UK Labour party pledges to nationalise much of BT if elected

A key policy of the Labour party ahead of the UK general election next month is to make broadband ‘free’ by nationalising Openreach.

Renationalising infrastructure is a core Labour policy in the run up to next month’s election and now that includes broadband. The good news for BT, and fans of property rights in general, is that Labour plans to buy the following using public funds it will get from somewhere: Openreach, the parts of BT Technology that deal with backhaul, BT Enterprise and BT Consumer. The bad news is that BT will have no say in the matter and Labour will decide on the price.

“It’s time to make the very fastest full-fibre broadband free to everybody, in every home in every corner of our country,” said Jeremy Corbyn, leader of the Labour party. “Making it free and available to all will open up opportunities for everybody, at the cutting edge of social and economic change. By creating British Broadband as a public service, we will lead the world in using public investment to transform our country, reduce people’s monthly bills, boost our economy and improve people’s quality of life.”

“This is public ownership for the future,” said John Mc Donnell, Labour’s Shadow Chancellor. “A plan that will challenge rip-off ‘out-of-contract’ pricing – and that will literally eliminate bills for millions of people across the UK. Every part of this plan has been legally vetted, checked with experts, and costed.”

Here are some of the ‘notes to editors’ from the Labour announcement:

  • Labour will deliver free full-fibre broadband to all individuals and businesses by 2030. We will integrate the broadband-relevant parts of BT into a new public entity, British Broadband, with a mission to connect the country. Labour will aim to deliver free full-fibre broadband to at least 15-18 million premises within five years.
  • This will be paid for through Labour’s Green Transformation Fund, with the costs of maintaining the network paid by a tax on multinationals (including tech giants like Google and Facebook).
  • To deliver this we will adopt a public mission to roll-out the remaining 90-92% of full-fibre across the country, as well as acquiring the necessary access rights to the existing 8-10% of full-fibre assets.
  • All current workers in broadband infrastructure and broadband retail services will be guaranteed jobs in the new public entity and be guaranteed the same or better terms and conditions.
  • There is a one-off capital cost to roll-out the full-fibre network of £15.3 billion (in addition to the Government’s existing and not-yet-spent £5 billion commitment), which will be paid for from our Green Transformation Fund;
  • The cost of bringing parts of BT into public ownership be set by Parliament and paid for by swapping bonds for shares, as occurs with other public ownership processes;
  • Full-fibre has low maintenance costs once rolled out, which can be estimated at around £230 million a year, which will be more than covered by a system unitary taxation of multinationals, which involves treating multinational companies as single entities, and taxing UK-based multinationals on the share of their global profits that reflects their UK share of their global sales, employment and assets.

Unsurprisingly such a radical pledge has provoked some robust responses, especially since McDonnell had said as recently as July that he had no plans to nationalise BT. The company itself is keeping its cards pretty close to its chest, offering only the following statement.

“It should be a top political priority to super-charge the roll-out of full fibre broadband and 5G right across the UK so we can build the digital economy of the future.  Whatever the result of the election, we’d encourage the next Government to work with all parts of the industry to achieve that. It’s a national mission that’s bigger than any one company.”

Others have been more forthcoming, however. “These proposals would be a disaster for the telecoms sector and the customers that it serves,” said Julian David, CEO of UK tech sector trade body TechUK. “Renationalisation would immediately halt the investment being driven not just by BT but the growing number of new and innovative companies that compete with BT.

“Full Fibre and 5G are the underpinning technologies of our future digital economy and society. The majority of the estimated £30bn cost for Full Fibre is being borne by the private sector. Renationalisation would put this cost back onto the taxpayer, no doubt after years of legal wrangling, wasting precious time when we can least afford it.  These proposals would be a huge set back for the UK’s digital economy which is a huge driver for growth.”

“Today’s announcement highlights the importance of full fibre access for all,” said Lloyd Felton, Chief Exec of County Broadband. “However, it also shows an alarming lack of understanding about the complex nature of full fibre rollouts and the fact that, unlike by comparison the rail industry that operates rail franchises, the industry has already invested billions of pounds in building its own infrastructure over which the service is delivered, in direct competition to BT.

“This proposal would almost certainly lead to delays, or at worst, derailment of existing full fibre investment and new network rollouts. It is a broad-brush, and makes no mention of how customers would be served and supported and provides no recognition for what has been achieved by the many Alternative Network providers who are currently active in providing a competitive full fibre solution.

“The competitive nature of the current market in the UK has meant consumers already benefit from one of the lowest cost broadband services in Europe. Broadband is an essential utility and whilst we share the ambition to bring future-ready full fibre connectivity to every home and business, we believe a mix of public and private investment is the only realistic strategy to deliver the service efficiently, without the need to bring significant cost to the public purse.”

Ofcom isn’t commenting and Openreach is leaving it to BT. We understand that there is an unprecedented exchange of views taking place within the UK telecoms industry, however, and look forward to the outcome of that. We also asked a few industry experts what they thought of Labour’s plans.

“There is no denying that the UK is far from a leader in full-fibre broadband, but the market is really starting to move as Openreach’s rollout plans are complemented by a long list of alternative / competitive network providers – Virgin, Talk Talk, CityFibre, Hyperoptic, and many more,” said Phil Kendall, Analyst at Strategy Analytics.

“A survey of The Independent Networks Cooperative Association (INCA) members showed an aspiration to pass 16 million premises with fibre by 2025. If there is a role for government in this it would be to support pushing broadband coverage out to all communities, so the areas that the private market will struggle to cover profitably, not torching the whole sector.

“If nationalizing Openreach doesn’t kill off some or all of those competing providers or wholesalers then offering free fibre broadband to everyone definitely will. For the average voter, there are good optics on this – free broadband, like free Wi-Fi or free roaming, is a nice populist idea and getting the evil webscale giants to pay for it is perfect. But this is a hugely destructive attempt to fix a sector that isn’t anywhere near as broken as Labour seems to think.”

“On the face of it this is not completely insane,” said telecoms analyst William Webb. “BT was, of course, publicly owned about 30 years ago. There have been state-led fibre deployments, most obviously in Australia, and while this hasn’t gone particularly well, nor had UK fibre deployment under the current model until recently.

“There is always a tension between a competitive market, which we currently have, but which will often not deliver socially desirable outcomes; and a publicly provided service, which will deliver those outcomes but tends to have well known downsides including a lack of innovation, possibly high prices (even if these are charged to taxpayers, not consumers), slow responses to changes and so on.

“But, of course, there are massive issues. The biggest is how we would transfer out of an environment with multiple competing providers in a way that compensates all fairly, that doesn’t slow things down, and that rationalises duplicated resource. Another is the extent to which we really need fibre everywhere and whether a state-led masterplan is reactive to real needs – this was one of the biggest issues in Australia. And as fixed and mobile converge with services like fixed wireless access, intervention will spill across into the mobile arena, potentially destabilising that competitive market.

“Fundamentally, I guess, it comes down to whether you believe in state ownership or market forces. Both can be made to work. But with the market forces approach appearing to work probably as well as it could right now, changing approach feels almost certain to slow things in the short to medium term.”

“It’s great to have bold aspirations but we’ve seen how challenging they are to implement,” said TMT Analyst Paolo Pescatore. “For sure, connectivity needs to improve and so does coverage. There are so many companies laying cables and installing masts. The best way is to forge partnerships which will help lower costs for all including consumers.”

There are coherent arguments in favour of nationalising natural monopolies, but the way Openreach has been regulated alongside the presence of competitive alternative fibre providers means this isn’t one of those cases. There are just so many flaws and pieces of sloppy, wishful thinking in this proposal that if it were a different time of year we’d assume it was a joke.

Firstly there’s the costing alone. Labour not only plans to quadruple Conservative broadband spending pledges, it needs to find the cash to buy over half of BT. Despite the hit to its share price this announcement has delivered, BT’s market cap is still around £19 billion, so that’s another £10 billion or so Labour would have to dig up, depending on how fair it intends to be to BT shareholders. And as for getting US tech giants to pay for the maintenance, good luck with that.

Then you have the underlying concept of forced state appropriation of private property. If Labour is willing to force one of the UK’s biggest companies to sell half of itself to the state, at a price it has no say in, then are any other companies safe? The effect on business sentiment of moves like this is likely to be catastrophic.

But finally, as many people have indicated above, we have the extreme improbability that the state will do a better job of fibre rollout than the private sector currently is. NBN is a great example of the folly of such initiatives and once a Labour government is forced to confront hard financial realities, work on the network would likely grind to a halt.

All politicians try to bribe the electorate in the run up to general elections, but the trick is to at least make it plausible that they will be able to deliver if they do win power. This policy is not only damaging for UK telecoms infrastructure and business in general, it also has no chance of being put into practice as promised. Labour has massively over-reached with this move.

The Indian telecoms crisis shows no sign of abating

The Indian government is showing no sign of backing down on its demands for massive payments from Bharti and Vodafone.

Bharti Airtel took an exceptional charge of around $4 billion on its latest quarterlies, to account for most of the bill presented to it by the Indian government for historical license fees. This follows a letter sent by the Indian Department of Telecoms demanding they pay up on timely fashion.

“On the AGR verdict of the Hon’ble Supreme Court, we continue to engage with the government and are evaluating various options available to us,” said Bharti Airtel boss Gopal Vittal in his comments on the quarterlies. “We are hopeful that the government will take a considerate view in this matter given the fragile state of the industry.” The charge indicates they’re not that hopeful.

Meanwhile Vodafone CEO Nick Read had a bit of a moan about the situation during his own earnings call earlier this week. This doesn’t seem to have gone down too well back in India, with government officials expressing their displeasure to the Indian media, according to the Standard. Read seems to have slightly retreated from his previous position, but not much. His underlying point that there is rapidly diminishing incentive to put up with all this aggro remains.

It looks like the best Voda and Bharti can hope for now is a bit of relief on the government bill, but they’re still going to have to shell out a lot of rupees. What this will mean for the future of the Indian telecoms market is unclear. Presumably Relaince Jio will be in a stronger position than ever to differentiate itself through network investment, which will surely have a negative effect on competition.

Spectrum shortage is killing African digital ambitions

Telcos complaining about government regulation and policies is not unique to the African continent, though they never seem to get along here.

Through the years there have always been complaints from the telcos at AfricaCom. Whether it is import tax making devices unaffordable or policies which don’t attract international investment, the bureaucrats constantly seem to be on the backfoot. This year’s event saw a global pain-point hit the keynote conference agenda; spectrum availability.

This is of course a gripe of almost every telco around the world; there isn’t enough spectrum available to deliver the digital economy which politicians have promised voters. However, when you breakdown the numbers, there are some valid concerns. Looking at the South African landscape demonstrates the point.

  Telco holding
Spectrum band Vodacom MTN Cell C Telkom Rain
900 MHz 22 MHz 22 MHz 22 MHz
1800 MHz 24 MHz 24 MHz 24 MHz 24 MHz 34 MHz
2100 MHz 30 MHz 30 MHz 30 MHz 30 MHz
2300 MHz 68 MHz
2600 MHz 15 MHz
3500 MHz 28 MHz 142 MHz
Total 76 MHz 76 MHz 76 MHz 150 MHz 191 MHz

Speaking during the keynote sessions, MTN CEO Rob Shuter highlighted the South African Government is demanding more from the telcos, without offering more of this valuable asset to deliver. The MTN business has been working with the same spectrum allocation for decades, a situation which cannot continue. More spectrum is needed.

This is one example, though the story is pretty consistent across the continent. The issue is apparent when you compare it to the UK.

  Telco holding
Spectrum band EE Vodafone Three O2
800 MHz 10 MHz 20 MHz 10 MHz 20 MHz
900 MHz 34.8 MHz 34.8 MHz
1500 MHz 20 MHz 20 MHz
1800 MHz 90 MHz 11.6 MHz 30 MHz 11.6 MHz
1900 MHz 10 MHz   5.4 MHz 5 MHz
2100 MHz 40 MHz 29.6 MHz 29.2 MHz 20 MHz
2300 MHz 40 MHz
2600 MHz 70 MHz 45 MHz 55 MHz
3500 MHz 40 MHz 50 MHz 60 MHz 40 MHz
3700 MHz 80 MHz
Total 260 MHz 211 MHz 289.6 MHz 171.4 MHz

Not only is there more spectrum available, it is broadly spread across a range of spectrum bands to address different usecases and challenges. Soon enough another spectrum auction will take place in the 700 MHz and 3600-3800 MHz spectrum bands.

This is of course a very simplistic way to look at the landscape. South Africa is a very unique country, and spectrum is allocated with conditions, such as minority ownership of the telco. There is an on-going conflict between the major telcos and the government regarding the obligations placed on spectrum allocation, but the end result is still the same; a scarcity of an incredibly valuable resource.

There is perhaps a glimmer of hope however. In recent weeks, the government published an ‘Information Memorandum’ outlining plans for additional spectrum to bolster 4G connectivity and pave way for 5G in the future, though attendees at AfricaCom are not exactly enthralled by the situation. For some, this is just more talk in place of action. Confidence in the governments ability to sort out this mess in a timely manner is not particularly high.

This sceptical view is perhaps supported by the 800 MHz spectrum band. Currently being used by broadcasters, there have been promises to clean the airwaves for use in the mobile world, though little of this promise has translated into assistance for the telcos. The frustration continues.

South Africa seems to have an ‘us versus them’ situation currently. Governments and telcos are rarely best of friends elsewhere, but there is a collaborative environment to ensure an effective connectivity landscape. The Shared Rural Network proposal in the UK is an excellent example of bringing together various different parties with compromises being made to achieve a common goal. This collaborative environment does not seem to exist in South Africa.

If South Africa, and African nations in general, are to compete with other regions in the digital economy, or drive digital inclusion across society, the spectrum conundrum needs to be addressed. But looking at the bigger picture, telcos and governments need to reduce the friction and create a more collaborative environment. These are not parties who are ever likely to be the best of friends, but they should at least be able to tolerate each other in the pursuit of a common objective.

China joins the race to 6G

Days after 5G was switched on by the three telecom operators in China, the Chinese government officially launched a 6G R&D programme.

Yes, you read it right. 6G is officially on the card. Reported by the Science and Technology Daily today, the official launch meeting was hosted by the Ministry of Science and Technology (MOST) on 3 November, three days after the country’s three incumbent telecom operators started offering 5G commercial services. The government department oversees the country’s long-term strategy in science and technology, and also owns the newspaper.

Two organisations will be set up to drive 6G R&D in China. The 6G R&D Working Group will be composed of government representatives from different departments, and will be responsible for overall promotion and implementation of R&D in 6G. The Experts Group will include 37 scientists and technology experts from academia, research institutes, and businesses, and will be responsible for setting 6G R&D agenda and conducting technology evaluation, as well as advising on important government policies.

The government officials believed this will be a prescient programme, when 6G technology roadmaps and use scenarios are still far from having an industry-wide consensus. Such an early move will help China assume a driving role to define where the technologies are going. Some industry experts have estimated that 6G will start taking a more concrete shape from around 2030.

China is not the first country to officially start research in 6G. The Finnish government endorsed the “6Genesis” programme already last year. The programme, led by the University of Oulu in northern Finland, will run into 2016. The first 6G Wireless Summit was held in March in Levi, a ski resort in Finnish Lapland, and the world’s first 6G whitepaper, “Key drivers and research challenges for 6G ubiquitous wireless intelligence” was published in September.

Shortly before the Finns came onstage at Mobile World Congress to announce their ambitions and plans, the most high-profile advocate for 6G was President Donald Trump, who tweeted at the beginning of the year that he wanted 6G in the United States as soon as possible.

Ofcom reported to have picked another civil servant as new boss

There was a time when some degree of telecoms expertise was considered a desirable quality in a prospective head of Ofcom, but that is long gone.

According to a report from the Guardian, former civil service Permanent Secretary Sharon White will be replaced as Chief Exec by former civil service Permanent Secretary Melanie Dawes if Ofcom has its way. While the appointment is made by the Ofcom board, it needs to be approved by the Secretary of State for Digital, Culture, Media and Sport. Since we’re not sure who that will be by the end of the year, Ofcom would apparently prefer to keep its choice quiet until after the General Election.

We asked Ofcom for comment, but were given the standard line about not responding to rumour and speculation, which was expected. We were pointed towards today’s official announcement that Ofcom board member and Chief Exec of the UK Regulators Network will be keeping the seat warm for Dawes, or whoever, until the UK political dust settles a bit. Oxley has ruled himself out of taking the gig permanently.

The Guardian quoted some random anonymous person who they say knows Dawes as calling her ‘a safe pair of hands’ and we have no reason to doubt this mysterious insider. That’s presumably why senior civil servants are now preferred to people with industry expertise – the government doesn’t want Ofcom getting funny ideas about policy and that sort of thing. Just keep quiet and do what you’re told, there’s a good regulator.

T-Mobile US merger with Sprint one step closer after FCC sign-off

Having secured a bunch of 5G network commitments, the US telecoms regulator has given its seal of approval to the merger of TMUS and Sprint.

The FCC had to make the usual judgment call when it comes to telecoms mergers of weighing up the reduction in competition with the increased investment power of the combined entity. As with apparently everything else in the US, the FCC is politicised and tribal. The three Republican Commissioners voted in favour, while the two republicans voted against.

To the winners go the spoils and the resulting announcement was heavy on the national benefits promised by ability of the combined entity to do a better job of rolling out a 5G network than the sum of its parts. The FCC (or at least the majority of it) is saying ‘the transaction will close the digital divide and promote the wide deployment of 5G services’. Let’s see.

“Specifically, T-Mobile and Sprint have committed within three years to deploy 5G service to cover 97% of the American people, and within six years to reach 99% of all Americans,” said the FCC announcement. “This commitment includes deploying 5G service to cover 85% of rural Americans within three years and 90% of rural Americans within six years.

“The parties also pledged that within six years, 90% of Americans would have access to mobile service with speeds of at least 100 Mbps and 99% of Americans would have access to speeds of at least 50 Mbps. This includes two-thirds of rural Americans having access to mobile service with speeds of at least 100 Mbps, and 90% of rural Americans having access to speeds of at least 50 Mbps.

“Compliance with these commitments will be verified by rigorous drive-testing, overseen by an independent third party and subject to Commission oversight, to ensure that the service Americans receive will be what the parties have promised. And in order to ensure that these commitments are met, the parties will be required to make payments that could reach over two billion dollars if they do not meet their commitments within six years. Moreover, the parties will be required to make additional payments until they have fulfilled their commitments.”

In their lengthy dissenting letter the two Democrat Commissioners stressed how little reassurance they take from these commitments. “The vague promise of 5G does not change what was true when this deal was first proposed and what remains true today—the benefits of this merger, if any, simply do not outweigh the harms,” wrote Commissioner Starks.

This still isn’t a done deal, however. It is the last of the federal obstacles but some individual states are pushing back and, by amazing coincidence, everyone involved seems to be of the Democrat persuasion. This is just how things work over there and the two companies will presumably need to dip further into the pork barrel to win those states over.

Having secured a bunch of 5G network commitments, the US telecoms regulator has given its seal of approval to the merger of TMUS and Sprint.

The FCC had to make the usual judgment call when it comes to telecoms mergers of weighing up the reduction in competition with the increased investment power of the combined entity. As with apparently everything else in the US, the FCC is politicised and tribal. The three Republican Commissioners voted in favour, while the two republicans voted against.

To the winners go the spoils and the resulting announcement was heavy on the national benefits promised by ability of the combined entity to do a better job of rolling out a 5G network than the sum of its parts. The FCC (or at least the majority of it) is saying ‘the transaction will close the digital divide and promote the wide deployment of 5G services’. Let’s see.

“Specifically, T-Mobile and Sprint have committed within three years to deploy 5G service to cover 97% of the American people, and within six years to reach 99% of all Americans,” said the FCC announcement. “This commitment includes deploying 5G service to cover 85% of rural Americans within three years and 90% of rural Americans within six years.

“The parties also pledged that within six years, 90% of Americans would have access to mobile service with speeds of at least 100 Mbps and 99% of Americans would have access to speeds of at least 50 Mbps. This includes two-thirds of rural Americans having access to mobile service with speeds of at least 100 Mbps, and 90% of rural Americans having access to speeds of at least 50 Mbps.

“Compliance with these commitments will be verified by rigorous drive-testing, overseen by an independent third party and subject to Commission oversight, to ensure that the service Americans receive will be what the parties have promised. And in order to ensure that these commitments are met, the parties will be required to make payments that could reach over two billion dollars if they do not meet their commitments within six years. Moreover, the parties will be required to make additional payments until they have fulfilled their commitments.”

In their lengthy dissenting letter the two Democrat Commissioners stressed how little reassurance they take from these commitments. “The vague promise of 5G does not change what was true when this deal was first proposed and what remains true today—the benefits of this merger, if any, simply do not outweigh the harms,” wrote Commissioner Starks.

This still isn’t a done deal, however. It is the last of the federal obstacles but some individual states are pushing back and, by amazing coincidence, everyone involved seems to be of the Democrat persuasion. This is just how things work over there and the two companies will presumably need to dip further into the pork barrel to win those states over. It’s a marathon, not a sprint.

US on the verge of signing some kind of trade deal with China

US Commerce Secretary Wilbur Ross has said his country is close to signing a deal with China that could lead to an easing of some trade restrictions.

Ross (pictured) said as much to Bloomberg, with the usual caveats about nothing being set in stone. Many media have been reporting their own conjecture about what this could mean for Huawei as fact, but Ross was keen to stress this deal doesn’t affect the ‘entity list’, which prevents US companies doing business with Huawei.

There was some couched optimism about licenses being granted, that would enable specific companies to conduct specific trade with Huawei, but then again the US has been sitting on a bunch of license applications for a while without apparently granting any. Arguable the biggest of these would be one that allows Google and Huawei to work together, thus enabling the latter to install the full version of Android on its phones.

It’s all very well for Ross to insist the entity list and the trade war are unrelated, but US foot-dragging over granting those licenses implies the contrary. Trade wars are a game of chicken in which each side raises the stakes to give them more weight in negotiations. Putting national champion Huawei in existential danger via the entity list is just too convenient a negotiating chip for its to be plausible that the two issues are unrelated.

 

Jio accuses Indian cellular trade body of foul play

India’s leading mobile operator group thinks the fact that the trade body lobbied on behalf of two others is proof of bias against it.

The trace body in question is the Cellular Operators Association of India (COAI), which apparently wrote to the Indian government yesterday to lobby for some kind of assistance for its members: Vodafone Idea and Bharti Airtel. The thing is Reliance Jio is also a member of the COAI and presumably doesn’t want its competitors to get extra help, so it’s not happy about the letter.

Jio communicated its displeasure at considerable length in a letter of its own to the COAI, which it also shared with Indian media. It characterised the COAI letter as having alleged an unprecedented crisis in the telecom industry and said it was shocked that the letter was sent before Jio had had the opportunity to contribute. It went on to say this is typical bad behaviour by COAI, which calls into question just how shocked Jio actually was.

“Evidently, submission of this letter… is another manifestation of COAI’s prejudiced mindset completely laced with the one-sided thought process,” continued the letter, warming to its theme. “By such unwarranted behaviour COAI has just proved that they are not an industry organization but just a mouthpiece of two service providers.”

It then bangs on about all the things that were wrong with the letter, which amount to the aforementioned bias in favour of Vodafone Idea and Bharti Airtel. Jio clearly doesn’t want its rivals to get any help from the government, and even went so far as to insist that the disappearance of its two main competitors wouldn’t harm competition, which feels like a bit of a reach.

Neither the COAI nor the Indian state seemed to have responded to the letter at the time of writing, but they both seem to be stuck in the middle of an increasingly acrimonious war between Jio and the incumbents whether they like it or not. This is what happens when the state pokes its nose into the commercial sector too much. It created a very benign regulatory environment for Jio and is now staring at a potential monopoly. Nice one.

Vodafone Idea is reportedly struggling, Indian government may step in

Indian operator group Vodafone Idea is reportedly looking to refinance its massive debt, while the government mulls a bailout for the whole sector.

The Indian telecoms sector is a bit of a mess these days. The arrival of Reliance Jio lowered prices and squeezed profits at a time when capital investment was most needed. Meanwhile the government seems to be doing everything it can to make the situation worse by first giving assistance to some operators, while further hindering others. You could be forgiven for thinking the Indian state is determined to drive incumbents Vodafone Idea and Bharti Airtel out of business.

So it comes as no great surprise to read reports that Vodafone Idea is struggling to meet its debt obligations and wants to renegotiate the terms. It should be stressed, however, that this report is based on anonymous sources and a spokesperson for Vodafone Idea has said the company hasn’t asked lenders to rework payment terms, so it all comes down to who you believe.

Even if Vodafone Idea hasn’t explicitly sought renegotiation with its creditors, with $14 billion debt and a fiendishly difficult trading environment it’s hard to believe it won’t soon. The merger seems to have bought the respective companies precious little time, but massive potential rewards await those companies that can ride out the current storm in what will soon be the world’s most populous country.

It seems possible that the Indian government is belatedly realising what a catastrophe the collapse of one on the few remaining national operator groups would be and, according to another report, has created a panel to look into a bailout for the whole sector. How much of this will be straight cash as opposed to regulatory concessions remains to be seen, but it the mere creation of this panel indicates an acknowledgement by the state that it hasn’t managed the sector very well.

Allowing the creation of Reliance Jio was fine, but it seemed to get a bigger regulatory helping hand than, in hindsight, seems appropriate for a company bankrolled by India’s richest person. At the same time the state is still active in the sector itself and seems to have been using the incumbents as a cash cow. The role of this panel should be to correct some of those mistakes, but we’ve seen little from the Indian state to make us optimistic about it succeeding.

FCC wants to use state muscle to ban Huawei and ZTE even more

What little presence Chinese vendors still have in US networks will be further eroded by a new initiative from the US regulator.

Federal Communications Commission Chairman Ajit Pai (pictured) announced at the World Radiocommunication Conference that the FCC will soon vote on a move to deny federal funds to any company that does business with any company that poses a national security threat.

Right now US operators get some state wonga from something called the Universal Service Fund, which is positioned as a pot of cash to ensure everyone in the US is connected. Any time a company is dependent on the state for funds, however, that leaves it vulnerable to state intervention in its business and that seems to be what Pai has in mind. Suddenly universal service is secondary to geopolitics.

With the usual preamble about how Chinese companies are compelled to assist their government in its spying operations, Pai said he thinks even more needs to be done to counter that threat to US national security.

Recognizing this risk, today, I’m circulating an order that would prohibit the use of Universal Service Fund dollars to purchase equipment or services from any company—like Huawei—that poses a national security threat,” said Pai. “Going forward, we simply can’t take a risk when it comes our networks and hope for the best.”

In the process of examining this issue, I also determined that the FCC needs to take a look back, so to speak. That’s because some rural wireless carriers that receive USF funds have already installed Chinese equipment.  So, I’m proposing that the Commission initiate a process to remove and replace such equipment from USF-funded communications networks.

“My plan calls first for an assessment to find out exactly how much equipment from Huawei and another Chinese company, ZTE, is in these networks, followed by financial assistance to these carriers to help them transition to more trusted vendors. We’ll seek public input on how big this “rip and replace” program needs to be and how best to finance it.  I hope that my colleagues will join me in voting for these important steps to protect our national security at our November 19 meeting.”

Public funds are a two-way street, you see. They can be taken away if you’re bad, but increased it you’re good. We don’t know how substantial the USF is, but operators could always just forgo that cash if they really felt like using Chinese gear, we suppose. However they would then find themselves on a governmental naughty list and presumably face all sorts of other state sanctions, so will probably decide discretion is the better part of valour when it comes to doing what they’re told in this case.