América Móvil strengthens its position in Brazil with Nextel acquisition

The Latin American mobile heavyweight América Móvil has agreed to acquire its competitor Nextel in the Brazilian market for $905 million.

Shortly after the deal was announced by América Móvil on Monday, and the board of NII Holdings, which owns 70% of Nextel, announced that it would propose to the shareholders to accept the offer. The other 30% of Nextel is owned by AI Brazil Holdings, the local operation of Access Industries, an American private company whose portfolio includes natural resources, telecoms, internet services, as well as Warner Music, among other media interests.

The nature of the deal, “cash free / debt free”, will let NII and AI Brazil keep all the cash while América Móvil will not assume Nextel’s debts. Although the total transaction value is less than 1.5 times of Nextel’s annual revenues in 2018 ($621 million), it represents almost four times NII’s market capitalisation on its latest trading day on NASDAQ ($229 million), indicating the buyer’s relatively strong confidence in the business prospect.

Brazil is a highly competitive market. According to research by Ovum, by Q4 2018, Vivo (owned by Telefónica) led with one third of the total mobile market, while TIM and Claro (América Móvil’s existing operation in Brazil) were vying for the second place, each serving about a quarter of the total mobile subscribers. Nextel had slightly over 1% market share. The rest of the market is served by Oi (a JV between Altice Portugal, formerly Portugal Telecom, and Telemar, Brazil’s largest integrated telecom operator).

After the acquisition, América Móvil plans to combine Nextel with Claro to “consolidate its position as one of the leading telecommunication service providers in Brazil, strengthening itsmobile network capacity, spectrum portfolio, subscriber base, coverage and quality, particularly in the cities of São Paulo and Rio de Janeiro, the main markets in Brazil.”

For NII, selling Nextel in Brazil represents the end of an era. The company once operated mobile services in multiple North and Latin American markets, including the eponymous professional radio service in the US, which was later acquired by Sprint. Brazil is its last operation, where it has been struggling in a classic four-operator market. Not only has it not been able to break into the leader group, but also seen business declining fast. The revenues in 2018 were a 29% decline from 2017 ($871 million), which itself was a 12% decline from 2016 ($985 million).

“The announcement of this transaction marks the culmination of an extensive multi-year process to pursue a strategic path for Nextel Brazil and provides our best opportunity to monetize our remaining operating assets in light of the competitive landscape in Brazil and long-term need to raise significant capital to fund business operations, debt service and capital expenditures necessary to remain competitive in the future,” said Dan Freiman, NII’s CFO. Earlier potential buyers included Telefónica Brasil, Access Industries (NII’s JV partner), though the most concrete case was TIM, which, according to Reuters, approved a non-binding offer in November last year. None of these negotiations has come to fruition.

“Management and our Board of Directors believe the transaction is in the best interest of NII’s stockholders,” Freiman added.

Is ‘superfast’ enough to pry an extra tenner from our wallets for 5G?

The US market is one which has suffered in the ‘race to the bottom’ but a $10 add-on for 5G connectivity from Verizon is certainly an interesting way to get ARPU heading the other direction.

With 5G networks officially ‘running’ in various markets around the world, one of the big questions which remained is how much the telcos would actually charge for the superfast bonanza. Verizon has been one of the first to twitch off the starting line with a new offer which will use 5G as somewhat of an ‘added value’ proposition to existing and new subscribers, and only for $10 a month.

“Continuing our track record of 5G ‘firsts,’ we are thrilled to bring the first 5G-upgradeable smartphone exclusively to Verizon customers,” said Verizon’s CTO, Kyle Malady.

“Not all 5G networks are the same. Verizon’s 5G Ultra-Wideband network is built by the company with the nation’s best and most reliable 4G LTE network. It will change the way we live, work, learn and play, starting in Chicago and Minneapolis and rapidly expanding to more than 30 US markets this year.”

Starting in Chicago and Minneapolis the 5G euphoria will quickly spread throughout the US. What is worth noting is coverage will of course be limited in the first instance, but that will unlikely be a roadblock for the early adopters who want to have 5G for the sake of having 5G.

For those who are concerned the network will be available without the compatible devices, Verizon has also partnered with Motorola to launch what the telco is promising will be the world’s first 5G smartphone. The device itself will not be 5G compatible, but users will have the option to purchase a 5G moto mod, which can be attached to the devices to plug into the superfast networks.

What we’re more interested in here is the sales strategy.

This has been one of the big questions which the industry has faced over the last couple of months; how will 5G connectivity be sold to the consumer? As it stands, there are few demands on the consumers digital lifestyle which are not answered by 4G. This will not be the case in a few years when new products and services emerge, but right now, 5G is an answer without a question; it’s a tricky conundrum for the telcos.

This is an interesting approach from Verizon however. We suspect anyone selling a 5G contract to subscribers will face failure, aside from the early adopters, though positioning the superfast connectivity as an add-on to subscriptions could be an interesting way to gain traction. And then there is the price.

$10 extra each month is affordable, and it is a very good play on nuance. If Verizon attempted to sell subscribers 5G connectivity for $60 a month, most would probably ignore it. However, by selling a 4G contract for $50 a month and offering an upgrade for $10, more would possibly consider it. It’s fundamentally the same outcome, but clever manipulation of the customer could achieve the desired results.

Buying something for $60 a month is scary, because that is a lot of money, but adding on an extra $10 onto a necessity becomes much more palatable. It’s the very same reason Netflix or Amazon Prime are priced so low compared to some other premium content platforms; spending $10 a month doesn’t sound like it will break your bank account, but scale of subscribers makes a difference for the provider.

While we still believe consumers are too cash conscious for consumer 5G tariffs to be a roaring success in the immediate future, this is certainly an interesting approach to generating ROI. Other telcos should take note, this is the sort of initiative which will give the best opportunity for success.

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.

UK set to impose 50 percent cap on Huawei kit – report

As the UK government’s review into what to do about the perceived security risk posed by Huawei reaches its conclusion, some kind of ban seems likely.

The Telegraph reports, citing those handy ‘telecoms industry sources’, ‘officials are preparing to recommend a 50pc cap on the proportion of equipment that can come from the Chinese giant when the review is completed in spring.’ They presumably mean ‘the Spring’, which could mean any time from now until the end of May.

How this cap, if it is imposed, would be implemented and enforced remains unclear. The report suggests it would apply equally to the core and the RAN, which seems like an escalation on previous assumptions that the UK was only worried about the core. Such a scheme would prove burdensome to UK MNOs and the prospect of a retrospective cap, which would be much more so, doesn’t seem to be off the table, although the Telegraph headline refers only to 5G.

Last month it was reported that some UK intelligence experts reckoned any risk from Huawei could be managed. However that was soon contradicted by the view of a defence and security think tank, which warned against naivety on this matter. Then at MWC 2019 Vodafone CEO Nick Read warned that banning Huawei could make the kit vendor market disastrously uncompetitive.

The Telegraph piece indicates that this arbitrary 50 percent cap is apparently being considered to ensure no MNO goes all-in on Huawei for their kit, but they would be mad to do so anyway. As we saw with ZTE the US can critically damage a Chinese kit vendor anytime it wants and it would be incredibly negligent of any MNO to allow themselves to be over-exposed to such a risk.

There is already good diversity of supply in the UK between the three big kit vendors, with some other suppliers thrown in too. No MNO currently has the majority of its kit supplied by Huawei and they presumably have no plans to, so this looks like the usual government attempt to look like its doing something without adding anything of consequence. Still, better that than it suddenly getting funny ideas about significant market intervention.

Three UK shows off its new Nokia cloud core

Mobile operator Three UK has upgraded its network with a fully cloud-based 5G-ready core and has started internal trials of the service. It plans to launch 5G later this year.

Three announced that it is testing the world’s first fully cloud-based core network, delivered by Nokia. The software-based core network is 5G ready and is already carrying the ongoing trial for Three’s own staff. The trial is on the 3.4-3.8GHz spectrum Three bought with over £164 million in the auction concluded in April 2018.

The readiness is also achieved on the edge. Three announced that by December 2018, all its mast sites were already connected to the new cloud-based core networks, meaning when 5G is switched on all Three customers would be able to access 5G services, provided they have the 5G-enabled user devices (fixed wireless access modems, or smartphones and tablets).

Another infrastructure update Three announced is the expansion of its datacentre network. The operator used to have three datacentres in London and the Midlands. After the latest upgrade, it now has “21 data centres spread from as far North as Edinburgh to Portsmouth in the South” which are all live and “have been connected up with fibre”, said the statement. In practical terms, the more distributed datacentre network would reduce latency experienced by the users faraway from southern England, giving customers more or less equal user experience.

Indeed, “enhancing its market-leading customer experience and becoming the best loved brand in the UK by its people and customers” is the explicit target of Three’s latest network upgrading. The company reiterated its target to launch commercial 5G service later this year, after committing to invest over £2bn into 5G. “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,” Dave Dyson, Three UK’s CEO, said late last year.

According to the latest telecoms complaints numbers released by Ofcom in January, Three received 4 complaints per 100,000 customers, narrowly behind its mobile competitors EE and O2 (3 complaints each) but way ahead of Vodafone (8).

Samsung looks to capitalise on Huawei’s woes

Samsung is reported to be investing heavily in infrastructure business to fill the market gap left by Huawei’s ban from 5G business in the developed markets.

Sources inside Samsung and other industry executives have told the Reuters that Samsung is pouring resources into its telecom infrastructure business unit, aiming to seize the opportunity created by the ban on Huawei in a number of important western markets. Samsung’s infrastructure business had been insignificant until recently, trailing Huawei, Nokia, Ericsson, Cisco, and ZTE, according to figures from the research firm Dell’Oro Group. But it saw a chance when first ZTE then Huawei found themselves being shut out of the lucrative 5G markets in one country after another in the developed world.

To join the ranks of Ericsson and Nokia, Samsung is said to be moving strong management resources as well as software engineers from the smartphone unit to the infrastructure business and to have started charming Huawei’s current customers. One of the global heavyweights that has been impressed by what Samsung has got to offer is Orange. After visiting Japan, where Samsung was conducting a 5G trial, Mari-Noëlle Jégo-Laveissière, Orange’s CTO, was happy to include Samsung in its shortlist of alternative suppliers, after the telco decided to ban Huawei, its long-term top supplier, from its 5G business in France. An Orange 5G trial with Samsung will be conducted this year.

One difficulty Samsung needs to overcome is the shortage of talents. To start with it needs good engineers. To this end, Samsung’s heir apparent and de facto head Lee Jae-yong, or Jay Y. Lee as he is known in the western world, has sought the support from the Prime Minister when the latter visited Samsung in January. “We need more software engineers and want to work with the government to find that talent,” Lee was quoted by government officials. Samsung’s infrastructure unit has a workforce of about 5,000 people, both Nokia and Ericsson employ more than 100,000 people, and Huawei is said to have employed 200,000 people.

Another type of people Samsung needs to get onboard is those that can build operator relations. This needs a different skill sets from what Samsung has excelled in dealing with distribution channels for its smartphones, and it needs them to be in all the right places in the mature markets, and, better still, to have already worked with the potential operator customers. Due to the nature of business, trusty relationship with telcos often need to be cultivated for years or even decades.

However, Samsung may have just chosen a perfect timing for expansion. Both Ericsson and Nokia are laying off people, either wholesale shutting down of full business units, or selectively downsizing certain teams. Many of these functions have actually had customer interface experience. Huawei’s founder meanwhile has warned that the company may also need to adopt some cost control measures. Though they could not bolster Samsung’s strengths to the same level of its competitors, these could all be good recruitment targets for Samsung to pounce.

Europe has not been great at net neutrality – report

Nearly three years after the EU net neutrality regulations came into effect, neither service providers nor national regulators have been role models in following the rules, a new report concluded.

The Vienna-based non-profit organisation Epicenter.works recently published a report to present its multi-year research into how the EU’s net neutrality regulation has been implemented. The report, titled “The Net Neutrality Situation in the EU: Evaluation of the First Two Years of Enforcement”, examined how the regulation was interpreted differently by the regulators and how the service providers have taken it into their own hands to decide what to implement, or not implement in the 28 EU member states as well as the three EEA nations ((Norway, Iceland and Liechtenstein). The results were not the most encouraging reading.

The EU regulation on net neutrality came into effect on 30 April 2016. The Body of European Regulators for Electronic Communication (BEREC) was mandated to lay down guidelines on the implementation for the national regulators. However, unlike other laws like GDPR, the net neutrality rules give member states the authority to decide the level of penalties if the rules are broken.  “This has lead (sic.) to a situation where some member states have not laid down rules for violations of net neutrality protections two years after the regulation entered into force,” the report says.

More specifically, 17 out of the 31 countries examined have not defined “effective and dissuasive penalties”, while in those countries that have defined monetary penalties, the amounts varied from a symbolic €9,600 in Estonia, to up to 10% of relevant turnover in the Netherlands or the UK. The report finds that, as a result of the less than strict implementation, “the largest telecom companies in Europe can choose not to comply with the law because it is financially advantageous for them.”

The area that the most offences were committed was differential pricing practices, in particular zero-rating data for selected applications and services. Although only Bulgaria and Germany have excluded “illegal commercial practices” (price discrimination when providing access to specific applications and services, in this case, zero-rating certain apps or services) from their penalty provisions, a total of 186 differential pricing products are being offered in all but three member states (Finland, Slovenia, Bulgaria), the majority (144 offerings) of them zero-rating (the rest are application-specific data volume). 17 countries’ regulators have started formal assessment processes into the differential pricing products offered by the service providers in their countries since the regulation came into effect, while the other 14 have not.

The report went on to analyse the impact of zero-rating offers on the consumer data price, and discovered that over a two-year period, the average data price (€/Gb) in countries with zero-rating offers largely held or slightly rose while the comparable price in those countries without zero-rating products went down by about 10%.

net neutrality data price

The reason for the steady price can be attributed to competition dynamics created by zero-rating, according to the report. Since the large service providers (e.g. Deutcshe Telokom) often have the biggest sway in partnering with content and application providers, the authors reckon, they create a “unique selling proposition” to attract consumers and no longer need to compete on the data package size or prize, which MVNOs and smaller operators can match their offers. This in effect has led to a slow-down in the growth of data package sizes or drop in prices in these markets.

It is not only the consumers that have been denied benefits by zero-rating, the authors find, there is also cost on the content and apps providers. In most zero-rating deals, the content and app providers will pay the fee for the traffic to the service providers (according to a report published by the Polish regulator UKE), which will then offer it to consumers at zero-rating. In this case, zero-rated data is actually sponsored data.

On top of the fees, in order for the billing to be correctly done, operators would require the content and app providers to make special data transport setup for the partnerships, e.g. change CDN contracts. This will also add operational cost to the content providers. In a high-profile case, when Vimeo did not participate in Deutsche Telekom’s “StreamOn” programme, it stated in an open letter to the German regulator that, although they are a 200 employee strong company, they cannot sustain co-operations with all the service providers whose customers they want to reach with their service through special programmes like this.

Two knock-on effects also come out of such partnerships. Due to the demand on fees and increased operational cost, most app and content providers can only afford to enter into limited deals. By the authors’ count, the large majority of app and content providers entered no more than three pricing programmes.

net neutrality number of programs

On the other hand, more often it would only be the Silicon Valley heavyweights that could afford to tie multiple partnerships with different operators in different markets, they occupy most of the spots on the leader table of differentially priced services being offered. “Among the top 20 zero-rated applications only three are from the EEA,” the report calculated.

net neutrality Silicon Valley heavy

The findings by the organisation has caught some attention. The Austrian regulator RTR will conduct its own research into the impact of zero-rating on data prices into more recent years and on operator level. The European Commission will also provide an evaluation report of the net neutrality provisions of the regulation by 30 April 2019, three years after the regulation came into effect.

Are you ready to look at 6G?

We can hear the groans already, but we’re going to do it anyway. Let’s have a look at what 6G could possibly contribute to the connected economy.

Such is our desire for progress, we haven’t even launched 5G but the best and brightest around are already considering what 6G will bring to the world. It does kind of make sense though, to avoid the dreaded staggering of download speeds and the horrific appearance of buffering symbols, the industry has to look far beyond the horizon.

If you consider the uphill struggle it has been to get 5G to this point, and we haven’t even launched glorious ‘G’ properly, how long will it take before we get to 6G? Or perhaps a better question is how long before we actually need it?

“5G will not be able to handle the number of ‘things’ which are connected to the network in a couple of years’ time,” said Scott Petty, CTO of Vodafone UK. “We need to start thinking about 6G now and we have people who are participating in the standards groups already.”

This is perhaps the issue which we are facing in the future; the sheer volume of ‘things’ which will be connected to the internet. As Petty points out, 5G is about being bigger, badder and leaner. Download speeds will be faster, reliability will be better, and latency will be almost none existent, but the weight of ‘things’ will almost certainly have an impact. Today’s networks haven’t been built with this in mind.

Trying to find consensus on the growth of IOT is somewhat of a difficult task, such is the variety of predictions. Everyone predicts the same thing, the number of devices will grow in an extra-ordinary fashion, but the figures vary by billions.

Using Ericsson’s latest mobility report, the team is estimating cellular IoT connections will reach 4.1 billion in 2024, of which 2.7 billion will be in North East Asia. This is a huge number and growth will only accelerate year-on-year. But here is thing, we’re basing these judgments on what we know today; the number of IOT devices will be more dependent on new products, services and business models which will appear when the right people have the 5G tools to play around with. Who knows what the growth could actually be?

IOT Growth

Another aspect to consider is the emergence of new devices. As it stands, current IOT devices deliver such a minor slice of the total cellular traffic around the world its not much of a consideration, however with new usecases and products for areas such as traffic safety, automated vehicles, drones and industrial automation, the status quo will change. As IOT becomes more commonplace and complicated, data demands might well increase, adding to network strain.

Petty suggests this will be the massive gamechanger for the communications industry over the next few years and will define the case for 6G. But, who knows what the killer usecase will be for 5G, or what needs will actually push the case for the next evolution of networks. That said, more efficient use of the spectrum is almost certainly going to be one of the parameters. According to Petty, this will help with the tsunami of things but there is a lot of new science which will have to be considered.

Then again, 6G might not be measured under the same requirements as today…

Sooner or later the industry will have to stop selling itself under the ‘bigger, badder, faster’ mantra, as speeds will become irrelevant. If you have a strong and stable 4G connection today, there isn’t much you can’t do. Few applications or videos that are available to the consumer require 5G to function properly, something which telco marketers will have to adapt to in the coming years as they try to convince customers to upgrade to 5G contracts.

4G and arguably todays vision of 5G has always been about making the pipe bigger and faster, because those were the demands of the telcos trying to meet the demands of the consumer. 6G might be measured under different KPIs, for example, energy efficiency.

According to Alan Carlton, Managing Director of InterDigital’s European business, the drive towards more speed and more data is mainly self-imposed. The next ‘G’ can be defined as what the industry wants it to be. The telcos would have to think of other ways to sell connectivity services to the consumer, but they will have to do that sooner or later.

The great thing about 5G is that we are barely scratching the surface of what is capable. “We’re not even at 5.0G yet,” said Carlton. “And this is part of the confusion.”

What 5G is nowadays is essentially LTE-A Pro. We’re talking about 256-QAM and Massive MIMO but that is not really a different conversation. With Release 16 on the horizon and future standards groups working on topics such virtualisation, MMwave and total cost of ownership, future phases of 5G will promise so much more.

The next step for Carlton is not necessarily making everything faster, or more reliable or lower latency, but the next ‘G’ could be all about ditching the wires. Fibre is an inflexible commodity, and while it might be fantastic, why do we need it? Why shouldn’t the next vision of connectivity be one where we don’t have any wires at all?

Carlton’s approach to the future of connectivity is somewhat different to the norm. This is an industry which is fascinated by the pipes themselves and delivering services faster, but these working groups and standards bodies are driving change for the benefit of the industry. It doesn’t necessarily have to be about making something faster, so you can charge more, just a change to the status quo which benefits the industry.

Coming back to the energy efficiency idea, this is certainly something which has been suggested elsewhere. IEEE has been running a series of conferences in California addressing this very issue, as delivering 1000X more data is naturally going to consume more energy to start with. It probably won’t be 1000X more expensive, but it is incredibly difficult to predict what future energy consumption needs will be. Small cells do not consume as much energy as traditional sites, but there will need to be a lot more of them to meet demand. There are a lot of different elements to consider here (for example environment or spectrum frequency), but again, this is a bit of an unknown.

Perhaps this is an area where governments will start to wade in? Especially in the European and North American markets which are more sensitive to environmental impacts (excluding the seemingly blind Trump).

Echoing Petty’s point from earlier, we don’t necessarily know the specifics of how the telco industry is going to be stressed and strained in six- or seven-years’ time. These changes will form the catalyst for change, evolving from 5G to 6G, and it might well be a desire for more energy efficient solutions or it might well be a world free of wires.

Moving across the North Sea, 6G has already captured the attention of those in the Nordics.

Back in April 2018, the Academy of Finland announced the launch of ‘6Genesis’, an eight-year research programme to drive the industry towards 6G. Here, the study groups will start to explore technologies and services which are impossible to deliver in today’s world, and much of this will revolve around artificial intelligence.

Just across the border in Sweden, these new technologies are capturing the attention of Ericsson. According to Magnus Frodigh, Head of Ericsson Research, areas like Quantum computing, artificial intelligence and edge computing are all making huge leaps forward, something which will only be increased with improved connectivity. These are the areas which will define the next generation, and what can be achieved in the long-run.

“One of the new things to think about is the combination of unlimited connectivity as a resource, combined with low latency, more powerful computing,” said Frodigh. “No-one really knows how this is going to play out, but this might help define the next generation of mobile.”

Of course, predicting 6G might be pretty simple. In a couple of years’ time, perhaps we will all be walking around with augmented reality glasses on while holographic pods replace our TVs. If such usecases exist, perhaps the old ‘bigger, badder, faster’ mantra of the telco industry will be called upon once again. One group which is counting on this is EU-funded Terranova, which is currently working on solutions to allow network connection in the terahertz range, providing speeds of up to 400 Gbps.

Another area to consider is the idea of edge computing and the pervasiveness of artificial intelligence. According to Carlton (InterDigital), AI will be every in the future with intelligence embedded in almost every device. This is the vision of the intelligent economy, but for AI to work as promised, latency will have to be so much lower than we can even consider delivering today. This is another demand of future connectivity, but without it the intelligent economy will be nothing more than a shade of what has been promised.

And of course, the more intelligence you put on or in devices, the greater the strain on the components. Eventually more processing power will be moved off the devices and into the cloud, building the case for distributed computing and self-learning algorithms hosted on the edge. It is another aspect which will have to be considered, and arguably 5G could satisfy some of these demands, but who knows how quickly and broadly this field will accelerate.

Artificial intelligence and the intelligent economy have the potential to become a catalyst for change, forcing us to completely rethink how networks are designed, built and upgraded. We don’t know for sure yet, but most would assume the AI demands of the next couple of years will strain the network in the same way video has stressed 4G.

Who knows what 6G has in store for us, but here’s to hoping 5G isn’t an over-hyped dud.