Global slowdown gives China a chance to leapfrog US and Europe in 5G race

Much has been made about the ‘Race to 5G’, and while much of it is little more than posturing, there are certainly economic and political rewards for accelerated deployments.

COVID-19 is a reality we will have to get used to for at least the immediate future. The outbreak is showing signs of slowing down, but that is only the first stage of recovery. It will be months until some semblance of normality returns to many parts of the world.

That said, China is reopening for business, and according to many reports, the 5G rollout is back on-track. This global pandemic, which is causing chaos in every facet of society, offers China an opportunity to make a challenge for 5G leadership, and it could result in a very difficult, divergent and discordant telecommunications industry.

Before we get into the guesswork and assumptions about the future, lets set the scene in Europe, North America and China.

Starting in Europe, the coronavirus outbreak has devastated the continent. The majority of countries are under some form of self-isolation regime, while telecoms operators are directing their attention towards improving resilience of broadband and 4G networks. These projects are seemingly forcing operators to refocus capital and resource away from 5G deployments, while the postponement of spectrum auctions will leave some operators short of the valuable airwaves critical to a 5G proposition.

In North America, the impact of coronavirus is perhaps several weeks behind Europe and other Asian regions, though it is now aggressively wrecking chaos. In the US, many citizens are under self-isolation measures, and the FCC delayed a spectrum auction for the mid-band spectrum which could make a considerable difference to 5G performance.

Both of these regions are staring at a recession in the mid-term, meaning customer demand for 5G, both consumer and enterprise, will be lessened, and while the high street is closed, device sales will take a material hit. With dampened consumer demand for 5G and telco attention being drawn elsewhere, the deployment of 5G networks will likely suffer.

Now over to China. Across the country, many regions are returning to normality as the lockdown lifts. Some presumed there would be a second wave of COVID-19 as the hustle and bustle returned to the streets, but so far there is little evidence of this. China appears to be returning to normal, which is of course an encouraging sign for the rest of the world.

That said, this is an opportunity for the Chinese telcos to ramp up 5G deployments as others slow down. And perhaps more encouraging for the Chinese telcos, there appears to be consumer demand as China Mobile boasted of 15 million 5G subscriptions during its last earnings call. The pieces seem to be falling into place.

The longer Europe and North America are in lockdown, the more of an opportunity the Chinese telcos have to close the gap on 5G network deployment, overtake and potentially create a leadership position as the new era of connectivity heads into the mainstream.

But realistically, having the biggest 5G network or the most 5G subscribers means very little on the surface. Politicians might like such soundbites, but it doesn’t translate into influence on the global stage unless China can capitalise on this transition to build a 5G enabled economy behind the posturing numbers. This is the very reason the US dominated the 4G era.

Although the first 4G networks were introduced in 2009, the democratised mobile internet did not really hit the mainstream until 2012/13.

4G subscription numbers (2010-14) during development years
  2010 2011 2012 2013 2014
USA 215,000 6,578,300 38,604,462 96,489,109 157,907,002
Japan 1,200 1,139,400 13,186,000 39,022,400 64,789,201
Germany 100 141,400 794,498 3,696,688 12,242,447
UK 0 0 250,000 2,866,000 19,309,727
China 0 0 0 800,000 98,130,800

Data curtesy of Omdia’s World Information Series (WIS)

As you can see from the table above, the US very aggressively pushed into the 4G era, while Japan followed quickly. Europe was slow to gain traction, while China arrived very late, but quickly scaled. Again, on the surface these are nothing but numbers, but you have to consider what they inspire.

4G brought about a new type of business model through the democratization of mobile internet services. What we take for granted today would never have seemed possible in 2012 as the concept of digital became a significant driver for economies. Today, the biggest digital fortunes are being captured by the early adopters, and many of them are located in the US or China.

By aggressively investing in scaling 4G networks, innovators had an opportunity to test out new ideas, products, services and business models on the domestic market. They collected revenues, fine tuned the idea and built a war chest for expansion into international markets. The entrepreneurs in markets where 4G was slow to scale did not have the same opportunities, and while these digital economies did eventually scale, the international pecking order had been established.

This is why scaling 5G networks faster than other nations is so important. 5G will bring about a new generation of products, services and business models, but in which country with the internationally dominant players be located? And where will the ecosystems to support these new ideas be concentrated?

Silicon Valley and Seattle are two regions which have hoovered-up the cash thanks to the likes of Facebook, Uber, Microsoft, Google and Amazon dominating the 4G era. And down another level, the ecosystems supporting all of these internet giants are prospering, and more likely to be in areas close to Silicon Valley and Seattle.

Let’s say a 5G ecosystem was to develop in Cambridge thanks to three random companies being the dominant forces in the 5G era, tomorrows Facebook, Amazon and Google. The faster these companies grow at the expense of others around the world, the more likely neighbouring innovation hubs are likely to appear as the supporting ecosystem/suppliers to these companies, bringing more jobs. Other companies will create their own R&D facilities in the surrounding areas as well, bringing more employment and prosperity.

Alongside these technology hubs, supporting industries such as legal and finance will blossom, as will construction to build homes, restaurants to feed people and high streets for shopping. It might sound simple but cultivating a growth industry offers a surge to the overarching economy.

In terms of numbers, if Silicon Valley was a country, it would be considered the second-most profitable country worldwide with $128,308 per capita in annual gross domestic product (GDP). Only Qatar is higher, while the Federal Bureau of Economic Analysis estimates this tech hub accounted for $275 billion in GDP, which is more than Finland.

The benefits of the 4G era has spread throughout the world now, but there are still regions were the greatest prosperity is evident.

Annual revenues of internet giants (2012-18)
  2012 2013 2014 2015 2016 2017 2018
Facebook 5,089 7,872 12,446 17,928 27,638 40,653 55,838
Amazon 68,090 74,450 88,990 107,010 135,990 177,870 232,890
Google 50,180 55,510 65,67 74,540 89,980 110,550 136,360
Uber 0 100 500 1,500 6,500 7,500 11,300
Microsoft 73,200 77,850 86,830 93,580 85,320 98,950 110,360

Total revenues in millions (US$)

5G will offer the same, and it looks like China has a chance to steal a bigger slice of the profit pie thanks to events today slowing down 5G network deployments in Europe and North America.

But what could this mean outside of an uplift to the economy?

Firstly, perhaps this is a lucky break for Huawei. It will of course collect profits through the sale of 5G base stations and 5G smartphones, but it will also create an opportunity to bed its Harmony operating system into the hearts and minds of a scaled 5G capable userbase, which would in turn encourage more developers to create services and products for this OS as well as Android and iOS. Without Android’s 5G users scaling at the same pace, Harmony OS might look like an attractive proposition to developers.

This is a very dire consequence for Google and can be traced directly back to the decision to place Huawei on the US Entity List, banning it from working with US partners and suppliers. China is a significant userbase, as are some of the nations who are closed allied with the Chinese Government or reliant on the country for trade, where Harmony OS could also blossom.

In the future, we could see three dominant mobile operating systems. Android and iOS in the West and Harmony OS in the East.

The second potential consequence of China taking the lead in the 5G stakes is further fragmentation in the global 5G ecosystem.

Should China push forward and accelerate the development of a 5G ecosystem based around its own companies and userbase, the political climate could threaten a wedge being driven in between the East and the West. You do not have to stretch the imagination too far to believe President Trump would take aggressive action to halt a Chinese leadership position in the technology world, therefore it is not out of the question to imagine two separate ecosystems, one based around the US technology industry and a second based around China.

This would be a disastrous outcome for the technology world, which has seen the consequences of fragmentation before. The globalised economy is benefiting many, though politics has for many years, and will continue for many years to come, threatened to splinter industries as isolationist policies in pursuit of patriotism become ever more popular.

And what would this mean for Europe? Forever caught between a rock and a hard place, this scenario would make for some very difficult international relations.

What is worth noting is that the final section of this article is very much theoretical. It is the worst-case scenario, but a realistic outcome. It shows what the power of 5G is to an economy and a nation’s influence on the global political stage.

China is going to scale 5G very quickly, but whether the 5G ecosystem benefits it more than other nations in the future is partly dependent on how much of a crippling effect COVID-19 has on 5G deployments and the ability of innovators to scale ideas.

Microsoft praises facial recognition regulation progress

Brad Smith, the President of Microsoft, has praised steps taken in Washington State to regulate controversial facial recognition technologies, but the landscape still remains incredibly fragmented.

Such issues would rarely bother the consumer today, but the same could have been said about a Facebook personality quiz in 2015. Like the proverbial butterfly flapping its wings, small actions have the potential to blossom into chaos, and the implementation of facial recognition certainly fits into this category.

As it stands, the freedom in which facial recognition technologies are being experimented with, thanks to a lack of accurate regulation, is dangerous.

“Washington state’s new law breaks through what, at times, has been a polarizing debate,” Smith said in a blog post.

“When the new law comes into effect next year, Washingtonians will benefit from safeguards that ensure upfront testing, transparency and accountability for facial recognition, as well as specific measures to uphold fundamental civil liberties.”

Regulation applied retrospectively is a very difficult thing to do. In this case, as some police forces and intelligence services have been making use of the technology, they might resist any attempts to draw limitations. Regulating proactively to prevent abuse instead of trying to take away existing powers is a much more effective approach to take, removing the risk of concessions and compromises.

This is what Washington State has done, as Smith praises. Governor Jay Inslee has attempted to get ahead of the adoption curve before it progresses too aggressively.

Passed on March 12 by a 27 to 21 count, Senate Bill 6280 was signed into law by the Governor on March 31. This piece of legislation creates a framework to dictate how facial recognition technologies can be used by authorities but protects democratic freedoms and civil liberties. This is the accountability that it required for a pervasive technology which poses a significant threat to privacy and a significant opportunity for misuse.

What is worth noting is that while Washington State is claiming the praise here, there are others who have made very ambitious progress in this field already.

Washington State should of course be commended for this piece of legislation, but lawmakers in Illinois deserve the crown when it comes to forward looking law. Senators in the midwestern state have already passed the Biometric Information Privacy Act, which offers stringent protections to citizens by designating biometric data as valuable as a social security number. Companies and authorities would have to consult users and citizens before using the technology, rules which Facebook has fallen foul of as it faces another privacy lawsuit in the state.

Amazingly, the Illinois Biometric Information Privacy Act protecting citizens against the free-wielding and unvalidated implementation of facial recognition technologies was signed into law in 2008.

While Illinois set the standards in years gone, Washington is taking legislation of this technology to a new level. Under the new rules:

  • APIs or other technical capabilities will have to be made available to enable testing of the technologies by third parties to ensure there is no bias embedded in the algorithms
  • Vendors must also disclose any complaints or reports of bias regarding the service
  • A clear use and data management policy must be created and validated before any technologies can be implemented by authorities
  • Humans, not machines, must be responsible for the decision making associated with any component of the facial recognition technology
  • Mass surveillance has been ruled out. Implementation must be for a specific purpose, though there are exceptions to the mass surveillance case, (1) if a warrant allows it (2) finding a missing person or identifying a deceased individual (3) exigent circumstances
  • Surveillance cannot be applied to any individual’s exercise of First Amendment rights, and authorities cannot justify facial recognition based on a person’s ‘religious, political or social views or activities’
  • Finally, any implementations must be opened to public consultation

There are of course many more nuances and clauses written in suitably foreign legalese, though as you can see from the bullet points above, this is a very comprehensive law which should prevent the flamboyant implementation of facial recognition technologies.

Getting regulation in front of the rapidly developing technology industry is a thankless and often impossible task, meaning most legislation should be viewed as risk mitigation. These rules are promising, but there will certainly be loopholes exploited by the slippery lawyers of Silicon Valley. However, Washington State legislators should be applauded for their efforts to control a potentially divisive technology.

Given the complexities of the technology industry, it is slightly unfair to criticise lawmakers for not being able to protect us completely from the nefarious twists and turns of the digital economy. Few people in the world understand how the technology industry works today, and a radically smaller percentage can accurately forecast developments over the next decade. This is what we are asking of legislators.

Washington, Illinois and California are three who have made progress, but it is critical other states follow the lead. For evidence of why, simply have a look at the impact 2015’s ‘This Is Your Digital Life’ Facebook app has had on life years later.

Verizon plugs healthcare in the never ending search for 5G ROI

Delivering 5G is the easy bit, figuring out how the telcos are going to make any real financial gains from it is the piece of the puzzle which is missing.

In its pursuit of the much lauded 5G profits, Verizon has announced a partnership with Emory Healthcare, creating what it now claims is the first 5G healthcare innovation lab in the US.

“The potential of Verizon 5G Ultra Wideband combined with mobile edge computing to transform healthcare is limitless,” said Tami Erwin, CEO of Verizon Business Group.

“Which is why Verizon is partnering with Emory to explore the 5G future of patient care. With 5G, doctors should be able to do things like create holographic 3D anatomical renderings that can be studied from every angle and even projected onto the body in the OR to help guide surgery.”

In what now appears to be the greatest PR campaign of the 21st century, the world was told 5G was the only way forward and it would recapture the lost fortunes of yesteryear for the telcos. The reality is somewhat different however as many telcos are still questioning how they are going to generate any ROI from the next generation of mobile technology.

The silver bullet is as real as a sociopathic unicorn, and it does now appear the industry has a new reality to ponder; profit by a thousand usecases.

In its efforts to create value in the healthcare industry, the Emory Healthcare Innovation Hub (EHIH) will aim to transform this vertical through the marriage of super-fast speeds and ultra-low latency networks, with real-time data analytics to add some credibility to the blue-sky thinking ideas of robotic surgery, the connected ambulance and remote patient monitoring.

Realistically, there is a lot to gain in the healthcare industry. This is a vertical which is under financial and operational pressure, and in desperate need of new ideas. Should the clunky bureaucracy of healthcare administrators be able to offer technology a clear path forward, there is an opportunity to create a preventative healthcare mission and significantly realise efficiencies throughout the hospital.

While it might seem like an obvious statement to make, the challenge which the likes of Verizon and Emory Healthcare will face here is going to be cultural. Perfecting the technology is the easy part of the equation, but convincing traditional industry to disrupt themselves will be a monumental task.

How North America will realise the promise of 5G with network densification

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Francesca Greane, Marketing, Content and Community Lead for The BIG 5G Event 2020, discusses the role of Network Densification in realising the promise of 5G.

Digital usage trends—such as 220 million connected vehicles on the road by 2020 and videos accounting for 82 percent of internet traffic by 2021—all point to the need for faster and more converged networks, but there is still uncertainty around how these networks will actually be achieved.

Indeed, network costs are expected to double with 5G, and North American operators are expected to start running out of capacity in at least 50% of sites starting 2020. Depending on the area (urban or rural), carriers will be able to meet the increased traffic needs by densifying their networks with macro-sites or small-cells. And while urban environments will bring the increased revenues, there is pressure on from a federal level to equally cater for rural connectivity needs.

As the CFO of Sprint, Tarek Robbiati, put it in an interview with Wireless Week: “We are not building a network that is 4G; 4G is almost a thing of the past. We are building a 5G network for the future and 5G networks are fundamentally different to 4G networks. They are all around high capacity and the more spectrum you have the more capacity you have, the more spectrum you deploy the more you can connect customers and the more speed you can give customers across your network and that requires a fair bit of densification.”

Some of the primary ways to achieve network densification include increasing the number of antennas and small cell sites as well as upgrading to sector-splitting and massive multiple input/multiple output (MIMO) technologies yet, even though the technology is largely there, the market is still lacking in commercial examples of building, launching and monetising a densified commercial network.

To help tackle this, experts from Boingo Wireless, Heavy Reading and Verizon will be joining The BIG 5G Event’s upcoming webinar on March 10th in order to explore North American commercial experiences of densifying a network and applications of cutting-edge technologies that will accelerate this process and bring valuable ROI.

Breaking down topics such as the concept of mMINO and applications, how beam forming will improve network performance, what network topology needs to be put in place to make mmWave work, network slicing to support 5G applications and so much more, this is an exclusive opportunity to gain business-critical insights around network densification as you plan your 5G roadmap for 2020, 2021 and beyond!

Simply click here to register for the webinar for free.

To discover the latest trends for 5G in North America, claim your ticket to The BIG 5G Event 2020 (May 18-20, Dallas, Texas). Gain insights from senior representatives from Sprint, T-Mobile, Verizon, AT&T and more as they detail their plans for 5G rollout in 2020 and beyond. Simply click here to get your ticket. 

Ericsson shares drop on disappointing North America numbers

Sales at kit vendor Ericsson barely grew in Q4 2019, with most of the blame being pinned on the protracted merger of T-Mobile US and Sprint.

When adjusted for adjustments total sales increased just 1% year-on-year, thanks to a 9% decline in North America. As you can see from the tables below, Ericsson had plenty of growth earlier in the year in North America, so this is a fairly significant reversal of fortunes. Ericsson would like us to believe it was an aberration brought about by the uncertainty surrounding the TMUS/Sprint merger, but that’s been going for a while so it’s not obvious why it would suddenly have such a profound effect.

“Due to the uncertainty related to an announced operator merger, we saw a slowdown in our North American business in Q4, resulting in North America having the lowest share of total sales for some time,” said Ericsson CEO Börje Ekholm. “However, the underlying business fundamentals in North America remain strong.

“Operating income was impacted by increased operating expenses. The increase is related to the Kathrein business acquisition, increased investments in digitalization and added resources to strengthen security as well as our Ethics and Compliance program. For 2020 we expect somewhat higher operating expenses, which will not jeopardize our financial targets.”

It looks like investors didn’t totally buy the North America narrative either, with Ericsson’s shares down around 8% at time of writing. Ekholm spoke at length about how important it is to continue to build for the long term and not sacrifice that for short-term gains. That’s fine, but many more quarters like this and even that strategy will be called into question.

New York Governor proposes localised net neutrality rules

New York state will join the likes of Washington and California in creating localised net neutrality rules.

Governor Andrew Cuomo announced the new rules to follow-up an executive order from 2018 which prevented Government agencies from entering into contracts with telco and technology companies unless they followed net neutrality principles. While the complications of contradictory state- and federal-level rules have not been fully appreciated, New York joins the crowd in ignoring the FCC.

“A free and open internet is one of the great equalizers — allowing every person the same access to information and helping protect freedom of speech,” said Cuomo.

“While the federal administration works to undermine this asset, in New York we are advancing the strongest net neutrality proposal in the nation so big corporations can’t control what information we access or stymie smaller competitors. These protections will help ensure an open market for ideas and content across platforms and preserve the unimpeded access to online content the public wants and needs.”

As part of the rules, telcos will be prevented from any blocking, throttling or paid prioritization of online content, while ‘zero-rating’ products will also be deemed illegal. Cuomo believes these rules exceed the levels of protection which were offered to the consumer under the net neutrality rules put in place by former FCC Chairman Tom Wheeler.

Although the net neutrality rules were officially undone by a Republican-controlled FCC on December 14, 2017, New York now becomes the fourth state to create its own rules. Washington State was the first, though California and Maine have followed suit. The next Presidential Election will dictate the next chapter of this story, though the current position is not healthy.

What is slowly emerging across the US is a fragmented regulatory landscape. This is not only because of the polar opposite approach in New York, California, Maine and Washington State compared to the FCC’s stance, but also the nuances between the different net neutrality regulations. None will be exactly the same creating a patchwork of legislative complications. Companies like consistency, and this is anything but consistent.

New Orleans declares State of Emergency after cyber-attack

Servers were powered down and devices unplugged as New Orleans suffered a cyber-attack comprehensive enough to force Mayor LaToya Cantrell to declare a State of Emergency.

Officials have said suspicious activity was noted on the network at 5am on Friday morning (December 14, 2019), though the emergency preparedness office, NOLA Ready, has been keen to drive home the message that there has been no evidence of significant data loss due to this cybersecurity incident.

What is worth noting, is this does not mean the City is in the clear, it simply confirms employees have not found the damage. These cyber-criminals likely compromised defences for a reason, and just because City Officials do not understand that reason for the moment does not mean damage has been avoided.

“We are in recovery mode,” said Cantrell during a press conference. “There is no evidence of personal data being lost at this time. Credentials were compromised but again we are now beginning recovery.

“4,000 computers will need to be scrubbed, 400 servers were affected, about 7,000 terabytes of data, 20 systems overall that we believe in terms of being brought online, and that touches heavily public safety.”

While few bureaucrats grasp the concepts of the digital economy, this incident drives home not only the dangers but also the lack of preparedness in combating the darker characters of the World Wide Web. In this incident, officials might be able to state that systems were shut down before any damage could be inflicted (or at least that is believed currently) though they were not able to stop the criminals from breaching defences in the first place.

This should not be swept aside, though it likely will. This is the latest in a string of cyber incidents across the US, highlighting the inadequacies of cyber security at public sector organisations, and it will only be a matter of time before genuine damage is inflicted in one manner or another.

Aside from this example, in July, school computers across Louisiana has to be taken offline in response to a ransomware attack. It is not known whether these two incidents are connected. A few weeks later, 23 government agencies were shut down as the State of Texas suffered a comprehensive ransomware attack.

These incidents should be considered warning shots, and it is very worrying at how often government agencies are taken offline. Another worrying factor to consider is that these are the incidents which are known; how many cyber defences have been compromised without setting off the alarm bells? Many governments are aggressively pursuing the digital economy, though perhaps these incidents suggest risk is not being managed appropriately.

Net neutrality argument reappears with another court appeal

A coalition of consumer interest groups are attempting to reinvigorate the dying embers of the net neutrality debate with a petition filed with US courts.

Filed in US Court of Appeals for the District of Columbia Circuit, the very same court which turned down the original appeal in October, the petition has asked the judges to reconsider their decision. The petition suggests the ruling from the October appeal conflicts with the decisions and precedent set by these judges and the Supreme Court in previous competition cases.

“The court unfortunately got it wrong when it upheld the FCC’s decision to arbitrarily side-line itself from protecting consumers’ internet access,” said Ed Black, President of the Computer & Communication Industry Association (CCIA).

“Open access is important for all internet users, and for businesses it supports more competition and innovation by putting the next start-up on equal ground with bigger businesses. With so many politicians calling for more competition and better enforcement, it would be a shame to miss an opportunity to uphold open internet rules which have supported competition.”

Alongside the CCIA, the petition has been filed by the Public Knowledge, Free Press, the Center for Democracy and Technology, New America’s Open Technology Institute and the Benton Institute for Broadband and Society.

Despite numerous challenges from consumer interest groups and Attorney Generals, the net neutrality debate did look to have come to a conclusion. After years of friction, the DC Court of Appeals confirmed in October that the FCC was perfectly within its rights to repeal the net neutrality rules, adding credibility to the assertion from the regulator that competition and fair access to the internet can be retained without the stringent oversight.

Interestingly enough, in the petition filed on Friday, the groups are suggesting the rules and definitions of consumer protection and competition are flawed, as opposed to criticizing the FCC’s ability to enforce them. This is a different strategy from the court proceeding which have been initiated in the past, though whether the consumer groups have enough weight behind them remains to be seen.

The previous cases against the FCC’s dismantling of net neutrality generated momentum thanks to significant support from Big Tech companies, but also from the general public. This support might have forced the hand of some politically-minded bureaucrats, but the courts backed the FCC. Renewed efforts without the previous support might struggle.

Verizon unveils mixed bag as media continues downward spiral

Verizon has released its third-quarter financials with the mobile business growing, broadband middling and media dropping.

Total revenues for the three-month period ending September 30 stood at $32.09 billion, a 0.9% increase year-on-year, though it has racked up $97.093 billion across 2019. As with previous quarters, there are positives to take away though the media business is still weighing heavy on the prospects of the group.

“Verizon continued its momentum in the third quarter by driving strong wireless volumes in both our Consumer and Business segments, while delivering solid financial results, highlighted by continued wireless service revenue growth, increased cash flow, and EPS growth,” said CEO Hans Vestberg.

As many would have imagined, little attention was given to the fragile media business. With each financial statement, the $5 billion bet on Yahoo’s media assets looks a little bit more like a waste of funds. Revenues in this business totalled $1.8 billion, down 2% percent year-on-year.

What was supposed to be the pursuit of alternative revenues in the ever-growing digital advertising segment is seemingly turning into nothing more than an Elephant’s Graveyard for assets in the digital economy. Aside from divesting interests in Flickr, Moviefone, MapQuest and Tumblr, Verizon is also reportedly on the search for a buyer for the Huffington Post. Perhaps executives have just had enough and are searching for a way to elegantly backtrack.

The failings of this business unit have been well-documented, so we do not want to invest too much time here, but Verizon was always going to fighting a losing battle. Winning a slice of the digital advertising profits requires out-of-the-box thinking, the ability to make money out of nothing. This is what Google, Amazon, Facebook and other innovative digital players can do.

But Verizon is not that type of business. It is a functional, engineering-focused, traditional beast. From a culture and risk-appetite perspective it was always going to struggle to compete with the lateral thinking Silicon Valley residents, and this is further evidence.

That said, when Verizon focuses on what it does best it can make money. The mobile business unit boasts of 193,000 retail postpaid net additions over the quarter and revenue growth of 2.6% year-on-year. Revenues for the broadband business are down year-on-year, but the number of Fios subscriptions are up 2.3%. It might not be as exciting to talk to investors about the world of connectivity compared to digital advertising, but it is what the company is very good at.

The team should of course attempt to secure new revenues to bolster the bottom line as the business of connectivity becomes increasingly commoditised but taking on the likes of Facebook and Google for digital advertising revenues always looked like too much of an ask.

Although this is a dampener for the Verizon business, there is more than a glimmer of hope around the corner; 5G.

There might be some questions regarding the coverage of its mmWave spectrum, but Verizon is making progress with 5G deployment. Alongside the financial results, the team also hit the go button for 5G in Dallas, Texas and Omaha, Nebraska. All of the launches are very limited from a coverage perspective, but momentum is gathering very quickly.

5G can form the catalyst for growth is the telcos force themselves through their own digital transformation. Let’s be clear, the telcos will not escape the utilitisation trends with 5G alone. The business needs to be transformed to offer new connectivity solutions to enterprise and consumer customers alike. Digital transformation is a more pressing concern for telcos than any other vertical.

But there is hope on the horizon. The lure of 5G contracts are proving to be tempting for consumers, which will help the bottom-line as data tariffs quickly surge towards unlimited as standard, and enterprise customers are enthusiastic about the connectivity euphoria. There are of course companies who want to steal the profits from the telcos, but the opportunity is still there.

AT&T in talks to appease Elliott: sources

Reports have emerged to suggest the AT&T management team is attempting to reduce pressure from activist investor Elliott Management.

According to Reuters, AT&T has engaged the vulture fund to understand how demands can be met without causing too much disruption to the business or undermining the long-term ambitions of the business.

Elliott Management is pressing AT&T to cut costs, make changes in the management offices and scale back the wider ambitions of the business. One element to the call-to-action from Elliott Management has been to divest non-core assets.

Aside from saving their own jobs, the management team will want to appease the aggression of the vulture fund. With the acquisitions of both DirecTV and Time Warner, the ambition is to diversify revenues, capturing the excitement being generated in the content world. That said, should Elliott Management get its way the AT&T business would be much more commoditised focused almost exclusively on connectivity.

The AT&T business is an interesting one which has polarised opinion. It perhaps has been too cavalier with the cheque book, but few will dismiss the ambition to chase after new revenues. Every forward-looking telco recognises the threat of ignoring diversification and the slow trudge towards commoditisation, though this does not concern Elliott Management.

For Elliott Management, the objective is simple; increase dividend payments and raise share price. Once these two objectives have been met, the team will sell off its stake and collect the profits. This is a mid-term strategy, and it is effective for money men, but it does present a danger to the long-term positioning of AT&T as an influential player in the digital society.

Elliott Management can cause waves, though the ability of the management to control this disruption will give some sort of indication of what AT&T will look like in the future.