Breaking down the Supply Chain Review Statement

Although there was very little said during the Supply Chain Review statement yesterday, there are some interesting developments worth keeping an eye on.

Speaking to the House of Commons, Secretary of State for the Department of Digital, Culture, Media and Sport Jeremy Wright did as most expected he would and dodged the Huawei decision. Although we were promised a decision by March, the slippery politician has managed to create enough breathing room to get him through to September.

Despite some being disappointed by a lack of clarity on the competitive landscape for UK communications infrastructure, there were a few takeaways.

There’s no avoiding interference from Transatlantic geo-politics

Every politician will tell you decisions are made dependent on what is best for the British people alone, but it is impossible to avoid the US here. The White House and its aggressive policies are causing havoc around the world, including here in the UK.

Fundamentally, without a decision on Huawei there is no clarity for investment and progress into the digital economy will falter.

Wright said a decision on Huawei would be made irrespective of the political influences of the US, but US interference is unavoidable.

“The hon. Gentleman has said that he is concerned to ensure that this should be a decision about the interests of the UK and not the priorities of the US Administration, and I understand that,” Wright said in response to the suggestion the US has too much influence from Tom Watson, Shadow Secretary of State for Culture, Media and Sport.

“I can give him the assurance that decisions we take will be decisions in the best interests of the United Kingdom, but he knows that this is a hugely interconnected sector and it simply is not possible to make sensible judgments about telecommunications without recognising those interconnections.”

With Huawei being placed on the Entity List the performance, resilience and security of its products might be impacted in the future. Wright has said he will not make a decision on Huawei until he has all the facts, and the relationship between China and the US is a huge factor in this.

Kicking the can to avoid irritating the new boss

Despite there being pressure from influential Parliamentary groups and the telco industry to make a decision, it was always highly unlikely Wright was going to say anything until his new boss has taken residence in No.10 Downing Street.

Boris Johnson is the new Prime Minister and he will want to put his own mark on proceedings. The Huawei decision is an important one, not only for UK 5G infrastructure, but because it will impact the relationship with the US. BoJo has already shown himself as somewhat of a pet of the President and will most likely want to nurture this relationship as only he knows how.

Wright does not want to jump the gun on making a decision and potentially irritating the new boss, especially when there is a potential promotion around the corner.

David Guake, the Justice Secretary, has resigned. Education Minister Anne Milton has gone. Chancellor of the Exchequer Philip Hammond has publicly stated he would quit if BoJo won. Rory Stewart, the Secretary of State for International Development, formally announced his resignation over Twitter at 11.18am. And finally, it is highly likely Foreign Secretary Jeremy Hunt, BoJo’s opponent for PM, will be shifted elsewhere.

“The reality is that this statement is just a lot of words to confirm further delay. Why are the decisions now being left in the gift of the new Prime Minister? Is this just another case of putting the Tory party before the country?” SNP MP Alan Brown questioned.

As one of the few politicians who managed to remain neutral during the proceedings, Wright could find himself heading up a new department before too long.

Security framework will make UK more secure

This is perhaps the most encouraging snippet to emerge from a relatively shallow statement overall; security requirements will be heightened for everyone.

“Fundamentally, we must make a decision on the basis of what is in our security interests, but he is also right that if we were to focus solely on one company or country, we would miss the broader important point that our telecoms supply chain must be resilient and secure, regardless of where equipment comes from, because risk may transfer from place to place and our population is entitled to expect that the approach we take puts security at its heart, wherever the equipment comes from,” Wright stated.

Although there are few details available regarding the new security requirements, Wright has suggested there will be a more stringent framework set in place and on-going assessments to ensure standards are being maintained. This will be applicable to every supplier, irrelevant of where they have come from.

To start with, this will be a voluntary scheme for the telcos, but soon enough it will be cemented in place through legislation. This takes time, but it is encouraging that the Government recognises threats can come from anywhere, everyone has a globalised supply chain and cybercriminals are becoming much more capable.

If policies have the position of 100% secure is impossible and everyone is a potential threat, risk mitigation levels should be set higher. This is the best possible means to achieve a resilient and secure network, capable of dealing with threats irrelevant as to their origin or intention.

Vendor diversification is nothing but a smokescreen

It might sound like a wonderful plug, but suggesting the UK is going to encourage diversification in the supply chain is nothing but a distraction to attract PR points for DCMS.

“In addition, we must have a competitive, sustainable and diverse supply chain if we are to drive innovation and reduce the risk of dependency on individual suppliers,” Wright said.

“The Government will therefore pursue a targeted diversification strategy, supporting the growth of new players in the parts of the network that pose security and resilience risks. We will promote policies that support new entrants and the growth of smaller firms.”

During the statement, Wright promised work will be done to enable smaller and more innovative players to contribute to the 5G euphoria. This sounds good and, in theory, addresses a long-standing problem in the telco world, but let’s not get ahead of ourselves.

The telco industry has been attempting to create a more diverse supply chain for years, as well as adapting procurement models to ensure smaller companies can weave through the red-tape maze. There has been little progress to date and intervention from DCMS is unlikely to reap any material changes.

You also have to wonder whether Wright is tackling the challenge head-on. Wright pointed to funding which has been directed towards the West Midlands and other innovation hubs, however this is not the problem which the telco industry has been facing. The limited supply chain is most harmful in places like the access network or core. This is where there are so few suppliers and competition has been impacting the cost of deployment.

Wright might be encouraging diversification and growth for start-ups, but don’t be fooled by this statement; he is not directly tackling the biggest competition challenge the industry faces.

Long-overdue legislative overhaul and Ofcom empowerment

The legislative and regulatory landscape has needed an update for years and Wright is promising one. Not only would this put the security framework into law, it will also ensure Ofcom has the right powers to be effective in the digital economy.

“We will pursue legislation at the earliest opportunity to provide Ofcom with stronger powers to allow for the effective enforcement of the telecoms security requirements and to establish stronger national security backstop powers for Government,” Wright said.

Until the new legislation is put in place, Government and Ofcom will work with all telecoms operators to secure adherence to the new requirements on a voluntary basis.”

Many of the rules which govern the telecoms and technology industry have been written for a bygone era. This is an outcome which is largely unavoidable when you consider the speed at which progress develops nowadays. However, rules need to be brought into the 21st century.

Legislation will offer the Government more influence over commercial communications infrastructure while Ofcom will have its teeth sharpened. It’s a long-overdue update.

Not much said, but potential to progress

Overall, there was little said by Wright in terms of material progress, but there is enough evidence the UK is creeping forward toward contextual relevance. We saw hints of progress yesterday, but realistically, the new Prime Minister and his administration will dictate evolution over the coming months and years.

Most EU countries complete 5G national risk assessments

24 out of the 28 EU member states have completed 5G risk assessments at national level, laying the groundwork for an EU-wide assessment by October.

The project was launched in March, when the Commission (the administrative branch) responded to the Council’s (the heads of state or government) expectations to see a “recommendation on a concerted approach to the security of 5G networks”. According to the Commission’s statement, the assessment should be conducted on three main areas:

  • the main threats and actors affecting 5G networks;
  • the degree of sensitivity of 5G network components and functions as well as other assets; and
  • various types of vulnerabilities, including both technical ones and other types of vulnerabilities, such as those potentially arising from the 5G supply chain.

All member states were requested to complete the national assessment by the end of June. The Commission does not publish the names of the countries that have missed the deadline.

“The completion of the risk assessments underlines the commitment of Member States not only to set high standards for security but also to make full use of this groundbreaking technology,” Julian King, Commissioner for the Security Union, and Mariya Gabriel, Commissioner for the Digital Economy and Society, said in a joint statement.

“We hope that the outcomes will be taken into account in the process of 5G spectrum auctions and network deployment, which is taking place across the EU now and in the coming months. Several Member States have already taken steps to reinforce applicable security requirements while others are considering introducing new measures in the near future.”

The national assessments will feed into the pan-EU 5G risk assessment, led by the EU Agency for Cybersecurity (ENISA), tasked to be completed by 1 October 2019. By the end of the year, a toolbox to mitigate the risks identified at national and EU levels will be developed by the NIS Cooperation Group, the EU’s cross-agency identity responsible for cybersecurity. By 1 October 2020, member states are requested to undertake an evaluation of the effectiveness of the measures taken and determine whether further actions should be taken.

Meanwhile, ENISA will also take the lead to develop an EU-wide certification framework to cover 5G networks and equipment, which member states are encouraged to adopt.

Ericsson happy to remain on track with Q2 numbers

Swedish kit vendor Ericsson is determined to make life difficult for journalists these days by delivering solid but unspectacular quarterly numbers.

Gone, it seems, are the heady days of quarterly high drama that accompanied the end of the Vestberg era and the start of the Ekholm one. For the past year or so Ericsson has just boringly hit its numbers, sometimes beating them, sure, but never spectacularly so. Where’s the story in that?

We chatted to Head of Networks Fredrik Jejdling, who has stepped into the void left by the departure of Helena Norrman to handle the hacks at quarterly time. His core narrative was that Ericsson is laser-focused on hitting its 2020 target numbers and remains on course to do. We noted that a share-price fall of 5% indicates investors expected more and Jejdling, reasonably, declined to speculate on the workings of investors’ minds.

As ever Ericsson’s numbers are all about the networks division, which we focused on since Jejdling is in charge of it. As you can see from the tables below Networks accounted for the majority of the revenue and pretty much all of the growth. While North America continues to be by far its biggest region, Jejdling was keen to bring attention to North East Asia, which includes China and Korea, as a significant source of growth. He also echoed his CEO’s regular comments that global regulators could do a better job of making more spectrum available.

The big macro driver for this growth was, of course, 5G. Jejdling said client conversations are much more focused on upgrading to 5G than they were only recently and indicated that interest in is more globally ubiquitous than is was for 4G at a similar stage. He did stress however, in classic Ericsson style, that it’s still early days and nobody’s getting too carried away. “As long as we feel we’re meeting the key milestones on the 2020 track then we’re quite happy,” said Jejdling.

We didn’t really get into the other business units, so here’s some of CEO Börje Ekholm’s statement accompanying the quarterly report. “We see strong momentum in our 5G business with both new contracts and new commercial launches as well as live networks. To date, we have provided solutions for almost two-thirds of all commercially launched 5G networks.

“5G momentum is increasing. Initially, 5G will be a capacity enhancer in metropolitan areas. However, over time, new exciting innovations for 5G will come with IoT use cases, leveraging the speed, latency and security 5G can provide. This provides opportunities for our customers to capture new revenues as they provide additional benefits to consumers and businesses.

“In Digital Services we continue to execute on the plan to reach low single-digit margins for 2020. In Managed Services the strategy is to enhance the customer offering by relying more on automation, machine learning and AI, which will longer-term change and improve the margin profile of the business. Near-term margins are negatively impacted by the increase in R&D investments.

“Organic sales growth in Emerging Business and Other was 24% driven by a continued growth in iconectiv. In this segment we invest in initiatives that aim to scale and help create future business for Ericsson. With the exception of iconectiv, the portfolio is still in an early investment phase.”

Ericsson’s share price was down 6% at time of writing, which seems a bit harsh, but that probably reflects disappointment from investors that all the early 5G hype hasn’t translated into even bigger gains and a more bullish outlook. But 5G was never going to result in sudden massive spikes in investment and, however difficult it may find it to do otherwise, Ericsson is probably sensible to caution against too much exuberance at this stage.

Ericsson q2 19 numbers

Ericsson q2 19 numbers segments

Ericsson q2 19 numbers networks

Ericsson q2 19 numbers digital

Ericsson q2 19 numbers managed

Ericsson q2 19 numbers other

KPN CEO resignation definitely had nothing to do with recent network crash

Maximo Ibarra resigned at CEO of Dutch telco KP the day after a major network failure, but the company insists the two events are unrelated.

Ibarra had led KPN for just a year and a half, having moved over from Italy where he was a Wind lifer and CEO for five years. If we take the KPN announcement at face value Ibarra and his family never took to Rotterdam and have decided to move back to Italy. Luckily for them Sky Italia had a vacancy and has appointed Ibarra as its new CEO once he’s served out his notice.

“I have been with KPN since 2017, and appointed CEO in 2018,” said Ibarra. “I regret the timing, but family reasons gave me no choice. I will dedicate myself the coming months to secure a seamless transfer to my successor.”

The timing referred to must surely be the major outage suffered by KPN on Monday of this week, which even shut down the 112 emergency number. It seemed to just affect voice calls, which were down across the country for three hours.

“We regret that this could have happened, and we offer our sincere apologies to our customers and also to the Dutch society,” said Joost Farwerck, COO of KPN. “We immediately established a crisis team and yesterday afternoon and evening every possible effort was made to find a solution. Thankfully, as a result, by early evening service was resumed and 112 was also accessible again.

“It goes without saying, KPN will evaluate this disruption thoroughly, because this should never have happened. In this evaluation, we will work together with the Ministry of Security and Justice, the Ministry of Economic Affairs, and the Telecom Agency and other relevant bodies. Of course, we want to learn from this disruption, so that we can draw the correct conclusions and ensure that this kind of incident can be prevented in the future.”

In the Ibarra press release KPN felt compelled to include the following statement: “His resignation is unrelated to the network outage experienced yesterday.” It probably was just unfortunate timing and we certainly have no evidence to suggest otherwise. But you can see how some people might put two and two together to make five.

Researchers identify global telecoms hacking operation likely involving China

US cyber security vendor Cybereason says it has uncovered ‘a worldwide campaign against telecommunications providers’ that it reckons involves the Chinese state.

The findings were published in a blog today, but the malicious activity was first discovered last year and seems to have been going since 2017. It talks of ‘an advanced, persistent attack targeting global telecommunications providers carried out by a threat actor using tools and techniques commonly associated with the Chinese-affiliated threat actor APT10.’

The purpose of the attacks seems to have been to hack into mobile phone networks in order to obtain the CDRs (call detail records) of certain specific people, presumably of political or commercial interest. These CDRs provide a fairly detailed account of an individual’s activities since they offer a lot of geographical information.

The main investigation seemed to focus on one telco client, but according to an interview the researchers did with TechCrunch, at least ten other networks around the world have been subjected to similar attacks over the past seven years. They added that they seem aimed at targeted individuals but declined to name them.

“We’ve concluded with a high level of certainty that the threat actor is affiliated with China and is likely state sponsored” said the Cybereason blog. “The tools and techniques used throughout these attacks are consistent with several Chinese threat actors, specifically with APT10, a threat actor believed to operate on behalf of the Chinese Ministry of State Security (MSS).”

Presumed malevolent intent by the Chinese state is at the core of much of the aggro Huawei has been dealing with this year and this sort of thing will serve to entrench those presumptions. As ever with espionage it’s very unlikely any ‘smoking gun’ evidence will ever be produced, but the circumstantial evidence is being served up on a regular basis.

Nokia UK CEO: Where are the bodies to build the networks coming from?

Cormac Whelan, Nokia’s UK CEO raised an interesting point in a recent conversation with Telecoms.com. Where are the employees to implement ambitious rollout plans?

As it currently stands, the UK is rapidly upgrading its nationwide broadband network. Virgin Media is expanding its fibre footprint by more than 100,000 premises a quarter, while Openreach is doing the same number each month. CityFibre has got approval to expand its fibre footprint to 70 cities across the UK, and various different alt-nets are scaling as well. Toob is growing in Southampton, Gigaclear is growing in the South-West and HyperOptic is scaling in London.

Arguably, the UK has one of the fastest growing fibre initiatives across Europe. Yes, it missed the memo which was sent to everyone else years ago, but it is finally arriving to the fibre feast. There are calls to increase the pace further, see BoJo’s ridiculous comments, but you have to wonder how much quicker the industry can actually go.

“Where are the bodies going to come from?” Whelan asked during a conversation at the Connected Britain conference in London. It’s a simple question, but one few have actually asked.

Last year, Openreach recruited 3,000 staff to help with its fibre plans, and it plans to add another 3,000 across 2019. Virgin Media’s Project Lightning is continuing to progress, and it is recruiting. If the alt-nets want to continue to scale, they will also need more bodies. But, finding these individuals is not simply a case of slapping a hard-hat on Joe Bloggs. These are specialised careers with a lot of training, soon enough the candidates are going to start drying up.

One of the big issues facing the industry, as Whelan points out, is the attractiveness of working elsewhere. The UK is a cosmopolitan society, but that is changing. With Brexit on the horizon, the UK is becoming less appealing to EU workers. There are more EU citizens arriving on UK shores than leaving, but immigration is at its lowest levels since 2013.

The big question which will need to be asked is whether it is more prosperous for workers who have the skills attractive to telcos to work in the UK or in the country of their birth? This is not suggesting that all field engineers are of EU dissent, but due to education trends over the last couple of decades there are less UK citizens suited to these professions than in previous generations.

The millennials were a generation ushered towards university. The percentage of UK citizens who are now in their 20s, 30s and early 40s have a higher proportion of degrees than previous generations. It is becoming less attractive to go to university nowadays, such is the horrendous price of tuition fees, but that does not fix the problem. Attracting workers from the EU was one way to fill the gaps in these fields of expertise.

As Whelan pointed out, Poland has an on-going broadband initiative running nationwide, while so do Hungary and Germany. Soon enough, the Czech Republic will be kicking off their own projects and so will numerous other EU nations. The UK is not the only place in Europe running large scale broadband schemes, but with Brexit on the horizon it is becoming increasingly unattractive as a place of work for EU citizens. Just as the UK telco industry needs to hire more field engineers, the availability of candidates might just start drying up.

Addressing BoJo’s preposterous claims 100% FTTH could be delivered by 2025, Robert Kenny, co-founder of Communications Chambers, suggested Brexit would be his downfall. Fortunately, the point Kenny is making also supports the argument being made here.

“Brexit has resulted in a large number of continental European engineers and construction workers returning home from the UK, meaning that telcos are having a nightmare recruiting the staff necessary even for the current pace of deployment,” Kenny wrote on LinkedIn. “Quite how they would radically accelerate is not clear.”

Some might suggest technology can take over and plug the gaps. Yes, the likes of Openreach and Virgin Media are getting better and faster at rolling out fibre networks. However, Whelan believes the technological gains will only help these companies maintain the current rate, to increase the pace of deployment there is only one solution; hire more people.

The UK is making progress. After years of ignoring the benefits of a fibre diet, the penny seems to have dropped. However, as with everything in life, some people will never be happy. It doesn’t matter is the UK is adding 3-4 million fibre premises to the network a year, more is always better. But more might not be possible before too long.

High road or blind alley? BT’s campaign for “open access” to street furniture

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article Antony Tomlinson, CEO of network builder Ontix, which has a concession agreement with the council in Westminster, shares his views on the concession model, addresses BT’s suggestion that they’re the wrong way to go, and explores what we should do to accelerate the roll-out of next-generation networks.

Local councils who want their street furniture to host telecoms equipment have generally chosen to agree concession contracts with wholesale infrastructure providers (or “WIPs”). The WIP takes on the work and the business risk, paying a license fee to the council and charging a wholesale fee to the operators.

BT was party to several such concessions, but now it is opposed to them.  In March, it called for “open access” to street furniture: indeed, it now believes that concessions are a barrier to investment, and it is proposing an alternate model in which operators engage separately and directly with the council.

BT has started an interesting discussion at a pertinent time, now we’re starting to see small cells being deployed in volume. However, if we want more small cells – plus WiFi and other technologies as well – then we can’t expect the operators to build all of it. We need more collaboration, with WIPs providing infrastructure which they can then all share. Unfortunately, BT’s proposal would prevent the collaboration that we now need more than ever.

The BT narrative

BT’s press release was cleverly framed.  It focused squarely on the concession model, as if there couldn’t really be any other reasons why more small cells have not been deployed to date. It chose targets that would resonate: councils, red tape, middlemen. It said it was now clear that concessions were a barrier.  Luckily, BT had the solution: “open access”. There wasn’t much detail on how it would work in practice, but that was for another day. The key message – a proven crowd-pleaser – was that it would “take back control”.

The reaction was interesting. Some readers found it ironic: BT hadn’t shown much enthusiasm for “open access” when other providers wanted to access BT’s ducts and poles. And was BT really negotiating here as it prepares to engage – and maybe displace – incumbent WIPs? However, a number of commentators were cautiously positive, including Jamie Davies in his article for this site (“BT pleads for open access to street furniture”).

We need small cells on street furniture.  Deployment hasn’t happened at the rate we would want to date (although we can see some significant deployments now), so we should absolutely debate what needs to change. But let’s frame our debate right. Unfortunately, BT’s narrative doesn’t do this. Their basic statements simply don’t bear scrutiny, for example:

  • There is no evidence to suggest that concessions have been a barrier to small cell deployment. On the contrary, most – if not all – of the small cells that have been deployed to date have been deployed under concessions, including in the City of London, Hammersmith and Fulham, and Aberdeen.
  • Concessions are “open”: a WIP is incentivised and contractually obliged to provide access and services to all operators on a fair and non-discriminatory basis. It is simply wrong to imply that concessions grant a single player “exclusive access to council-owned street furniture”.

It really isn’t credible to suggest that the reason there are no small cells in Carlisle and Plymouth is because of the concession, as BT has implied. We need to reframe the discussion more realistically, or we will direct friendly fire at the wrong targets.

Reality check

There are some very basic reasons why more small cells haven’t been deployed to date. The operators have been focused on macros, and upgrading them for 5G. Some operators are only just piloting small cells now. Moreover, the vendors are only just starting to produce versions of their small cells that are optimally small. Previous generations of units were often too big and heavy for our street furniture, especially if they also needed separate housings and external antennas.  Maybe we should be more realistic about why we are where we are.

There is nonetheless a more fundamental challenge that won’t fix itself.  Small cells provide less coverage and less capacity than macros, so the TCO and the lead time needs to be reduced proportionately if they are ever going to be a default solution. Unfortunately, the cost and complexity of small cell deployment doesn’t scale down easily due to several factors:

  • Deployment remains complex and costly if an operator has to do it all by itself, ie. building relationships with lots of councils, and resourcing and managing large numbers of small deployments – especially if councils have limited resources to streamline and support the process.
  • Connectivity is a major blocker if an operator needs its own fibre connection to every post.

What do we do?

Fundamentally, the operators need someone independent to deploy and manage shared infrastructure that they can license, so they don’t have to build their own “DIY”.

BT’s proposal cannot help here: it leaves operators doing it all DIY.   But the concession model can help – and it really does. In Westminster, where Ontix has a concession with the council, we are building a hybrid fibre/microwave network (“Metrohaul”) to provide high capacity / low latency / low cost connectivity to connect street furniture across the borough for different operators and different technologies – and on lead times that would otherwise be unthinkable. We are also planning a new shared antenna solution in Oxford Street, so that different operators can use the same new street furniture when the area is redeveloped. These are things that wouldn’t happen in a model that left operators to deploy on a DIY basis.

Of course, the concession needs to be set up right. The council’s priority should be the public benefit: and the WIP should be neutral.  But if it’s done well, a concession can unlock potential that would be lost in a DIY model, where operators would spend their time and money trying to landgrab assets and then build duplicate infrastructure because there was no larger strategy.

We aren’t suggesting that concessions are the only answer, or that every council should do exactly the same thing. It takes time to run a tender for a concession like Westminster. A “concession lite” might be more appropriate for a town where there’s less demand but the council wants to contract resource instead of building up its own team. Maybe some councils don’t need a concession at all. But we are suggesting that, far from being void, the concession model is very relevant.

The councils themselves are really best placed to determine their own approach, so let’s encourage them to do something – but give them the latitude to decide what to do and how to do it.

US official overseeing country’s frequency strategy has resigned

David Redl, heading National Telecommunications and Information Administration (NTIA), responsible for the US’ strategy on frequency and 5G, abruptly resigned from his post.

The circumstances of his resignation were not disclosed, but the Wall Street Journal reported that Redl has had conflicts with other political appointees at the current administration, including officials at the FCC. Redl, together with the Commerce Secretary, was tasked by President Trump to develop the country’s “National Spectrum Strategy” last October.

A few days before his resignation, Redl used his speech at Satellite Industry Association’s annual dinner to voice his concerns. “We don’t have to choose between making more spectrum available for the private sector and sustaining our critical government systems. We also don’t have to choose between terrestrial 5G and satellite services,” Redl said on that occasion. “To start with, satellite will play an important role in 5G connectivity, but perhaps more to the point these uses are not mutually exclusive; it’s just going to take hard work for them to continue to coexist in a more contentious spectrum environment.”

Meanwhile, FCC would not wait to have the “comprehensive, balanced and forward-looking” spectrum strategy in place before it pressed ahead with the auction of the mmWave frequencies, including the 24GHz and 37GHz bands that are also being coveted by the satellite industry. “I can’t recall ever in the past watching two different arms of an administration get into this kind of public disagreements,” FCC Commissioner Jessica Rosenworcel commented.

In other cases, Redl’s opinions often carried a lot of weight in FCC’s decision making. Before the decision was taken to deny China Mobile the operation licence, Redl’s earlier note had already set the tone. Ajit Pai, the FCC Chairman, in his statement called Redl “a longtime colleague, who served with distinction during his 18 months at NTIA.  He was a vocal advocate within the Department of Commerce for repurposing federal spectrum for commercial use and fostering the private sector’s lead in 5G deployment.  I thank David for his service and wish him all the best in his future endeavors.”

It may or may not be related, but Redl’s resignation also coincided with fresh pressure from the US on the UK to join the alliance to ban Huawei from the country’s 5G networks. The DC-based news outlet The Hill reported that Diane Rinaldo, Redl’s former deputy, would be taking over as acting administrator.

UK and Latin America gave Telefónica a steady Q1

Telefónica’s otherwise flat quarter was bolstered by strong performance in its UK and Latin America South units, which delivered 5.3% and 15.2% organic growth rates, taking the group level growth rate to 3.8%.

Telefónica reported its first-quarter results, with the total revenue at €12.611 billion, an increase of 3.8% in organic terms. This means adjustments were made to the reported numbers considering impacts of exchange rate moves, regulation and reporting standard changes, and special factors, for example adjustment made to the Argentina numbers on account of the hyper-inflation. Otherwise, the total revenue would have reported at € 11.979, or a 1.7% decline from a year ago. The quarterly operating income before depreciation and amortisation (OIBDA) reached €4.264 billion, up by 10.3%; and the net income grew by 10.6% to reach €926 million.

The Telefónica group is now serving a total of 332 million subscriber accounts (“accesses”), 6 million less than a year ago. The total mobile accesses by the end of the quarter stood at 267 million, down by 4 million from a year ago. But the good news for Telefónica is that it actually grew the contract customer base by 7.5 million over Q1 last year, meaning the loss is mainly on the pre-paid market, down by 11.5 million. It also grew its fixed broadband (including FTTx and cable) customer base by 2.1 million over the course of the year.

“The first quarter results showed a significant improvement in revenue growth trends and double-digit growth in net income and earnings per share. Strong cash generation, which was three times higher than the figure reported in the first quarter of the previous year, allowed for an acceleration in debt reduction, for the 8th consecutive quarter, further strengthening our balance sheet,” commented José María Álvarez-Pallete, Chairman and CEO of Telefónica. “We have started the year by extending our leadership in fibre and 4G deployment, testing new 5G capabilities and making progress in the UNICA virtualisation programme, allowing us to continue gaining customer relevance through better experience and higher average lifetime.”

Ángel Vilá, Chief Operating Officer of Telefónica, introduced the Q1 results and its outlook to 2019 annual outlook in more detail in the video clip at the bottom (in Spanish, with English subtitle).

While the its two biggest markets, Spain and Brazil, managed to stay stable, delivering modest organic growth of 0.3% and 1.7% respective (+0.3% and -5.2% in reported terms), Telefónica’s UK business registered a strong 5.3% organic growth to reach €1.67 billion (£1.47 billion). Excluding the exchange rate impact, the UK business would have reported a 6.6% revenue growth to reach €1.691 billion (£1.488 billion). The company is now serving 32.7 million mobile subscribers, up 2.3% over Q1 last year, which includes both customers on O2 (25.1 million) and those on the MVNOs using Telefónica networks (Sky Mobile, giffgaff, Lycamobile, and Tesco Mobile).

“This is another good set of results building on our momentum from 2018. We have delivered further revenue and customer growth underpinned by our award-winning network and market-leading loyalty,” commented Mark Evans, CEO of Telefónica UK. “We are committed to making every day better, providing customers with compelling reasons to join and stay with us through attractive propositions such as O2 Custom Plans.”

Looking across all the Telefónica markets, the UK registered the lowest churn rate of 0.9% among in its postpaid customers. In comparison, in Telefónica’s other European markets, the churn rate of contract customers was 1.6% in Germany and 1.7% in Spain. Comparable churn rates in markets like Chile and Mexico ran around 3%.

Telefónica attributed high customer loyalty, among other things, to its aggressive investment to improve its networks. The company claims it is investing equivalent to £2 million a day to strengthen its network and increase its reach.

One of O2’s focus investment areas in 2019, in addition to the planned launch of 5G, will be high density venues, including sports arenas, shopping centres, hotels, and conference centres. Already serving the Anfield Stadium in Liverpool and the Lord’s cricket ground in London with improved networks, in collaboration with the Wireless Infrastructure Group (WIG), an infrastructure company, O2 is planning to upgrade and improve its coverage and capacities in other high usage venues.

“While we look ahead to 5G we also continue to focus on our existing network capability. We strive to deliver a great network experience to all our customers, including some of the UK’s busiest locations where network demand is at its peak,” said Brendan O’Reilly, O2’s Chief Technology Officer. “Our multi-million pound investment with our partners at WIG should provide O2 customers with even better connectivity in the places they love to visit.”

Here’s more commentary from COO Ángel Vilá.