Sky and Liberty Global allegedly in talks for full-fibre investment

Sky is reportedly in discussions with Liberty Global to add further fuel to the full-fibre machine which is engulfing the UK at an increasing rapid rate.

After a new company, Liberty Fibre Ltd, was registered with Companies House in the UK last week, parent company Liberty Global has allegedly entered talks with Sky UK to add additional investment to the scheme. According to the Financial Times, with Sky moving away from satellite connectivity for its content proposition, the team are seeking more attractive wholesales terms, with Virgin Media providing a potential alternative.

As it stands, Openreach is the incumbent wholesale partner to Sky. The wholesale giant has enjoyed market dominance in recent years, though numerous ‘alt-nets’ and alternative providers are creating a much more competitive market. Sky is supposedly in talks with Virgin Media to use its fibre network to deliver its broadband and OTT content service, and the creation of another wholesale fibre business would further lessen the dependence on Openreach in the rural locations.

The new company, Liberty Fibre Ltd, will aim to deploy full-fibre networks in locations outside of the main urban areas, the primary focus for the vast majority of network owners. Virgin Media will become the anchor tenant of the network, though should the rumoured discussions continue as planned, Sky would become an investor in the scheme and a second customer.

For Liberty Global, attracting Sky as a customer would be a significant win.

Although it does not own any of its own network assets (fixed or mobile), Sky is one of the most successful broadband providers in the UK. Although Sky has stopped reporting total subscription numbers, most estimates put the total number of broadband customers between 6.2 million and 6.5 million. This would give Sky roughly a 20% market share, even with Virgin Media and second behind BT. Currently, Sky has a fibre penetration of 38%.

The commitment of a heavyweight such as Sky would certainly lesson the financial burden of deploying a fibre network in areas where ROI projections are certainly less attractive than the dense urban environments. The attractiveness of Sky as a customer only increases when you consider the increasingly popular OTT video drive and aggressive fibre broadband marketing campaigns.

Although Sky is still primarily known for being the premium satellite pay-TV content provider in the UK, the OTT proposition, Now TV, is becoming increasingly popular. After being acquired by Comcast, Sky is likely to attract additional advertising revenues from the parent-company to further consolidate an attractive position in the UK.

After years of neglect, the full-fibre market in the UK is gathering momentum very quickly. It is still years behind other nations across the European continent, but the creation of a new fibre wholesale player will add more fuel to the blaze as glass sweeps across the isles. Liberty Fibre Ltd is an interesting idea, and if it can nail Sky as an investor and customer, its prospects will certainly head north.

Ericsson and Nokia up their R&D game to compound Huawei misery

Whenever Huawei is facing scrutiny, rivals simply have to sit back and reap the benefits, though Ericsson and Nokia are upping the focus on research and development to compound the gains.

This is the opportunity which is being presented to Huawei’s rivals. When it is banned from certain markets, there is a gain. When there are security concerns shown, there is a gain. When there are questions about the resilience of the supply chain, there is a gain. All the likes of Ericsson, Nokia and Samsung have to do is sit back and do what they have been doing for years. The worse beating Huawei takes, the better their alternative looks.

What is clear is these companies will have to be as careful when capitalising on the misfortune, tip toeing over broken glass as gunfire rages overhead. Just look at the trouble Nokia CTO Marcus Weldon got himself in when criticising Huawei a couple of months back.

However, looking more closely at the financial reports of the rivals, there is perhaps evidence of an attempt to compound the gains by increasing R&D investments. There are of course numerous reasons why this would be done.

Firstly, if Huawei is considered the market leader for radio and transmission equipment, this is an opportunity to close the gap. Secondly, this is a chance to seize the initiative in the 5G race while the reputation of Huawei is picking up dents. Looking at the numbers, this story becomes a bit more apparent.

Vendor R&D investment as % of total revenues
Huawei c.15%
ZTE 14.9%
Nokia 21.2%
Ericsson 18%

The numbers above are taken for the first six months of 2019. Huawei hasn’t given numbers for the first half, only a full year commitment, so this is more of a rough guess. Samsung does not break-out financials for its network equipment division, keeping up its reputation for being less-than-transparent, so it is difficult to offer a comparison.

Including Samsung with the other four major network infrastructure providers might raise some eyebrows, but with a strong 5G RAN product Samsung now deserves to dine at the top table according to Heavy Reading Analyst Gabriel Brown, particularly in markets where it has made long-term, sustained investment in R&D and in customer support, such as the US, India and South Korea.

After years of investment and working to meet customer requirements, the US market offers promise to Samsung. Without Huawei and ZTE in the game, operators are looking for credible alternatives to the Nokia and Ericsson duopoly in RAN, while its Korean domestic market clearly offers some wins. There is a clear opportunity for growth, though as Brown points out, there are other considerations.

In terms of the 5G RAN, Samsung has competitive base station products according to Brown. However, it doesn’t necessarily have the breadth of portfolio, relationships or footprint to compete globally. Brown stated this is often an area which is underestimated and is expensive to build-up and maintain. Outside of its priority markets Samsung does not have the local support that telcos have come to expect nor the long-term in-country presence that gives operators confidence to do business.

However, it is still an opportunity, with the team is making the right noises, producing the right demonstrations and making the right connections to grow and claim market share.

The numbers above are taken for the first six months of 2019. Huawei hasn’t given numbers for the first half, only a full year commitment, so this is more of a rough guess. Samsung does not break-out financials for its 5G network equipment division, keeping up its reputation for being less-than-transparent, so it is difficult to offer a comparison.

Including Samsung with the other four major network infrastructure providers might raise a few eyebrows but work done over the last few years has raised their game. According to Heavy Reading Analyst Gabriel Brown, Samsung now deserves to dine at the top table, with strong focus on the US, India and South Korea.

Samsung is a company which is clearly benefiting from the Huawei misery. The US is a market which will offer promise to Samsung, though it will have some difficulties considering an ex-CEO of Ericsson is in charge at Verizon, while its domestic market clearly offers some wins. There is a clear opportunity for growth, though as Brown points out, there are other considerations.

In terms of the 5G base station product, Samsung is up there with the best according to Brown, though as it doesn’t necessarily have the relationships or product inventory in place it might struggle in certain areas. Brown stated this is often an area which is underestimated, as Samsung may well struggle to meet the timelines demanded by telcos in Switzerland or Columbia (for example). It doesn’t have the ‘feet on the ground’ or scaled manufacturing experience of its rivals, an element many telcos will have come to expect.

However, it is still an opportunity and the team is making the right noises, producing the right figures and making the right connections to grow and claim market share.

Back to the R&D investments, this is an important metric to judge vendors by and will gain interest from potential customers. At Ericsson, the 18.7% ratio invested in R&D is certainly an increase from the 14% and 15% it spent in 2015 and 2016 respectively. Nokia’s investments are also up from this period, though it has consistently hovered around this level. As a percentage of net sales, R&D accounted for 20.5% and 21.2% for 2018 and 2017 respectively at Nokia.

Although both of these firms are leaping ahead when it comes to the percentage, another factor that you have to take into account is that Huawei is spending more in real terms.

Vendor Total R&D investment in US$
Huawei $8.38 billion
ZTE $900 million
Ericsson $1.93 billion
Nokia $2.53 billion

While Huawei is vastly exceeding the amount spent by its rivals, it has a much broader scope. Ericsson focuses on mobile predominantly, while Nokia has both mobile and fixed businesses, as well as licencing payments from its former glory days as a leading mobile phone manufacturer.

Huawei has its fingers in a lot more pies. Not only does it focus on both mobile and fixed, it also has a subsea cable business and an enterprise unit, while the consumer group is now the largest contributor to total revenues. Looking at the consumer unit alone, Huawei will be investing R&D funds into smartphones, laptops, wearable devices and a new operating system to potentially replace Google’s Android.

This $8.38 billion figure should always be considered when comparing the R&D investments from all the rivals, but it should also be weighed against the broader business exposure Huawei as.

There are of course numerous factors to consider when judging who is winning the 5G race, geopolitical trends are close to the top of the list, but the percentage of revenues being attributed to R&D is another very important one. Although these numbers do not tell the whole story, perhaps it does indicate rivals are attempting to make the most of Huawei’s misery while they have a chance.

KDDI catches the Lime bug as scooter revolution drives forward

KDDI has announced an investment in Neutron Holdings, the company which owns the Lime scooter sharing service which is becoming increasingly popular around the world.

With more people living in cities than ever before, new solutions to move said people around cities are needed. Most urban centres do not have the most helpful public transit systems and it is becoming increasingly impractical for everyone to drive. Transport sharing initiatives are one way to fix the problem and Lime is presenting a popular solution.

Some might not be familiar with the business, but they might well have spotted a stray electric scooter on the pavement. These are just obstacles for pedestrians to navigate, but an alternative means for anyone to speed up the commute. Beating Connie home to ensure the linens are fresh and clean could be so much easier.

By downloading the Lime app, users can locate the nearest free electronic scooter through an embedded mapping feature, before paying for the service through a QR code or entering a six-digit code located on the scooter. Each ride costs $1 (roughly) irrelevant of the length.

After being founded in San Francisco in 2017, the Lime bug has been catching worldwide. The main footprint is in the US, though the scooters can be found all over Europe, as well as in South America (Uruguay and Mexico), Singapore, Australia and New Zealand. The idea of ‘mobility as a service’ is certainly catching on.

As part of this investment, Lime will also join the newly-developed Smart EAST project in the city of Fukuoka. The city is often referred to as the most innovative in Japan and will be the first in the country to host a Lime scooter ride. Alongside fellow project sponsors Digital Garage Co. and KDDI, the aim is to ‘create a model city with comfortable, high quality lifestyle options and intelligent use of urban space through the introduction of cutting-edge technological innovation’.

“We’re thrilled to be working with the Smart EAST project to bring our electric scooters to Japan for the very first time,” said Mitchell Price, Lime’s GR and Policy lead in Asia Pacific. “Fukuoka is a city focused on the future, and with Lime electric scooters riders will be able to unlock sustainable urban mobility like never before.”

What is worth noting is that the firm might come under some criticism before too long. Although it is a creative way to answer the mobility challenge in increasingly congested urban environments, they are proving to be a nuisance occasionally. In some cities it is illegal to ride scooters on the pavements, tickets for the offence in Los Angeles increased by 1815% between January and July 2018, while some are also frustrated by the scooters being discarded willy-nilly with no consideration to others.

This is not necessarily surprising as there are no rules to dictate the practice of riding a scooter. City officials might well have ignored these ‘vehicles’ in by-gone years, simply because there weren’t enough to justify any serious consideration. However, should trends continue on the same trajectory, a conversation will certainly need to take place.

Arguably Uber kicked-off this revolution, though KDDI is looking to cash-in on a trend which is spreading to all forms of transport very quickly.

Funded through the KDDI Open Innovation Fund (KOIF), the aim of this venture is to invest in start-ups both domestically and internationally which are using connectivity in a way outside the norm. KOIF Number 3. was first launched in April 2018 alongside Japanese venture capitalist firm Global Brain looking into firms in fields such as AI and IoT, areas where 5G can compound growth potential.

KOIF Number 3. will run through to 2028 with 20 billion Japanese yen to play around with, focusing primarily on the Japanese, US and South Korean markets. Of course, this is an investment opportunity, though the investment will also present collaboration opportunities with KDDI and the other start-ups which the fund has invested in.

UK government tries to encourage 5G innovation rural areas

The UK government has set aside £30 million to fund a few winners of a competition to come up with bright ideas about exploiting 5G tech in the countryside.

This marks the latest minor trip to the well that is the National Productivity Investment Fund, a pot of £37 billion in public wedge that is being drip-fed to industry every time the government reckons a certain area of infrastructure could do with a prod in the right direction. 5G and fibre are core national infrastructure topics, as is the development of rural communities, so the government gets two PR wins for the price of one with this announcement – a bargain at £30 million.

“The British countryside has always been a hotbed of pioneering industries and we’re making sure our rural communities aren’t left behind in the digital age,” said Digital Secretary Nicky Morgan. “We’re investing millions so the whole country can grasp the opportunities and economic benefits of next generation 5G technology.

“In modern Britain people expect to be connected wherever they are. And so we’re committed to securing widespread mobile coverage and must make sure we have the right planning laws to give the UK the best infrastructure to stay ahead.”

That latter statement is a nod to ongoing work to give operators better access to places where they can stick their radio gear, which presumably resulted from persistent moaning on the matter from said operators. This could well be especially challenging in rural areas, where land owners are in a strong position to dictate the terms of business.

Among the changes under consideration in this area are:

  • changing the permitted height of new masts to deliver better mobile coverage, promote mast sharing and minimise the need to build more infrastructure;
  • allowing existing ground-based masts to be strengthened without prior approval to enable sites to be upgraded for 5G and for mast sharing;
  • deploying radio equipment cabinets on protected and unprotected land without prior approval, excluding sites of special scientific interest; and
  • allowing building-based masts nearer to roads to support 5G and increase mobile coverage.

“We’re committed to delivering the homes people across the country need, and that includes delivering the right infrastructure such as broadband connectivity and good mobile coverage,” said Minister of State for Housing and Planning, Esther McVey.

“There is nothing more frustrating than moving into your new home to find signal is poor. That’s why we are proposing to simplify planning rules for installing the latest mobile technology – helping to extend coverage and banish more of those signal blackspots, particularly for those living in rural areas.”

Slightly hyperbolic there, Esther, and it’s presumably part of any home-buyer’s due diligence to check the mobile signal when they inspect their prospective purchase, but we get your point. Whether land-owners, farmers, etc agree on the paramount importance of rural mobile connectivity is another matter, but one of the organizations claiming to represent them seems keen.

“The vast potential of the rural economy will only be fulfilled when everyone in the countryside has full mobile connectivity, and we welcome DCMS’s intent to deliver the Prime Minister’s promise of internet access for all,” said Mark Bridgeman, Deputy President of the Country Land and Business Association.

“The current situation, where only 67% of the country can access a decent signal, is unacceptable and government is right to focus on planning reform as a means to removing current barriers but there must also be a balance between the interests of landowners and mobile operators.”

Prospective rural 5G pioneers have a couple of months to apply for a piece of the 30 mil. This sort of thing seems fairly positive on the surface, but it’s debatable how much impact chucking a few mil at a small number of pet projects will have in the great scheme of things. On the flip side any state intervention in private business needs to be treated with caution as the ultimate arbiter of the viability of any business initiative should be the market.

FWA is starting to gather momentum in UK

The idea of Fixed Wireless Access (FWA) has been belittled in the past, but it is moving beyond ‘flash in the pan’ territory and becoming a genuine alternative across the UK.

Some have been harping on about the benefits of FWA for years, while others have snubbed the concept for more traditional means of broadband connectivity, but there is growing interest in the technology throughout 2019. The latest to join the hype is Macquarie Capital, yet another private investment company looking to capitalise on the sluggish telco segment. Here, the team is backing the rollout of FWA solutions in rural communities.

“The roll-out of superfast and ultrafast broadband has too often focused on the UK’s urban centres – leaving untapped investment requirements in the UK’s rural communities,” said Oliver Bradley of Macquarie Capital.

“We believe that using Macquarie Capital’s unique principal investment and development expertise there is a significant opportunity to work with Voneus to accelerate the deployment of UK rural broadband, this will help unlock significant economic and social benefits for the UK.”

Working alongside emerging ‘alt-net’ Voneus, Macquarie Capital will invest £10 million initially and an additional £30 million through various different build-out phases. FWA will be the tip of the spear, as Voneus looks to focus on 900,000 homes across the UK countryside who still don’t have access to Superfast broadband services.

“Macquarie Capital’s backing is a huge endorsement of Voneus’ business model and vision, as well as an indication of how much work still needs to be done to connect the many homes and business across the UK that still do not have access to decent broadband services,” said Steve Leighton, CEO of Voneus.

While the only option for genuine 100% future-proofed broadband connectivity is fibre, the FWA revolution does offer considerable benefits. Firstly, it is faster to deploy as last-mile connectivity is over-the-air, removing the complications of civil engineering. Secondly, it is cheaper to deploy raising the interests of the telcos. And finally, it satisfies the need for the moment.

FWA could be viewed as half-way house on the road to full-fibre deployment as it offers the connectivity speeds which are required today. Some Government targets for broadband infrastructure are non-sensical as they focus on technology not the desired outcome. If the immediate desire is to deliver relevant download speeds in the home, this can be done through FWA solutions. There is no reason why FWA can’t address the immediate challenge, assuming of course there are on-going plans to rollout fibre infrastructure over a reasonable period of time simultaneously.

This is what Voneus is proposing. It will deliver FWA connectivity in areas which have largely been ignored by the traditional providers, while also working the business case to deploy full-fibre broadband in the future.

This approach might irritate some of the traditional telcos in the UK, but there are cases around the world where it has been proven a success. Over in the US, Starry is a FWA ISP which is rapidly expanding. Although it is focused on multi-dwelling units in major cities, the theoretical business model, and customer appetite has been proven.

Closer to home, Three and Vodafone have also launched their own FWA propositions for 5G. It will be interesting to see how these convergence strategies play out, but Three already has 800,000 home broadband subscribers through its acquisition of UK Broadband. This is an area of great potential for these two broadband challengers, especially should the reliability of FWA be proven as 5G rolls out across the country.

The idea of a fibre spine and wireless wings is not a new one, but it is certainly one which has merit. Here, Voneus could certainly gain traction in areas which have been neglected by the traditional player because of the high-cost of deploying infrastructure. FWA can be a good idea, just as long as its not the final goal for the ISP in question.

Openreach adds another 35 cities to ‘fibre first’ programme

Openreach has announced a further 36 cities and towns which will be upgraded to Fibre-to-the-Premises (FTTP) broadband technology over the next 12 months.

As part of the ‘fibre first’ programme, 74 cities and large towns will undergo extensive upgrade programmes to ensure fibre is a realistic option for broadband services. It might have taken a while to get the UK on-board with the necessity for future-proofed broadband infrastructure, though momentum is gathering.

“We’re pressing ahead with our investment and Openreach engineers are now building in communities all over the country, keeping us on track to deliver against the bigger ambitions we set out in May,” said Clive Selley, MD of Openreach.

“The Government wants to see a nationwide full fibre network and we’re keen to lead the way in helping them achieve that. We know that if it’s going to happen, Openreach will need to be at the front doing the heavy lifting, so we’re working hard to build a commercially viable plan.”

With the continued aggressive push towards fibre broadband throughout the country, the prolonged battle between BT and Ofcom to retain control of Openreach makes much more sense. The telco fought bitterly to keep Openreach in the Group and now with enthusiasm for fibre higher than ever before it is was a justified battle, even if it did negatively impact the relationship with the regulator.

However, things are not all rosy for Openreach.

“One headwind to investment which affects all full fibre builders is business rates, and we’ve been encouraged by the Scottish Government’s move to extend rates relief north of the border,” Selley stated. “I’m convinced that prioritising investment in faster, more reliable and future proof broadband networks will prove to be a no-regrets decision for future generations.”

Complaints over regulation are of course not a new element of the telecommunications industry, though this is one which has been persistent. The industry has been promised changes, though few has been realised to date.

That said, the fibre revolution is catching. New Prime Minister Boris Johnson has pushed the issue onto the front pages with a ludicrous statement of 100% fibre penetration by 2025, though momentum was gathering prior to this. Last year, at Broadband World Forum in Berlin, one panel session discussed the improved appetite from investment funds and bodies to fuel the objective. The consumer demand has been proven, therefore the money men are starting to get interested.

What is worth noting is that Openreach is not the only firm who is on the charge with fibre expansion. Virgin Media’s Project Lightening is progressing successfully, while CityFibre is leading the charge for the ‘alt-nets’ to broaden the footprint in areas which might be deemed less commercially attractive.

With ambitious Government targets pushing the fibre rollout, it is encouraging to see promises entering into reality.

Japan joins the anti-globalisation movement

It might not be as aggressive a position as the White House has entrenched itself in but limiting foreign ownership of strategic segments is a similar objection to globalisation.

According to The Telegraph, the Japanese government has identified 15 new sectors which would be restricted from foreign ownership, while restrictions on a further five would be increased. Any foreign investor wanting to take more than a 10% share of a companies listed in these segments would have to report to the Japanese government.

“…based on increasing importance of ensuring cyber security in recent years, we decided to take necessary steps, including the addition of integrated circuit manufacturing, from the standpoint of preventing as appropriate a situation that will severely affect Japan’s national security,” said a spokesperson for the Japanese government.

While telecom is already one of the sectors which has been listed for protection against foreign ownership, the new segments include mobile phone and the wider IT sector.

The rules themselves seem to be heavily nuanced to offer enough wiggle room for decision makers. At the very top level, should an investment be deemed contrary to national security, the Japanese government has granted itself the power to block or force changes to investment plans.

Although this might seem like another step on the road towards isolating China, sceptics are suggesting this is a plan to block the theft of trade-secrets by Chinese authorities and companies, it should hardly come as a surprise. After all, Japan is one of the countries the US has success in turning against China.

Last year, the Japanese government passed rules which would ban the use of phones, computers and other components from Chinese vendors in any of its agencies. Telcos have also been awarded 5G spectrum licences which come with coverage and security obligations, a move seen by some as a means to limit network exposure to Huawei. The telcos had in fact already committed to omit Huawei and ZTE from their network deployment plans, though an official position is a much stronger symbolic gesture.

There might be genuine security and economic concerns about China and its telco flagbearers, but the world is increasingly moving away from the concepts of openness. This announcement might only be a pebble in the global pond, but each pebble adds to the growing waves of isolationism.

UK is the tech start-up centre of Europe – research

A new report from Tech Nation has crowned the UK as the European hotspot for technology start-ups, and fourth worldwide for scale-up investment after US, China and India.

While the US led the rankings by a considerable margin, the UK managed to attract 5% of global high-tech scaleup investment, with capital investments in UK firms topping £6.3 billion for 2018. Digging down into the details, Tech Nation estimate the fintech firms are doing even better, attracting £4.5 billion of investment between 2015 and 2018, with the UK leading the world.

“The UK continues to exceed all predictions when it comes to tech growth,” said Gerard Grech, CEO of Tech Nation. “This report shows how the UK is a critical hub when it comes to global technology developments, with scale-up tech investment being the highest in Europe, and only surpassed by the US, China and India. This is a testament to the innovation, ambition and tenacity of tech entrepreneurs across the UK.”

The claim itself is based on various datasets, including information from PitchBook. By identifying the number of scale-up companies in each of the determined countries, and the value of investments made into these companies, Tech Nation has drawn-up the ranking. Scale-up companies are identified as those which have either achieved employment or revenue growth of 20% for two consecutive years and have a minimum of 10 employees.

The US is leading the rankings, which will come as a surprise to few considering the dominance of Silicon Valley on the technology industry, with China coming in second and India coming in third. US firms attracted 49.3% of the world’s scale-up investment, while China accounted for 20.4%.

The total scale-up investments made in UK firms was also 2.5X the value of what would be expected for a nation the size of the UK. In fact, tech scaleup deals delivered £5 billion of the £6 billion investments made in tech companies in the UK across 2018. AI seems to have taken the crown, accounting for £1.3 billion of the total.

Critically, this demonstrates the work which has been done to attract and encourage innovation, investment and start-ups in UK society is working. Perhaps there is some method to the government madness. Looking forward, all the signs seem to be heading in the right direction. With 5G networks on the horizon, the catalyst for growth is about to emerge.

5G will not necessarily change the world overnight, but the power of the networks has the potential to foster the unicorns of tomorrow. This is a network which will deliver new services in the same way as 4G did, demonstrating the importance of being one of the first to scale the connectivity boom.

The US led the deployment of 4G networks did not spur the economy into any great revolution, but the tools offered allowed innovation. Companies like Uber scaled because evolution of the networks, while an entire new segment of the economy was allowed to flourish. Without the connectivity tools to play with, these companies would have not had the potential to scale; the same can be said about 5G.

5G offers an opportunity to create new products and services. Artificial intelligence, cyber security, latency, MEC and high-consumption/speed data-applications can all exist without 5G, but they are more attractive, practical and viable with the next evolution of the network. Uber could have existed without 4G, but it is a disruptive success because of it. Joe Bloggs cannot conceive what products and services will be available over the next couple of years, but the right tools have to be in place to ensure the innovators can scale them.

5G won’t change the world, but it will offer the opportunity for innovators to create value for themselves, customers and the national society which fosters them.

What might be a hurdle before too long are the deployment plans of the UK telcos. Having a test-bed to create these products and services in the first instance is all well and good, but soon enough these start-ups will need customers to scale the business. The faster networks are deployed, the quicker these start-ups can get to market, engage customers, tweak the proposition and potentially create the Uber of the 5G generation.

The UK Government has been looking for ways to shore-up defences against the future, hoping to give the economy and society the greatest opportunity to thrive. This is why fibre rollouts, or mobile coverage gains are so important now even if there is no immediate benefit; it’s all about making the country future-proof, ready for the unknown and resilient to the future challenges. And cultivating start-ups is a critical component.

Not only does this have the potential to address the questions surrounding wealth in-equality, it removes the UK dependence on the financial sector. Tech is the dominating growth sector in the global economy, and the best way to reap the rewards is to create an environment suitable for start-ups, the companies who could steal the headlines in the future.

The UK Government has been preaching about the world it is doing to encourage innovation and start-ups over the last couple of years; perhaps this report is vindication of the work which has been done.

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.

 

Intel VC arm plugs its disruptive vision

Intel has seemingly learned a lesson from the woes of stumbling giants, announcing it has invested $117 million in ‘disruptive’ start-ups at its annual VC conference.

There is a very good reason investors are so keen to pump cash into the likes of Google and Amazon, despite recent criticism and the threat of regulatory reform; these are companies which never sit still. The likes of Jeff Bezos and Sundar Pichai are constantly pushing the boundaries, expanding the business into new segments. It should be viewed as a lesson for every CEO around the world.

However, this is seemingly a lesson which has only recently been added to the management curriculum. In generations gone, some of the worlds’ leading technology companies have climbed further than any other before, and then stopped exploring. IBM, Oracle and Microsoft are three examples of companies which sat still for years, and the industry moved on without them. They have since recovered, but it took a lot to bridge the chasm.

“Intel Capital is continuing that legacy of disruption with these investments,” said Wendell Brooks, President of the VC arm, Intel Capital.

“These companies are shifting the way we think about artificial intelligence, communications, manufacturing and health care – areas that will become increasingly essential in coming years as the linchpins of a smarter, more connected society.”

One of the oldest phrases in the technology industry is often forgotten, but it seems Intel is attempting to resurrect it; disrupt or be disrupted.

Google and Amazon are the perfect embodiment of this statement. If you look at the acquisitions made over the years, they are incredibly intelligent bets. Google bought YouTube, Android and DeepMind for huge sums at the time, but now they look like bargains. Amazon didn’t make a profit for years, instead re-investing and now has AWS as a profit machine. These companies could have collected profits, paid more dividends and rewarded management with more bonus’, but look at what the end result is.

As it stands, Intel is in a relatively healthy position. Looking at the financials for 2018, revenue was $17.1 billion for the fourth quarter and $62.8 billion for the 12 months. These figures are 8% and 9% up year-on-year respectively, with data-centric revenue up 21% compared to Q4 in 2016. Share price declined on the news, investors were concerned over a conservative forecast, but the warning shot has seemingly been heeded.

If growth is not satisfying investors, something needs to change. The status quo is unlikely to reap more rewards tomorrow than today, therefore investment is required. Some of this will be directed inwards, though through the investments in Intel Capital the firm is welcoming disruption; it wants to be in on the ground floor of these potential booming enterprises.

“Our continued goal is to leverage the global resources and expertise of the world’s greatest engineering company, and its ecosystem of customers and partners, to help these founders accelerate growth and innovation,” said Brooks.

Looking at the investments, AI features heavily. Cloudpick is a smart retail technology provider with proprietary computer vision, deep learning, sensor fusion and edge computing technologies to enable cashier-free stores. SambaNova Systems is building an advanced systems platform to run AI applications. Zhuhai EEasy Technology is an AI system-on-chip (SoC) design house and total solution provider.

The team is also investing in the edge computing hype with Pixeom, mobile content streaming with Polystream, digital healthcare with Medical Informatics and Reveal Biosciences and also smart manufacturing.

The lessons of sitting still are incredibly obvious. Oracle founder CEO Larry Ellison dismissed the cloud and look where that has landed the firm. IBM refused to respond to the evolving PC market and it resulted in a colossal overhaul. Microsoft was another which ignored market trends, with former CEO Steve Balmer making some very off-target predictions in 2006. All of these companies have learned a lesson on disruption, but it came at a cost which took years to fix.

With its VC arm, Intel is promising to invest $300 to $500 million a year in disruptive technologies. It is taking a page out of the Amazon and Google playbook; if you want to remain on top, you can never sit still.