen this year in terms of customer wins and development firsts, supporting our relentless drive to be a true leader in 5G – end-to-end.”

If this sort of thing belatedly makes Europe more competitive in 5G then it’s hard condemn, but there’s something unnerving and protectionist about Europe picking private sector winners within its bloc. And what about Ericsson? Sweden is also a member of the EU but, crucially, not the eurozone, having decided to cling onto the krona. The process of picking winners is inherently discriminatory and you have to wonder whether Ericsson is being punished for Sweden’s currency defiance.