World Bank continues mission to make Africa more investable

The World Bank has selected Progressus to head-up the second phase of its ambitious African Regulatory Watch Initiative (RWI).

The African RWI is an interesting and unique project, aiming to tackle some of the more unique challenges faced across the African continent. Despite progress being made in the connectivity field, there are still some very difficult hurdles to overcome to close the digital divide on the continent, as well as place Africa on a level playing field with more developed regions.

The RWI will aim to tackle some of these challenges, such as licensing, spectrum allocation, taxation and tariffs, as well as appropriate regulatory oversight and accountability.

“This is an extremely exciting project,” said Olivier Jacquinot, who heads up RWI at Progressus. “RWI Phase 1 managed to identify some key regulatory levers that pushed forward the development of broadband in some countries. Phase two will deliver an even greater level of analysis – and help keep the African telecoms industry moving forward.”

Despite being managed by the World Bank, the financiers are staying pretty quiet regarding their own drivers and ambitions. That said, it might not be difficult to guess, these are moneymen after all and have some very obvious objectives.

One objective might simply be confidence. Bankers and venture capitalists are always looking for new investments, and the telecommunications industry is proving to be increasingly popular. An initiative which provides an improved and standardised regulatory environment across the continent might well be an important step to providing confidence to invest in the African telecoms and infrastructure industries.

Despite there being great potential for investors on the continent, Africa has several unique challenges. Accessibility, both financial and technological, is a significant one, though an incredibly fragmented and varied regulatory landscape across the continent is an issue.

At AfricaCom in November, MTN CEO Rob Schuter used the acronym CHASE to indicate the major challenges on the continent; Coverage, Handsets, Affordability, Service bundles and Education. Some of these challenges can be addressed through industry initiatives, such as the RWI, though others need much bigger thinking. Making the economics of network deployment or handset accessibility is a significant barrier.

On numerous occasions, more nefarious challenges such as government and regulatory corruption are raised as barriers also. Such rumours will always make investors nervous.

The first phase of the initiative was launched in 2017, and due to the success, the second phase will be launched imminently. 22 regulators have signed up so far, perhaps demonstrating how desperate some of these nations are for external investment; no-one likes being told how to govern or regulate their own sovereign nations after all.

In the second phase, Progressus will introduce the RWI Index. This ranking system will benchmark each of the nations involved in the RWI. The Index will be based on spectrum management, Universal Service Funds management and other Government support measures and regulatory governance.

Africa is a unique continent with some very unique challenges, and this initiative should provide a stable route forward. It isn’t the most revolutionary idea, but there is no need to reinvent the wheel sometimes.

Seems the White House is all bark and no bite on intel sharing

The UK was threatened with intelligence embargoes should it allow Huawei to operate in its 5G industry, but Downing Street has seemingly won that game of chicken with the White House.

As part of the US lobby efforts over the last few months, access to valuable security data and intelligence was put on the line. The US Government believed allowing Huawei to contribute components to the UK’s 5G networks would compromise its own national security. The threat was made, and Prime Minister Boris Johnson called the White House bluff. Now it seems the US delegation in London is moonwalking away from the intelligence sharing ban.

The White House has been surprisingly quiet on the UK’s Supply Chain Review conclusion. Either President Donald Trump has his hands full with the on-going impeachment enquiry, or perhaps this an embarrassing outcome, a sign the Special Relationship is not as powerful as some would have thought, and the White House is not as influential as it currently believes.

Speaking at an event in London, US Secretary of State Mike Pompeo has suggested intelligence sharing between the two countries would continue.

“That relationship is deep, it is strong, it will remain,” said Pompeo.

Pompeo has remained resolute in his belief Huawei is a threat to Western democracies, believing the firm to be in-effect the intelligence gathering arm of the Chinese Communist Party. The Secretary of State even suggested there would be an opportunity for the UK to reconsider its decision in the future.

Although Pompeo is now on his way to Kiev, Ukraine, yesterday saw meetings with Prime Minister Boris Johnson and Foreign Secretary Dominic Raab. The aim is to underline the commitment of both parties to the Special Relationship and work towards a trade deal. Pompeo has suggested a new deal between the US and UK could be on the table by November.

While the UK has made its position very clear, there is still plenty of work for Pompeo to do; the UK is just one European nation after all.

“Our view of Huawei has been that putting it in your system creates real risk,” Pompeo said to reporters before leaving the US on the 28th January. “This is an extension – an extension of the Chinese Communist Party with a legal requirement to hand over information to the Chinese Communist Party.

“We’ll evaluate what the United Kingdom did.  It’s a little unclear precisely what they’re going to permit and not permit, so we need to take a little bit of time to evaluate that.  But our view is that we should have Western systems with Western rules, and American information only should pass through trusted networks, and we’ll make sure we do that.”

This trip abroad will see Pompeo have meetings in Ukraine, Belarus, Kazakhstan and Uzbekistan, and while there will certainly be lobbying taking place, the Secretary of State will also be keeping a keen eye on developments across Europe.

Germany is yet to make a formal decision, while France and Spain have not shown enthusiasm for banning the Chinese vendor. The UK is an influential voice in the European political arena, despite the offence Brexit might be causing, and if it can avoid retaliation from the temperamental President it adds confidence others could too.

Ultimately it was always likely to be an empty threat from the White House. Intelligence sharing works both directions, as the US will use data from allies to build its own databases. If the US banned intelligence sharing with every country where Huawei was operational in 5G, it might find itself to be very lonely.

In the greater game of political chess, the US is losing. If it is not able to convince arguably its closest ally, the UK, to its own way of thinking it might not have much success elsewhere. Thanks to Brexit, the UK was in a difficult position after all. Some might have suggested the UK would appease the White House in pursuit of a valuable trade deal, but Prime Minister Johnson has more of a spine than some have given him credit for.

Looking across the continent, Belgium looks unlikely to enforce a ban, having found no evidence that telecoms equipment supplied by Huawei Technology could be used for spying. France’s cybersecurity agency has seemingly given Huawei the thumbs up. Germany is holding off from a decision until after the EU Summit in March, though a ban is unlikely. Hungary is pro-Huawei. Italy has passed legislation to safeguard networks, but allowing Huawei in.

The US has seen lobby efforts gain traction in some nations such as Japan and Australia, though it has not been able to exert the same influence in Europe. This would have been unthinkable a decade ago, but it does appear the European nations are inclined to ignore the huffing and puffing from the Oval Office nowadays.

Healthy growth forecast for RAN market – Dell’Oro

Analyst firm Dell’Oro reckons the renewed growth being experienced by the global radio access network market has a few years left in it yet.

The company has just published its latest RAN market five year forecast and is saying total revenues will be $200 billion over that period. However most of the growth will be in the next year or two, with things slowing after that once everyone has got 5G out of their system. The market is expected to grow by 4% this year, but more like 2% CAGR over the full period.

“Following three consecutive years of declining worldwide RAN revenues between 2015 and 2017, the global upswing that began in the second half of 2018 has become deeper and stronger, reflecting a shift from 4G to 5G that is accelerating at a torrid pace, much faster than anyone expected,” said Stefan Pongratz, Analyst with the Dell’Oro Group.

“We expect these trends to propel the overall RAN market to advance at a healthy pace over the near-term accommodating an intense 5G capex envelop before growth tapers off in the outer part of the forecast period resulting in a flat CAGR between 2019 and 2024.”

As is standard practice with Analyst press releases, most of the juicy, granular data is kept secret in the hope that people will pay for the full report. They did offer the following extra morsels, however: 5G NR RAN investments to surpass $100 Billion, 5G NR small cell market to approach 10 percent to 20 percent of overall 5G NR market. Global macro and small cell transceiver shipments to approach 0.7 Billion. Millimeter Wave 5G NR to account for one sixth of overall small cell investments.

Could Iliad Italia be a victim of Corporate Darwinism?

Iliad’s Italian business unit has lodged complaints with Italian and European regulators regarding network sharing deals, but could these objections be effectively ignored?

While network sharing is a proposition which offers great benefits to cash-strapped telcos in pursuit of the eye-wateringly expensive 5G connectivity dream, it is not without its opponents and critics. Some regulators have become very defensive about the progressive idea, while there are telcos being left out of discussions who are objecting also.

In Belgium, Telenet has raised concerns over a tie-up between Orange and Proximus, while the European Commission prevented O2 and T-Mobile from expanding an existing agreement to include 5G in the Czech Republic. Both of these network sharing partnerships have been halted in the pursuit of maintaining attractive levels of competition, but Iliad’s objections might fall on deaf ears.

Iliad is objecting to network sharing agreements between Wind Tre and Fastweb, as well as another between Telecom Italia and Vodafone Italia. Iliad is the only major telco in Italy not to be in a network sharing discussion. If these partnerships bear fruit, efficiencies will be realised, meaning competitor funds can be redirected elsewhere.

If this is a prediction of the future, Iliad will be in a weakened position to compete in the Italian market, and financial pressures could become too much to justify the venture. Iliad could become a victim of Corporate Darwinism.

The competition versus consolidation conundrum

Competition has been somewhat of a difficult topic of conversation between the regulators and telcos in recent years, primarily because of the polar-opposite opinions on market consolidation. The telcos would like to consolidate to achieve scaled economics, while the regulators want to preserve the number of telcos in each of the markets to maintain competition and encourage investment.

There are pros and cons on either side of the fence, though the regulators do not seem to be shifting. This argument has knock-on effects for network sharing agreements.

Ovum’s Dario Talmesio points out, network sharing could be viewed as consolidation through the backdoor. Combined assets reduces the number of independent networks in the market, and potentially reduces investments and competition.

In the Czech O2 and T-Mobile case, the European Commission suggested as there were only three major players in the market, further combination of assets between two of the parties would present too much of a risk of the third being squeezed out. The same case has been presented by Telenet to the national regulator in Belgium.

Regulators are sensitive to any propositions which would negatively impact competition in a market, but what about markets where the number of telcos could actually be reduced?

How much is too much competition?

While there is no official stance on the number of telcos in a market, the European Commission does not generally approve activities which would reduce the number of telcos below four. Vetoing the O2/Three merger in the UK, or Telia/Telenor in Denmark are two examples, but this might not be the case in Italy.

If regulators were to allow the network sharing agreements to proceed, Iliad would certainly be in a very precarious position, though there would still be four mobile service providers in the country; Telecom Italia, Vodafone Italia, Wind Tre and a Fastweb proposition enabled by its agreement with Wind Tre. This might be deemed enough competition in Italy to maintain a healthy market for the consumer and a financially sustainable one for the telcos.

The four telcos named above are venturing into untested waters here. This presents a new question for the regulators to answer on competition. Theoretically, suitable levels of competition are being sustained, and this network sharing dynamic has been approved by regulators in the past.

In the UK, Three and EE have formed MBNL, while Vodafone and O2 have CTIL. These are passive infrastructure sharing joint ventures, focusing on the rural environments. It is a similar situation which would be created in Italy, and the UK does have a sustainable telco industry. It is evidence that the dynamic could work, with or without Iliad in the mix.

Could this be a case of Corporate Darwinism?

Corporate Darwinism occurs when a market evolves to such a degree that players are either irrelevant or uncompetitive, and therefore go out of business.

The best example of this is Blockbusters. Once a dominant player in the movie rental business, as the distribution of content moved online the proposition of Blockbusters was no-longer relevant, therefore the company did not survive. This is an example of a market evolving to such a degree that the business was no-longer relevant.

The Iliad example is perhaps one where the market evolves to such a degree that the business is no-longer competitive.

If the four remaining mobile service providers have network sharing initiatives driving network deployment, investments can be more intelligently spend (a) on the network, or (b) in other areas of the business.

The shared networks might have a greater geographical footprint, have future-proofed technology and higher performance specs. Theoretically, Iliad would churn subscribers to higher quality rivals. Also, as less money is being spent on network deployment, tariffs could be lower, but profitability could be maintained. Or, more cash could be invested in value-add propositions for products. Rival offerings could look more attractive than Iliad products.

If regulators approve the network sharing agreements between Telecom Italia and Vodafone Italia, alongside Wind Tre and Fastweb, Iliad would find itself in a very difficult position. It become difficult to see the telco surviving in the long-term.

Unfortunately for Iliad, there is a coherent argument to approve the partnerships to drive towards a more sustainable telecoms industry, allowing the telcos to realise efficiencies ahead of the vast expenditure of 5G. The consumer would benefit, as would enterprise customers and the Italian economy on the whole. It might be a case of letting Iliad die out for the greater good of the Italian telecoms sector.

Open-minded RAN key to 5G success

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Steve Papa, CEO of Parallel Wireless, makes the case in support of the OpenRAN initiative.

Years of consolidation have left the telecoms industry with three Radio Access Network (RAN) technology giants: Huawei, Ericsson and Nokia. But, these players risk becoming obsolete as the telecoms industry starts demanding networks that are open and flexible.

The RAN is a significant expense for mobile operators, in what is already a capital-intensive industry. Legacy RAN networks, built using the technology of the major vendors, is typically hardware centric and designed in silos for each generation (e.g. 2G, 3G, 4G) of connectivity. The technology is ‘closed’ by its nature, which means that it is incompatible with other vendors. Subsequently, networks have been very difficult to adapt and upgrade, with the hardware giants dictating the timings and cost of any maintenance and installation.

As we move towards the introduction of 5G, the industry is now beginning to realise that the economics of building the RAN need to change. 2019 saw significant moves towards OpenRAN, a new model of building radio networks, based on a software-centric and open infrastructure. The benefits of OpenRAN were illustrated by Vodafone’s announcement that it would be opening its entire RAN in Europe to OpenRAN vendors during TIP Summit in November. Both the O-RAN Alliance and the Telecom Infra Project (TIP) are leading the industry towards OpenRAN, with the O-RAN alliance driving industry standards, and TIP driving deployments.

Understanding the value of OpenRAN

The OpenRAN approach is achieved by separating hardware and software in the network. This helps networks support open interfaces and common development standards, to deliver multi-vendor, interoperable networks. This gives operators the flexibility to cost-effectively deploy and upgrade their networks, reduce complexity, and deliver coverage at a much lower cost. OpenRAN also makes it easier for network to support dynamic spectrum sharing (DSS) technology, which allows LTE and 5G New Radio technology transmission at the same time. DSS is key to the early adoption of 5G smartphones, which will rely on both 5G and LTE transmission.

Analysts’ projections from ReTHINK show that the costs of building 5G Macro-cell networks will fall by 50% if deployments incorporate open architectures. This saving equates to hundreds of millions of dollars in the overall total cost of ownership, and will help mobile operators extend investments and become more profitable.

In developed markets, 5G roll-out is in full swing and operators are spending considerable amounts building out their next generation networks and marketing them to the public. However, current connectivity standards cannot be neglected, and operators need a new, software-based approach that will allow them to deploy and run 5G technology efficiently alongside their 3G an 4G networks. This is why OpenRAN is so appealing to operators such as Vodafone, as it enables to manage all connectivity standards using a software interface.

Meanwhile, operators in developing markets are currently focussed on scaling 2G, 3G and 4G to rural and urban areas that don’t have internet. But developing markets have a low average revenue per user, so operators in these markets won’t survive with the approach of building and managing siloed networks for each network generation, as CAPEX and OPEX will skyrocket.

Internet para Todos (IpT), a wholesale operator owned by Telefonica, Facebook, and Latin American banks IDB Invest and CAF Bank is also driving momentum. It recently opened talks to bring a second operator on board, after connecting more than 650 sites and covering 800,000 people (450,000 actual customers) with a 4G rollout in rural Peru. Meanwhile, MTN, the South Africa based operator, recently announced that it is deploying OpenRAN technology in 5,000 sites as it looks to unify its 2G, 3G and 4G networks, to save costs for itself and its customers.

The OpenRAN initiative takes off

In 2020, the momentum behind OpenRAN will continue to grow as other operators realise how they can reduce costs, drive more competition between technology vendors, and stimulate higher levels of innovation in the industry.

OpenRAN clearly has the support from major players in the industry, however, it is vital that operators consider the most effective technology partner to enable the OpenRAN vision. OpenRAN must address all generations of mobile connectivity standards together – 2G, 3G, 4G and 5G. If MNOs decide to only introduce OpenRAN for 4G and 5G, they will still be faced with managing separate legacy and new networks, which contradicts the aims of the initiative.

Being able to support all generations of mobile connectivity under the same OpenRAN software umbrella is crucial to providing reliable connectivity for all and allowing the transformative benefits of 5G to be realised. The industry is hungry for change, and open-minded operators are the ones which will succeed. That might mean the traditional ‘big 3’, don’t stay the big 3 for long!

 

Steve has worked in the technology industry for over 20 years and is the founder and CEO of Parallel Wireless. Previously, as founder and CEO of Endeca, he built the business ultimately leading to Oracle acquiring the company. He was part of the team creating Akamai that developed global Internet content distribution – now carrying peaks of 15 terabits/s of web traffic on any given day – and led the team at Inktomi that reimagined the network cache to create carrier class caching. Steve also previously worked with AT&T Teradata. He has a BS from Princeton University and MBA from Harvard Business School.

Telenor Norway goes all-in on Ericsson for 5G RAN

Norwegian vendor Telenor has announced Ericsson will be the sole vendor for its 5G radio access network, replacing incumbent Huawei.

“We are happy to announce that we have chosen Ericsson to start building the future 5G radio network in Norway, and I am confident we now are perfectly positioned to be in the forefront of the country’s network modernisation,” said Petter-Børre Furberg, CEO of Telenor Norway.

“As the first mobile operator on 5G in Scandinavia, Telenor will ramp up the roll out of 5G to our customers in Norway in 2020. The full modernisation of the mobile network in Norway is an ambitious undertaking, and something we are excited to get started on.”

A wholesale change of vendors such as this is a tricky process if you want to avoid any disruption to the service. The modernisation of the RAN, which currently uses entirely Huawei kit, is expected to take 4-5 years. So Huawei will be in play during that time, including some of the 5G upgrade work. That implies this is a business decision rather than a security one, which is consistent with the Norwegian governments apparent decision not to ban Huawei from 5G.

“We expect 5G to be the one technology that will transform our society the most in the next decade,” said Sigve Brekke, CEO of Telenor Group. “We have been through a thorough process to evaluate all the main vendors’ ability to deliver on Telenor’s requirements for the future mobile network.

“When selecting the vendor for the radio access network, we have considered important factors like technical quality, ability to innovate and modernise the network, commercial terms and conditions, as well as carried out an extensive security evaluation. Based on the comprehensive and holistic evaluation, we have decided to introduce a new partner for this important technology shift in Norway.”

This news comes hot on the heels of Telia Norway making exactly the same decision, so Ericsson has Norway pretty much sewn up when it comes to RAN work for the foreseeable future. In the core Ericsson has to coexist with Nokia and that is set to continue with 5G. For Huawei, being frozen out of a market in which it is being allowed to compete freely must be a significant blow.

Telefónica Deutschland picks Huawei and Nokia for its 5G RAN

As part of a broader announcement concerning its 5G plans, Telefónica Deutschland revealed Huawei and Nokia are the chosen kit vendors for its 5G radio access network.

Referring to them as ‘proven strategic partners’ TD indicated that it has an established working relationship with the two vendors and doesn’t see any need to change that. That said, TD also noted that they will have to pass a safety certification as required by German law, the details of which are still being thrashed out.

So TD seems to be saying it has no problem with Huawei, at least in the RAN anyway, but ultimately it can’t fully commit to it until the government makes up its mind whether or not it constitutes a security threat. What will happen if the government does throw a spanner in the works is unclear, but since TD has a multi-vendor policy that might be good news for Ericsson. The decision on the core network will apparently be made next year.

The broader strategic statement made by TD is to significantly accelerate its growth for the next couple of years by spending 17-18% of its revenue on expanding its 4G network and getting its 5G one off to a flying start. As Light Reading notes, this will require a dividend cut, which will upset some investors, but you can’t have it both ways and the money has to come from somewhere.

Telecoms had a good 2019 and expects a better 2020 – survey

Our latest industry survey reveals a an optimistic outlook, largely bolstered by the launch of 5G commercial service, but also helped by innovations and progress in other quarters of the industry.

The newly published Telecoms.com 2019 Annual Industry Survey Report, produced based on the responses to the eponymous survey, took an overview of the industry landscape over the last 12 months and projects to 2020 and beyond. There is a perceptible optimism among the respondents. 57% of them think 2019 has either been good or excellent. Meanwhile, more than three quarters of the respondents are looking forward to a positive or very positive 2020.

“The waiting for the commercial launch of 5G finally came to an end this year,” said Scott Bicheno, Editorial Director of Telecoms.com. “Hardly a day would pass without us reporting some kind of 5G news, either new technology breakthrough or new business initiatives. Improved performance of many telecom companies including operators has also helped improve the mood of the industry, so have the exciting continuous innovations both on the technology and business fronts.”

The report also digs deep into the most pertinent topics of the industry, including 5G rollout and its next step prospect, opportunities and challenges of digital transformation, IoT and communication service providers’ role, and the modernisation of operating and business support systems (OSS/BSS).

The single biggest change in the industry landscape over the past year was apparently the launch of commercial 5G service in different parts of the world. Although so far, the most marketed service is high speed internet access, including on mobile and fixed mobile access, B2B services, including 5G serving other vertical industries, will clearly feature much stronger the near future.

“The success of 5G, including end-to-end network slicing, mandates a unified view across layers and domains, built upon understanding network and service topology and relevance to customers and devices,” commented Dr. Konstantinos Stavropoulos, Solution Marketing Lead, EXFO. “5G mandates actionable insights and intelligent automation to detect and resolve or to predict and prevent customer- and device-impacting issues in real time.”

Meanwhile, there is strong consensus among the respondents that telecom companies need to undergo big transformation to unleash the full potential of new technologies, primarily because the old business model, centred on connectivity provision, is losing values.

“The telecoms.com survey has been for several years the annual health check for the industry. It provides the real insight into what the industry really thinks and cuts through any hype and hyperbole. The results show the good, the bad and sometimes the ugly prospects,” said Martin Morgan, VP Marketing, Openet. “Thankfully this year there’s been more good than bad and the outlook is refreshingly positive. As the results showed the industry has turned a corner: digital transformation is well on track, new revenue streams are opening up and 5G is being rolled out.”

IoT is one of those industries that connectivity is only a small piece on the whole value chain, and telecom operators expect, and are expected, to play a much stronger role in the ecosystem.

“The 2019 survey highlights that IoT investments are well advanced today with the majority of respondents having already started to introduce services, and smart cities, utilities and industrial/manufacturing topping the list of prospective verticals,” said Ann Hatchell, CMO of Incognito Software. “Achieving excellent IoT service quality coupled with operational efficiency is clearly top of mind for CSPs and IoT providers. The research reinforced the importance of remote device management in delivering extensive automation in zero-touch provisioning, automated device discovery, and access to data telemetry to improve business intelligence and monetization opportunities,” added Hatchell.

New opportunities, presented by 5G and other new technologies and new business models, require both the network-facing and the customer-facing support networks to catch up with the change. It is encouraging to see that an overwhelming majority of the respondents recognise the demands for modernisation.

“In recent years, B2B enterprise monetisation was overshadowed by the focus on consumer monetisation which demanded digitalisation in a highly price-sensitive and data-focussed market. B2B enterprise monetisation has been allowed to fall behind in terms of service experience, efficiency and personalisation,” commented Gary Bunney, CEO of MDS Global.

“With the advent of 5G, a growing SME market and the exploding IoT market, this has to change. There are increasing requirements for ‘designed-for’ B2B BSS platforms, delivered as a cloud service, which enable cost-efficiencies and dedicated service delivery. Business demands new digital engagement tools designed for efficient and personalised interaction with enterprise markets, resellers and partners.”