O2 joins the OpenRAN movement

O2 is the latest telco to join the increasingly popular OpenRAN cause, suggesting the technology could better serve customers in the hard to reach and heavily-populated areas.

Working with Mavenir, DenseAir and WaveMobile, O2 will aim to deploy the technology in dense urban environments, as well as the smaller, isolated rural communities. Like every telco, O2 is attempted to fine-tune the economics of network deployment as the realities of significant 5G investments start to rear their head.

“Connectivity is a lifeline for consumers and businesses alike and we’re committed to delivering the best possible network experience for our customers,” said O2 CTO, Brendan O’Reilly.

“O-RAN represents a really exciting opportunity to deliver better coverage, in more places, more of the time. By opening up our radio access network to smaller vendors, and as we look towards wider adoption of 5G, O-RAN will be part of the solution to bring the latest connectivity to more people around the country.”

The Mavenir segment of the project will focus on high-density environments in London. The objective will be to provide enhanced mobile connectivity and better customer experience in high-traffic areas such as stadiums and shopping centres.

“Densification of coverage in cities is a challenge but OpenRAN is ready to take it forward and Mavenir is proud to work with O2,” said Stefano Cantarelli, CMO of Mavenir.

O2 has said the WaveMobile OpenRAN technology is currently active on several sites across the UK including Woldingham in Surrey, and the solution could be used to provide connectivity services in ‘not spots’ in the future.

OpenRAN is increasingly looking like an attractive idea not only because of the technological benefits, but also the commercial. Firstly, opening-up the network to new suppliers will encourage innovation in new areas, and secondly, it puts pressure on current suppliers to negotiate more favourable terms with telcos.

Some might call it cynical, but there have been suggestions that Vodafone’s aggressive move towards OpenRAN is a ploy to gain the upper-hand during negotiations with the likes of Huawei, Ericsson and Nokia. These traditional suppliers will of course want to hold onto contracts, and prevent money heading towards the likes of Mavenir, Parallel Wireless and Altiostar. Success breeds success after all.

The more noise makes about OpenRAN as a realistic alternative to the status quo, the more nervous traditional RAN vendors will be. But this is not to say OpenRAN will not take its place in future networks on its own technological merit, it is just a factor which is worth bearing in mind.

Although O2 should certainly be categorised as an early adopter of the technology, there are other existing projects worth noting.

Rakuten will soon become the fourth mobile player in the Japanese market, with its network deployment driven by OpenRAN. Few have the luxury of a greenfield approach like this, but that has not stopped Vodafone deploying OpenRAN in the UK, DRC, Mozambique, South Africa or Turkey. Similarly, Etisalat in the UAE recently announced it was working with NEC, Cisco and Altiostar to deploy the open technology in its own networks.

And over in the US, various Senators and FCC Chairman Ajit Pai has been plugging the technology as an alternative for Huawei. Senator Mark Warner recently tabled a bill in Congress which would direct as much as $1 billion toward the OpenRAN community. It will not replace the traditional RAN ecosystem any time soon, but OpenRAN is here and here to stay.

O2 expects the commercial deployment of OpenRAN to accelerate over the next 18-24 months. This might be bad news for the traditional RAN vendors, but with Mobile World Congress kicking off in just over a month, there might be a few more announcements in the pipeline.

O2 signs on for 4G trials on London Underground

It seems like we have been promised the internet on the London Underground for years, and it might well become a reality in the next couple of months.

O2 is the first telco to confirm it has signed an agreement to pilot 4G in the London Underground tubes in March 2020. The Jubilee line between Canning Town and Westminster stations will be the first to experience 4G below the streets.

“The pilot will allow us to continue working hand in hand with TfL, and other network operators, to bring connectivity to commuters across London,” said Derek McManus, COO at O2. “This unique collaboration builds on the recent announcement of the Shared Rural Network, showing how the telecommunications industry is spearheading a more connected, mobile Britain.”

“It’s great that O2 have signed up to bring their 4G network to Jubilee line customers,” said Shashi Verma, CTO at Transport for London (TfL). “The London Underground network is an incredibly challenging environment in which to deliver technological improvements, but we remain on course for customers to start benefiting from our pilot from March 2020.”

Like the rollout of 5G, it would be unfair to promise too much in the early days. This is only a trial for the moment, and due to the complexities of laying communications infrastructure in underground tunnels which have trains running through them almost 19 hours a day, deployment across the entire network is likely to take a very long time.

The trial will begin in March 2020, with plans to award commercial contracts in the summer.

MORE TO FOLLOW…

5G is good, but perhaps not worth upgrading just yet

New research is suggesting London 5G speeds are getting the promised boost, though the overall experience might disappoint a few.

Global Wireless Solutions, a US network benchmarking, analysis and testing firm, released its examination of the London networks of EE, Vodafone and O2, and while there is success evident in the first months, there is still plenty of work to be done.

“The spikes in the test data reveal that promises of faster speeds can be delivered, but ultimately, it’s the consistency and reliability that is most important to consumers,” said Paul Carter, CEO of Global Wireless Solutions.

“Based on the limited number of sites with 5G antennas combined with the distance constraints of higher frequency 5G signals, it’s going to be a challenge to get 5G access in buildings.

“Given that the mobile network operators have a significant rollout ahead of them to fully realise the potential of 5G, we might also benefit from a review of restrictions governing signal mast height and placement to allow more antenna sites in more convenient locations, rather than just placing them on rooftops.”

According to the analysis, the MNOs are delivering the high-speed download experience which has been promised through 5G, though only if you are standing in the right place.

At St Pauls Cathedral, EE’s network delivered instantaneous peaks of over 470 Mbps, while 330 Mbps from O2 at Victoria Station and 320 Mbps from Vodafone in Belgrave Square also demonstrated the eye-watering speeds of these networks. These are cherry-picked examples from numerous tests throughout the city, though the trend was encouraging; 5G is delivering remarkable download speed upgrades.

What is worth noting, it this is not the gigabit download speeds promised, though you have to bear in mind these networks are operating in the world of non-standalone 5G. More will be delivered in the future as the technology progresses and matures.

This is of course encouraging, however there are two elements which dampen the parade. Firstly, the availability of these download speeds and secondly, latency.

On the latency side, Global Wireless Solutions has indicated there is no meaningful upgrade from 4G connectivity. This is not entirely surprising, as without a 5G core the full-suite of latency services will not be available, though one might have expected an incremental upgrade.

Secondly, the team has noted the drop-off rate is high. By making use of higher-frequency airwaves for 5G connectivity, coverage will be shorter. There is no way around this, the laws of physics dictate the state of play here. However, as 5G is currently being built on existing passive infrastructure, designed for 4G spectrum with larger coverage cones, the problem is unavoidable.

Over the next couple of months, governments and regulators will have to be engaged to ensure the 5G experience can be delivered. Rules on the deployment of active infrastructure will have to be massaged, as relying on rooftop infrastructure to deliver connectivity will not work everywhere. This is a bureaucratic challenge, and one which is being discussed behind closed doors.

All of this presents an interesting challenge for the telcos; how do you engage the consumer with an experience which is wholly inconsistent?

The telcos will have to be very careful. Arguably, it is more damaging to steal a customer and not deliver on the experience than not to have the customer at all. Burnt bridges are very difficult to repair after all, especially with the core mobile connectivity offering becoming increasingly commoditised.

Ultimately, 5G will be a necessity for the consumer. Data consumption habits are aggressively growing and 4G will not be able to meet the demands, both in terms of speed and network congestion. That said, the 5G proposition does look hard to justify for the moment. Compatible devices are incredibly expensive, and the network experience looks very limited. It does not appear to be worth the extra expenditure just yet.

O2 starts making progress in the enterprise services world

O2 might be an ‘also ran’ in the enterprise services world to date, but in being named a supplier on the Crown Commercial Service’s (CCS) new Network Services 2 framework, it is taking a step in the right direction.

As the Government agency tasked with improving government commercial and procurement activity, gaining recognition from the CCS is a notable win for O2. The Network Services 2 framework is effectively the list of suppliers public sector bodies and organizations can work with for telco services such as networks, voice and data provision, internet access and wifi.

“We know that making services easy to procure is a major priority for our public sector customers – so the news that we have been named as a supplier on the new Network Services 2 framework is a huge milestone for all of us at O2,” said Matthew Spencer, Head of Public Sector Sales at O2. “It means we can offer our entire product range of ICT services to public sector and non-profit organisations.

“Today’s announcement opens the door to all sorts of new projects and better integration for customers. As technology evolves, there is enormous potential for improved connectivity, productivity and savings across the public sector – and O2 is here to work with organisations as a digital partner, helping them reach their connectivity goals, faster.”

Originally formed in 1991 under a different name, the CCS is part of the Cabinet Office and negotiates preferred supplier lists for Government departments, agencies and non-profits. It you aren’t on the list, you will find it almost impossible to do business in the public sector.

The ‘Frameworks’ are effectively pre-negotiated template contracts for public sector organizations to use when engaging with potential suppliers for a variety of different services. In this case its telecommunications, but it could be anything from office supplies to payroll management software.

Within each of the frameworks, there are designated ‘Lots’. O2 has been named as a supplier for Lots 1-4 and 6-8, allowing it to offer services such as data access; local connectivity, traditional telephony, inbound telephony, mobile voice and data, paging and alerting and video conferencing. The suppliers for Lots 5, 10 and 13 will be decided in the near future, though we were not able to figure out what these Lots cover.

The supplier lists for Lots 9, 11 and 12 have also been drawn up, though O2 does not feature on these. Services covered here are audio conferencing, radio and surveillance.

At O2, this is a big step forward. The CCS has effectively given the telco its seal of approval, allowing the team to expand in the enterprise services arena.

To date, the enterprise market has been largely dominated by Vodafone and EE. O2 has been operating in the private space for some time, though it has been regularly highlighted by the management team as a significant growth area moving forward. This ambition seems to have been compounded with the looming introduction of 5G.

5G offers the telcos new avenues to work with enterprise customers above and beyond the traditional means of connectivity. With digital transformation a buzzword of yesteryear, enterprise organizations and public sector agencies are increasingly looking to technology to enhance operations. There is an opportunity for the telcos to secure a more valued position in the digital ecosystem, as well as the increased profits, if the proposition is right.

Over the last 12-18 months, O2 has been working alongside a number of the FTSE100 firms to trial usecases ahead of the 5G boom. Although details of the activities are relatively thin, the management team has boasted of its success to date.

Entry onto the preferred suppliers list might seem like little more than a box ticking exercise for some, this is a very important step forward from O2. The inclusion in the framework adds validity and credibility to the O2 enterprise services case, offering a much greater opportunity for the team to carve out market share in a, potentially, very profitable segment of the telco industry.

EE forced to backtrack on 5G data tariffs

It does appear EE has been forced into a rethink on 5G data pricing, as the firm launches an unlimited data offering to keep pace with rivals in the UK.

Like hamburgers at breakfast, the 5G tariffs didn’t look right to start with. The price points were too expensive for today’s cash conscious consumer who expects the world for tuppence. EE might have been first out of the gate to capitalise on the growing 5G euphoria and earn the right to boast about being first, but it has been forced to backtrack a little.

The only issue with being first is that you give everyone else a taste of what is on the table. Even if EE had nailed the proposition and priced it perfectly, it left the door open to be embarrassed by rivals to be undercut. If the aim of the game was to secure post-paid subs and look to long-term ROI, EE left itself exposed to a cheap shot.

That said, it has now seemingly rectified the situation.

When it first launched in May, prices were tiered depending on download limits. Not only did it not look practical, limits would be reached relatively easily, it was expensive. Admittedly the price of 5G devices were factored in, but with rivals presenting options which were easier on the wallet, a new approach was needed.

“If you want an unlimited data plan, you should get it on the UK’s best network, with the coverage and speeds that let you make the most of it,” said Edward Goff, Marketing Director at EE.

“Our new unlimited range offers customers the ultimate smartphone experience in more places across the UK than any other network, all with no speed caps and great swappable benefits like Amazon Prime Video and BT Sport.”

What is worth noting is that the unlimited offer for 5G-SIM only plans is still expensive.

MNO Price
EE £44 a month
Vodafone £30 a month
Three £22 a month
O2 Unknown

Each of the telcos have taken their own approach to data pricing. EE offers 5G SIM-only contracts for £44 a month in the most traditional manner. Vodafone has offered tariffs on speed tiers with the £30 a month tier offering the ‘fastest available speed’, which might vary dependent on where you are. Three is offering 5G connectivity for free for anyone who has an unlimited 4G contract. The £22 a month deal is SIM-only.

O2 is the only one not to release pricing for its 5G data tariffs, being the last to market, though it certainly has taken the opportunity to undermine the promising progress made by rivals.

Although few in the EE offices will be happy to backtrack and have a rethink on the unlimited plans, it does now look to be in a very competitive position. It is the most expensive, but it does have the best network and most consistent, high download speeds. If performance is the measure of success in the consumers eyes, EE is certainly hitting the right notes.

Another factor to consider is the ‘swappables’ element of these deals. For those who sign-up to a 12-month SIM-only deal on 5G for £44 a month, three ‘swappable’ content deals will be included. Each month, customers will be able to elect which bundled content services they desire, ranging from zero-rated video data or music, additional roaming locations, BT Sport or Amazon Prime Video.

The team could probably do with negotiating a few more partnerships as it does look a bit thin on the ground, though it is a reasonable offer.

What we are yet to see from EE is an aggressive push towards the convergence game. Executives have been giving the same presentation at conferences for years, promising a seamless connectivity experience for customers through mobile, broadband and wifi assets, though there doesn’t seem to be much activity on the marketing front to link-up these elements in one conclusive offer.

Either there is something in the pipeline or this is a case of negligence. The combination of EE mobile and BT’s wifi and broadband assets would create a connectivity offering few could dream to compete with. Three and Vodafone are plugging into the convergence game with their own fixed wireless access (FWA) offerings, but EE seems to be lagging here. The opportunity to make noise is there but the team seem to be enjoying the uncomfortable silence.

EE is arguably the market leader in the UK, though thanks to O2’s MVNO relationships it can claim to be the network with the most mobile connections running across it. With the unlimited offer, bundles, biggest and best network coverage and BT’s wifi and broadband assets, EE has an opportunity to nail itself down as the top mobile provider in the UK.

Trying to pick out the winner in the UK’s 5G race is starting to get very difficult.

Europe not happy about Czech network sharing arrangements

The Czech Republic’s two dominant mobile operators are sharing one network and the European Commission thinks this is taking things too far.

When the EC thinks something might be dodgy, but hasn’t totally decided yet, it likes to kick things off by sending a statement of objections to all concerned. This puts them on notice that it’s looking into the situation and initiates an investigation. Hence the network sharing arrangement between the Czech versions of O2 and T-Mobile is now under the EC microscope.

“Operators sharing networks generally benefits consumers in terms of faster roll out, cost savings and coverage in rural areas,” said Commissioner Margrethe Vestager. “However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive. In the present case, we have concerns that the network sharing agreement between the two major operators in Czechia reduces competition in the more densely populated areas of the country.”

This is an intriguing conundrum; how can something good suddenly become bad when it’s done too much? To be fair, between them T-Mobile and O2 account for almost three quarters of Czech subscribers. If the only other MNO of note – Vodafone – is frozen out of this arrangement that would appear to put it at a massive disadvantage. The EC is also concerned that their collective dominance means they have a disincentive to provide a decent service.

Unlimited data is inevitable with 5G, but try telling operators that

We’re quickly moving into the 5G era and many assume the concept of unlimited data bundles will be commonplace, but how will the telcos fare in this new world?

As it stands, the telcos are under pressure. This is not to say they are not profitable, but many shareholders will question whether they are profitable enough. Tight margins and a squeeze on core revenue streams are common enough phrases when describing telco balance sheets, but this could get a lot worse when you factor in unlimited data packages.

As Paolo Pescatore of PP Foresight pointed out, when you offer unlimited data you are effectively killing off any prospect of revenue growth per subscriber in the future. In some markets, there are still fortunes to be made, but in some, such as the UK where 4G subscription penetration is north of 100%, where are you going to make the growth revenues from when consumers are demanding more for less?

More consumers are seeking unlimited or higher data allocations but are not willing to pay for the experience. Some MNOs might be able to resist, but the more rivals who offer such tariffs the more the rest will be forced into line. It’s the race to the bottom which is profitable in the short-term, but growth will end quickly. The price per GB is only heading one direction and unlimited data allocations will end the prospect of upgrading customers.

O2 fighting for air

This is the conundrum which the telcos are facing in the UK right now. All four have announced their 5G intentions and all four are promising big gains when it comes to the next era of connectivity.

Starting with O2, the only one of the four MNOs not to have released 5G pricing to date, this is a telco which looks to be in the most uncomfortable position. Over the last few quarters, the management team has boasted of increased subscriber numbers, but this can only go on for so long in the consumer world. Soon enough, a glass ceiling will be met and then the team will have to search for new revenues elsewhere.

This is of course assuming it plans to go down the route of unlimited data, it might want to stick with the status quo. That said, if everyone else does, it will not be able to fight against the tide for fear of entering the realm of irrelevance.

The issue here is one of differentiation. The idea of attracting new customers by offering ‘bigger, meaner, faster’ data packages will soon end and telcos will have to talk about something else. O2 does have its Priority loyalty programme, but with rivals launching their own version this USP will fade into the noise.

Differentiation and convergence are two words which have been thrown around a lot over the last few years, though O2 has thus far resisted. Last year, CEO Mark Evans suggested he was not bought into the convergence trend and would continue as a mobile-only telco, though this opinion does seem to be softening.

If O2 is going to be competitive in the almost inevitable era of unlimited data, it will have to source growth revenues from somewhere. It is making a push into the enterprise connectivity world, which will bring new profits to the spreadsheets, though does it want its consumer mobile business to stand still?

Bundles of fun

This is where the other telcos in the UK have perhaps got more of a running start in the 5G era. EE has its connectivity assets in broadband and wifi to add value, as well as a content business of some description. Three is already known as the data-intensive brand, while its FWA push will take it into some interesting connectivity bundling options. Vodafone also has FWA, a fibre partnership with CityFibre and is arguably the leader in the enterprise connectivity market. The rivals are offering more than mobile connectivity as a stand-alone product.

Looking at Vodafone to begin with, the recent announcement is certainly an interesting one. The innovative approach to pricing, tiering tariffs on speeds not data allocation, will attract some headlines, while it is also super-charging its own loyalty programme, VeryMe. It has secured content partnerships with the likes of Sky, Amazon, Spotify and gaming company Hatch, while its FWA offering also includes a free Amazon Alexa for those who sign-up early enough.

Combining the FWA product or its fibre broadband service, courtesy of CityFibre, also gives them the ‘connectivity everywhere’ tag, a strength of BTs in recent years, to allow them to communicate and sell to customers in a different way. Perhaps it is missing a content play to complete the convergence bundle, but it is in a strong position to tackle the 5G world and seek additional revenues should the unlimited craze catch.

The same story could be said of Three. With the acquisition of UK Broadband, it has forced itself into the convergence game and kicked off the ‘race to the bottom’ with an unlimited 5G data offer. As long as you have a Three 4G contract, you can get 5G for no additional cost, assuming you have a 5G compatible phone of course.

Three’s strength and weakness lies in its reputation. It is known for being the best telco if you have an insatiable data appetite, this works very well for the 5G era, though it is also known for having a poor network. Three regularly features at the bottom of the network performance rankings, especially outside of the big cities where it has not done nearly enough to satisfy demands.

This will of course change over the next couple of months. Three is working to improve its network with additional sites and a new Nokia 5G core, however it will have to do a lot to shake off the reputation is has acquired over the last few years.

EE is perhaps the most interesting of the four. It has lost its position as the market share leader when it comes to 4G subscriptions, but it does have the reputation for being the best in terms of performance throughout the country. It is regularly the fastest for download speeds, but its 5G pricing is by far the most expensive to be released so far.

That said, with the BT assets it has for wifi and broadband, as well as the content options, there is plenty for the consumer to be interested in. Should BT be forced to readdress the pricing conundrum, it might not have the fear regarding a glass ceiling on revenues as there are plenty of other products to engage the consumer. It will be able to find additional revenues elsewhere.

MVNO no you didn’t

Outside of the MNOs, you might also start to see some competition. MVNOs are nothing more than ‘also rans’ today, but Sky has officially entered the 5G race. This is an interesting competitor, one who could cause chaos to the status quo.

Firstly, understand mobile is not the primary business for Sky. This is an add-on, where it is seeking to drive additional revenues and attract more customers through bundled services. It is the leader in the UK when it comes to premium content and has a thriving broadband unit also. Sky can add services on top of connectivity to make itself seem more attractive than the traditional mobile service providers.

Then again, there are only a couple of MVNOs who can pose this challenge. Sky is one, while there are persistent rumours Amazon wants to get involved with the connectivity game and Google has its own Fi service. These are also companies who are at the mercy of the MNOs in terms of the commercial agreement with the MVNOs, so damage is likely to be limited unless one network owner decides to go down the wholesale infrastructure route.

But you cannot ignore these companies. They are cash-rich, constantly searching for new ways to make money and have incredible relationships with the consumer. They are also the owners of platforms and/or services which are very attractive to the mass market; bundling could be taken into a new context with these firms.

Diversity is our strength

This is of course only looking at the services which are common throughout telco diversification plans today, there are other options. Orange has launched a bank, has experimented in energy services and is making a move towards the smart home in partnership with Deutsche Telekom. Over in Asia, gaming is an important element of many telcos relationships with consumers and this trend is becoming much more prominent in the European markets also.

Elsewhere, the smart home could certainly offer more opportunities for telcos to add-value to an emerging ecosystem, while the autonomous vehicles offers another opportunity and so does IOT. The issue which many of these telcos are facing is competition from the OTTs. Arguably, the battle for control of the smart home might already have been won by the OTTs, though the same could be said for autonomous vehicles and IOT.

In many of the emerging segments, telcos will remain a connectivity partner though they certainly need more than that. This will remain a consistent stream of revenue, though it will also sleepwalk telcos to utilitisation. In IOT, as an example, the major cloud players are crafting business units to engage enterprise businesses for edge and IOT services; this is a market which the telcos would love to capitalise on for both enterprise and consumer services.

Security is another which is increasingly becoming a possibility. The concept of cybersecurity is generating more headlines and consumers are becoming more aware to the dangers of the digital world. Arguably, the telcos are in the strongest position to generate revenue from this segment; there is trust in the brand and they have largely avoided all the scandals which are driving the introduction of new regulation.

Unlimited data is certainly not commonplace today, but with the services of tomorrow promising to gobble up data at an unfathomable pace, it would surprise few to see more people migrating to these tariffs. The question is how you make money once you have migrated everyone.

Diversification and the acquisition of new products is not a simple task, but then again, it is becoming increasingly difficult to imagine how single revenue stream telcos will be able to survive in the world of tomorrow.

 

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O2 sets October deadline to join the 5G race

5G launches are starting to become old news nowadays, but the UK will soon be in the enviable position of having all of its MNOs up-and-running.

O2 has confirmed the on switch will be hit during October, going live in 20 cities by the end of the year, which will be expanded to 50 by the summer of 2020. With Vodafone and EE already live, Three set to launch in a matter of weeks and O2 bringing up the rear, the 5G economy is fast-approaching in the UK.

“O2 will finally join the 5G party,” said Paolo Pescatore of PP Foresight. “This feels somewhat forced upon in light of moves by the other mobile operators.

“Though O2 will be the last to offer 5G services, it is still early days as the network is not widely available. The move is good in the interests of UK and it will be one of the first countries in the world to have all mobile operators offering 5G connectivity.”

Although there are no details on pricing, we get the impression there won’t be anything adventurous or interesting here. During a press briefing the management team attempted to undermine the innovative approach Vodafone showed a couple of weeks ago with its speeds tiered approach to data tariffs, a dig which suggests it will stick with the ‘bigger, faster, meaner’ mentality, which has exhausted the patience of consumers throughout the country.

Another question which remains unanswered is whether O2’s MVNO partners will have access to the same technology, enabling them to also offer 5G services through the O2 network. Agreements have allegedly been signed, but the question of timelines for MVNO partners was met with shrugs.

One area where there is little confusion from the management team is on the radio supply side. Rivals might be getting twitchy over the Governments decision to delay any decision on Huawei, but O2 has elected to stick with its traditional suppliers Nokia and Ericsson. Huawei equipment might be installed on a dozen cell sites around the country, owing to 5G trials, but it does not appear the lack of clarity from the Supply Chain Review announcement will have any detrimental impact at O2.

On the enterprise side of connectivity, this is an area which will be up-and-running sooner rather than later. A new division, known as O2 Business, will launch on August 1, building on the momentum the MNO has been generating over the last couple of months. The enterprise market is an area of significant growth potential for O2, and it does seem to be gaining traction through its open-invitation for R&D with the FTSE 100.

Two examples of this progress include Northumbrian Water Group, we the pair are trialling 5G sensors to manage water quality and prevent leaks, and also with Network Rail for its own 5G trials. COO Derek McManus said the transport network poses one of the most significant challenges for the telco industry, with only a small percentage of tracks, those in the immediate area around stations, being genuinely commercially attractive for network deployment.

Interestingly enough, this 5G announcement will overshadow healthy financial results for the first six months of 2019. Revenues for the period grew 5.1%, while total connections running across the network (O2 and MVNO customers) has also increased to 33 million, up 3.6% year-on-year.

O2 now currently has 25.4 million customers in the UK, commanding churn rates of 0.9% over the first six months. Postpaid net additions were 41,000, a number which increases to 612,000 when you include M2M connections.

What you can expect to see from O2 over the next couple of months is a sustained approach to investment in the 4G network as well as 5G deployments. The management team has suggested consumers are more interested in a more reliable and consistent 4G experience, 31%, while only 11% of respondents to a survey state 5G is a driver for purchasing decisions.

O2 does not have the most glimmering of records when it comes to 4G, regularly battling with Three for last place in Opensignal rankings, though it will be interesting to see how the £358 million over the last six months impacts this performance. O2 has been regularly committing healthy amounts to the CAPEX column over the last 18-24 months, and hopefully this will translate into improved performance sooner rather than later.

While all the 5G launches across the UK are going to be incredibly limited in terms of coverage, we would not recommend rushing to fork out a grand for a 5G capable phone for the moment, the UK is in a very enviable position. In October, all four MNOs will have their first foot through the door, stepping into the 5G economy with the UK as a global leader. Who would have said that would have been possible three years ago?

O2 and Vodafone double down on network sharing deal for 5G

Network sharing deals are not new in the UK, but with O2 and Vodafone evolving their existing relationship to active infrastructure, the partnership certainly has a new mission.

Announced today, O2 and Vodafone have agreed to share 5G active equipment, such as radio antennas, on joint network sites across the UK. The approach should accelerate 5G deployments in the areas where infrastructure investments are not as commercially attractive, though the 23 largest cities have been excluded from the deal.

“Today is an important step in demonstrating our commitment to invest for the future, with mobile connectivity one of the UK’s most powerful opportunities to strengthen the economy and improve the lives of British people,” said O2 CEO Mark Evans. “This agreement will enable us to roll-out 5G faster and more efficiently, benefiting customers while delivering value for our business.  It also importantly allows us to utilise the spectrum we acquired in the last auction very effectively.”

“We’re driving our 5G roll-out forward with this agreement, and taking our customers, our business and the whole of the UK with us,” said Vodafone CEO Nick Jeffrey. “Greater autonomy in major cities will allow us to accelerate deployment, and together with active network sharing, ensures that our customers will get super-fast 5G in even more places more quickly, using fewer masts. We can boost capacity where our customers need it most so they can take full advantage of our new unlimited plans.”

Prior to this announcement, the duo were already in partnership through the Cornerstone Telecommunications Infrastructure (CTIL) joint-venture. This company effectively acquires and manages passive infrastructure across the country, enabling the pair to share costs on some of the most expensive aspects of network deployment; site acquisition, local government bureaucracy and civil engineering.

This new agreement takes the relationship one step further. Although many telcos around the world believe active equipment is a means to differentiate experience, the pair are putting aside their squabbles to grow the network across all regions in the UK. For those areas where ROI is more difficult to realise, spectrum assets will be the only differentiating factor.

In the larger, more densely populated environments, the duo will remain competitive. In 23 large cities, covering 16% of combined cell sites, all assets will be separate. In cities such as London, Manchester or Liverpool, profitability has not been difficult to demonstrate through network expansion, such is the number of subscribers in such a small geographical zone.

Although we are slightly surprised by the concept of sharing active equipment, it is a logical path for the two telcos to take. Spectrum assets should be enough to deliver some sort of differentiated experience, and if the telcos want to move up the value chain, they will need to reconsider their thoughts on the delivery of data.

Connectivity revenues will remain the core business, but 5G presents an opportunity to create a new role in the ecosystem and deliver more value-added services. To enable this, a new mindset to network infrastructure has to be acquired to free up revenues for other areas. This is not the only advantage of network sharing deals, but the intelligent reallocation of funds could allow MNOs to transform from ‘Communications Service Providers’ to ‘Digital Service Providers’.