Abu Dhabi investment fund buys 1.85% Jio Platforms stake

Reliance Industries have found a fifth investor to purchase a handsome stake in Jio Platforms, its digital business unit, with Mubadala signing a $1.2 billion cheque for 1.85%.

Confirmed via Twitter, Khaled Abdulla Al Qubaisi, CEO of the Aerospace, Renewables and ICT portfolios for Mubadala, revealed the $1.2 billion investment will make the firm a stake holder in Jio Platforms, the holding company of disruptive telco Reliance Jio and numerous other digital ventures. “This investment is in line with our current ICT strategy and complements our portfolio of investments in telecoms, satellite operations, data centres and other ICT infrastructure,” Al Qubaisi said.

For Reliance Industries, it certainly caps off a successful seven weeks, though who knows whether there are other irons in the fire.

Jio Platform investments since April 22, 2020
Partner Stake Investment Date
Mubadala 1.85% $1.2 billion 4 June
General Atlantic 1.34% $860 million 18 May
Vista Equity Partner 2.32% $1.5 billion 11 May
Silver Lake 1.15% $750 million 4 May
Facebook 9.9% $5.7 billion 22 April
Total 16.56% $10.01 billion

As you can see from the table above, it certainly has been a profitable couple of weeks for the Reliance Industries MD Mukesh Ambani. Aside from the additional cash which is being invested into the business to continue network deployment and upgrades, there are some interesting synergies.

Facebook, for example, offers interesting opportunities to work with SMEs in the emerging cashless economy. General Atlantic already invests in Doctolib, digital healthcare platform in Europe to connect health professionals and patients. Mubadala is the same.

One of the Mubadala investments happens to be Yahsat, a satellite company which offers voice and data coverage across 161 countries. Not only could this company assist Jio by improving the connectivity patchwork in India, it is also an interesting partner to have in the mix for international roaming.

Each of these investors have expertise and investments which would be of interest to the Jio connectivity mission, or the second wave of monetization which follows the democratisation of the mobile internet.

4G subscriptions in India (2015-21), thousands
Year Bharti Airtel Vodafone Idea Reliance Jio Other Total
2015 1,459 21* 77 1,557
2016 10,800 9,541* 72,000 3,700 95,150
2017 30,000 36,998* 160,091 22,466 242,130
2018 77,067 75,300 280,100 22 433,061
2019 127,345 104,200 370,000 604,745
2020 180,491 105,062 406,978 702,686
2021 219,718 110,344 403,310 754,803

*For simplicity, Vodafone India and Idea Cellular subscriptions have been bundled together

Source: Omdia World Information Series

The table above offers a lot of information, but there are a few very important points which we would like to draw attention to.

Firstly, the total number of 4G subscriptions in India. At 754 million, there is still plenty of headroom for growth in a country where the population exceeds 1.3 billion. Secondly, the Reliance Jio disruption dragged the India market through a digital revolution from 2016 onwards. And third, Reliance Jio has a much greater opportunity to diversify revenues through digital services as it has more 4G subscriptions than its rivals.

When you look at the subscriptions data for all mobile technologies, adding everything from 1G through to 5G, the market share battle looks a lot more flattering for Bharti Airtel and Vodafone Idea, but it is a misleading picture. We are focusing on the 4G subscriptions as there is much more potential for additional revenues from this generation of mobile connectivity.

The blunt force object approach to telecoms is selling more subscriptions at an attractive price. Reliance Jio is clearly better at this than rivals, and there is more opportunity to sell 4G contracts in India. This will make Reliance an interesting investment, but the more savvy investors will look at everything this connectivity enables.

Through Jio Platforms, Reliance Industries has launched ventures into digital entertainment, AI, enterprise connectivity, IOT and many others. Democratising connectivity is an entry point to build a second wave of businesses as more of India is brought into the digital economy. These additional investments could be healthcare orientated, offering an alternative to traditional banking infrastructure or digitising government services. As the growth of Silicon Valley has shown, there is potential to make fortunes by leveraging connectivity.

This is why Jio Platforms is getting foreign investors excited. There is so much more to India’s digital economy than selling 4G subscriptions.

Nokia signals its technology virtue

Finnish kit vendor Nokia has been getting involved with liquid cooling 5G base stations and dynamically refarming loads of spectrum.

Ericsson might be having a good run of 5G deal wins, but can it liquid cool its base stations? Well, Nokia can. The proof of the pudding is in its deployment by Finnish MNO Elisa, for which the new tech is helping reduce the potential energy expenses of its base stations by 30 percent and CO2 emissions by approximately 80 percent. This is apparently the first commercial deployment of this sort of thing.

Base stations produce a fair bit of heat, most of which is dissipated into the air around them. By using liquid cooling, that heat can be repurposed, although it’s not immediately obvious what for. Liquid-cooled sites are silent, we’re told, they require zero maintenance, and can be 50 percent smaller and 30 percent lighter than standard active air conditioning units.

“Nokia was first to introduce a liquid-cooled base station with the 2G, 3G and 4G base stations with Elisa in Finland,” said Tommi Uitto, President of Mobile Networks at Nokia. “Now we have demonstrated the world’s first liquid-cooled AirScale 5G base station in commercial operations, making liquid cooling a reality for all network generations. This innovative solution supports operators in their quest to be more environmentally responsible while allowing them to achieve significant cost savings.”

“Elisa has set a clear target to be carbon neutral at the end of 2020,” said Sami Komulainen, EVP of Production at Elisa. “We also want to maintain our 5G leadership and continue to be amongst the top operators in the world to offer the wide benefits of this new technology to our customers. Innovations such as Nokia’s liquid cooling 5G base station demonstrate how 5G can help drive sustainability.”

Save a few euros and get to do some eco virtue-signalling at the same time, seems like a double win to us. Meanwhile Nokia has helped Vodafone Idea to complete what they claim is the world’s largest Dynamic Spectrum Refarming deployment. As the name implies, DSR technology enables MNOs to allocate spectrum to different radio technologies on the fly, which should make the transition from one generation to another more smooth. The two also collaborated over some massive MIMO gear.

“At a time when connectivity is so crucial, the deployment of DSR and mMIMO will help Vodafone Idea enhance network capacity and improve the experience for their customers,” said Sanjay Malik, Head of India at Nokia. “We are committed to helping mobile operators around the world strengthen and optimize the efficiency of their networks through innovative solutions so that they can fully utilize all available resources.”

“Dynamic spectrum refarming provides us with more network capacity and data speed to enable us to deliver best-in-class network experience to our subscribers,” said Vishant Vora CTO at Vodafone Idea. “Vodafone Idea was the first one to trial the DSR and I thank Nokia for the close partnership. Similarly, we have the largest deployment of mMIMOs in India and our investment in mMIMO technology significantly helped us in meeting the growing data demand during the COVID-19 crisis.”

So, Ericsson got to show off yesterday, today is Nokia’s turn, but things are strangely quiet from Huawei. Come on, you’re not going to let a bit of aggro from the US keep you down are you?

Rakuten takes first step towards a hybrid operator/vendor telco

Rakuten and NEC will develop a containerized standalone (SA) 5G core network, which will become one of the first products available on the Rakuten Communications Platform (RCP).

Although any news or developments coming out of Tokyo are of interest to the world nowadays, there are two very distinct elements to this announcement. Firstly, the creation of a containerized SA 5G core network, and secondly, the emergence of a hybrid telco model, where Rakuten is an operator but also a vendor, selling products to other telcos who want to embrace the open revolution.

“We are very excited to collaborate with NEC on the development of our standalone 5G core network,” said Tareq Amin, CTO of Rakuten Mobile.

“Our partnership with NEC represents a joint collaboration to build an open, secure and highly scalable 4G and 5G cloud native converged core, that will also become a key feature of the highly competitive services we will offer to global customers through the Rakuten Communications Platform.”

The containerised SA 5G network core will be built on software source code developed by NEC, powering the standalone network launch in 2021 (theoretically). Although the product itself is not exactly revolutionary, the concept has been discussed for years, the selection of NEC is a notable one.

NEC software will be the brain of Rakuten’s network, one which is build on OpenRAN technology and virtualised components. This is a vote of confidence in the Japanese vendor, a mark of credibility in an ecosystem which is still in its embryonic days. The inclusion in one of the industry’s most ground-breaking projects certainly gives it an advantage over rivals, many of whom are attempting to justify their existence in the Open ecosystem.

The Rakuten overarching mission is one which has captured the imagination and interest from telcos around the world; an attempt to build a network entirely with ‘open’, non-proprietary technologies. Should it work, it could be a gamechanger when it comes to the telco supply chain.

The promise from Rakuten is to deploy a network cheaper than via traditional means, but also to slash operational costs. The executive team has already said it envisions a network operations team of hundreds, as opposed to thousands as per normal, which could result in saving millions each year. If these savings are transferred through to lower data tariffs, there could be a disruptive force on the horizon.

Should this gamble pay off for Rakuten, there will be considerable interest in the ‘open’ ecosystem, with NEC collecting much of the plaudits but the likes of Mavenir, Parallel Wireless, Altiostar, Red Hat, Cisco, Innoeye and Netcracker all benefitting. These companies are of course very interesting, but it is the Rakuten Communications Platform (RCP) which is a more dramatic shift.

Rakuten has not been shy about his intentions to sell its ideas. It is an interesting move, as few telcos would want to sell their family jewels, and this is what the Rakuten ‘open’ network would be. This is the secret recipe, a competitive edge over rivals, but Rakuten wants to monetise this.

With all the innovation taking place in Rakuten’s network deployment strategy, the opportunity to monetize these ideas by selling to potential rivals is certainly a new approach. Few other telcos would want to take this approach, but few other telcos can implement this strategy in earnest, perhaps explaining why it is open to selling the secret recipe.

Rakuten’s network is greenfield, while most others are brownfield. Rakuten can implement these new ideas everywhere, whereas rivals can only consider elements here and there. Rakuten will always have an advantage taking a wholesale approach, whereas others can only take the bit-part route.

This is a new dynamic, a new business model for the telcos, creating a blended operator/vendor hybrid company. Should this work, it will be interesting to see how many other telcos embrace such a collaborative mindset, one which is very counterintuitive to attitudes today.

US path to mid-band spectrum not as simple as some make it seem

Despite many proclamations and posturing during the development years of 5G, mmWave is not living up to expectations, but securing valuable mid-band assets is becoming an increasingly complex project.

As it stands in the US market, T-Mobile US has access to 2.1 GHz spectrum to deliver 5G services. These assets were accessible due to the recently approved merger with Sprint and offers a significant advantage over Verizon and AT&T, both of whom are still operating in the high-frequency airwaves, the mmWave, which delivers high-speed and low coverage for an overall substandard experience.

Over the next 12-18 months, theoretically, more mid-band spectrum should be made available to the likes of Verizon and AT&T, as well as Dish as it expands its offering, through three separate spectrum auctions. However, there is still plenty which can go wrong in the meantime according to Chris Pearson, President of 5G Americas.

“If history shows us anything it is that we have not been very successful at co-operation,” Pearson said during a call with Telecoms.com.

What Pearson is referring to here is collaboration between private industry and public organisations to either harmonise spectrum usage or clearing the bands to offer more power to the mobile service providers. There are success stories, clearing the 1700-2100 MHz airwaves is one, but these outcomes are seemingly more the exception rather than the rule.

The issue with spectrum is simple. High frequencies offer exceptional download speeds but very poor coverage, while at the other end with low-frequency bands a telco can offer excellent coverage, but the download speeds and latency will be woeful. This is why mid-band assets are so important, it is a more palatable compromise between speed and coverage, a mobile experience which can be sold as an upgrade to customers.

When we asked Telecoms.com readers about how important the mid-band airwaves are 68% said without these assets it is impossible to deliver an attractive 5G service. Only 3% said the industry should be paying more attention to mmWave, and 8% believed mid-band spectrum is critical for the moment but its importance would fade behind mmWave eventually.

“Can we move along without it,” Pearson said. “Absolutely. But for the long-term we will need more spectrum.”

As Pearson highlights, there are three spectrum auctions on the horizon which are worth paying attention to. At the end of July, the ‘CBRS’ band at 3.5 GHz will make 150 MHz of spectrum available to the industry. In December, the C-Band airwaves (3.7-4.2 GHz) should be cleared up to make an additional 280 MHz of spectrum available. And the NCIA (NATO Communications and Information Agency) is currently producing a report to free up more assets in the 3.1-3.55 GHz range.

Theoretically, there should be plenty of spectrum available for the mobile network operators to deliver a comprehensive 5G solution, though this is under the assumption that everything runs smoothly.

Firstly, the ‘CBRS’ auction has already been delayed once. It should go ahead of course, but there is always a risk.

Secondly, the C-Band auction, scheduled to take place in December, is currently under threat from legal action. Several smaller satellite broadcasting companies who are being asked to vacate and/or move operations in these airwaves are kicking up a fuss. The aim is to shift the satellite operators in the 3.7-4.2 GHz range into a consolidated 200 MHz block, which would offer plenty of room for the telcos to play around it, but there are dissenters.

PSSI Global Services has filed a lawsuit in the District of Columbia arguing the FCC is crippling the entire industry by forcing through the changes in this spectrum band. Should this legal challenge gather momentum or spin-off into different directions, it could impact the availability of assets in the C-Band range, and subsequently delay the auction.

The final area is another very difficult issue to manage. The report which is being produced for the 3.1-3.55 GHz range has only completed one of six sections. This report is supposed to shed light on what the spectrum is being used for, by whom and ways which it can be rationalised to add more available spectrum for mobile operators. But Pearson highlighted that progress has been sluggish.

The issue seems to be that it is difficult to understand what the spectrum is currently being used for, the incumbents are not being the most helpful as there are confidentiality hurdles to negotiate. No-one officially knows what this spectrum is actually being used for which usually means it is something to do with the military or intelligence services.

Without co-operation from the incumbents, it becomes very difficult to audit these airwaves and create a logical strategy to move forward.

To understand the importance of mid-band spectrum, it is worth looking at the experience being delivered without access.

According to OpenSignal’s most recent analysis of the US market, Verizon is delivering speeds few other international telcos can compete with over mmWave, but this digital dream is only accessible to 0.5% of its 5G subscribers. Elsewhere, for example in the UK where mid-band spectrum is being utilised, there is a speed upgrade (albeit nowhere near as much) but 12X more users are able to access the 5G airwaves.

What is critical about 5G right now is not delivering gigabit speed over the air, there are no applications which require this today, but demonstrating 5G is an upgraded service. Speed and latency improvements are a must, but if the users cannot access them the money spent on 5G networks are a complete and utter waste of time.

The US does of course recognise this situation, Pearson highlighted there is momentum gathering in support of the telcos in Washington, however it is far from an ideal situation. This is a pain point, though there is plenty of risk on the horizon to acting as a blocker for the solution.

China leads the way as mobile network core market proves resilient

With the difficulties presented by COVID-19, the 5G roadmap might not have progressed as planned, but growth has remained steady for mobile core deployments.

There might be a few vendors nursing headaches as RAN deployments have not scaled as some would have expected, but some consolation can be found in the network core segment. Over the last twelve months, the segment grew 10% to nearly $8 billion with several high-profile deals inked, most notably in China.

“Our outlook has become more positive, especially since the Chinese service providers accelerated their plans for 5G Core deployments,” said David Bolan, Senior Analyst at Dell’Oro.

“China Mobile and China Unicom have completed their 5G Core tenders, and plan to launch 5G service early in 3Q20. We expect other Chinese service providers will follow very soon. This has raised our outlook to an anticipated growth of 14 percent year over year for the trailing four quarters ending in 1Q21.”

In April, China Mobile selected Ericsson, ZTE and Huawei to deploy 5G network cores across the country, while Nokia saw a minor victory by securing a contract for core deployments with China Unicom. With China Telecom and China Broadcast Network, the newly created fourth telco, undergoing their own tenders, there could be some PR wins on the horizon.

While China is surging forward with its network deployment strategy, it is not alone. In Germany, some activities might be inhibited by the on-going coronavirus pandemic, however Telefonica Deutschland has awarded the contract to deploy its own network core to Ericsson.

“As a network operator serving the most mobile customers in Germany, we have a special social responsibility to provide secure networks,” Telefonica Deutschland CEO Markus Haas said.

Work should be completed on the network core during 2021, with the team targeting network slicing and edge computing services.

“With our cloud compatible 5G core network, we are entering a new technology era,” said Mallik Rao, CTO of Telefónica Deutschland. “Gigabit data rates, real-time communication and massive IoT – these visions are now becoming reality.

“We have a clear plan for the further development of our network infrastructure towards a standalone 5G network that can handle the massive data streams of the future and open up new digital business models for all our customers. In doing so, we are relying on the latest network technologies that the market has to offer.”

Similar to other European nations, German telcos have made the decision to remove Huawei, and other vendors who would be deemed high risk, from network cores. Interestingly enough, this trend does not seem to have had too much of a material impact on Huawei’s business. Dell’Oro estimates Huawei and Ericsson combined for over half of the market, while Nokia, ZTE, and Cisco more than 25%.

Although the network core elements of 5G is not the most financially rewarding for the infrastructure vendors, it is a very good sign for the industry. Although widespread installation of 5G base stations are an easy boast, 5G services cannot be delivered in earnest without a 5G network core, enough fibre in the ground and a dispersed cloud network where enough attention has been given to the edge.

Progress in the core is progress for 5G as new services, such as network slicing and automation, can be more effectively delivered. It might not be the most profitable part of the industry, but perhaps a more material indicator of 5G progress. 5G RAN offers a speed upgrade, somewhat of an aesthetic benefit, but the core offers the opportunity to deliver services which were not realistic in the 4G era.

International voice traffic spikes 20% during COVID-19

Roaming traffic might be down substantially, but industry association i3Forum is reporting a surge in the number and duration of international calls.

International roaming traffic dropping in the region of 30% during the coronavirus pandemic, though international voice traffic increased 20% year-on-year in March, while the duration of phone calls was up 30% in March and over 60% in April 2020 compared to 2019.

“Changing user behaviours, resulting from the move to remote working and ‘stay at home’ orders, have had an immediate impact on the international voice market,” said Philippe Millet, Chairman of i3forum.

“i3forum Insights has seen an initial spike in traffic in March then a return to regular traffic volumes in April, albeit with different patterns as people have adapted to new social and working situations. What is striking is the growth in call duration. Calls are longer and that compensated for the decline in number of calls.”

Although the increased call volume is unlikely to compensate for the falling revenues attributed to roaming, it is another example of shifting consumer behaviour during the COVID-19 period. The world is slowly returning to some semblance of normality, but it is always worth remembering that some of the coronavirus behaviours will stick.

The extremity of today’s work from home dynamic will not persist, but some of the lessons learned will. Businesses can function without being in the office every single day and cloud technologies do have advantages. These behaviours will have an impact on telco operations, and although this lock-down period will not persist indefinitely, telcos are fooling themselves if they think the world will return completely to the pre-COVID-19 days.

As MasMovil becomes latest acquisition target, are more takeovers on the horizon?

KKR, Cinven and Providence have combined forces to buy Spanish telco MasMovil, but with depressed share prices and regulatory opinions shifting, it could be the first of many corporate transactions.

The merger and acquisition landscape has been somewhat quiet over the last few months, since the COVID-19 pandemic set in across the world, but we struggle to believe there are not cash rich investment funds considering weighty purchases. The most successful investment funds are only such because they can sniff an opportunity, and this is exactly what the MasMovil acquisition should be viewed as; corporate opportunism.

There are still approvals needed from Banca de Espana, the Spanish Telecoms ministry and Industry & Commerce ministry (foreign investment approval), as well as competition authorities in the EU, China, Turkey, Serbia and Israel. However, we suspect the process will run smoothly, especially considering MasMovil CEO Meinrad Spenger has already said he would support the transaction.

First reported by Reuters, the trio of bankers have now made an official public tender offer for $3.3 billion, a 22% premium on the opening share price this morning (June 1). Share price has surged 20%, as one would expect, though it has only just crept above the pre-lockdown levels.

This is what is very interesting about the telco market currently; share price for all major and minor telcos is severely depressed. For those who have money available, and the desire to push into the telecoms space, it is a very attractive opportunity currently.

Share price of selected European telcos during COVID-19 lockdown period
Telco Share Price, June 1 Share Price, Feb 3 Change
BT 120.51 163.34 -26%
Telecom Italia 0.48 0.34 -29%
Telefonica 6.11 4.48 -26%
Telenor 17.75 15.02 -15%
Orange 12.80 10.98 -14%
Vodafone 150.82 134.86 -11%

Share prices accurate at the time of writing – 10.30am, June 1

Some of the companies mentioned above would be too big to consider to be an acquisition target, Orange or Telefonica for example, though others could certainly fall into the right bracket. BT has a market capitalisation of £11.9 billion and is underperforming against UK rivals considerably, while the likes of KPN in the Netherlands could be another interesting target. Sitting third in the mobile market share rankings in the Netherlands, a cash injection and refreshed strategy could be a worthwhile gamble with the telco’s market capitalisation currently €9.42 billion.

Of course what is also worth noting is that the opportunity for acquiring business is not just limited to the bankers. Thanks to a ruling from the European Court of Justice, telcos might have renewed enthusiasm for market consolidation.

Last week, the General Court of the European Court of Justice annulled a decision made in 2016 to block a merger between O2 and Three in the UK on the grounds of competition. In annulling this decision, it challenges the long-standing belief that mergers which would take a market from four operators to three would be vetoed automatically.

This decision is very important for those who have been championing market consolidation. Some argue fewer telcos would results in more concentrated network investment, as well as scaled economics thanks to larger customer bases. The decision from the European courts opens the door for potential market consolidation.

There are of course markets where consolidation is not realistic, the Netherlands or Belgium for example where there are only three mobile network operators (MNOs) today, but there are others where this could be an interesting development. Spain is certainly one of them.

The Spanish market is one where there is plenty of competition. There are currently four major mobile operators, albeit MasMovil is an MVNO, while Euskaltel announced plans to challenge the market with a Virgin Media branded proposition. KKR, Cinven and Providence want to take control of MasMovil, but might Orange be tempted to muscle in on the action?

Telco subscriptions in Spain (2018-2021)
Telco 2018 2019 2020 2021
Orange 19,450,963 19,016,941 19,783,330 19,890,931
Telefonica 18,384,400 18,916,801 19,579,529 20,040,114
Vodafone 15,500,832 15,427,639 15,262,546 15,406,460
MasMovil 6,760,000 7,435,000 7,513,777 7,952,289

Source: Omdia World Information Series

MasMovil could look attractive to Orange for several reasons. Firstly, this is a telco which is heading in the right direction, subscriptions are growing year-on-year. Secondly, MasMovil has bought into the convergence business model which is being championed by the Orange Group. And finally, MasMovil is a MVNO customer of Orange’s Spanish wholesale business, making integration a bit simpler.

With the European courts turning a new page on market consolidation, possibly indicating authorities might be more accommodating of such transactions, this could be an idea which is being discussed in the Orange offices. It would make sense for Orange’s ambitions in the country, while MasMovil is open to some sort of transaction.

Some might also suggest Telefonica would be interested, but with the management team desperate to reduce the €44 billion debt burden and its credit ratings not exactly sparkling, this is unlikely. Vodafone might have considered such a move at another time, but it has larger problems to tackle without adding the complications of an acquisition, most notably in India and Italy.

Speculation aside, KKR, Cinven and Providence will attempt to buy the Spanish challenger telco. With a depressed share price and appreciation for the importance of the telecoms industry at its highest levels, we would not be surprised if this is only the first of several transactions from investment funds, though telco consolidation is also another story worth keeping a close eye on.

A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


GSMA cosies up to O-RAN Alliance

The GSMA, the telco industry lobby group, has announced a new partnership with the O-RAN Alliance to accelerate the adoption of Open Radio Access Network (RAN) technologies.

Full story here


Europe backtracks on market consolidation opposition

The General Court of the European Court of Justice has annulled a decision made in 2016 to block the merger between O2 and Three in the UK, potentially opening the door for consolidation.

Full story here


Huawei CFO loses first legal battle in extradition case

Huawei CFO Wanzhou Meng, the daughter of Ren Zhengfei, has lost her first legal battle in Canada and will now have to face an extradition case.

Full story here


Data privacy is in the same position as cybersecurity five years ago

It has taken years for the technology and telecoms industry to take security seriously, and now we are at the beginning of the same story arc with privacy.

Full story here


Indian telco association pushes for ‘floor tariffs’ on data pricing

In an open letter to India’s telecoms regulator, the Cellular Operators Association of India (COAI) has pressed for quicker decision making on pricing restriction rules.

Full story here


UK’s National Cyber Security Centre launches another Huawei probe

The National Cyber Security Centre (NCSC) has confirmed it is attempting to understand what impact potential US sanction directed towards Huawei would have on UK networks.

Full story here


 

GSMA cosies up to O-RAN Alliance

The GSMA, the telco industry lobby group, has announced a new partnership with the O-RAN Alliance to accelerate the adoption of Open Radio Access Network (RAN) technologies.

Although the benefits of OpenRAN technologies are still widely disputed by opposing corners of the industry, there is clear momentum gathering. With telcos desperate to make the commercial realities of network deployment more attractive, it should come as little surprise new ideas are being embraced.

“As the demand for data and vastly expanded mobile communications grow in the 5G era, a global, cross-border approach is needed to rethink the RAN,” said Andre Fuetsch, Chairman of the O-RAN Alliance, and CTO of AT&T.

“The GSMA collaboration with the O-RAN ALLIANCE is exactly the sort of global effort that’s needed for everyone, operators and vendors alike, to succeed in this new generation.”

The promise of OpenRAN technologies is simple. Firstly, more competition will be introduced to the market to encourage diversity and resilience. Secondly, once hardware and software have been disaggregated, deployment costs will be decreased, and innovation can be increased as best-in-breed technologies can be selected for each segment. Finally, vendor lock-in will become a thing of the past.

The Telecom Infra Project (TIP) has recently released a report which demonstrates the drive of the mobile network operators (MNOs). 53% are now prioritising total cost of ownership (TCO) reductions as profits erode and capital expenditure expenses increase.

What is worth noting is that the MNOs are taking a realistic view on the development of this segment. 66% believe Open RAN technologies will be critical to the survival of numerous MNOs as ARPU falls, but it will be several years before a comprehensive, resilient and competitive ecosystem emerges. A third of tier-1 and half of tier-2 telcos believe they will have commercially launched OpenRAN by 2023, but this does not mean the death of traditional network infrastructure within a generation.

While all these promises sound very interesting, optimism is not shared by all in the industry.

“Not all openness is good and not all closed-ness is good,” Nokia CTO Marcus Weldon said this week.

The likes of Nokia, Ericsson and Huawei will give messages of support to OpenRAN in public, but there will always be an undertone of doubt, as is in Weldon’s message above. The OpenRAN movement fundamentally destroys their business model so it is not difficult to understand why they have resisted and not been as helpful as they could have been to date. Slowing down this movement provides a bit more time for profits without disruption to operations after all.

The OpenRAN ecosystem is not ready yet, despite what some might insist, though progress is being made. And while this partnership might seem like little more than a ribbon cutting ceremony it is also very important. Like Vodafone or Telefonica embracing OpenRAN trials, a partnership with the GSMA provides credibility for the technologies, encouragement for less adventurous and innovative telcos.


Telecoms.com Poll:

When will OpenRAN be ready to be embraced by the industry without reservation?

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Europe backtracks on market consolidation opposition

The General Court of the European Court of Justice has annulled a decision made in 2016 to block the merger between O2 and Three in the UK, potentially opening the door for consolidation.

In 2016, Europe decided it was better for sustainable competition that the four operators in the UK remain independent, blocking the mega-merger between O2 and Three. This decision has set market precedent over the subsequent period, with the generally accepted rule that bureaucrats would not allow less than four independent mobile network operators in a single market. This ruling turns that presumption on its head.

“In our appeal, we argued that the Commission’s approach to reviewing the proposed merger, and European telecoms mergers more broadly, was guided by a misconceived default view that European telecoms markets are better served by having a minimum of four Mobile Network Operators in each EU Member State,” CK Hutchison, Three UK’s parent company, said in a statement.

“This approach ignores market realities, the clear evidence of successful market consolidation in Europe and across the world as well as the very significant efficiencies in terms of increased investment, network improvements and consumer benefits that can be achieved from mobile mergers.”

As soon as the decision from Europe was made to block the merger between Three and O2 was made, the agreement between the two parties was terminated. It will now always be a case of what could have been, as this decision will not reignite talks between the two parties.

“Telefónica notes the EU Court’s decision, but the company has moved on,” a Telefónica spokesperson said. “Telefónica recently announced a transaction that combines Virgin Media, the UK’s fastest broadband network, and O2, the country’s most reliable and admired mobile operator, into a 50:50 joint venture that will create a powerful fixed-mobile challenger in one of its core markets.”

As there will be no material impact on the proposed merger between Virgin Media and O2, which was announced in recent weeks, questions will now turn to more general market consolidation in Europe


How do you feel about market consolidation in Europe?

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Europe has always been against market consolidation if the result leads to less than four independent service providers in the mobile segment. If concessions are offered, like in the Netherlands for example, mergers would be allowed but this would result in a diluted version of what the merging parties would have wanted to achieve.

The ruling from the General Court changes everything.

In 2016, the European Commission considered the reduction from four to three service providers would have resulted in increased prices, decreased quality of service, hindered investment in infrastructure and would have had a detrimental impact on the MVNO segment also.

The ruling which has been made public today disputes the claim there would be negative impacts on competition. Negative experiences for the consumer has not been seen in other markets around the world where there has been consolidation, while there were several flaws during the assessment process. The original assessment also failed to demonstrate effectively that network infrastructure would be impacted also.

With the General Court annulling the decision to block the merger, it is effectively saying Europe would consider market consolidation should there be a good business case. This is a very interesting ruling and statement to make, as it is effectively a green flag to the industry. Could this spur the market’s imagination for consolidation?