Ofcom forces Openreach to open up again and reintroduces Dark Fibre

Ofcom has proposed new rules which will force Openreach to open up more of its network to other communications service providers.

Access to ducts and poles owned by Openreach has been a point of interest for Ofcom for some time, and now it appears the regulator is gathering momentum. As it stands, Openreach has to offer rivals access to its telegraph poles and underground ducts when providing services to consumers and SMEs, though the new rules will extend this ‘co-operation’ to enterprise scale and mobile backhaul connectivity services.

“The amount of internet data used by people in the UK is expanding by around half every year,” said Jonathan Oxley, Ofcom’s Competition Group Director. “So, we’ll need faster, more reliable connections for our homes, offices and mobile networks.

“Our measures are designed to support the UK’s digital future by providing investment certainty for continued competitive investment in fibre and 5G networks across the country.”

Although the likes of Virgin Media, TalkTalk and CityFibre are among the firms already using Openreach’s ducts and poles, to date the rules have been somewhat of a halfway measure. Improving access to Openreach infrastructure will improve the potential business case for all telecom services, offering greater prospects for competition.

The draft rules also bring the Dark Fibre discussion back into the fray.

In areas where BT faces no competition, Openreach would be required to give competitors physical access to its fibre-optic cables, at a price that reflects its costs. BT has always argued against the Dark Fibre suggestions from Ofcom, with the telco challenging rules brought forward by the regulator in the 2016 Business Connectivity Market Review.

BT’s legal challenge focused on the market definitions Ofcom used in the market review, with the Competition Appeal Tribunal (CAT) agreeing with the telco:

“The Competition Appeal Tribunal has found Ofcom to have erred in relation to various aspects of the decisions concerning market definition under appeal and required Ofcom to look again at some specific matters concerning market definition.”

This of course did not end the pursuit of Dark Fibre, but it did send Ofcom back to the drawing board. What is worth noting is that BT is not the only infrastructure owner to find issues with the obsession with lighting up Dark Fibre.

Following the decision from CAT, Ofcom promised to do better next time, much to the dismay of CityFibre.

“However, whilst the quashing of the BCMR is welcome, Ofcom’s response today appears to double down on its misguided approach to assessing the scope for competition whilst maintaining its flawed fixation with regulated dark fibre access,” said Mark Collins, Director Strategy & Policy at CityFibre.

“It’s pessimism about the prospects for real, infrastructure-based competition perversely restricts alternative providers’ ability to compete.”

The argument from the likes of CityFibre and BT is relatively simple. Dark Fibre removes the drive for infrastructure investment. Why would rivals want to spend money on fibre deployment when they could just force those who are making the plunge into working with them. It could potentially create a position where everyone is sitting, waiting on the starting line, waiting for a rival to twitch first.

That said, Vodafone does not feel the Dark Fibre rules go far enough.

“We support competition, but Ofcom’s proposals to grant access to dark fibre only on the fringes while loosening its price controls on BT Openreach will mean businesses and the public sector paying more to meet their connectivity needs,” said a Vodafone spokesperson.

“There is an alternative. Providing universal access to dark fibre now would give the UK the connectivity it needs, at a price everyone can afford. Sadly this is another opportunity Ofcom has missed to plug the full fibre hole in the UK.”

What is worth noting is that these rules are draft proposals for the moment. There is likely to be push-back from the likes of Openreach and CityFibre, and perhaps legal challenges in the mid-term. What rules are eventually introduced might look very different in a couple of months.

UPDATE: 24/05/19, 12.20pm: Openreach has released the following statement:

“Last year we delivered our best ever service performance, but we want to keep improving and we share Ofcom’s desire to improve service across the industry.

“Our ducts and poles have been open to other companies since 2011, and we recognise that unrestricted access is a natural next step, so we had volunteered to get on with that, ahead of Ofcom’s original schedule.

“We welcome the greater clarity around Dark Fibre and the timeframe needed to deliver a fully functional product to market.

“We’ll consider the range of proposals carefully, and we’ll continue to work with Ofcom on developing an environment that encourages greater investment.”

UK rural collaboration back on the table

Getting competitors to work together for the greater good is a complex and often failed task, but the latest effort to address ‘not spots’ in the UK is holding steady.

Following a meeting with the Department of Digital, Culture, Media and Sport, the CEOs of the four major UK MNOs have agreed, in theory, on a collaboration plan which will address the not spots in the UK. For those languishing in the rural regions of the UK, this news will come as a welcome boost to digital ambitions.

However, what is worth noting is this is not a done deal. Collaboration plans have fallen apart in the past, and there is still plenty of room for error.

The plan itself is one which is built on the idea of reciprocation. Instead of forcing the telcos to open up infrastructure to competitors, an idea which would be more beneficial to certain parties, or imposing a ‘national roaming’ initiative, the telcos are discussing two separate and parallel paths forward.

Firstly, one competitor would open up infrastructure to another should the same be done in return. This would reward telcos for (1) investing in the rural communities and (2) working alongside a rival. Building a mast could compound coverage gains with reciprocal agreements. This is more for the areas where users have limited choice in providers.

Secondly, the areas which do not fall into the footprint of any telco. The four telcos are proposing the creation of a new company which would focus on building infrastructure in the not-spots. This infrastructure would be accessible to all telcos, potentially filling-in the digital voids throughout the countryside.

French council gets sick of waiting for MNOs so goes it alone

The local government in Eure-et-Loir has seemingly got tired of waiting for the MNOs to end not-spots in the countryside, deciding to construct its own masts in the region.

Announced via Twitter, the local authority approved funding for the ‘Eure-et-Loir Mobile Networks’ project in an effort to bridge the digital divide. The scheme will create a new company, which will have a budget of €10 million and aim for 100% geographical 4G coverage, through building its own mobile infrastructure.

“The @eurelien department is the first in France to create a project company to accelerate the deployment of the #4G throughout its territory, for 2021,” Eure-et-Loir Department Advisor Remi Martial said on Twitter.

In claiming to be the first Department in France to take such action, with the move somewhat undermining government plans to tackle the rural connectivity problem. Announced back in January 2018, the ‘New Deal Programme’ was designed to tackle not-spots across the country, though it appears the Eure-et-Loir local authority has little confidence in the scheme.

Two firms bid to be part of the project, with ATC winning. ATC will now enter into a public-private-investment scheme with the Eure-et-Loir authority to improve mobile coverage. Reports have previously suggested the region is short of 100 mobile masts to provide adequate 4G coverage.

When you consider the environment, it starts to make sense why the Eure-et-Loir region is not necessarily a priority for the MNOs. With a population of 432,967 (2013) it is the 55th largest region across France, with a population density of 74 citizens per km2. Compared to Paris, 21,234 per km2 or Hauts-de-Seine, 9,042 per km2 the business case is less convincing.

That said, should the hard work be done for the MNOs, renting space to place mobile equipment is a small price to pay for meeting government demands and improving coverage. With the vast majority of capital being allocated into civil engineering aspects of the project, few will complain, even if it does give the impression of mediocrity.

 

Despite a $1 billion loss ZTE is seeing light at the end of the tunnel

The Chinese telecom vendor ZTE reported a total annual net loss of over $1 billion from its business in 2018 but is foreseeing returning to profit in Q1 2019.

After a roller-coaster year, ZTE reported a total operating revenue of RMB 85.5 billion ($12.7 billion, at the exchange rate $1=RMB6.7233) in 2018, a 21.4% decline from a year ago. The net loss amounted to RMB 6.9837 billion ($1.04 billion), down from a net profit of RMB 4.57 billion from 2017, or a decline of 253%. After pulling off a surprising return to profit in Q3 last year,  the net profit in Q4 came down to RMB 276 million, narrowed by more than a half from the RMB 564 million from the previous quarter, despite that the quarterly revenue increased by over 38%.

When looking at the results by business lines and by sector, we can see that its consumer business, mainly smartphones, which account for more than a quarter of ZTE’s business before the US sanction, suffered the heaviest decline. The unit’s total revenue came down by 45%, and only accounted for 22% of the total business in 2018. The revenue from carrier’s network business shrank by 10.5%, and that from B2B business including public sector was down by 6%.

When it came to its performances in different markets, the heaviest decline came from its business in mature markets in Europe, Americas and Oceania, where the revenues dropped by 45%, followed by that from Asia, which was down by 25%. The domestic market, representing 63.7% of ZTE’s total business, suffered a decline of 12%. Its business in Africa actually registered a growth of 8.4%, despite that it only accounted for less than 5% of ZTE’s total business. Incidentally, it was in Africa that ZTE reaped the highest gross margin of 48%, compared to 38% in China, and only 13% in Europe, Americas and Oceania.

The decline of the annual total business could largely be attributed to the heavy fines of $1.4 billion ZTE had to pay the US government for the settlement in the middle of last year, in addition to the wholesale change of management and the board. The market has chosen to look at the upside after the ban was lifted. Its share price had already gone up by over 50% by the end of last year and has now more than doubled the low of last July.

Looking forward, ZTE predicted that it would generate between RMB 0.8 billion and RMB 1.2 billion ($119 million to $178 million) net profit during Q1. To power future growth, the company spent 12.8% of its income on R&D during 2018 and will continue to do so this year. In particular, ZTE “has continuously concentrated on the core 5G technical fields and further intensified 5G R&D investment.”

However, 5G is a long play, and is a game that there is no guarantee ZTE will win. The prospects in China, by far ZTE’s biggest market, are less than certain, as the Chinese operators are among the cautious ones when it comes to 5G investment. Africa and Pakistan, where the company has a relatively strong position, are not going to deliver results from 5G very soon. In Europe and North America, where its customer base is already limited, ZTE has been included in the list of “Chinese vendors” which the US government is lobbying to ban, despite the limelight is often on Huawei, ZTE’s arch-rival.

BT pleads for open access to street furniture

BT is attempting to rally the industry in an attempt to convince local authorities to ditch the current exclusive concessions model in UK cities in favour of an ‘Open Access Model’.

As it stands, many local authorities operate a concessions model which grant a single player exclusive access to council-owned street furniture, such as lamp posts, to place mobile network equipment. This might seem attractive to the councils from a revenue perspective, but BT is arguing this will be to the detriment of the digital economy in the long-run.

“While the concessions model made sense in the early 2010’s when it first came into common use, the market and regulatory landscape have changed, and it’s become clear that exclusivity agreements act as a barrier to further 4G and 5G investments,” said Paul Ceely, Director of Network Strategy for BT.

“Government initiatives such as the DCMS Barrier Busting taskforce are showing the way, but we believe that industry needs to act. We are leading the way by handing back exclusivity in nine key areas.”

BT currently operates nine exclusive concessions (Glasgow, Cardiff, Brighton, Plymouth, Carlisle, Newcastle/Gateshead, Nottingham, Gloucester and Leicester) and is proposing to end these contracts should the result be an open access environment. The new model would grant all mobile operators and infrastructure companies access to street furniture, paying the local authorities a flat, consistent rate.

Although it is not a new gripe, the bureaucratic and regulatory environment across the UK has once again been blamed for connectivity problems. Almost all the operators have had a moan at the red-tape wrapped regulatory landscape at one point or another, but an open access model would appear to be a sensible step forward to encourage improved mobile coverage and experience.

However, what should be worth noting is there are authorities who have made progress in this area without prompts from industry.

“One of the reasons why the West Midlands was chosen as the location for the UK’s first region-wide 5G test bed was our commitment as a region to do what it takes to work with operators to get the 5G networks we need built in the fastest, fairest and most cost effective way,” said Henry Kippin, Director of Public Service Reform at the West Midlands Combined Authority.

“The timing and spirit of this Open Access initiative is ideal as we will make faster progress through operators and public services working together to a shared agenda so that 5G can fulfil its full potential in driving economic growth that can benefit all our diverse communities.”

While some small-minded public servants might point to the lost revenue when ending the exclusive concessions, you have to look at the long-term benefits. The West Midlands is now home to numerous 5G test beds, R&D facilities and is home to hubs of excellence for emerging technologies.

Whether the local authorities pay attention to logic is an entirely different matter, but any suggestions to decrease the red-tape complications of UK bureaucracy should be welcomed by all.

A post-Brexit Ofcom worries us – Vodafone

With the anti-China rhetoric dominating the headlines in recent months, Brexit chatter has become unfashionable. But with the deadline fast approaching, what will Ofcom look like in the future?

Speaking at a breakfast briefing in London, Vodafone UK Chief Counsel and External Affairs Director Helen Lamprell let loose on the UK regulator. Cell tower height, rural roaming, potential reintroduction of international roaming charges, dark fibre and auction dilemmas, there seemed to be a lot of venting going on.

“The UK remains a challenging environment [regulatory], one of the most challenging in the world,” said Lamprell. “But we are seeing positive change.”

The issue which Vodafone is keeping an eye-on is Brexit. According to Lamprell, Ofcom is one of the most conservative regulators throughout the bloc, though when it is freed from the tethers of the Body of European Regulators for Electronic Communications (BEREC), there is a risk it could become even more so.

There isn’t necessarily one massive bugbear from the telco, but several little aggravations which all combine to a much larger nuisance. Let’s have a look at mast height to start with.

Everyone wants signal, but no-one wants towers

As it stands, UK cell towers are limited to 25 metres in height. This obviously doesn’t take into account those masts which are placed on the top of buildings, just the actual structure itself. In most cases, this doesn’t have a massive material impact on operations, such is the population density of the UK, but when you look at countryside locations it becomes a much larger discussion.

Part of the up-coming 5G spectrum auctions will place coverage obligations on telcos. This is a reasonable request by the government, as telcos have shown they will not bridge the digital divide on their own, though as it stands 99% of the UK population is currently covered. Geographical coverage is no-where near this figure, though as there is little commercial gain from providing coverage to these remote locations, reaching the 90% objective is difficult.

One way which this could be done is by providing exemptions to the 25-metre limit in certain situations, such as the countryside, as CTO Scott Petty pointed out, for every 10-metres you go up the coverage ring is doubled.

All four of the major UK MNOs (EE, O2, Vodafone and Three) are meeting with the Department of Digital, Culture, Media and Sport (DCMS) this afternoon, and this will be a point on the agenda. Should these exemptions be granted, it opens the door for shared infrastructure also, as the main cost of these structures is civil engineering and construction, not the equipment on the tower. Both of these developments combined would aid the telcos in reaching the geographical coverage objectives.

This brings us onto another interesting point raised by Lamprell, rural roaming.

My restless, roaming spirit would not allow me to remain at home very long

“Rural roaming takes away our incentive to invest,” Lamprell said. “It’s a really, really dumb idea.”

Three are one of the companies pushing for rural roaming, but as the Vodafone team points out, it is the only MNO which hasn’t built out its rural infrastructure. However, should rural roaming be introduced it would cause a stalemate for investment.

As Petty points out, why would any MNO invest in its own infrastructure when it could force its way onto a competitor’s? All the telcos would be sitting on the starting line, waiting for another to twitch first, such is the pressure on the CAPEX spreadsheet column when investing in future-proofed infrastructure.

Moving onto the international roaming question, Vodafone is staying pretty agile right now. As it stands, the status quo will be maintained, though the team will react to the commercial realities of a post-Brexit landscape. Currently, as a member of the European Union, Vodafone is protected from surcharges when it comes to termination charges, though those protections will end with Brexit.

Vodafone has quite a significant European footprint, in most cases there is little to worry about, but for those territories which fall outside the Vodafone stomp, negotiations will have to take place.

There are several countries, Estonia is an example, which has higher termination rates than the UK. If the reality of a post-Brexit world is Vodafone is swallowing up too many charges from international calls/SMS/data, roaming charges might have to re-introduced in certain markets. This is all very theoretical currently however Ofcom will prevent Vodafone from replicating these charges from the European nations. Vodafone is sitting and waiting for the realities of Brexit right now, though it will not be a broad-brush approach.

“Our position today is to maintain the position we are in, but we will have to evaluate the situation at the time,” said Lamprell.

Ignore Luke, the Dark Side is great

Dark fibre. It used to be a popular conversation, but everyone seems to have forgotten about it recently.

Not Lamprell.

The focus of Ofcom over the last 12 months or so has been on opening-up ducts and poles, and while this certainly is progress, it only addresses part of the problem. Dark fibre is an aspect of the regulatory landscape which could add significant benefits to the industry but has seemingly become unfashionable.

Dark fibre, fibre cabling which is not currently being utilised by Openreach, could answer the backhaul demands of the increasingly congested networks quickly and efficiently. Mainly as it is already there. There is no need to dig up roads, apply for planning permission or procure new materials, it could be as simple as flicking a switch.

Openreach resistance and Ofcom’s aggressive focus on ducts and poles is perhaps missing a trick.

Going, going, maybe not yet

The UK is currently in somewhat of an unusual and unprecedented situation. It is one of the nations leading the world into the 5G. This is not to say it is in a podium position, but compared to the 4G era, the UK is sitting pretty.

Part of the reason for this has been early auctions to divvy up spectrum assets, however, moving forward there are some irregularities which is causing some head-scratching.

Later this year, Ofcom will kick-start another auction which will see 120 Mhz of spectrum in the 3.6-3.8 GHz bands, as well as 80 MHz in the 700 MHz band go up for sale. For both Lamprell and Petty, this auction doesn’t make sense. These are two bands which will be used for different purposes (coverage and speed) so why auction them off together.

If Vodafone had known this was going to happen back in April 2018, during the first spectrum auction, it might have altered its strategy.

“We could end up with a very fragmented spectrum situation,” said Petty.

From the team’s perspective, it seems Ofcom has only just woken up to the coverage demands of the UK government, and is using this auction as a blunt tool to meet the objectives. From an engineering perspective it doesn’t seem to make much sense to Vodafone.

“We are not happy with the rules,” said Lamprell. “But it’s rare for us all [MNOs] to be happy.”

Looking good but looking suspect

The UK is currently in a good position ahead of the 5G bonanza from an engineering perspective. With test hubs being set up around the country and telcos who are acting proactively, the UK looks like an attractive environment to invest in for R&D. It is by no-means leading the global 5G race, but it is in a healthy position.

However, political and regulatory uncertainty are a threat to this perception. The activities and culture of both DCMS and Ofcom over the next couple of months will has a significant impact on the 5G fortunes of the UK, as well as the ability to attract new talent, companies and investment.

Germany outlines its 5G security requirements

Short and to the point, did we expect anything from the German 5G security requirements other than meet our standards and you can operate in our country?

“We regularly adapt the applicable security requirements to the current security situation and the state of the art,” said Jochen Homann, President of Bundesnetzagentur. “The security requirements apply to all network operators and service providers and they are technology-neutral, covering all networks, not just individual standards such as 5G.”

What is worth noting is that while 5G and international security concerns might be the catalyst to these requirements, they will be applied across all networks and communications infrastructure moving forward, as well as all vendors.

The announcement from Bundesnetzagentur, the German regulator, will come as a blow to the aggressive geo-political ambitions of the US. It seems the anti-Huawei propaganda is running low on fuel, and such is the weight of Germany’s influence across Europe, Chinese executives might be letting out a sigh of relief.

Although the new safety requirements are only a concept for the moment, Bundesnetzagentur plans to release a draft of the rules for feedback over the next couple of weeks.

The requirements are quite broad-ranging, though there are enough clauses to ensure Germany is the master of its own fate. For example, critical components can only be used in communications infrastructure should there be certification recognized by the Federal Office for Information Security (BSI). Employees who install or manage this equipment will also have to be certified by German authorities.

There does also seem to be a move towards the UK’s approach to monitoring and managing risk. As part of the new requirements, network traffic must be regularly and continuously monitored for abnormalities, while safety-relevant network and system components must undergo regular and continuous safety checks. This is a more forensic approach to network management, which allows for companies like Huawei to operate in the country, but the risk is managed.

Another interesting aspect to be included in the new rules addresses ‘monocultures’. Although this is a term which is usually used in agriculture, Bundesnetzagentur is essentially ensuring there is depth in the supply chain. Redundancy must be built into the networks through using multiple vendors for different segments and aspects of operations.

While this might create more work for telcos, vendors and regulators, we feel this is a more proportionate response to the risk of nefarious external parties. Simply banning one company, or companies from a single country, will not work, such are the complexities of the digital ecosystem. Vulnerabilities are everywhere, and the most pragmatic approach should be to understand 100% secure will never exist. Its all about managing the risk most appropriately, and Germany seem to be taking a very sensible approach.

In the UK, the industry is eagerly awaiting the results of the Government’s supply chain review, which will potentially dictate how telcos interact with the vendor ecosystem. Rumours have emerged suggesting no single-vendor can own more than 50% of a certain area, but we hope the result is somewhat similar to the German approach here. This seems to be the attitude of Vodafone also.

Speaking at a briefing in London, Vodafone UK CTO Scott Petty highlighted the team has been working with the National Cyber Security Centre (NCSC) to identify the levels of risk associated with each segment of the network (Radio, Transmission, Core), and building a diverse supply chain to mitigate risk where appropriate.

This approach has led to Chinese companies being excluded from certain areas, though on the radio side where right has been deemed to be very low, Huawei supplies 32% of equipment. This approach allows best-in-breed kit to be considered but considering the sheer volume of cell towers around the UK, even if some equipment is compromised, the impact would be incredibly minor. Resilience has been built in through volume, data encryption and security gateways.

Interestingly enough, Germany is taking another very sensible approach to managing risk; the assumption that everyone is nefarious. All components and equipment will have to be certified, not just those products from countries which are deemed underhanded by paranoid opinion. Every vendor’s supply chain is becoming increasingly complex, suggesting vulnerabilities could appear anywhere. This impartial approach to suspicion will certainly place Germany is a sound position.

A considered approach to security

While certain countries have taken a knee-jerk reaction to security requirements, pinning the blame of an insecure digital ecosystem on one country or a very limited number of countries, Germany is taking a much more considered approach.

Having such a laser-like focus on security, scrutinising single elements of the ecosystem is incredibly dangerous. Cyber-criminals are incredibly intelligent, managing sophisticated networks through the dark web. If the risk of exposure becomes too high through a single route, another will be sought. Taking a blanked approach to security as Germany is doing minimises risk throughout the supply chain.

We suspect the Chinese government is not completely innocent in light of all the accusations, but we also believe they are not alone. Many of the fingers are being pointed in one direction, but Germany is not falling into that trap.

Ciena bags 20.5% growth perhaps thanks to Huawei dilemma

Optical networking company Ciena posted positive results for the first quarter of 2019, with total revenues of $778.5 million beating analyst expectations.

There have been whispers in corners of various conferences that a Huawei ban could benefit some, and it may well be having a positive impact for Ciena. While there are numerous other companies which would compete with Huawei in the optical equipment segment, with Ciena one of the few ‘pure-play’ companies it might have a more notable impact on the financials.

That said, irrelevant of where the favourable fortune has come from investors will be happy. $778.5 million represents a 20.5% year-on-year increase for the first quarter, while nearly all geographical markets have shown healthy growth.

“We began fiscal 2019 with a very strong first quarter performance, including outstanding top and bottom line growth as well as continued market share gains,” said Gary Smith, CEO of Ciena. “We believe that the combination of our leading innovation and positive industry dynamics will enable us to further extend our leadership position.”

Net income for the quarter stood at $33.6 million, though this is incomparable to the same period of 2018 which registered a loss of $473.4 million thanks to President Donald Trump’s US tax reform.

Looking at the regions, in the US, a market which now accounts for 62% of the company’s total revenues, the earnings grew just over 20% to $485.5 million, while 20% growth was also registered in the APAC region. The big success story however was in Europe, where the team grew the business by 32% to $129.2 million. This is still only 16.6% of the total haul for Ciena, but more geographical diversification will certainly be welcomed.

For Ciena, Europe could be a very interesting market over the next couple of months. With Huawei coming under increasing scrutiny globally, telcos will look to further diversify supply chains to add more resilience and protect themselves from potential government bans. While the anti-China rhetoric being spouted out by the White House is losing momentum, the European Union is reportedly looking some sort of ban, even if this puts the Brussels bureaucrats at odds with some member states.

For such vast investments, telcos will be looking for certainty and consistency from government policies. When looking at Huawei as a potential vendor, telcos will naturally be nervous, even if they don’t want to admit it.

With Huawei’s ban set to have little impact on the US market, it is not a major supplier to the market historically, the Europe could be a hidden goldmine for Ciena.

Interestingly enough, this scenario also seems to be paying off dividend in the APAC markets as well. Smith notes the success in the APAC region has come from Australia, Japan and Korea, three markets where Huawei has either been explicitly banned or is receiving a rather frosty welcome.

FCC and Oval Office locking horns over 5G

The FCC originally looked like a diligent foot-soldier for the President, but with the nationalised 5G infrastructure argument seemingly emerging again, heads are set to butt.

Reports have been emerging in various corners that the White House is revisiting plans to develop a nationalised 5G network, a plan originally raised in January 2018 to keep the US at the front of the technology arms race. The plan was shot-down back then, and the FCC has already raised set the tone of resistance through social media over the last week or so.

Following the President’s twitter rant last month, which saw the Commander-in-Chief bemoan progress being made by the telcos, FCC chiefs set their position out quite firmly.

In the case of FCC Chairman Ajit Pai, a retweeted message from 2018 reiterates a point which was made when the plans were first suggested; hands-off from the government is the best stance. This seems to be one of the only positions the Democrat and Republican representatives on the board of the FCC seem to agree on; the telcos should build the US 5G network, not the government.

Although the White House has not released any official statement confirming its favour of a nationalised 5G infrastructure, the defensive position entrenched by Pai and Commissioner Jessica Rosenworcel suggest there have been conversations which neither like. These tweets could be viewed as in-direct opposition, with the pair attempting to get ahead of the game.

According to Politico, this isn’t the only conflict which is emerging either. The Trump 2020 re-election campaign team have been pushing the benefits of a government-owned, wholesale infrastructure, while the current Trump political administration are keen to avoid the topic. While the disagreement is hearsay and reports for the moment, it would not surprise us if the Trump campaign led with such a promise.

This sort of political manoeuvre fits perfectly into the Trump playbook from his first election campaign. It hits pain-points for US citizens in the politically less-attractive states, the very people Trump was able to mobilise in 2016. However, attacking the digital divide in rural communities is not a new trick, Hilary Clinton used this tactic in 2016 also, but a nationalised 5G infrastructure will appeal to those who feel ignored by corporates. Trump has shown he can communicate effectively to those who believe they are under-represented by mainstream politics, and this angle could prove to be an effective tool.

The idea which seems to have been raised here is to create a wholesale network in partnership with a private third-party. The government would fund the deployment of the network, while the third-party would manage the operations and wholesale business, creating a system which would operate like the electricity market, with parties ‘purchasing connectivity’ on a rolling basis.

Theoretically, this position sounds wonderful. The arguments for nationalisation are often very compelling, and it could be justified as an effective way to spend tax-payers money. However, nationalised businesses and infrastructure have been shown to be ineffective time and time again. The government is not equipped to manage such projects in the long-run and not savvy enough to compete against private entities when they emerge. It might sound very appealing to voters who are stuck in the chasm of the digital divide, but it will not help the US in the global technology arms race.

As Brenden Carr, a Republican FCC Commissioner, notes above, private industry is the best way to secure a leadership position in 5G. This is a lesson which has been learned numerous times over the years in the US; when you leave private industry alone, simply creating a legislative and regulatory framework to encourage growth, much can be gained. In the technology world, this is perfectly evident with the success of Silicon Valley.

The dominance of the US on the technology stage is being widely challenged, though it seems the ego of the Trump party is getting in the way of logic. First to market does not necessarily mean the best, but this seems to be the angle which the President’s team is taking.

The big question is what impact this will have on the future for the Republican party. Should these rumours of a nationalised network evolve into reality, a split may well appear in the rank and file. The Republican FCC representatives are clearly not happy about this position, and neither are the science and technology advisors in the White House. However, you can’t argue that such a campaign promise would be very attractive to those who currently reside on the wrong side of the digital divide.

Here is what the Trump 2020 electoral campaign team will have to assess; is the long-term detriment of communications infrastructure a fair trade-off for the lure of ‘Middle America’ votes in the 2020 election? We suspect they won’t be looking much further beyond 2024.