National Infrastructure Commission questions UK progress

The National Infrastructure Commission (NIC) has released its annual report, dampening enthusiasm around telco progress, but the industry got off lightly compared to everyone else.

Progress has been made by the Government and telcos in closing the not spots across the country, as well as accelerating the deployment of 5G, though the NIC has been quick to point to the shortfalls. Most notably, connectivity on the railway.

The risk which is at present today is a false sense of achievement. 5G is progressing quickly, though it is always important to remember the 4G rollout is not complete. In the rural communities and on roads and railway lines, connectivity is poor, irrelevant as to what the telcos or Government will tell you otherwise.

“The UK desperately needs a strategy that looks well beyond this Parliament, setting out infrastructure policy and funding up to 2050,” said Sir John Armitt, Chair of the NIC. “It must contain goals, plans to achieve them, funding to deliver those, and deadlines for delivery.”

Although it might as well be deemed an impossibility, Armitt is correct with his statement. Infrastructure strategy and investment should not be politicised, though it already has been. In making some bold and embarrassing statements, both Prime Minister Boris Johnson and former Labour Leader Jeremy Corbyn made connectivity a political ping-pong ball, potentially creating a policy war which bounces back and forth across the aisles achieving very little.

That said, the work of egotistical politicians cannot be undone therefore we have to pursue the current course.

Looking at the report, the telco industry got off lightly. Government departments have been panned for the thus-far laughable attempt to improve rail connections through HS2, better the energy efficiency agenda for the electricity networks and increase house building rates to meet promises of PR hungry politicians. But the telco industry did not escape all condemnation.

Interestingly enough, the NIC suggested mobile voice and 4G data services were now available on all UK motorways, though most who have driven these routes might find some points of disagreement. But it is the rail network which has fallen woefully behind according to the report.

“Motorways now have near universal mobile coverage for both voice calls and 4G data, and work is progressing on the rest of the network,” the report states. “In contrast, progress in improving mobile connectivity on the rail network has been limited, and work appears to have stalled since government endorsed the Connected Future recommendation.”

As with every good backseat driver, the NIC has made several recommendations to improve the connectivity prospects of the UK.

  • Introduce a Digital Champion in the Department of Transport to ensure connectivity aims are being translated into actionable policy and strategy
  • Formalise a strategy to deliver increased connectivity on rail routes. This strategy should be put down on paper by December 2020
  • Force National Rail to collaborate with third parties for access for third parties to deliver a trackside connectivity network on railway land. These arrangements should be formalised by December 2020
  • Begin a competitive process for delivering mobile connectivity improvements on at least four main line routes by June 2021

Interestingly enough, despite there being many pitfalls in the progress of the telco industry in recent months and years, the report has been quite favourable. Progress is of course being made but the UK telco industry is far from perfect. Perhaps more attention will be paid to this critical industry following a new appointment at the NIC.

James Heath, currently the Director of Digital Infrastructure at the Department for Culture, Media and Sport (DCMS), has been announced as the new CEO of the NIC.

“Infrastructure has shot to the top of the political agenda and this role offers an unparalleled opportunity to advise government on how to ensure future investment will deliver lasting benefits to communities across the UK,” Heath said. “I will be joining a talented team and supporting a group of Commissioners whose expertise offers huge value in shaping a strategic approach to infrastructure policy.”

The NIC does have the clout to influence Government decision making and policy, and perhaps this is an effort to pay homage to the increasing importance of telecoms in every aspect of our daily lives. Heath was the man who led the Supply Chain Review process and will of course bring a lot of industry specific experience with him.

Texas Judge rules for White House over Huawei

Huawei has faced a setback in its pursuit of legitimacy in the US. as a Texas District Court ruled against its lawsuit directed towards the National Defense Authorization Act (NDAA).

Judge Amos Mazzant of the US District Court in East Texas ruled that section 889 of the NDAA was valid and legal. Huawei had argued the clause, which effectively banned it and ZTE from working with any company receiving federal funding, was unconstitutional on the grounds it presumed guilt without a fair trial.

While a Huawei victory was hardly going to make an impression with the single-minded White House policy makers, this is a victory for the Government, seemingly validating its decision.

“Contracting with the federal government is a privilege, not a constitutionally guaranteed right – at least not as far as this court is aware,” Judge Mazzant said in the ruling, first reported by Reuters.

This is an interesting nuance which has been put forward by Judge Mazzant. Huawei has argued the clause banning service providers from spending federal money on Chinese equipment is unconstitutional, though Judge Mazzant has stated that the Government should have the right to control how its money is allocated and spent. The Act does not prevent Huawei from doing business in the US entirely, which keeps the Government on the right side of the line.

The lawsuit, which was filed in March 2019, stated that Congress was acting in violation of the US Constitution as it was denying the firm the right to bid on both Government and private sector contracts. Huawei suggested the Act was a Bill of Attainder, as it presumed guilt without trial. Under Article I Section 9 in federal law, and in state law under Article I Section 10, US Constitution forbids such actions.

For the US, this could add some momentum to the already existing propaganda campaign against China and seemingly all companies from China. This ruling could add buoyancy to the Simple Resolution which has recently been passed in the House of Representatives.

The resolution, which can be used to influence administrative actions and foreign policy, stated that the House of Representatives believed all Chinese countries were effectively under Government control, state-owned or private. Such a broad-brush approach to condemnation is a very dangerous and small-minded approach to take, though the anti-China rhetoric could be offered a new lease of live…

Huawei attacks US Government and Wall Street Journal credibility

Huawei has issued its retort to US accusations that it has access to telco networks, suggesting the US Government should be more mature than resorting to PR and propaganda campaigns.

“US allegations of Huawei using lawful interception are nothing but a smokescreen – they don’t adhere to any form of accepted logic in the cyber security domain,” the statement reads. “Huawei has never and will never covertly access telecom networks, nor do we have the capability to do so.”

Earlier this week, US officials briefed journalists at the Wall Street Journal regarding a technical loophole which granted Huawei access to telco networks around the work. Intended for law enforcement agencies, these backdoors offered opportunity for ‘Lawful Intercept’ activities when validated by the courts, though Huawei allegedly had access to these backdoors.

While it is a claim which certainly would have shocked a few people around the world, the story itself was a little bit suspect…

Firstly, if this is evidence of a smoking gun to prove espionage, why weren’t US officials showing this to the Governments of allied nations. Secondly, the US officials didn’t actually state that Huawei had done anything wrong. Third, it seemed unusual that only Huawei has access to these backdoors. And finally, if this is a situation which has been present since 2009, why are we only finding out about it now?

It would be foolish to completely disregard claims of espionage from the Chinese Government, but these statements from the US Government to the WSJ look more like a propaganda campaign, an offensive move to turn the tide of public opinion. If there was evidence, as the US officials suggest, surely it would be presented to other regulators and governments rather than a news outlet.

In its response to the allegations, Huawei has hit back suggesting the claims are nothing more than a rouse, the WSJ should have more credibility than to blindly follow such statements, its products are built to standards which make provisions for lawful intercept, and that it is an equipment manufacturer to the telcos.

The last point is an interesting one. Huawei manufacturers equipment which it sells to telcos, who then operate it behind security firewalls and systems. There would have to be some very sophisticated and nefarious software skills to embed such treacherous backdoors, and considering the damning reports the National Cyber Security Centre (NCSC) gave it in recent months, it seems like a long shot. Not impossible, but perhaps improbable.

At some point the telcos are going to have to put their hands up and say they aren’t that incompetent. Security is one of the most important roles in a telco nowadays, and to suggest Huawei has managed to dupe the telcos for all these years without a single sniff of suspicion, or at least someone accidentally bumping into a backdoor, is also quite unlikely.

If a network is breached or has played a role in international espionage, the telco which owns it has as much to lose as Huawei; how many subscribers or enterprise customers would it have left if this was the case? How many lawsuits would they open themselves up to if all these allegations could be proven true? Eventually, the telcos are going to have to say they aren’t idiots and know what they are doing to mitigate risk and uphold the security principles they preach.

AWS sues US Government for Trump hatred

Amazon has launched a legal challenge against the Department of Defense’s preference to Microsoft Azure, suggesting the decision is linked back to President Trump’s hostility towards CEO Jeff Bezos.

The animosity between the pair has been anything but private, and now it appears the public display of difference is causing complications for the White House. Amazon is suggesting the Department of Defense’s decision to award the $10 billion Joint Enterprise Defense Infrastructure deal, known by the acronym JEDI, to Microsoft was compromised by the actions of Trump.

“This case demands an expanded AR [administrative record] so that the Court may fully assess AWS’s well-grounded claims of bias and bad faith,” the filing states.

“President Donald J. Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to disrupt the orderly administration of government functions-including federal procurements-to advance personal motives. There is no question he did so here.”

Amazon is requesting greater access to internal documentation to further build a case against the US under the assumption the President’s hatred towards Amazon CEO Jeff Bezos saw pressure placed on the Department of Defense to award the contract elsewhere. Aside from Amazon and Microsoft, IBM and Oracle were also in the running for the cloud infrastructure and migration services contract.

The contract itself was awarded to Microsoft back in October, though it was not without controversy at the time. Several Senators wrote to President Trump asking the decision to be re-evaluated in favour of splitting the contract to more than one supplier. These pleas were ignored, and AWS even released a statement questioning the logic of the decision on the grounds it believed it was the market leader.

To make matters a bit messier, a Seattle Judge ruled Government employees were unfairly favouring AWS in July. This ruling followed a lawsuit filed by Oracle which claimed there were conflicts of interest with past employees which led to AWS gaining an upper hand due to the way the contract was drawn up.

This has been a scruffy process from start to finish, and thanks to the President’s apparent personal feelings towards Amazon CEO Jeff Bezos, it might be extended further.

The conflict between the two has been on-going for years, and AWS is now alleging the President pressured Government officials to ensure the Amazon company did not profit from Government contracts. The President reported ordered former Defense Secretary James Mattis to ‘screw Amazon’ out of the contract. Following these comments, procurement reports allegedly leaned towards Microsoft.

Amazon now claims the Department of Defense committed ‘numerous and compounding prejudicial errors’ which led to the team disfavouring AWS. These errors included relying on an outdated, superseded version of AWS’ proposal, misstating facts from the proposal, downplaying failures in the Microsoft proposal and fabricating areas of superiority in the final stages of evaluation to favour Microsoft.

This is only one incident, though Trump has a history of targeting Amazon and its CEO Jeff Bezos.

Prior to entering the White House, Trump had warned that it would be bad news for Amazon if he assumed power, while the filing aims to prove many of his actions have been used to punish enemies or advance his own personal agenda. The decision to award a $400 million contract to build the controversial wall to Fischer Industries and intervention to prevent the relocation of the FBI headquarters away from the nearby Trump International Hotel in downtown Washington are two more examples offered by AWS to demonstrate inappropriate influence and pressure from the Oval Office.

Another example is the removal of press credentials for CNN’s Jim Acosta just hours after the President branded the reporter a ‘rude, terrible person’. Although these examples are not directly relevant, if AWS is able to prove the President unduly influences Government decisions based on grudges or personal grudges it might be able to gain some traction.

The end game has not been explicitly mentioned in the filing, just that AWS lawyers want to begin a ‘discovery’ process which would be used to fuel future legal action. AWS clearly feels it has something to gain here, either by halting the President’s alleged bias against the firm or forcing the Department of Defense to restart the

Seems the White House is all bark and no bite on intel sharing

The UK was threatened with intelligence embargoes should it allow Huawei to operate in its 5G industry, but Downing Street has seemingly won that game of chicken with the White House.

As part of the US lobby efforts over the last few months, access to valuable security data and intelligence was put on the line. The US Government believed allowing Huawei to contribute components to the UK’s 5G networks would compromise its own national security. The threat was made, and Prime Minister Boris Johnson called the White House bluff. Now it seems the US delegation in London is moonwalking away from the intelligence sharing ban.

The White House has been surprisingly quiet on the UK’s Supply Chain Review conclusion. Either President Donald Trump has his hands full with the on-going impeachment enquiry, or perhaps this an embarrassing outcome, a sign the Special Relationship is not as powerful as some would have thought, and the White House is not as influential as it currently believes.

Speaking at an event in London, US Secretary of State Mike Pompeo has suggested intelligence sharing between the two countries would continue.

“That relationship is deep, it is strong, it will remain,” said Pompeo.

Pompeo has remained resolute in his belief Huawei is a threat to Western democracies, believing the firm to be in-effect the intelligence gathering arm of the Chinese Communist Party. The Secretary of State even suggested there would be an opportunity for the UK to reconsider its decision in the future.

Although Pompeo is now on his way to Kiev, Ukraine, yesterday saw meetings with Prime Minister Boris Johnson and Foreign Secretary Dominic Raab. The aim is to underline the commitment of both parties to the Special Relationship and work towards a trade deal. Pompeo has suggested a new deal between the US and UK could be on the table by November.

While the UK has made its position very clear, there is still plenty of work for Pompeo to do; the UK is just one European nation after all.

“Our view of Huawei has been that putting it in your system creates real risk,” Pompeo said to reporters before leaving the US on the 28th January. “This is an extension – an extension of the Chinese Communist Party with a legal requirement to hand over information to the Chinese Communist Party.

“We’ll evaluate what the United Kingdom did.  It’s a little unclear precisely what they’re going to permit and not permit, so we need to take a little bit of time to evaluate that.  But our view is that we should have Western systems with Western rules, and American information only should pass through trusted networks, and we’ll make sure we do that.”

This trip abroad will see Pompeo have meetings in Ukraine, Belarus, Kazakhstan and Uzbekistan, and while there will certainly be lobbying taking place, the Secretary of State will also be keeping a keen eye on developments across Europe.

Germany is yet to make a formal decision, while France and Spain have not shown enthusiasm for banning the Chinese vendor. The UK is an influential voice in the European political arena, despite the offence Brexit might be causing, and if it can avoid retaliation from the temperamental President it adds confidence others could too.

Ultimately it was always likely to be an empty threat from the White House. Intelligence sharing works both directions, as the US will use data from allies to build its own databases. If the US banned intelligence sharing with every country where Huawei was operational in 5G, it might find itself to be very lonely.

In the greater game of political chess, the US is losing. If it is not able to convince arguably its closest ally, the UK, to its own way of thinking it might not have much success elsewhere. Thanks to Brexit, the UK was in a difficult position after all. Some might have suggested the UK would appease the White House in pursuit of a valuable trade deal, but Prime Minister Johnson has more of a spine than some have given him credit for.

Looking across the continent, Belgium looks unlikely to enforce a ban, having found no evidence that telecoms equipment supplied by Huawei Technology could be used for spying. France’s cybersecurity agency has seemingly given Huawei the thumbs up. Germany is holding off from a decision until after the EU Summit in March, though a ban is unlikely. Hungary is pro-Huawei. Italy has passed legislation to safeguard networks, but allowing Huawei in.

The US has seen lobby efforts gain traction in some nations such as Japan and Australia, though it has not been able to exert the same influence in Europe. This would have been unthinkable a decade ago, but it does appear the European nations are inclined to ignore the huffing and puffing from the Oval Office nowadays.

Government claims UK cybersecurity sector is surging

Government figures suggest the UK cybersecurity sector is thriving, employing more than 43,000 individuals and estimated to be worth £8.3 billion.

With new regulations forcing companies to invest more in cybersecurity and consumers becoming increasingly aware of the dangers of the digital society, the conditions are right for the sector to thrive. As this is an area which has largely been ignored to date, this is an open opportunity for the aggressive to capture, and it seems the UK has been very successful in doing so.

“It’s great to see our cyber security sector going from strength to strength. It plays a vital role in protecting the country’s thriving digital economy and keeping people safe online,” said Digital Minister Matt Warman.

“We are committed to seeing it grow and are investing £1.9bn over five years through our National Cyber Security Strategy to make sure we lead the way in cyber innovation, develop and attract the best talent.”

Annual revenues for the sector are estimated to have grown 46% over the last two years to £8.3 billion, with the number of cybersecurity firms increasing by 44% to more than 1,200 at the end of 2019. The total number of full-time employees, 43%, has increased by 37% during the same period, with revenue-per-employee reaching an average of £193,500 a year.

Looking at the industry, demand for cybersecurity services is certainly on the rise. A recent report from IDC suggests worldwide spending on security-related hardware, software, and services will be $106.6 billion in 2019, an increase of 10.7% year-on-year. Managed security services, integration services, consulting services, and IT education and training, will see some of the biggest growth, though software, such as identity and digital trust products or security analytics, will also see a significant surge.

With new regulations threatening some very steep fines, GDPR punishments could be as much as €20 million or 3% of global revenues, attitudes are changing as wallets become threatened. For those who are aggressive and innovative enough, there are certainly profits to be made.

One question which some might ask is why the cybersecurity sector is thriving in the UK? There will of course be numerous contributing reasons, but a simple answer might be that the UK is an excellent incubator for start-ups and SMEs.

The UK is often cited as one of the most attractive nations for start-ups in Europe, but also worldwide. Various factors contribute to this image, such as access to a good workforce (both experienced and graduates), excellent transport links, the 6th largest economy in the world, good communications infrastructure and a thriving professional services industry. But in London, businesses have access to one of the worlds most prominent financial centres.

Roughly 30% of Europe’s venture capitalists are based in the UK, accounting for a significant amount of investment funds across the bloc. According to PitchBook, the UK and Ireland accounted for 44.4% of total European fundraising volume through to the end of the third quarter. This accessibility to cash is critical in the early days of a business.

The cybersecurity sector is one which is primed for disruption and start-ups could well find themselves scaling very quickly. Not only is there more regulatory pressure, such as GDPR, to enhance security, but the consumer is becoming increasingly aware of the risks posed by the digital economy. It might not be mainstream yet, but digital security might be factored into buying decisions in the future; businesses will have to invest in this underappreciated sector before too long.

Supply Chain Review offers clarity and new headaches for MNOs

Any decision is better than the purgatory of uncertainty which the telcos have been sitting in for months, but the Supply Chain Review offers a whole new wave of headaches.

There are still grey areas to consider, but the Department of Digital, Culture, Media and Sport (DCMS) has offered a foundation for telcos to build on. Some might be slightly disappointed by the decision, certainly some more than others, but any decision was better than playing the waiting game; action can now be taken.

Huawei’s contributions to a UK MNOs 5G radio inventory can not exceed a 35% share. However, another interesting element to consider is that Huawei radio equipment cannot carry more than 35% of internet traffic either. This presents new questions as to how networks are built. Huawei technology might not be able to be clustered in certain urbanised areas, which has been the trend in the past.

But new questions are arising for each of the players in the market.

Is Huawei to lose leadership position in the UK market?

Speaking during a call to the press, Huawei VP Jeremy Thompson said capturing 35% market share in any nation would be a job well done for Huawei, though this is assuming customer relationships are rebalanced.

For Huawei to capture 35% market share, it would have to be a major supplier to all the UK MNOs and for all the MNOs to use every inch of the 35% network share. This is a situation which is very unlikely to happen.

EE and Vodafone are over the 35% limit for Huawei equipment in their 4G networks, therefore these relationships will have to be structured down. Three named Huawei as its sole 5G RAN supplier, Samsung provided 4G RAN equipment, therefore it will definitely lose business here as well. There is room for growth at O2, but this is a telco it has not had notable success in recent years.

Huawei’s RAN equipment makes up less than 1% of O2 radio inventory, only present due to trials, and this is unlikely to change.

As Thompson pointed out, Huawei’s market share in the UK when the Supply Chain Review was initially launched was 35%. Its business with its three main customers will have to decrease for them to meet the targets in three years, and it is unlikely to increase its commercial activity with O2.

Huawei could very feasibly lose its RAN leadership position due to bureaucracy as opposed to head-to-head competition.

Three has the biggest headache of all

Three is not in a healthy position but fortunately its 5G deployment is not that advanced.

“We note the government’s announcement and are reviewing the detail,” said Three UK CEO Dave Dyson.

Last year, Three began stripping Samsung 4G equipment out of its network to ensure interoperability with its sole 5G RAN supplier, Huawei. Fortunately, Three has not been accelerating its deployment plans as quickly as EE or Vodafone, therefore does not have as much work to undo. Three will not have to start again from the beginning, but it will have to redevelop the strategy.

As a city-centric telco, the Huawei decision made sense as the Chinese vendor arguably has the best equipment for the situation. Investing so significantly in Huawei might have been a bold decision two years ago, but it is now looking like nothing short of a disaster.

Business as usual for O2

“Huawei kit makes up less than 1% of our owned network infrastructure,” said an O2 spokesperson. “We will continue to develop our 5G network with minimum disruption with our primary vendors Nokia and Ericsson.

“Whilst we agree with the government that diversity of supply is the best way to serve customers, careful consideration must be given to the distinction between ‘core’ and ‘non-core’ as 5G networks develop and evolve. We’ll now take time to review the full report.”

There are roughly a dozen Huawei radios in the O2 network, a legacy of trials during yesteryear prior to supplier decisions being made. O2 has said it will work exclusively with Ericsson and Nokia in the past, painting a gloomy picture for Huawei, though there is always room for change.

Earlier this month, O2 announced it would be aiming to integrate OpenRAN alternatives into some areas of the network. This was slightly unexpected news and would have altered deployment plans in pursuit of commercial efficiencies. This demonstrates that the plans are not 100% set in stone.

Huawei’s commercial relationship with O2 can only get better, and if it does want to maintain its RAN leadership position in the UK, it will have to figure out how to break into this business. Ultimately, very little changes for O2 unless it wants to change itself.

EE and Vodafone have some thinking to do

“While Vodafone UK does not use Huawei in its core – the intelligent part of the network – it will now analyse the potential impact of today’s decision on the non-core elements of its network (masts and transmission links),” a Vodafone statement reads.

“Vodafone UK uses a mix of Huawei, Ericsson and Nokia equipment for its 4G and 5G masts, and we continue to believe that the use of a wide range of equipment vendors is the best way to safeguard the delivery of services to all mobile customers.”

For its 4G network, Ericsson supplies 50% of the radio inventory, Nokia 12% and Huawei 38%. Vodafone CTO Scott Petty has previously suggested plans to phase out Nokia, though that position might have to be reconsidered. Vodafone will have to scale down its Huawei relationship moving forward into 5G and find a suitable replacement.

Interestingly enough, Vodafone has also launched its own OpenRAN initiative, though whether this technology is resilient for a straight swap remains to be seen. It will at some point, but Vodafone will not want to wait until that point.

EE is in a similar position.

“This decision is an important clarification for the industry,” said a spokesperson from EE parent company BT.

“The security of our networks is an absolute priority for BT, and we already have a long-standing principle not to use Huawei in our core networks. While we have prepared for a range of scenarios, we need to further analyse the details and implications of this decision before taking a view of potential costs and impacts.”

EE currently works with Huawei and Nokia. The share of Huawei radio inventory exceeds the 35% limit, though it has time and options to renegotiate over the next three years. It is a bit of a headache for the team, but not the end of the world.

The difficulty which EE faces is the current structure of the network. Huawei provides the radio equipment for the urbanised areas, while Nokia is focused on rural. The internet traffic crossing Huawei radios on EE’s network will dramatically exceed the 35% restriction.

Are Nokia and Ericsson in a stronger negotiating position?

For cut-throat sales opportunists, this is a very interesting position for Ericsson and Nokia. Unless OpenRAN makes significant progress in the short-term future, or Samsung starts swinging punches, 65% network share is effectively a straight shootout between the two.

As Heavy Reading Analyst Gabriel Brown has pointed out, the limits are only directed towards 5G access and is therefore more manageable, but the knowledge of restrictions will always be in the mind of some salespeople; this adds weight to the vendor negotiating position.

Ericsson and Nokia will of course never acknowledge this position, but these are commercial organisations who have seen profits eroded over the last few years. And the guys sitting at the negotiating table are salespeople who like getting big bonus checks.

Could this be the catalyst for OpenRAN and Samsung?

When there are challenges for some, opportunities will always be presented for others. Ericsson and Nokia are certainly set to prosper thanks to Huawei limitations, though the same could be said for the OpenRAN ecosystem and Samsung.

OpenRAN has been touted by US politicians as a potential alternative to Huawei equipment, Senator Mark Warner is proposing a $1 billion fund for the ecosystem, though needs might accelerate demand.

With Huawei’s RAN equipment under restriction, there is certainly a dent in the competitive landscape. It could have been a lot worse, but it will have an impact. The question is how much enthusiasm will be placed in the OpenRAN movement to compensate and create the competitive environment so many are hoping will emerge.

Vodafone and O2 have already dipped their toes into the OpenRAN waters, with commercial deployments to accelerate over the next 2-3 years, though the Huawei saga could make this seem like an attractive alternative to more. The UK Government has seemingly not banned Huawei completely for competition fears, therefore it might be tempted to invest in some developing ecosystems, as would EE and Three.

Samsung is a different story.

This is a vendor which has credibility in the RAN market but has never made a significant impact on the UK telco industry. It did have a healthy relationship with Three prior to the Huawei shift, but activities otherwise have been limited in this segment. Huawei limitations could present an opportunity.

At Three, it would make sense to head back to tried-and-tested waters, while other telcos might consider the Korean vendor to ensure increased diversity in the supply chain. If reliance and variety is the goal, few would want to put more eggs in the Ericsson or Nokia baskets.

With relationships in Korea with KT and SK Telecom, as well as Verizon in the US, Samsung has credibility. The Huawei woes might just be enough to tip the scale in this vendors favour, if it start to throw the right punches.

End of the UK road for ZTE?

The 35% limit is not a restriction for a single supplier, but for any suppliers who are deemed ‘high-risk’. Huawei and ZTE both fall into this bracket therefore it is likely to present a question to the telcos; do we work with Huawei or ZTE? There is room for a slice for each, but this is highly unlikely to happen, especially since the review concludes there is no way to mitigate the risk posed by ZTE.

When it comes to the global market share of RAN, ZTE is a company which falls into the ‘also ran’ category. It has experienced success in Africa and Asia, and of course in China, but exposure in Western Europe has been incredibly limited. In the UK, there is very little evidence of success, though Jersey Telecom named the vendor as its sole 5G RAN supplier.

Jersey Telecom will have to have a complete rethink of its strategy, like Three, but the writing seems to be on the wall for ZTE. This could be the end of the vendor as a player in the UK market.

Opening-up to investment is the key to unleashing Britain’s full-fibre potential

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Mikael Sandberg, Chairman of VXFIBER examines the UK investment environment for fibre roll-out.

‘Unleashing Britain’s Potential’ – the slogan we saw blazed across the Conservative 2019 election manifesto. A document full of pledges to make Britain the land of milk and honey, it showcases the many opportunities Britain can offer, putting it, amongst other things, as the best place to start and grow a business. After all, the UK government is on a mission to take back control and ensure that the country continues to tap into the fruitful ‘Digital Economy’- becoming a nation of start-ups and successful scale-ups.

But, as we are all fully aware, the vital ingredient to this success – full fibre broadband connectivity -currently comes in at a mere 10% in the UK. Meek in comparison to fibre penetration in other parts of Europe, and the world, it begs the question; is the UK – and will it continue to be – a leading digital nation after all? We may have, again according to the Tory manifesto, ‘more ‘unicorns’ – new billion-dollar tech companies –than any other nation in Europe’, but unless the connectivity infrastructure issue is addressed how long can and will this last?

Connecting Britain – ensuring that every citizen has access to high-speed internet – does seem to be a key priority for the UK government, sitting alongside other regional development programmes such as the promised Northern Powerhouse rail link and the Midlands Rail Hub. Boris Johnson himself stated (pre-leadership and General Election) that he wanted a turbo-charged broadband revolution, giving all UK businesses and homes access to full-fibre by 2025. This will only be possible once the UK installs its full-fibre network by replacing the current copper infrastructure, which is currently not fit to deliver the UK’s digital future. This means every premise – including homes, businesses and public buildings – needs to have fibre served directly to it, not to mention the necessary fibre infrastructure to support 5G networks and beyond. But, one of the major challenges that the UK faces in rolling out fibre is financing.

Pre-election – at the Tory Party Conference to be exact – the UK Chancellor Sajid Javid suggested that an additional £5 billion will be made available for connectivity upgrades, focusing on fast broadband access in harder-to-reach parts of the UK. And Ofcom’s recent four-point plan  is focused on tackling the remaining roadblocks to investment and supporting competition within the industry. However, we will now have to wait until March 11 to find out the exact figures that will make up the Chancellor’s ‘Infrastructure revolution’ post-Brexit Budget. And it begs the question – is there really enough money available from the public purse in order to make the necessary impact on our fibre penetration? And if not, where’s the money going to come from?

The government must continue to play its vital role as a catalyst for full-fibre deployment, and it has made positive steps via funding schemes as well as addressing policies/regulations that acted as a bottleneck in deployment (e.g. Barrier Busting Taskforce). However, due to the scale and the cost, it simply cannot do it on its own.  For the UK to achieve its ubiquitous full-fibre coverage target, there needs to be more collaboration and investment from both the public and private sector.  Support is needed from other sectors of society and perhaps those who potentially will gain profusely from the economic benefits connectivity brings.  Without third-party investment, it’s likely the original 2033 target will be missed by a mile, let alone Boris’ pipe dream of 2025.

Looking at the consumer, there is certainly more appetite.  This will be partly down to the customer being more educated on the different connectivity options.  Ofcom rules killing off dubious and misleading fibre claims from ISPs and the price of fibre connectivity dropping in recent years.  And thanks to increased demand from the consumer, the UK fibre landscape is looking like a more attractive investment.  Securing additional funds from third-parties is becoming a critical component of the mix.  Opening-up third-party investment opportunities will help back much needed fibre-to-the-premises (FTTP) roll-out in cities and regions across the country.

The UK telecoms and internet market is highly competitive in nature, and by regulatory standards, is “open”.  This makes it conducive to attracting third-party investment along different stages of the value chain. However, it’s important to note that there are many different business models that exist within the “open access networks” space.  As the very nature of this definition enables confusing references to be made to the traditional/incumbent vertically integrated model, to be termed “open access”. The term “open access” implies a resource that is made available to clients, other than the owner, on fair and non-discriminatory terms.

In the context of telecommunications networks, “open access” typically means the access granted to multiple service providers to wholesale services in the local access network. This enables them to reach the subscriber without the need to deploy a new fibre access network. There are a number of business models that exist depending on which role the different stakeholders’ take-up.  But one thing is for sure, aside from lowering the costs for service providers, open access can deliver what end-users want: choice of providers, choice of services, competitive pricing and high performance.

This shift in approach means that up to date and innovative fibre infrastructure is no longer really about telecommunications. Instead, it is about digital connectivity. By taking the telco operator out of the equation, investments can be made into the infrastructure. In fact, with this type of model, gigabit full-fibre becomes a strategic asset that real estate companies and municipalities should consider, along with bricks and mortar or other physical investments. It’s an approach that’s enabled the fast rollout of full-fibre connectivity in countries such as Sweden and South Africa. In both countries, investment is made directly into infrastructure projects, bypassing the corporate/incumbent telco entity, and enabling more money to flow through the system because of better penetration.

Indeed, by adopting this type of approach to broadband connectivity, investment will open-up individual regional or local digital infrastructure projects to multiple external investors and power Britain’s race to deliver universal high-speed broadband. This presents a huge and scalable opportunity and could even open-up a more sustainable territory for private investors.

If we start looking at fibre assets as infrastructure in its own right, it becomes apparent just how much opportunity there is for investment across the entire country. And whilst we might have an incredibly challenging objective of achieving universal fibre connectivity in the UK by 2033 (or 2025), perhaps it’s collaboration between the government, the industry and the investor community who will help us get there, or certainly bring us a lot closer to achieving our digital destiny.

After all, the economic (regeneration, innovation and business growth) and socio-economic benefits (access to healthcare, education and better delivery of public services) that internet access brings cannot be denied. So, bring on the UK government’s promised investment in technology and innovation, and its pledge of giving us one of the most important tools to flourish in the economy of the 21st century – full-fibre connectivity. But maybe to get there it needs just a little help from its friends – the third-party investment community.

 

Mikael Sandberg is co-founder and Chairman of VXFiber.  He is a serial entrepreneur in the telecom and broadband industry. Previously Mikael co-founded and managed two major broadband companies in Sweden. Prior to his operational roles, Mikael worked as a telecoms analyst in the City; management consultant with Analysys Mason and Arthur D. Little; and as Assistant Science Attaché at the Swedish Embassy in London. Mikael is a Swedish citizen living in the UK, and holds an MSc in Industrial Engineering and Management from Chalmers University of Technology, Gothenburg, Sweden and an MBA from School of Management, University of Bath, UK.

UK imposes new IoT rules designed to improve safety

The UK Government has unveiled new rules for the growing consumer connected objects segment, forcing the ecosystem to take a more rigorous and conscious approach to security.

The new law has been drafted by the Department for Digital, Culture, Media and Sport (DCMS), focusing on three requirements for the manufacture and sale of connected objects in the UK:

  1. Devices must have unique passwords and no ‘factory reset’ option
  2. Reporting functions for vulnerabilities must be created by all manufacturers
  3. Consumers must be made aware of the minimum length of time security updates will be received for the products at the point of sale

Although connected devices have been flooding onto the market in recent months, the security credentials of some are questionable. There are likely to be many reasons for this, though the pursuit of profitability is likely to be sitting at the top of the list.

Security is a growing concern for the general public in an increasingly digital society, though the risks are still greatly undervalued. It would be safe to assume only a small number of consumers would genuinely veto a purchase due to digital security concerns, and in the absence of consumer pressure for greater security, the Government is seemingly forcing the hand of the IoT ecosystem.

“We want to make the UK the safest place to be online with pro-innovation regulation that breeds confidence in modern technology,” said Digital Minister Matt Warman.

“Our new law will hold firms manufacturing and selling internet-connected devices to account and stop hackers threatening people’s privacy and safety. It will mean robust security standards are built in from the design stage and not bolted on as an afterthought.”

The industry on the whole has been gradually moving towards the concept of ‘Secure by Design’ though the question is whether this progress is fast enough to prevent serious consequences. And to be fair, consumers are becoming more aware of the risks of a digitally orientated society. However, the fact that data breaches and leaks still occur validates the argument that security attitudes are not evolving fast enough.

“Smart technology is increasingly central to the way we live our lives, so the development of this legislation to ensure that we are better protected is hugely welcomed,” said Nicola Hudson, Policy and Communications Director at the National Cyber Security Centre.

“It will give shoppers increased peace of mind that the technology they are bringing into their homes is safe, and that issues such as pre-set passwords and sudden discontinuation of security updates are a thing of the past.”

This is perhaps the risk which is being faced today. As these devices are just making their way into mass market purchases, new customers are being engaged, and perhaps these new customers are not technology-enthusiasts. Some might consider purchasing a TV today as no different from a decade ago, therefore not appreciated the risk which a gateway to the internet creates.

The question is whether this is the best approach to ensure security?

The consumer IoT space is an incredibly fragmented and embryonic ecosystem. There are a huge number of inventors attempting to create the next big thing and companies attempting to embed connectivity into everything or anything. It is a lot of moving parts and plenty of opportunity for something to go wrong.

Some companies might go out of business, and therefore stop offering security updates. In the mad rush to get products to market, some elements might be overlooked. And of course, there are those who will simply ignore the rules.

This might sound negative, but it is reality. The Government is not doing anything wrong by suggesting this new law, it is certainly progress to force more security conscious products onto the market, but there are of course challenges to be aware of also. But as with every challenge, there is an opportunity to be the good guy.

Security solutions for digital products are nothing, anti-virus software has been around for decades after all, but security platforms to manage all connected objects inside the home are not common. This is not to say products should not be ‘Secure by Design’ but added layers of security, and a proposition which helps manage the complexities might well be a product more digitally aware consumers would buy into.

In creating these new rules, the ecosystem is being forced down the right path, while it promotes the concept of cybersecurity in the minds of the consumer also. The more aware, and afraid, the consumer is of the dangers of a digital society, the more likely they are to spend money. The question is, who could create a platform to address this area? The telcos are in a strong position, but you can bet Big Tech is already investigating.

Huawei conundrum starts heating up (again)

In among the trade war rhetoric, 5G launch announcements, privacy scandals and smartphone rumours, the UK is also supposed to be making a decision on the fate of Huawei.

Despite the Supply Chain Review being one of the most critical decisions in recent history of the UK’s telecommunications industry, it seems to have become background noise as the Government has become so well-practiced at kicking the can. However, the debate is rearing its head once again as US diplomats are in town for a lobby mission and the MI5 declares it isn’t that worried about the threat of US intelligence starvation.

“Perhaps the thing that needs more focus and more discussion is how do we get to a future where there’s a wider range of competition and a wider range of sovereign choices than defaulting to a yes or no about Chinese technology,” said Sir Andrew Parker, Director General of the MI5, the UK’s domestic counter-intelligence agency.

Sir Parker was surprisingly upbeat about the situation, despite the threats moving from chest-beating to a paper trail.

Last week, the Republican Senator for Arkansas, Tom Cotton, presented a new bill to Congress which would officially ban the US from sharing intelligence with any country which had Huawei components or equipment in telecommunications infrastructure. Should this bill pass into law, this would no-longer be considered an idle threat, but a piece of legislation the US Government would (theoretically) be forced to obey.

But speaking to the Financial Times, Sir Parker has said he does not feel there would be any reason the data-sharing relationship between the US and UK would be in jeopardy. The intelligence chief believes relationships between the ‘Five Eyes’ nations are the strongest ever, and this is not going to change in the near future.

That said, it is difficult to understand where Sir Parker’s optimism originates. Perhaps he assumes the bill will not pass to law, or there is some clause in US law which would supersede the bill? Or perhaps the intelligence community will just revert to back channels and secretive communications? As you can see from the extract below, the bill does not leave a lot of wiggle room.

“(a) PROHIBITION – Intelligence of or under the control of the United States, including intelligence products of the intelligence community, may not be shared with any country that permits operation within its national borders of fifth generation (5G) telecommunications technology of Huawei Technologies Co. Ltd.”

The above text is quoted directly from the bill introduced to Congress by Senator Cotton last week. It is very explicit and does not leave much (or any) room for interpretation.

Sir Parker seems to be leaning on the idea that everything will be fine as long as Huawei is excluding from the network core, though there is no evidence to support the US would agree to this state of affairs. The US does not seem to buy into the idea that risk can be mitigated by separating the network into dumb (radio and transmission) and intelligent (core) segments. This is a popular idea in the UK, which has gained traction in the industry.

Alongside Sir Parker’s comments, a US delegation is currently in London to hold discussions with Prime Minister Boris Johnson and senior officials on the future of Huawei in the UK. As with other visits from US representatives, this delegation is very much likely to be pushing for a complete ban.

The US stance in this equation is not very difficult to guess, but when the UK might actually say something material is. Some are expecting a decision on whether the telcos can buy components and equipment from Huawei will be made this month, though considering the track record, it is perhaps just as likely to see another delay.

After being debated for what seems like years, the UK telco industry is no clearer on what the outcome will be. After Matt Hancock was replaced by Jeremy Wright as the Secretary of State for Digital, Culture, Media and Sport (DCMS), Wright decided to delay any decision as there was a change of leadership in Downing Street. Once Johnson had settled in as PM, the decision was again delayed due to the General Election in December.

The current Secretary of State for DCMS Nicky Morgan complicated matters by stating she would no-longer be standing as an MP at the General Election, but the decision to make her a Life Peer allowed her to continue leading the department.

The current political landscape is a mess, largely thanks to the B-word. It does appear that there might be a decision in the immediate future, though we are just as likely to be waiting until the summer. That will certainly be getting the telcos a bit twitchy.