Three UK talks up its 5G investment plans

The UK’s fourth MNO, Three, has given a public update on its investment priorities and plans for 5G.

The headline figure is £2 billion, which is what Three says it is committed to spend on 5G stuff. Apparently Three customers are more data-hungry than average, so it’s even more important that it drops enough cash to ensure its infrastructure can keep up. The intended message seems to be that Three is for real in the 5G era and the other UK MNOs had better watch their backs.

“We have always led on mobile data and 5G is another game-changer,” said Three CEO Dave Dyson. “Also described as wireless fibre, 5G delivers a huge increase in capacity together with ultra-low latency.  It opens up new possibilities in home broadband and industrial applications, as well as being able to support the rapid growth in mobile data usage.

“This is a major investment into the UK’s digital infrastructure. UK consumers have an insatiable appetite for data and 5G unlocks significant capability to meet that demand. We have been planning our approach to 5G for many years and we are well positioned to lead on this next generation of technology.  These investments are the latest in a series of important building blocks to deliver the best end to end data experience for our customers.”

Dyson also had some stuff to say on the matter of Huawei potentially getting a hard time from UK public bodies which you can read more about here. So where is all this wedge going to end up? Details are thin on the ground right now and it looks like the headline figure includes some investment already made. Three did offer the following highlights of its 5G investments so far.

  • Acquired the UK’s leading 5G spectrum portfolio
  • Signed an agreement for the rollout of new cell site technology to prepare major urban areas for the rollout of 5G devices, as well as enhance the 4G experience
  • Built a super high-capacity dark fibre network, which connects 20 new, energy efficient and highly secure data centres
  • Deployed a world-first – a 5G-ready, fully integrated cloud native core network in the new data centres, which at launch will have an initial capacity of 1.2TB/s, a three-fold increase from today’s capacity, and can scale further, cost effectively and quickly.
  • Rolled out carrier aggregation technology on 2,500 sites in busiest areas, improving speeds for customers

Budget is good start, but don’t get too excited – National Infrastructure Commission

The National Infrastructure Commission has given the UK’s Autumn Budget the thumbs up, but will the shiny new roads take much needed funding away from the country’s quest towards the digital economy?

While it might be a boring topic, roads and railways received a lot of attention during the budget announcement. But this is one of the bigger concerns for the NIC, which is wondering whether the a lack of private investment in such schemes would detract from government investment in other areas, most notably, next generation technologies for communications and energy.

“Today’s Budget includes a number of welcome measures for infrastructure – but the real test will be next year’s Spending Review and, crucially, the National Infrastructure Strategy that the Chancellor has promised,” said Sir John Armitt Chairman of the National Infrastructure Commission.

“This strategy should bring together the roads funding from this Budget with longer-term funding for cities and projects like Northern Powerhouse Rail and Crossrail.  And it should include access to full fibre broadband and greater use of renewable sources for our energy.”

The budget, which was unveiled on Monday, featured plans to hold the internet giants accountable to pay more tax in the UK, as well as a £1.6 billion commitment to support the Industrial Strategy and R&D funding, including technologies from AI, future manufacturing, nuclear fusion and quantum computing. An additional £200 million from the National Productivity Investment Fund will also be pointed towards various schemes to encourage the rollout of fibre infrastructure throughout the UK, most notably in rural regions with primary schools to be the first to get special attention.

Looking specifically at the National Productivity Investment Fund, investments in fibre and 5G will increase to £715 million between 2019 and 2021, though whether this is enough to keep the UK on track in the global digital economy remains to be seen. The ambition set out in July in The Future Telecoms Infrastructure Review targets a nationwide full fibre network by 2033. Alongside the Budget, the government is publishing consultations to mandate gigabit‑capable connections to new build homes.

The consultation, which is being led by the Department of Digital, Culture, Media and Sport, will aim to amend the Electronic Communications Code (EEC) to place an obligation on landlords to facilitate the deployment of digital infrastructure when they receive a request from their tenants, while also enabling telcos to use magistrates courts to gain entry to properties where a landlord fails to respond to requests for improved or new digital infrastructure. The EEC is starting to look like a very large stick for the telcos to swing around and force people to do anything they want.

What is slightly concerning is a lack of attention for 5G. In the budget document on the HM Treasury website, 5G is actually only mentioned once.

What is worth noting is this budget might actually mean nothing in a couple of months. Hammond has given himself adequate breathing room with a no-deal Brexit scenario looking increasingly likely, stating it would be back to the drawing board should the worst-case scenario become a reality.

Shareholder attitudes on fibre are shifting – investor

Some telcos might have been afraid of committing to fibre deployment due to the vast expense and potential shareholder backlash, but attitudes are changing.

Over the last few years the need to invest in fibre has become increasingly evident, though progress is incredibly varied. Forward-looking telcos, Orange for instance, have been pumping cash into fibre deployment for years, while stuttering operators such as BT and Deutsche Telekom has chosen alternative technologies in an incredibly short-sighted move, maybe satisfy the bloodhounds in the annual general meeting, and the rising demands of the consumer.

While technologies such as G.Fast or vectoring might be appealing to the accountants, with the gigabit-economy around the corner, the shortfall is starting to look quite obvious. What was initially sold as a cunning move now looks to be nothing more than delaying the inevitable, with the overall result a net loss. But with attitudes towards fibre changing, the intensity of fibre rollouts might just increase. And it isn’t a moment too soon.

“We’ve seen the evolution of fibre as an asset class which is becoming much more accepted and more confidence in the take up and monetization potential of fibre,” said Chris Hogg, Investment Director at Amber Infrastructure, speaking on a panel session at Broadband World Forum in Berlin. “As an investor, we are getting a lot more confidence in the ability of the market to maintain the uptake level. It becoming a lot more visible and a lot easier to have confidence in these projects.”

Hogg’s position does offer him considerable credibility in making such comments, though he does work for a fund which specifically targets infrastructure projects and companies. This might not be the common attitude amongst the investor community. Kate McKenzie, CEO of wholesale network operator Chorus, does however confirm his position.

“We have definitely seen a change,” said McKenzie. “When we first started investors were sceptical about market adoption, but now investors are asking how they can go faster with the rollout.”

The issues from yesteryear were relatively simple. With profits being squeezed at the telcos thanks to the intervention and disruption of the OTTs, shareholders asked whether such vast expenditure on fibre was necessary. Firstly, did the network need such a facelift when it is dealing with the demands of the 3G and 4G world, and secondly, would the consumer appetite for fibre be there? Some investors doubted the business case, and these are the telcos who are falling behind when it comes to fibre rollout.

But what has changed over the last couple of years? Firstly, the consumer has demonstrated he/she is prepared to pay more for fibre connectivity. Secondly, new services emerged (Netflix for example), and new segments grew substantially (gaming) pushing the networks to the limit. Finally, 5G. The first point demonstrated there would be buyers for the new products, while the latter two suggested telcos would not even be able to offer adequate services unless the money was spent.

The takeaway here is simple; spend or die. Unfortunately for those who are late to the party, expenditure will squeezed into a smaller timeframe, while they’ll be playing catch-up in the time consuming task.

With 5G emerging, the investments in fibre become a little bit more palatable for investors however. With the incredible data rates promised with 5G, fibre is a necessity to ensure network performance. And while it might be able to act as a replacement for the last mile for broadband, fixed wireless access, the sites still need to be fibered up. It is as much an opportunity for connectivity as it is a threat to traditional broadband products.

“We’ll always need fibre to service the base stations,” said Dana Tobak, CEO of Hyperoptic, a UK fibre-to-the-premises broadband provider. “Some people think they’ll only need one connectivity technology in the future, but as our appetite grows, we’ll need more routes to the internet.”

For those investors who back fibre deployment plans over the years, well done. Those who were too timid, bad bet, there’s catching up to do now.

Indian government greenlights plan to increase broadband penetration

While Reliance Jio has been ripping up the rulebook, causing chaos in the Indian mobile market, some might be surprised to hear broadband penetration is still less than 10%.

Accessibility has long been an issue in India, from a mobile perspective Jio seems to have addressed this issue, though broadband remains an challenge. According to the latest subscription figures from the Telecom Regulatory Authority of India (TRAI), there are currently 22.2 million broadband subscriptions in the country, compared to roughly 250 million households. This is one of the discrepancies being addressed by the National Digital Communications Policy – 2018.

According to the Indian Express, the government has officially given the green light for the policy, which aims to attract $100 billion investment and create an additional four million jobs in the digital communications sector. The ambitions and targets are certainly bold, though momentum is certainly with India.

In terms of the top-line objectives, there are six; provisioning broadband for all; creating the four million jobs; increasing the percentage digital communications contributes to GDP from 6% to 8%; taking India into the top 50 places in the ICT Development Index of ITU; ensuring digital sovereignty; enhancing India’s global contribution to the digital economy.

Looking specifically at the broadband side of things, by 2022 the Indian government hopes to enable fixed line broadband access to 50% of households across the country, 100 Mbps broadband on demand to all key development institutions, provide 10 Gbps connectivity to all Gram Panchayats of India. These ambitions will be realised through creating a ‘fibre first’ initiative, promoting collaboration models involving state, local bodies and private sector, as well as incentivising and promoting fibre connectivity for all new developmental construction.

The telcos will surely be rubbing their hands together in anticipation of the opportunity. Fixed broadband infrastructure is an expensive game, though love and care from the government, as well as subsidies and potential tax benefits, will certainly offer opportunity to deploy infrastructure, new customers and revenues. Over the next couple of months, the government will aim to create a National Digital Grid, through the establishment of the National Fibre Authority, building Common Service Ducts and utility corridors, facilitating development of Open Access Next Generation Networks, as well as standardising costs and timelines.

Broadband offers a significant opportunity for the telcos who have seen profit margins decimated by the entry of Reliance Jio. With such low broadband penetration, the land grab for customers will be a vicious one, though with higher ARPU the rewards are quite clear.

From a global perspective, increased broadband penetration will certainly offer India a greater opportunity to play a more notable role in the global marketplace. This is looking at the global question outwardly; there will be a number of international businesses keeping an eye on developments here. Should broadband accessibility increase, companies like Netflix will almost certainly be lining up new products and tariffs. This in turn will stimulate the Indian creative industry, as a cornerstone of the Netflix strategy is to create local content.

The mobile revolution kicked off by Jio’s disruptive pricing proved to be a catalyst for India in the international digital economy, though increasing broadband accessibility and penetration could have the same impact. India has been an interesting market over the last 12-18 months, and with broadband now being addressed, it has recaptured our attention.

UK Gov releases another £95 million for local full-fibre diets

Over the last year, the UK Government has been proudly preaching of massive investments into digital infrastructure. It’s questionable how much has made its way into reality, but an additional £95 million has been released today.

The Local Full Fibre Networks (LFFN) Challenge Fund has announced £95 million has been made available to aid the roll-out of full fibre networks. Local authorities and public sector bodies around the UK can apply to the Local Full Fibre Networks Investment Panel to access the investment, which has been earmarked for rural areas, regions which have higher than average hurdles to 5G, the public sector and the development of local technology hubs. A plan to spend the money by March 2021 would have to be tabled to be applicable, with the Department of Digital, Culture, Media and Sport believing £95 million should be enough to fund roughly 20 projects.

“We recently set out our ambition for a nationwide full-fibre broadband network by 2033, and initiatives like this will be instrumental in achieving that,” said Minister for Digital, Margot James. “We want to hear from any local authority interested in taking part, so we can work closely with them on their plans to help them secure funding.”

The first two rounds of grant funding released £105 million into the economy, while this £95 million will deplete the funds bank account. The cash itself is part of the government’s expanded £31 billion National Productivity Investment Fund, £740 million has been reserved for digital infrastructure. How many cheques have been signed so far is unknown, though questions still remain whether £740 million is a big enough commitment considering the lost ground on global leaders.

As it should be, emphasis will be placed on the proposals which plug the gaps from private sector investment. Rural regions are of course an area of interest here, as are regional technology hubs, potentially decreasing the reliance of the UK economy on London. The Midlands is an excellent example of this initiative, with the region targeting the development of electric cars and the components in creating its own hub of technical excellence.

For those interested in wrestling investment away from the fund, an email expressing interest would have to be sent by September 30 2018.

Government launches fund to increase diversity in tech

The UK Government has announced launch of a £1 million Digital Skills Innovation Fund to help people from underrepresented groups gain the necessary skills to work in the digital economy.

The funding will be used to help women, disabled people, people from minority backgrounds or those living in lower socioeconomic areas train for roles in the digital economy, skills which are being so disappointingly overlooking during traditional education curriculums. The fund will launch in September and will aim to support the Government’s Digital Strategy.

“It is crucial everyone is able to take advantage of digital technology, whether it is to learn how to use the internet or develop the skills to work in a tech role,” said Minister for Digital Margot James. “If we want to maintain our position as a world-leading digital economy we need to work with industry, local authorities and the voluntary sector to develop solutions so no-one is left behind.”

“As the rate of technological change and innovation continues, ‘tech’ is becoming increasingly integrated within every sector and industry,” said Local Enterprise Partnership Network chair and Digital Skills Partnership board member, Christine Gaskell. “We share the aspiration to ensure that more people have the skills and creativity that will enable them to contribute to, and benefit from, new economic opportunities and deliver more inclusive growth.”

An additional £400,000 Digital Inclusion Fund has also been launched to help older and disabled people acquire digital skills. This fund is aimed at helping people to adapt to digital life as opposed to employment. As society moves more towards digital first, it is important to remember there are still those who lack the ability book GP appointments online, use apps to communicate with friends and family, or make the most of search engines. These skills might seem simplistic to most, but it is crucial the small percentages of society are not left behind and inadequately prepared.

While these initiatives are crucial in ensuring everyone benefits from the digital boom, you have to wonder why the issue is not being addressed at the source. Some might suggest education for most is too traditional, and curriculums in both primary and secondary schools needs a significant overhaul.

Ericsson ups US investments in search of regionalised relevance

Ericsson has announced it will increase investments for R&D in the US as it revs its engines in pursuit of much-hyped 5G market share.

Increased investments in R&D is nothing which should be applauded, it is after all a monumental shift in the telecommunications and technology industry, and therefore should be expected. That said, Ericsson seems to be sending a message to the world with the focus on the US; Huawei continues to find itself on the sh*t list, so we are going to dominate this market.

“The increased investment is to support accelerating build out and rapid deployment,” said Ericsson’s Head of Networks, Fredrik Jejdling. “All about working with our customers more closely.”

While increasing the focus on the US might not be the greatest endorsement for the manufacturing capabilities or employee competence in Europe, Jejdling pointed out this is not a shift away from the continent, but Ericsson’s localisation strategy. This is where Huawei has found success in recent years, its engineers have been on hand to help development and deployment. These investments are focused on adapting R&D focus for the individual needs of the market.

For example, while the US is primarily focused on enhanced mobile broadband and fixed wireless access, China has prioritised IoT. There isn’t necessarily a wrong answer for the 5G focus, but by moving R&D centres closer to customers, Ericsson is able to adapt operations to local demand. Jejdling also highlighted the strategy will allow the business to create a more flexible supply chain, working with manufacturers in the specific regions to shorten development lead time and bring products to market quicker.

“We need to make sure we are relevant to each customer,” said Jejdling. “It’s all about serving the markets in their own way.”

The US is currently Ericsson’s largest market, accounting for a quarter of the firm’s business over the last seven years. The absence of market leader Huawei is almost certainly working for the benefit of Ericsson, but the reasons don’t actually matter that much. The vendor landscape is highly unlikely to change considering the political paranoia towards China and its vendors; Ericsson’s decision to double-down on the US and capitalise on the opportunity is a very sensible strategy.

What is worth noting is this is new investment from Ericsson. Just because the US is getting attention right now, does not mean investments will be decreased in markets such as Europe. Accoring to Jejdling, this is not a trade-off, at the very least, investments will be sustained in Europe.

“One of our big manufacturers is in Talin, and so are some of our biggest research sites,” said Jejdling. “This announcement is not about moving away from Europe, but expanding in the US.”

Looking at the focus of the R&D investments, there are three areas of particular interest. Firstly, the Austin ASIC Development centre will receive some additional attention, as well as 80 more bodies. It might be worth noting, one of the AT&T research labs focusing on IoT manufacturing, retail and data analytics, is conveniently located a 50 minute flight away in Plano, Texas. The second will be a baseband software development centre, which will be staffed by 200 new employees. Finally, an artificial intelligence research centre will be located in California, close to the Silicon Valley technology hub, and will account for an additional 100 hires.

The focus for the AI research centre seems to be around machine learning and network automation technologies, these are closest to Ericsson’s core competencies after all, though Jejdling commented this is a relatively blank script for the moment. The team will lead with the demands of the market, which is still trying to grasp the potential of the technology.

“R&D for AI is in the process of being established,” said Jejdling.

While some might worry over the lack of concreteness around AI developments, it is worth noting this is the new status quo in the development world. The companies who have made best use of new breakthroughs in the world of intelligent technologies are the ones who adopt a fail-fast business model. These developers are adaptable and scale dependent on external factors such as market demand and parallel technological breakthroughs. Should Ericsson want to bolster its credentials in the software work, some might comment it is flagging currently, it will have to embrace this new, un-telco, mentality.

As a strategy, increasing investments in the US is certainly a sensible one. US customers account for a significant chunk of the Ericsson spreadsheets as it stands, therefore it would be a perfectly reasonable place to start the 5G assault, capitalising on established relationships. The strategy also has a Huawei feel about it. The Chinese firm has a reputation for accessibility, placing engineers close to customers to improve customer service. Consider the success over the last few years, why shouldn’t Ericsson take a lesson from the Huawei playbook.

Samsung writes $22bn cheque for AI and 5G to fill smartphone hole

With the smartphone segment not looking as profitable anymore, Samsung has announced an investment worth roughly $22 billion to boost credentials in artificial intelligence and 5G.

The announcement comes off the back of slightly disappointing quarterly results, ending a run of record breaking figures, with sluggish S9 sales proving to be the downfall. The semiconductor business is still booming, but investments in next generation technologies will be needed to ensure this momentum is continued. $25 billion over the next three years should do the trick.

“Samsung announced plans to boost investments in businesses that will drive its future growth, committing to a KRW 25 trillion investment over the next three years, primarily led by Samsung Electronics, in the areas of artificial intelligence (AI), 5G, automotive electronics components and biopharmaceuticals,” the team said in a statement.

What is worth noting however is this is not the largest number Samsung is throwing around. $22 billion is just a slice of $161 billion which include investments into capital expenditure and R&D. In the semiconductor unit, Samsung will expand investments in manufacturing hubs, while in displays, investments will be increased to develop high-value, differentiated products. Through this cash injection, Samsung expects to create 40,000 new jobs over the next three years.

The main focus on this announcement is artificial intelligence and 5G. 5G factors in for obvious reasons, it will be a significant boost, directly and indirectly, for almost every aspect of the telecommunications, technology and media industry, though AI will power the next era. In AI, the plan is to significantly expand its research capability, increasing the number of advanced AI researchers to 1,000 across all operations. It will also invest aggressively to establish itself as a player in the advanced markets for 5G chipsets, as well as related devices and equipment.

Two future targets for the team are electronics components for future cars, developing system-on-chips for autonomous driving, and biopharmaceuticals. This is an area Samsung has seen strong growth from both its contract manufacturing and biosimilar businesses, with future investments focusing on developing and manufacturing biosimilars to combat chronic and difficult-to-cure diseases. It will also extend its existing support of basic sciences to identify new growth opportunities.

Another interesting area for development will be its C-Lab initiative, Samsung’s answer to Google’s moonshot labs. Over the last couple of months, Samsung has funded several internal projects, spinning off products to form standalone businesses. Since 2015, 34 projects have been spun off in areas such as smart gardening, directional speakers and predictive analytics platforms.

Through additional investments, 500 projects, 300 external and 200 internal, will be funded over the next five years. Alongside the Korean government, the team will also fund software education centres across the country. The search for the next big idea can be a frustrating job, requiring much patience and an acceptance of failure, but Samsung seems to have taken on Google’s sense of adventure in searching for success in the dark and uncomfortable corners of the unknown.

The Samsung smartphone business might be suffering, but it seems the Koreans are determined to stay on top of the technology world. In truth, the business is in a very attractive position which enables it to explore new areas. Samsung is still the number one smartphone brand, a product which will continue to bring in billions, while the semiconductor unit is gathering momentum each quarter. It’s in the comforting position of searching for diversification as a bonus, not for survival like so many others are.

Some might look at the business enviously, but it is an excellent lesson in how to do business properly. A cash cow cannot be milked forever, the good days are the time to search for a replacement.

Google continues infrastructure investment with trans-Atlantic cable

Google has continued its cloud infrastructure quest with its first private trans-Atlantic subsea cable connecting Virginia Beach in the US to the French Atlantic coast.

The cable, named Durant, is expected to become available in late 2020, adding network capacity across the Atlantic, supplementing one of the busiest routes on the internet. This will be the 13th cable Google has invested in, though it is the first Atlantic asset which will be privately owned in its entirety.

“Today, we’re announcing our newest private subsea cable project: Dunant,” said Jayne Stowell, Strategic Negotiator at Google. “This cable crosses the Atlantic Ocean from Virginia Beach in the U.S. to the French Atlantic coast, and will expand our network–already the world’s largest–to help us better serve our users and customers. The Dunant cable is expected to become available in late 2020.”

The cable itself has been named after Henri Dunant, the first Nobel Peace Prize winner and founder of the Red Cross, and unveils another little quirk of the Google business. The Durant cable follows Curie, a cable connecting Chile to Los Angeles, which was announced in January, with Google confirming the trend will continue. Like the Android updates which follow the alphabet (funny that) and are named after sweets, the cable investments will also be named alphabetically, but after famous scientists.

There are a few to pick from when it comes to E. ‘America’s greatest inventor’ Thomas Edison could be an option, as could astronomer Arthur Eddington or Greek scientist Eratosthenes, the first person to produce a reliable, logical method to discover prime numbers. With AI as 2018’s buzzword, 1963 Nobel Prize winning neurophysiologist John Eccles could also be a good outside bet, but the safe money would have to go on Albert Einstein.

Northern Virginia has been a region receiving some attention in recent months, as aside from the cables landing on its beaches, Google has also been focusing some data centre investments in the region as well. In the escalating cloud battle, Google has some catching up to do, though AWS is largely believed to dominate this region of the states. Whether Google has the financial clout to compete against the market leader remains to be seen, but the search giant has not been scared to sign cheques in recent months.

Durant in the Atlantic and Curie in the Pacific are two serious investments being made by Google. Competitors are also involved in consortiums to build and maintain other cables around the world, though few head down the route of privately funding their own. Here, Google will have more control over capacity and the route of the cable, perhaps giving it a bit of an edge over competitors such as Microsoft and AWS who will have to compromise with partners when crossing the Atlantic.

The major cloud players are not short of cash to invest, though whether Google veering towards private investment in subsea cables kicks off a new trend remains to be seen.

Google Atlantic Cable