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.

TIM and Vodafone Italia sign 5G network sharing pact

Competing Italian MNOs TIM and Vodafone Italia have decided it makes sense to pool their resources when it comes to 5G infrastructure.

Having blown their reserves on the recent 5G spectrum auction, the two have presumably spent the intervening time contemplating awkward concepts like return on investment. Rivals tend not to partner unless they’re so desperate for the return on such a move that it outweighs their instinctive aversion to cooperating with each other.

Hence they have signed one of those rather limp memoranda of understanding, that in this case is a public statement that they’re both up for active network sharing over 5G, but they can also bail out as and when they no longer fancy the idea. Active network sharing involves the actual kit, while passive just means sites, towers, etc.

They already have a passive sharing agreement in place for 4G and that has presumably gone smoothly. So TIM and Vodafone now reckon it may be time to take their relationship to the next level and get active with each other. The main focus of all this activity is 5G but they’re seriously considering extending that to 4G too.

“This partnership will allow our customers to enter the 5G revolution faster and deeper, while at the same time making the best use of both companies’ resources,” said TIM CEO Luigi Gubitosi. “We believe that network sharing is key to do more, effectively and better for the benefit of our clients and all stakeholders, in view of the process of change that will be triggered by the launch of 5G in the years to come and that will be paramount for the development and digitalization of our country.”

“This partnership will allow us to generate significant benefits for our customers and other stakeholders, who will be able to enjoy the best 5G experience, made available in a shorter period of time and across a wider geographical area,” said Aldo Bisio, CEO of Vodafone Italia. “5G represents a technological breakthrough that will have a profound impact on society, and that requires investment, efficiency and a rapid rollout. This has led us to broaden the scope of our existing successful partnership.”

They even have aggressive ambitions for the passive side of things and are contemplating combining the 22,000 towers they collectively own into one company. This wouldn’t be entirely straightforward as TIM’s tower division – Inwit – is partly independently listed so there will be extra scrutiny over the pros and cons of the move.

The announcement coincides with TIM’s full-year 2018 numbers and its announcement of a new cunning plan for the next three years. Revenue growth was flat and the plan is the usual corporate stuff about efficiencies, profit, etc. While partnerships like this have a distinctly defensive feel about them that doesn’t mean they’re a bad idea and if they’re shown to boost the bottom line then everyone’s a winner.

Germany’s 5G auction has not got off to a flying start

Telefónica Deutschland has filed an urgent appeal against the country’s 5G auction terms. Deutsche Telekom may follow suit.

Telefónica Deutschland was seeking to halt the country’s 5G auction by filing an appeal for injunction at an administrative court in Cologne on Tuesday 5 February. Germany was scheduled to hold the 5G auction by the end of March and was expecting to raise up to €5 billion. The key items on the terms issued by the Federal Network Agency being contested are concerning the coverage requirements, especially the coverage in rural areas and along motorways, and the mandated network sharing with competitors (the so-called domestic roaming).

Telefónica Deutschland argued that the coverage obligations could not be fulfilled with the spectrum at auction, while the frequency in its possession is already being used by other expansion requirements.

“This legal uncertainty is extremely unhelpful for the necessary massive investments in future network expansion. Billions in 5G cannot be invested on the basis of unclear rules. It must be in the interest of all involved that clarity and planning security are created here before an auction,” said Markus Haas, CEO of Telefónica Deutschland.

Telefónica was also unhappy that politicians should demand network sharing between competitors. “We have already invested €20 billion in infrastructure in Germany. We have always said that we will continue to invest if the conditions are right,” Haas told the German publication Handelsblatt late last year. However, as a condition to approve its merger with E-Plus in 2014, EU regulators already required Telefónica to make 30 percent of its capacity available to MVNOs, in this case 1&1 Drillisch.

Meanwhile Telefónica insisted that even if there would be a delay in the auction, “this would not have any influence on a large-scale launch of 5G in Germany. This is because the spectrum available for auction for this purpose will not be allocated to the successful participants until the end of 2020 anyway,” the company said in a statement.

Deutsche Telekom may also consider its position differently now. It first told Handelsblatt “we have not yet made an urgent request, to avoid delaying the auction schedule.” But in light of the new appeal from Telefónica, “we are therefore examining all legal options,” the spokesperson added.

It is not the first time the telcos have resorted to legal measures. By the end of December, Deutsche Telekom, Vodafone, Telefónica, as well as the challengers United Internet and Freenet had all filed lawsuits against the government’s rules over the upcoming auction, but none was successful in halting the process.

Deutsche Telekom, Vodafone, Telefónica, and United Internet (trading as “1&1 Drillisch”) filed applications before the deadline of 25 January to participate in the upcoming 5G auction.

Collaboration will be key for telcos in an era of shared 5G networks

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Virat Patel, Managing Director of Pioneer Consulting Asia explores network sharing in the 5G era.

A proposal was recently put forward in the US that its 5G networks should be built and maintained by the US government. In part, this recommendation was made with the view of mitigating espionage risk by Chinese network equipment providers. However, another reason for this recommendation was that the sheer cost of rolling out a nationwide 5G network may not be justifiable based on the potential returns any single operator will be able to generate.

For previous generations of network technology, including the most recent 4G networks, each provider has rolled out their own nationwide network. While there are instances of tower sharing and leasing as well as wholesale agreements, for the most part the operators own their network infrastructure.

The challenge is that for 5G to deliver on its promises of low latency (sub 10ms) and high bandwidth, the number of cells required per km represents a 10-fold increase on the current density. This results in much high capex requirements for telcos and is likely to reduce their willingness to deploy the infrastructure to less populated areas which unfairly penalizes residents in these parts with slower connectivity speeds.

If the government takes responsibility for rolling out the 5G network, this would reduce capex wastage by providing a single 5G network across the country instead of multiple operators deploying their own overlapping networks. Some fear that this will lead to an inefficient government market place that stifles competition, exactly the kind of utility telecom the US government broke up in 1984.

However, there are precedents that suggest government sponsorship of infrastructure can in fact lead to more competition. In efforts to provide high quality broadband with nationwide coverage, governments have already taken steps to launch government supported networks known as national broadband networks (NBNs). Singapore has one of the most successful implementations of an NBN in which the government drove the development of passive and active infrastructure through incentives and fostered a highly transparent and competitive retail market. This model has led to some of the lowest broadband prices in the world. Completing the public to private sector initiative, the entity that owned and wholesaled the passive infrastructure was IPO’d in 2017.

Can the 5G business case work without some form of network sharing?

While 5G standards are still being finalized, the business case for 5G is unlikely to stack up without the sharing of networks – both passive and active components. Even if government ultimately does not take on the task of building out 5G networks, there appears to be a strong business case for operators to go beyond tower sharing and consider sharing radio access and backhaul to minimize their individual capex. Should either of these scenarios materialize, Telcos will no longer compete on network availability or core connectivity services (since all will be identical) but rather on digital services and operational cost efficiencies.

In this scenario of shared 5G networks, how can telcos differentiate their services?

Telcos will need to leverage new technologies and tap into emerging consumer trends to offer services that deepen consumer engagement with their services in a cost-efficient manner.

Below we have outlined emerging technologies and trending services that telcos should consider offering to build differentiation in an era of shared infrastructure:

AI – AI will lead to both cost efficiencies by automating internal processes and delivering better customer experiences, both important areas for telcos to improve at. One area already gaining momentum is AI supported customer service channels. Through AI powered solutions’ that can better sort and respond to natural language queries, operators will be able to reduce issue resolution time thereby improving customer sentiment toward their brand while also saving costs

Digital ecosystem apps – Pioneered by Wechat and now appearing around the world, digital ecosystem apps offer customers a single app to manage their daily needs from voice and messaging communications to ordering transport, groceries and meals to making payments. With mobile carriers enabling subscribers’ mobile lives, a well-designed app with strong partners can leverage their subscriber base for easy access and drive deeper engagement

Video Content – The proliferation of OTT video apps is leading to a tyranny of choice for consumers and the inconvenience of needing and using too many apps to watch content. While telcos have so far struggled with their own standalone OTT video apps, they are well positioned to offer an aggregator platform that curates other apps onto one platform and facilitates single billing through direct carrier billing.

Indeed, these technologies/services are not mutually exclusive – Digital ecosystem apps may well include video services which in turn leverage AI.

We believe telcos should partner with digital service providers rather than use a “build it ourselves” approach, which they have tended to adopt in the past.

How will telcos achieve 5G success?

In summary, the key to telcos’ 5G success will lie in successful collaboration – with other telcos on infrastructure and with emerging digital players for innovative digital services.

 

Meet Virat Patel and other experts in the APAC telco space in the region’s only dedicated 5G event, 5G Asia 2018, taking place in Singapore this September.

Ericsson managed services contract with MBNL gets extended

MBNL, the network joint venture between UK MNOs EE and Three, has decided to keep Ericsson on as its managed services provider until 2020.

Managed services is a big part of Ericsson’s business, but has been its most problematic division of late thanks to a bunch of ill-advised historical contracts apparently entered into in a desperate drive for growth. Current CEO Börje Ekholm has prioritised profitability over growth and thus encouraged the abandonment of the worst of these, among which the MBNL deal clearly isn’t.

“This marks another significant milestone in our longstanding partnership with MBNL and our joint commitment to deliver superior network quality and performance to Three and EE consumers in the UK,” said Peter Laurin, Head of Managed Services at Ericsson. “We are delighted to continue our successful relationship and continue to evolve our managed services portfolio to deliver innovation and industry leading efficiencies through automation and analytics.”

“The agreement to extend the Design, Plan and Deploy services contract with Ericsson, for a further two years, reflects the strength of the collaborative relationship between Ericsson and MBNL,” said MBNL MD Pat Coxen. “This will continue the trend of collectively delivering great results and is a sign of true partnership. We look forward to continuing the great work with Ericsson in order to meet the demanding business objectives of MBNL and its shareholders.”

So far, so generic, but Ekholm and Laurin will be delighted by any positive news coming out of the managed services division. A major strategic decision has been to restrict its customers to those who already by Ericsson networking gear, which also seems to be a good way of restricting excessive deal-making zeal. You can hear more from Laurin about the strategy for his division in our Inside Ericsson piece.

Will the UK ever agree on the internet?

This week Telecoms.com has 16 year-old Shannon O’Connor joining the team for work experience, and today’s ‘thrilling’ task is to join Jamie at the Connected Britain event in London. Here are her thoughts. 

With the Connected Britain event bringing together executives from TalkTalk, CityFibre and Openreach, as well as government representatives, the question still remains as to whether they will be able to work collaboratively to progress?

As the speakers continue to roll out their plans for an accelerated investment in high capacity networking across the UK, there still seems to be a lot of busywork.

“If you could rollout out connectivity through reports and investigations, Britain would have faster broadband than Japan and Korea,” said Matthew Howett of Assembly, the chair at this year’s event.

But is there any action?

Minister for Digital and the Creative Industries, Margot James highlighted the inequality of connectivity not being reached within the rural areas of the UK. As major towns and cities continue to prosper and develop, those living in the outskirts face difficulties in sustaining accessible, basic broadband. Something which interested attendees intently as plans begin to emerge for infrastructure collaboration.

However, in the following panel it was clear that collaboration would not only create conflicting ideas between competitors but also allow those to question whether proper competition could ever come while working hand in hand.

Emerging from what the speakers said at the conference was quite simply uncertainty. There had been too much discussion and not enough action in developing fibre broadband within the public sector and beyond in the UK. There doesn’t seem to be any consistency or coherence; it seems asking adults to be mature and agree on a logical path is too much (and that’s coming from a teenager – Ed.).

As our Europe counterpart continues to prosper both economically and industrially, the UK continues to fall further behind because of an inability to agree.

A new consortium appears to lay another massive cable

A horde of big names has come together to build a high-capacity cable system that will connect Maruyama and Shima in Japan with Los Angeles in the USA and Daet in the Philippines.

So who is in the consortium; PCCW Global, Amazon, Facebook, NTT Communications, PLDT and SoftBank. Scheduled to be ready for service by early 2020, the Jupiter Cable will be approximately 14,000 km in length and has a design capacity of more than 60 Tbps.

“The demand for bandwidth in the Pacific region continues to grow at a remarkable rate, and is accompanied by the rise of capacity-dependent applications like live video, augmented and virtual reality, and 4k/8k video,” said Koji Ishii of SoftBank, co-chairperson of Jupiter consortium.

“Jupiter will provide the necessary diversity of connections and the highest capacity available to meet the needs of the evolving marketplace. TE SubCom has a proven record of success in the design and implementation of innovative, scalable and robust transoceanic cable systems, making the company the most reliable choice for the Jupiter supply partner.”

The cable itself has been configured as a trunk and branch system with submersible ROADM (reconfigurable optical add/drop multiplexer) using WSS (wavelength selective switch) for a gridless and flexible bandwidth configuration. The team claim the ROADM nodes in the design are the most advanced form of this technology to date, providing bandwidth reconfiguration flexibility in an undersea network.

Bandwidth demand over the trans-Pacific route has more than tripled in just four years, though this is only going to increase as new, bandwidth-intensive technologies including Virtual Reality (VR), social media applications, video streaming, and gaming content start to gain traction in the mass market.

“Consumers and enterprises continue to require significantly increasing amounts of bandwidth whether for their own applications, or for their interface with content providers, hosting companies and cloud services,” said Marc Halbfinger, CEO of PCCW Global. “The Jupiter network will play a crucial role in serving this increased demand across the key trans-Pacific artery.”

This is of course not the only cable which is being laid to deal with the rising demand of cat videos. Others include the Trident Subsea Cable, the Hawaiki cable and the FASTER cable. These are only three other examples, but the bottom of the ocean might start looking like the back of your PC before too long.

JUPITER Cable Map