Three UK readies assault on broadband market

While its latest financials might not look mind-blowing, Three UK is steading the ship as it casts its eye towards the promised land of convergence and 5G.

Convergence is not really much of a buzzword anymore, such is the accepted nature of the model across the telco industry, though Three is seemingly readying itself for a broader push into broadband segment. The first job is to rebrand Relish, which will happen next month, and the next box to tick will be 5G.

“We are well set up for some transformational shifts in 2019 for our customers and our employees,” said Three UK CEO Dave Dyson. “It will be a year when our customers will start to see the real benefits of the next generation of 5G “mobile” technology, a technology that will not only replace 4G, but will also replace the need for wired broadband services.”

With the new ‘Three Broadband’ branding and a 5G network launching in H2, the Three marketers will have plenty to talk about when attempting to add to the 800,000 broadband customers it already has. In terms of the current state of play, Three said 10% of its current customer base is already ‘converged’ but 5G offers an opportunity to accelerate growth in the broadband business.

The team feels it has an advantage over rivals with its 5G holdings, offering superfast broadband connectivity which is not reliant on fibre. Whether UK consumers are swayed by the Fixed Wireless Access promise remains to be seen.

Looking at the position of the business, it would be fair to describe the last twelve months as healthy without being particularly good. This might not sound the most positive, but the raw materials are certainly in place for Three to make some very strong strides forward.

Total revenues over the last 12 months rose 1% to £2.4 billion, while total network connections reached 11.3 million. 99% of new customers were brought in through Three’s own sales channels, churn is down to 1.1% and net promoter score has reached a new high of +15. Three might not have torn up many trees last year, but the foundations of the business are very healthy.

Looking forward, the team is in the testing stages for its fully-virtualized 5G-ready cloud core network, while there are now 21 data centres live on the network. The business has also signed an agreement with SSE to improve mobile backhaul and 3G spectrum is being continuously re-farmed for 4G. All these initiatives will incrementally improve the customer experience.

“Three is fully embracing a business transformation to take maximum advantage of the opportunities digital businesses enjoy,” said Dyson. “2018 was the year when we set the foundations in place for us to jump up to the next level and become the UK’s best-loved brand by our people and customers, meeting all our customers’ connectivity needs.”

This kind of feels like a ‘calm before the storm’ scenario. Once the broadband rebrand is finished and 5G launched, we feel there will be some very aggressive moves from Three, staying true to its data-orientated roots but heavily integrated convergence messages on-top.

Germany outlines its 5G security requirements

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

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

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

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

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

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

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

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

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

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

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

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

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

A considered approach to security

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

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

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

Ciena bags 20.5% growth perhaps thanks to Huawei dilemma

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

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

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

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

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

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

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

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

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

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

Competition is a problem, removing Huawei could be disastrous – Vodafone CEO

With all eyes in directed towards Mobile World Congress this week, Vodafone CEO Nick Read took the opportunity to vent his frustrations.

Competition is unhealthy, accusations are factually suspect, protectionism is too aggressive, the trust with customers has been broken, collaboration is almost non-existent. From Read’s perspective, there are plenty of reasons the 5G era will be just of much of a struggle for the telcos as the 4G one.

And of course, it wouldn’t be a telco press conference if there wasn’t a reference to Huawei.

“I would like a new contract for the industry, I want to go out and build trust with consumers and businesses,” said Read. “This will require us to engage government and build the vision of a digital society together.”

Read has reiterated his point from the last quarterly earnings call, there needs to be more of a fact-based conversation around the Huawei saga. There is too much rhetoric, too much emotion, and perhaps, too much political influence.

Huawei is the punching bag right now, but any ban or heavy-handed response to US calls for aggressive action would be a consequence for everyone.

As Read points out, Huawei is a significant player in almost everyone’s supply chain, controlling roughly 28% of mobile infrastructure, while Nokia and Ericsson also have market share in the 20s. Removing one of these players from the market will further compound a problem which plagues the industry today; the supply chain is too concentrated around a small number of vendors.

There simply isn’t enough diversity to consider removing a key cog to European operations.

Of course, you have to consider the status quo. The US is happy to ban Huawei as it has never been a significant contributor to its infrastructure. Should the same ban be enforced in Europe, negotiations would be de-railed, and operations disrupted. Read suggests this would set 5G plans back by two years across the bloc.

The issue here is of confidence to invest. Why would telcos enter into deep negotiations when future conditions have not been set in stone. This is already evident in Vodafone’s decision to pause work on the core with Huawei; delaying these important initiatives could push Europe further behind global 5G leaders. Telcos need confidence, certainty and answers. The longer reviews go on, the more precarious the situation becomes.

This is one of the many challenges the industry is facing. There is an ‘us versus them’ mentality when it comes to telcos. Read is referencing the relationship with regulators and government, suggesting a lack of collaboration which is negatively impacting the ability to operate, but it is also evident in the relationship with the consumer and competitors. Collaboration is a key word here.

One example of collaboration is in the UK where the National Cybersecurity Centre effectively monitors Huawei equipment. This model could be rolled out across Europe, though Read’s stressed the point that there would have to be a harmonised approach. Fragmentation is the enemy here, and it would stifle progress. If there is a European level of monitoring, or even if it is taken down to nation states, it doesn’t actually matter as long as it is consistent.

The Huawei ban is set to become one of the talking points of this years’ MWC, that is not necessarily an idea anyone will be surprised about, but what we are not sure about is the disruption. Will it slow 5G development? Has the uncertainty already slowed 5G development? Will the anti-China rhetoric, dilly-dallying and confusion kill Europe’s ambitions in the global digital economy?

O2 up and running but how much damage has been done to them and Ericsson?

With O2’s UK network back up and running, the 32 million Brits who depend on it have been returned to the digital era, but you have to wonder how big the fallout from this disaster will be.

With 3G data services restored late Thursday evening, and 4G getting the green-light early Friday morning, a stressful period comes to a close. Now the more difficult questions need to be asked to understand why this happened, why O2 is rumoured to have had to cancel its Christmas party last night and what the consequences of the chaos will actually be.

“We can now report that our 4G network has been restored,” said an O2 announcement. “Our technical teams will continue to monitor service performance closely over the next few days to ensure we remain stable. A review will be carried out with Ericsson to understand fully what happened. We’d like to thank our customers for their patience during the loss of service on Thursday 6 December and we’re sorry for any impact the issue may have caused.”

In fairness to O2, the simple thing to do here would have been to shift all of the bad press and finger pointing towards the root cause of the problem, Ericsson, but it has managed the saga as well as could be expected.

And while it might have taken a couple of hours for the Swedes to come clean, they finally did, as you can see below:

“The faulty software that has caused these issues is being decommissioned and we apologize not only to our customers but also to their customers,” said Börje Ekholm, Ericsson CEO. “We work hard to ensure that our customers can limit the impact and restore their services as soon as possible.”

While Ericsson is continuing to do root cause analysis on the fault, the issue has been narrowed down to two specific software versions of the SGSN–MME (Serving GPRS Support Node – Mobility Management Entity). These nodes in the core of O2’s network caused the calamity, though it was not alone.

Softbank experienced the same issues over in Japan, while there are rumours several telcos in Asia also had network outages. Ericsson has confirmed it impacted other customers, but it is not its place to name said customers; O2 and Softbank made their own announcements, so it is up to the operators themselves. Mobifone in Vietnam could well be one of these customers, with its own network shutting down at 11.30am local time.

Before we move on, it’s worth drawing attention to the graph below from web performance and security company Cloudflare, just for context.

Cloudflare graph

As you can see the drop was incredibly pronounced, though the minor traffic which can be seen has been attributed to O2 customers who were roaming outside the UK. These customers do not seem to have been impacted by the data-doomsday.

One of the big questions which is now floating around concerns the fallout. With people and society on the whole relying so heavily on data networks, any fear of sub-par or non-existent performance will have a negative impact. Outages are something people should realistically expect to happen every now and then, but the severity and length of this one is certainly noteworthy.

“The disruption shows how much importance we place on a mobile device,” said telco and media analyst Paolo Pescatore. “Without connectivity, people are stranded, and businesses cannot compete. Furthermore, it underlines the need for continuous investment in the UK digital infrastructure, both fixed line and mobile networks to ensure growth and productivity.”

Just scrolling through Twitter, you can see how many people were impacted by the outage. This impact cannot just be restricted to personal activities, as there have also been several reports of sole-traders and critical services being unable to do their jobs. Whether we’re talking district nurses being unable to do house-calls because they are unable to rely on mapping apps or a plumber who can’t access his emails, the consequence is incredibly real and financial.

Earlier this year we had the chance to speak to various O2 executives, including CEO Mark Evans, over dinner, and the enterprise market was a segment targeted for growth at the firm. This is a lucrative market currently dominated by EE and Vodafone, though with this outage you have to wonder what the cost will be for O2. Joe Bloggs having to speak to someone on the bus is a minor inconvenience but shutting down a business which relies on mobile to work effectively is a completely different matter.

On one side of the coin, you have to feel a bit sorry for O2. This is a business which has been effectively shut down due to a fault from one of its network partners. Customers will not actually care what the problem is, they only deal with O2 therefore O2 should shoulder the blame. The negative impact on brand credibility and the company’s ability to offer basic services will certainly be questioned by some. Conversely, Ericsson’s share price has actually gone up a few percent since this news broke, perhaps reflecting the apparently swift resolution of the crisis.

However, you also have to wonder whether O2 is itself culpable. Should this be considered a due diligence or supply chain issue? As you can see from the tweet below, Heavy Reading’s Gabriel Brown doesn’t feel O2 is innocent through the saga:

And sticking with Twitter to finish, as you can imagine there were certainly a few people who had fun with the toil and torment of others. We’ve copied a couple of our favourite tweets from the last 24 hours below. Enjoy.

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

Vodafone announces 2019 commercial launch and 1k 5G sites by 2020

Vodafone has confirmed it will be ready to hit the 5G on-switch as soon as devices are available on the market, though only in Manchester in the first instance.

Speaking at the gloriously named Future Ready press conference in the telcos Newbury HQ, CTO Scott Petty confirmed the team will be ready for a commercial launch in 2019, though whether the devices will be available is another matter. Having launched in seven urban and rural locations over 2019, Vodafone will have 1,000 5G sites live by 2020 as the beast scales.

“Next year we’ll be launching in rural areas where there is great data growth based on innovation in those areas,” said Petty. “For instance, Cornwall and the Lake District will have 5G in 2019 and not just London, Manchester, Liverpool, Birmingham.”

It’s unsurprising the tech hubs will be getting the 5G euphoria first, though the rural focus is an interesting one. Few rural communities have fast-tracked to the front of the queue with any technology breakthrough, though Petty highlighted such experiments are important in building the 5G business case. It’s not just about autonomous vehicles, smart grids or real-time business analytics, what about agricultural IoT (the connected cow made an appearance at the event) and fixed wireless access? These are use cases which can be validated in Cornwall and the Lake District, two regions which have been identified as rural hot spots for data activity.

Vodafone Cow

IoT is clearly a massive driver for the business, the breadth and scale of the IoT business was pointed to unsubtly several times throughout the day, with the team claiming it has the biggest and fastest growing IoT business worldwide. 70 million ‘things’ are already connected to the network, a number which is set to increase as Vodafone continues to engage its sizeable enterprise business customer base.

With EE declaring its 5G network would be up and running during 2019, it was only going to be a matter of time before Vodafone got in on the act. But before we get too excited, we’ll have to wait for the devices to hit the market.

“You will see some announcements around MWC from Android manufacturers with their own silicon,” said Petty, hinting perhaps at Samsung and Huawei.

LG and Motorola are seemingly going to be the first manufacturers to launch in mid-2019, though Petty is looking more towards end-2019 and 2020 for scalable launches to the mass market. As it stands, there is still a lot of work to do. Having travelled to the US to visit currently unnamed manufacturers, Petty highlighted the devices are still too big, 2-3 times the size of current devices, with the battery and antennas proving to be the difficulties.

This is nothing to be too shocked about, new spectrum means new problems with the antennas and getting them small enough was always going to be a challenge. The devices are also far too demanding on the battery, again unsurprising. Petty highlighted when it came to MIMO panels, it took the industry 12 months to get a functional product down from 60kg to a more suitable 20kg. The technology works, it’s just shrinking it to a practical size now.

Of course what is worth noting is this isn’t just smartphones but also network equipment availability. 5G specifications were only finalised last year so there is a race to the finish line for the network vendors, all excluding ZTE which does not feature in the Vodafone footprint whatsoever.

Scott Petty

With the 5G dawn just about to break, Vodafone looks to be in a promising position. Redstream, its fully integrated voice, data, optical and IOT network, is up and running with 4000 access nodes and 1500 pops already deployed, while more customers and services are being migrated across. This is a key pillar of the 5G strategy, as Petty highlighted it allows the team to switch off the troublesome legacy equipment and networks, while also retiring legacy products. 80 have already been sent to pasture.

“Redstream is the foundation building block for everything we need for 5G,” said Petty.

Elsewhere, a new digital exchange layer, which allows people to separate the digital services from the underlying billing systems, has been developed allowing the team to build highly flexible, agile technologies and services, adding new channels and services rapidly. Alongside the progression adoption of Devops throughout the business, the team can move from quarterly to monthly and weekly software updates, with the option of daily updates being the holy grail.

With the 5G promise so close to becoming a reality, some of the European telcos are doing their best to wrong stereotypes. With Vodafone UK patiently hovering around the on-switch, waiting for the emergence of compatible devices, some might be fooled into believing the UK is a 5G leader.

Darker days forcing Vodafone CEO towards tower unit sale

The doom and gloom outlook at Vodafone seems to be strangling the glint out of the eyes of designate CEO Nick Read, as the incoming boss ponders selling off the tower business.

According to the Financial Times, Read made comments at Goldman Sachs 27th Communacopia Conference in New York, seemingly reacting to a slump in Vodafone share price since the beginning of the year. With €31 billion debt and share price down roughly 35% through the last twelve months, something needs to change.

Competition in the Spanish and Italian markets and an exiting CEO are hardly going to inspire confidence in the business, though a gloomy trading update for the remainder of the year make things slightly more awkward. Pressure will soon start to mount up from investors, though the entry of activist investor group Elliott Management will almost certainly ramp up the background noise.

With 110,000 towers across Europe, 55,000 of which are directly controlled, there is an opportunity to relieve some of the pressure, with a sale expected to generate in the region of €12 billion. The Idea merger won’t have been cheap, India has been a recurring headache, though the takeover of Liberty Global’s German and eastern European operations will also weigh heavy on the spreadsheets. The scene is perfectly suited for vulture fund Elliott to cause chaos.

As an investor, Elliott scours the globe for businesses which is deems underperforming on the financial markets. The team rile up other investors, often attempting to force the hand of the current management team into asset disposals and other short-term strategies, to inflate share price. It’s a pump and dump strategy which has proved incredibly effective for one of the world’s most influential investment management firms.

What is worth noting is this is not an announcement. Read has reacted to questions and is simply blue-sky-thinking the strategy, though this might be a toe dipping exercise to soften the eventual reception. He has declared this would not be a traditional transaction, should it become more concrete, as any potential buyer would have to be “more open to different formulas”.

We wonder whether this is the most sensible actions from the CEO. There is no such thing as a bad idea, though this could be a notion for Elliott to sink its teeth into. Vodafone will not want to sell its tower unit, unless absolutely forced to, though this has simply offered Elliott some ammunition and credibility to throw back in the future. This is a firm which doesn’t need to be encouraged to charge towards short-term ambitions, though Read seems to be helping it out.

Aussie watchdog reviews termination regulations

The Australian Competition and Consumer Commission (ACCC) has kicked off a public inquiry to decide whether to extend, vary or revoke the domestic mobile terminating access service (MTAS) declaration.

MTAS is the wholesale service offered between the mobile operators to allow customers to call and send texts to those who might use a different providers. The terminating network (the one receiving the call or text) charges the originating one, which in turn recovers the cost from the consumer through monthly tariffs. The issue which the ACCC wants to address is the way in which consumers are communicating with each other.

“Increasingly, consumers are choosing over-the-top services to make calls and send messages,” said ACCC Commissioner Cristina Cifuentes. “These fall outside the MTAS service description and we are interested in knowing whether the ability of consumers to choose these ways of communicating means that declaration of the MTAS is no longer necessary.

“Regulation of wholesale mobile termination has, in the past, helped to lower retail prices for mobile services for the benefit of consumers. This inquiry will consider whether continued regulation is needed to deliver this result. Given the pace of technological change in mobile networks, the ACCC will seek to determine whether the service description remains fit-for-purpose and accurate. We also intend to test what effect the declaration of SMS services in 2014 has had on relevant markets, in particular its impact on consumers.”

The Competition and Consumer Act 2010 requires the ACCC to review the current MTAS declaration during the 18 month period before it expires, which will be on June 30 2019. Such is the size of the Australian landscape, the ACCC believes operators effectively have a monopoly when it comes to accessing its customers, therefore regulation is required. Back in 2014, the introduction of the original declaration was justified to ensure operators did not deny or set unreasonable terms of access to these termination services.

The review will decide whether MTAS should remain a ‘declared’ or regulated service in light of changes in the way consumers use devices. As it stands, there is a difference of opinion in the industry. During the commissions Sector Market Study, Telstra and TPG said they were in favour of a less regulated service, while Macquarie Telecom, Vodafone and MessageMedia were all in support of ongoing regulation.

AT&T network revealed as the most useful asset of spymaster NSA

AT&T has been unveiled as one of the NSA’s biggest assets as the intelligence agency proves to be a difficult rash to get rid of.

In years gone by, the NSA has not been the shining light of the intelligence community. What started off as a little bit of spying on leaders of movements protesting the Vietnam War and economic espionage, evolved into warrantless wiretapping, illegally obtaining evidence against US citizens and various different examples of unethical data mining. Now it has been revealed AT&T is the telco harbouring the NSA’s continued and questionable Big Brother ambitions.

According to The Intercept, eight AT&T buildings across the US are used for the NSAs surveillance initiative, known as ‘Fairview’. The programme dates back to 1985, and gives the agency direct access to raw data that passes through the US, including emails, web browsing, social media and any other form of unencrypted online activity. The eight hubs in Atlanta, Chicago, Dallas, Los Angeles, New York City, San Francisco, Seattle, and Washington, provide the backbone of the project, for which AT&T is the only telco involved.

While AT&T has a significant network which would prove to be an asset to any intelligence agency, it is the relationships with other organizations which seems to be one of the most important factors here. ‘Peering’ is a common practice in the communications world, allowing telcos to offload traffic onto another telco’s network should congestion get to a certain point. AT&T not only has these relationships with US telcos, but many international ones such as Telia, Tata Communications, Telecom Italia, and Deutsche Telekom, offering a glutton of data to anyone monitoring the network.

Only eight of AT&T facilities across the US offer access to the networks’ ‘common backbone’, though through these data centres the NSA can access a significant amount of information, both domestic and international. Although the data exchange during the ‘peering process’ takes place outside of the AT&T network initially, the data is then routed through the telco’s network. Mark Klein, a former AT&T technician claims it is an incredibly efficient means of monitoring as everyone will cross the AT&T network at some point through the practice of peering. Data is collected through AT&T access links, before being transferred to a processing facility, codenamed ‘Pinecone’, and then onto two NSA systems, before making its way to the spymaster’s HQ in Fort Meade in Maryland.

The NSA calls this idea ‘home field advantage’. It describes the location and strategic importance of the US as home of many of the world’s largest internet companies. With the vast amount of the world’s intercontinental internet traffic travelling through subsea fibre optic cables, a large portion of this information pass across the cables is routed at one point through the US. Data travels across the internet in the cheapest fashion, not the most direct, therefore the bounties offered to the NSA are significant. 197 petabytes of data pass across what AT&T describes as the ‘world’s most powerful network’ every day.

Once at NSA HQ, the data is integrated into two databases called Mainway and Marina, which store and analyse the metadata. The information is then made available to NSA employees through tool named XKeyScore. Here the NSA can access everything from the content of emails to web-browser history and webcam photos.

Although we should hardly be surprised by the notion the NSA is playing an active role in snooping through the lives of citizens, the fact AT&T is being described as a demonstrating an ‘extreme willingness to help’ and ‘aggressively involved’ is a bit more difficult to swallow. The consumer relationship with providers is built on trust, and this does seem to be somewhat of a direct violation of it.

Companies such as Google, Microsoft and Facebook, do co-operate with authorities when legally obliged to, though these requests are seemingly put through the stress test before being accepting; passing across personal information seems to be only in the circumstances where saying no is not an option. Few have been described in such buddying terms as the NSA does in congratulating the telco.

What is worth noting is AT&T can be legally compelled to co-operate with intelligence agencies in the US, though there seems to be little resistance.