Vodafone searches for supply chain rejig through OpenRAN

Vodafone has announced it will introduce OpenRAN technology in various parts of its UK network, as well as the Democratic Republic of Congo (DRC) and Mozambique.

In what appears to be an effort to break down barriers to work with new vendors, Vodafone will seek to empower the ecosystem through the introduction of commoditised hardware. This is the first trial of the technology in a ‘developed’ market, leaning on trials which have taken place in Turkey and South Africa.

“We are pleased with trials of OpenRAN and are ready to fast track it into Europe as we seek to actively expand our vendor ecosystem,” said Vodafone CEO Nick Read.

“OpenRAN improves the network economics enabling us to reach more people in rural communities and that supports our goal to build digital societies in which no-one is left behind.”

Launched through the Telecom Infra Project (TIP), the OpenRAN initiative aims to build 2G, 3G and 4G RAN solutions based on a general-purpose vendor-neutral hardware and software-defined technology. With vendor-neutral hardware hitting the networks, the aim is to reduce reliance on a small number of vendors, de-couple the hardware and software components of the network more stringently and reduce the vast expenditure made on network infrastructure.

The UK trial will focus on rural locations, perhaps to reduce the exposure of failure. These are also the cell sites which will cost the most and offer the smallest profits. There is a lot to gain here, while the consequence of failure will be limited.

“Encouraging the emergence of new suppliers would give operators greater choice in a far healthier ecosystem,” said Kester Mann of CCS Insight. “Disrupting the status quo could, in particular, make the economics of network deployment stack up in rural areas or hard-to-reach locations, for which roll-out may not currently be viable or cost effective.

“Improving network economics and better monetising infrastructure assets is an important focus of Vodafone CEO Nick Read as the company seeks to achieve ambitious cost-saving targets.”

Like many of the worlds’ telcos, Vodafone is slowing stumbling towards a tricky situation with its supply chain, though many of the issues are outside the control of the company. With Huawei under increasing pressure, the future does look glum for a segment of the ecosystem which is already under-populated.

However, the telcos are not completely blameless in this situation. Investments have been concentrated with the three major vendors in this space (Huawei, Ericsson and Nokia). Through prioritising these companies as primary vendors, challengers have not been given the opportunity to scale and compete. Another complaint levelled at the telcos has been a comprehensive and convoluted procurement process, which has inhibited the ability of smaller players to compete against the status quo.

When the industry is running smoothly, few would have complained with the concentration of investment to a small number of vendors, but there are wrenches being thrown into the works all over the place.

With Huawei potentially facing bans in numerous countries and its supply chain being compromised thanks to the entry onto the US Entity List, a major vendor is under threat. Although Huawei has confirmed it is producing products free of US components, the performance of this equipment is unknown for the moment. Worst-case scenario, the vendor community could become a lot smaller.

Vodafone is one company which does look to be exposed to the Huawei conundrum. UK CTO Scott Petty has said banning Huawei would set the company back two years in its quest for 5G, costing millions as the company would be forced to strip the vendors equipment out of its network. Huawei equipment currently accounts for 32% of the 18,000 base stations around the country, though it has plans to strip Nokia equipment out, with Ericsson taking the rest.

Only working with two suppliers is a precarious situation, though this is compounded when you look at the difficulties Huawei is facing. The introduction of OpenRAN might be considered a bold move, but it is starting to look very necessary to enable access to more vendors.

The trials in the UK, DRC and Mozambique will focus on mobile calls and data services across 2G, 3G and 4G, with 5G possible over OpenRAN in the future. OpenRAN could be debuted elsewhere across Europe dependent on the success of the trials in the UK.

The team have currently identified 100+ rural locations to trial the technology, though this could be expanded in the future. Vodafone has said OpenRAN could reduce network hardware costs by up to a third, but this is dependent on how the technology and supplier ecosystem develops over time. Mavenir, Parallell Wireless and Lime Microsystems are three new suppliers enabled by the trials, though there are a huge number of start-ups who are connected to TIP.

Although this is a small trial for the moment, it is certainly one worth keeping an eye on. Vodafone is in a slightly tricky position when it comes to its supply chain, though should OpenRAN prove to be successful, numerous options could be opened-up. It is a low risk gamble, though the gains of a new supply chain certainly outweigh the consequence of failure.

Vodafone first to take advantage of spectrum sharing rules

Vodafone has announced it has entered into a three-year agreement with StrattoOpencell to share the use of it 2.6 GHz spectrum assets to deliver connectivity in Devon.

Following adjustments to spectrum license rules by Ofcom earlier this year, Vodafone becomes the first telco to share out the valuable airwaves. As part of the agreement, StrattoOpencell will deploy 4G small cells to deliver connectivity services to a holiday site in Devon.

“Vodafone has a long history of innovation, from sending the first text message to conducting the first 5G holographic call,” said Vodafone UK CEO Nick Jeffery. “We are delighted to become the first mobile company in the UK to share some of our spectrum to extend rural coverage.

“By offering some of our 4G spectrum to StrattoOpencell, we are helping to extend fast and reliable mobile network access for people in rural communities. Mobile connectivity in rural areas is just as important as it is for those in towns and cities, which is why we continue to work with others to help improve rural connectivity for all.”

Earlier this year, Ofcom made some amendments to allow for spectrum assets to be licensed off to third-parties by the telco which owns the airwaves. The changes are designed to more efficiently make use of the valuable assets. Vodafone is currently using the 2.6 GHz spectrum band in urbanised areas, though not in the rural communities. The high-capacity is attractive in the cities, though the shorter-range is less so when dealing with the rural areas.

This looks to be a very good example of proactive and forward-thinking regulation. If Vodafone is not making use of the spectrum in certain areas, why shouldn’t someone else? It is after all an asset which Vodafone is entitled to monetize in any (legal) way it sees fit.

Should a telco find a partner it would like to license its spectrum assets to, it has to seek permission from Ofcom detailing the band, location, bandwidth and power required. The regulator looks at it with a positive outcome in mind, though it will look for potential interference. The applications are dealt with on a case-by-case basis.

“Our new sharing approach aims to help more people access the airwaves they need to create local networks around the UK, including improving connections in rural areas,” said Philip Marnick, Group Director of Spectrum at Ofcom.

“Vodafone and StrattoOpencell are the first to take advantage of this. We look forward to seeing how others use our new spectrum access approach to support innovation and enable local communities to have better connections.”

Although this is only in Devon for the moment, the spectrum policy has been altered to enable more creative connectivity solutions in areas where fixed-connectivity is not an option. This might be difficult to reach places, or areas where permanent connectivity is not required. The success of the idea will be dependent on adoption, so it will be curious to see whether EE, O2 and Three elect to join the sharing scheme.

UK Government does not understand digital divide – committee report

A UK parliamentary committee has unveiled a report that suggests while rural connectivity is improving, it is still not keeping pace with the urban environments.

The report from the Environment, Food and Rural Affairs Committee has suggested the digital divide is persistent. Steps forward have been made though the committee does not believe the Government has fully grasped the extent of the problem, the scale of the challenge, or the wider cost of poor connectivity for the rural economy.

“Despite improvements in coverage since our predecessor’s Report, our inquiry has shown that poor broadband and mobile data services continue to marginalise rural communities, particularly those living in hard to reach areas,” said Neil Parish, Chair of the Environment, Food and Rural Affairs Committee.

“Digital connectivity is now regarded by many as an essential utility, with many in rural areas struggling to live a modern lifestyle without it. There continues to be a lot of frustration felt by those living or working in rural areas– and rightly so.”

While the committee has conceded positive steps have been made by the Government is recognising the challenge, Parish does not feel it fully grasps the depth and breadth of the challenge.

“However, the Committee is not confident that the Government has fully grasped the scale of the challenge currently faced and is sceptical as to whether the Government will meet these ambitious new targets without considerable and potentially controversial reforms,” Parish said.

The Government has of course set very ambitious targets to close the digital divide, though it does appear the action plan to meet these targets has not been set in place. If the gains are only being dwarfed by progress in the cities, is this is a genuine solution?

Although it might sound like a first-world problem, the idea of connectivity should no longer be seen as a luxury; it is a fundamental part of the UK’s society.

This is the attitude some will take. You can’t get fast enough broadband, so outside and kick a ball instead of watching Netflix. However, if you consider many banks are now taking a digital-first approach, closing smaller branches in the countryside, connectivity becomes critical. At risk patients no-longer have to be limited to a ward if they can be effectively monitored at home. Agriculture can be revolutionised with technology also. There are certainly more benefits than simply removing buffering.

Another interesting element to this argument, aside from empowering businesses outside the major towns and cities, is the impact on well-being.

This is a very important aspect on improved connectivity and an element of the evolution of many forward-looking businesses. Trends are moving towards a flexible-working relationship between the employee and employer, with more companies being open to work-from-home environments. It improves the happiness of the employee, potentially increasing retention, and also allows the company to access new talent.

However, it does depend on consistent, reliable connectivity throughout the country.

Interesting enough, a sluggish approach to the broadband challenge could also have an impact on the fast-growing mobile economy, bolstered by the emergence of 5G.

“With 5G on its way, it is also crucial to ensure the background infrastructure (the fibre highway) is in place, using techniques such as fibre cabling directly to the outdoor antennas, combining fibre with power to the huge number of new ‘small cells” that will be required and leveraging existing fibre-to-the-home (FTTH) construction to add in extra 5G connection points along the way,” said Phil Sorsky, VP of the international business at CommScope.

The digital divide might not be as apparent in the UK as it is elsewhere, though it is still a persistent problem for British citizens. BoJo’s target of full-fibre coverage by 2025 might sound good, however it does appear there is a lack of thinking behind the execution of the strategy.

FCC allocates $20bn to close US digital divide

One of the genuine risks of the accelerated journey towards the digital economy is the widening digital divide, though an extra $20 billion from the FCC could help even the landscape.

Although the US is one of the most advanced digital nations in the world, the difference between the haves and have nots is quite staggering. If you were to compare the connectivity options for a millennial in San Diego to a farmer in rural Ohio, you wouldn’t assume it was the same country. Some might see it as a first world problem, however with the benefits of connectivity being applied to areas such as education and healthcare, it is irresponsible to allow this divide to continue.

This is the conundrum which the FCC has faced in recent years. It is of course commercially attractive to drive connectivity options in the densely populated urban areas, but such are the sparse and environmentally challenging regions across some of the US, vast numbers of people are being left behind.

Here, the FCC is proposing the establishment of the Rural Digital Opportunity Fund, which will direct $20.4 billion towards closing the digital divide.

“In short, we’re proposing to connect more Americans to faster broadband networks than any other universal service program has done,” said FCC Chairman Ajit Pai.

“I’m excited about what this initiative will mean for rural Americans who need broadband to start a business, educate a child, grow crops, raise livestock, get access to telehealth, and do all the other things that the online world allows. And I look forward to kicking off this new auction next year.”

This fund will have a broader scope than the previous Connect America Fund (CAF), and will aim to assist regions which are not currently able to access download speeds of 25 Mbps and upload speeds of 3 Mbps, significantly higher than the caps placed on the CAF funds.

The funding will be allocated in two phases. Firstly, using data which has already been collected by the FCC, a reverse auction will be implemented to hand out the funds. Alongside this auction, a new data collection tool will be implemented to offer greater depth to the insight. In the second phase, the intelligence gathered through this tool will help allocate funds as well as to those communities which missed out in the first phase.

With what will be known as the Digital Opportunity Data Collection initiative, the FCC will aim develop more granular broadband deployment data. This initiative will aim to collect geospatial broadband coverage maps from fixed broadband ISPs, and also develop crowd-sourcing portal that will gather input from consumers as well as from state, local, and Tribal governments. Through crowd-sourcing the data, the FCC will hope to validate the information put forwards by the ISPs.

This is a sensible approach from the FCC, as while the ISPs will have the biggest treasure troves when it comes to data, they have also shown themselves to be misleading in the past. With such a tool at its disposal, the FCC can become a more intelligent organization, taking proactive steps towards fixing the digital divide as opposed to simply signing blank cheques for the telcos to cash.

“I appreciate the hard work that went into this item to fix the Commission’s broken mapping process,” said FCC Commissioner Michael O’Reilly.

“Like some of the very laudable mapping bills being considered by Congress, including those by Chairman Wicker and Senator Capito, this item takes important steps in creating a more accurate and useful picture of broadband coverage, which should allow the Commission’s universal service policies to better focus on those millions of Americans left behind without access to broadband service today.”

And while this might sound like a positive step-forward, Commissioner Jessica Rosenworcel, a political opponent of Pai and O’Reilly, has found something to be irked about. Rosenworcel fears the maps might be replaced by a difficult to find URL and handing control of data collection to the administrator of the funds is not the best way forward.

Although we should not be surprised by the objections, they are incredibly weak. Rosenworcel has said she likes the idea, though her objections are seemingly just trying to be awkward, playing the childish role of political opponent wherever possible. While we rarely have anything positive to say about Pai and his cronies in the FCC, this is a sensible move forward and Rosenworcel seems to be finding objections purely because it adds to the theatrics of politics.

What is incredibly difficult to understand is how severe the digital divide actually is in the US. The FCC suggests there are 21 million US citizens who cannot access acceptable broadband speeds, though Rosenworcel has quoted a report which claims the digital divide is as high as 162 million.

This outlandish claim pays homage to a report from Microsoft which should be taken with a bucketful of salt. Let’s not forget, Microsoft is a firm which will benefit from stoking the fire and attracting additional funds to fuel connectivity deployments in the rural community.

This in itself is one of the significant problems when attempting to tackle the digital divide; no-one actually knows what the starting point is. Depending on your commercial aims and political allegiance, the number of underserved citizens will vary wildly. How can one address a problem when the variables remain unknown? It is nothing more than shooting in the dark, hitting the mark occasionally but likely to miss the most important targets.

Alongside these changes in funding connectivity, the FCC has also released a statement which will address how funding for telehealth services is allocated.

This is where the idea of connectivity can be more than simply a means to access entertainment, taking the digital divide beyond the realms of first world problem. There are communities in the US who are underserved by medical services thanks to doctor shortages and hospital closures. The Rural Health Care Programme aims to address these challenges, making use of connectivity to ensure all US citizens have access to medical services as and when they need them.

The latest proposal is another reform to how funds are allocated, attempting to identify the regions which are most severely underserved. Funding will be increased by 43% to $571 million.

Amazon takes one small step for satellite connectivity

Amazon has submitted its application to the FCC to deliver home broadband services to rural communities in the US through its Kuiper Systems satellite programme.

In a filing with the FCC, Kuiper Systems, a wholly-owned subsidiary of Amazon.com, plans to deliver high-speed, low-latency broadband services to consumers, businesses, and other customers worldwide through a constellation of 3,236 satellites in 98 orbital planes at altitudes of 590 km, 610 km, and 630 km, us Ka-band radio frequencies.

Aside from providing broadband solutions to rural and hard-to-reach communities, the plan is also to enable MNOs to expand wireless services to unserved and underserved mobile customers and provide high-throughput mobile broadband connectivity services for aircraft, maritime vessels, and land vehicles.

While Amazon has plugged its bank account to entice the FCC, it is also leaning on its existing operations as a means to support the new venture. It has stated it has the ‘global terrestrial networking and compute infrastructure required for the Kuiper System’, as well as the ‘customer operations capabilities’ acquired through its various businesses from eCommerce through to AWS cloud computing.

It’s a comprehensive filing from Amazon, and we suspect it peak some interest at the offices of the FCC.

“The Kuiper System will deliver satellite broadband communications services to tens of millions of unserved and underserved consumers and businesses in the United States and around the globe,” the application states.

“According to the FCC’s 2019 Broadband Deployment Report, 21.3 million Americans lack access to fixed terrestrial broadband with benchmark download and upload speeds of 25 Mbps/3 Mbps, and more than 33 million Americans do not have access to mobile LTE broadband speeds of 10 Mbps/3 Mbps. Amazon will help close this digital divide by offering fixed broadband communications services to rural and hard-to-reach areas.”

Once the ugly duckling of the communications family, the satellite segment has been given a new lease of life in recent months. Amazon and Tesla are two companies which are attracting the lion’s share of headlines, but there are several firms, such as OneWeb, Telesat and LeoSat Technologies, with grand plans to launch constellations over the next few years to bridge the connectivity gap.

And it isn’t just satellites which might be filling the skies over the next few years. Google’s Loon is another business attempting to break the mould when it comes to connectivity. Last week, Google finally received the relevant permissions to start testing its balloons to deliver connectivity, with commercial services set to launch over the coming months.

Even internally the telco industry is seeking to disrupt the status quo. Fixed wireless access for broadband solutions are becoming increasingly popular as a means to deliver connectivity over ‘the last mile’. AT&T and Verizon are charging ahead in the US, with companies like Starry challenging, while numerous telcos have announced their own ambitions in Europe, including Vodafone and Three in the UK.

Although there are still ambitions to deliver the full-fibre dream, the commercial realities seem to be getting in the way. It is incredibly expensive to deliver home broadband through wires, especially when you go to regions such as the US, where the geography is so diverse and vast, or Africa, where ARPU remains a problem in justifying ROI. The digital divide is present everywhere, to varying extremes, and it seems the traditional approach to home broadband is not going to be able to meet demands.

That said, some territories are even out of the reach of Bezos. In the application, Amazon has requested a waiver from delivering connectivity to Alaska, as it would be too far north for the constellation. It perhaps undermines the validation Amazon has put forward, delivering connectivity where it is too difficult for others, though whether this has any material impact remains to be seen.

Although progress is clearly being made here, what is absent from the application are any details on the design of the satellites or timetables for launches. Should permission be granted, we suspect Amazon would move forward very quickly however, Bezos is a space-buff after all.

Interestingly enough, Bezos’ side venture Blue Origin could be in the running to launch the satellites, though Amazon would have to be very careful here. As a publicly-traded company, this could be viewed as a conflict of interest.

The OTTs have constantly been a threat to the delivery of connectivity, a segment owned by the telcos to date, and have faced numerous complications is staging a coup (see Google Fiber). Using satellites might just be a way to carve a niche. It will be an expensive job, but these are companies which have the funds, the desire and the culture to make such a dream a reality.

OTTs Telcos
Cash Cash rich organizations, with incredibly profitable core business models to fuel expansion Incredibly constrained thanks to disruptions to profit-machines such as voice and SMS. Already committed to expensive business of traditional connectivity leaving limited funds for cash-intensive R&D outside bread and butter operations
Desire Constantly searching for new ideas to fuel growth on the spreadsheets. Expectations are high with shareholders and core models will slow down at some point. Do not have the same limitations placed on them (legacy business models and technologies) as the telcos Seem to be fighting too many short-term fires to cast an eye on the horizon. 5G and fibre are taking up so much attention, there seems to be little desire to disrupt themselves. Focusing on protecting what they have
Culture Cultivated a culture of exploration and fail-fast. Willing to fuel ideas without immediate commercial gains if there is potential for profits. More of a big-picture mentality to business Traditional businesses, with traditional leadership and traditional employees. Rarely search beyond the norm for profitability

UK rural collaboration back on the table

Getting competitors to work together for the greater good is a complex and often failed task, but the latest effort to address ‘not spots’ in the UK is holding steady.

Following a meeting with the Department of Digital, Culture, Media and Sport, the CEOs of the four major UK MNOs have agreed, in theory, on a collaboration plan which will address the not spots in the UK. For those languishing in the rural regions of the UK, this news will come as a welcome boost to digital ambitions.

However, what is worth noting is this is not a done deal. Collaboration plans have fallen apart in the past, and there is still plenty of room for error.

The plan itself is one which is built on the idea of reciprocation. Instead of forcing the telcos to open up infrastructure to competitors, an idea which would be more beneficial to certain parties, or imposing a ‘national roaming’ initiative, the telcos are discussing two separate and parallel paths forward.

Firstly, one competitor would open up infrastructure to another should the same be done in return. This would reward telcos for (1) investing in the rural communities and (2) working alongside a rival. Building a mast could compound coverage gains with reciprocal agreements. This is more for the areas where users have limited choice in providers.

Secondly, the areas which do not fall into the footprint of any telco. The four telcos are proposing the creation of a new company which would focus on building infrastructure in the not-spots. This infrastructure would be accessible to all telcos, potentially filling-in the digital voids throughout the countryside.

BT’s rural position is nothing more than defensive strategy

BT has unveiled its own proposals to bridge the rural divide, but this strategy is just as much about protecting its own attractive position as it is connecting the unconnected.

In a letter to the Daily Telegraph earlier this week, BT’s consumer CEO Marc Allera outlined the vision for a digital society where everyone reaps the benefits. BT is proposing infrastructure tit-for-tat in the regions where there is coverage from at least one of the UK MNOs, and a more simplistic infrastructure sharing proposal in the genuine not-spots.

Both ideas are completely reasonable, and both are geared towards protecting a competitive edge for BT, created through years of mobile infrastructure expansion.

Although there are arguments that rural roaming or network sharing propositions would slow down investment and the rollout of mobile infrastructure, following the money is perhaps a better means to understand BT’s underlying strategy. With every change made in the telco landscape, there is financial gain and loss. When BT proposes an idea, you must question what the financial gain or loss is.

The reason Allera is making noise through the mainstream press right now is due to the negative PR the company attracted a couple of weeks back. O2, Vodafone and Three proposed an infrastructure sharing initiative, which was promptly rejected by BT, painting the picture of a spoilt child having a hissy fit because he has been told to share his favourite toy train. However, when you delve into the details, you see BT’s rejection was a sound commercial decision.

In short, the trio of competitors proposed opening-up current mobile infrastructure, forcing any mast owners to allow competitors to place radio equipment on the structure in areas which have been deemed underserved. This sounds fantastic for the consumer and the Government’s ambition of 95% geographical 4G coverage by 2022, but it effectively erodes the position BT/EE has spent years attempting to craft.

BT/EE has the best mobile coverage throughout the UK. This is not only average speed, but geographical spread. Some might dispute this point, but year after year test from the likes of Opensignal and Ookla crown EE the champion. This has allowed it to tell customers they will be able to get fantastic signal almost everywhere in the UK, an advantage over rival MNOs.

The cost when it comes to expanding 4G coverage is not necessarily anything to do with the radio equipment, but everything else. Acquiring the land, negotiating local planning laws, constructing the site, wiring it up with fibre and electricity, the raw materials and the man power, all add up to make an expensive proposition. It’s no wonder telcos want to open competitor’s masts as opposed to building it themselves. It’s much faster and significantly cheaper to simply pay an engineer to fix radio equipment to an existing mast.

Should the trio’s proposal of collaboration be accepted, this would effectively kill this advantage and completely undermine a long-term commercial strategy. No competent business person would agree to such an initiative, especially considering how much it would have cost.

Now take into consideration the BT alternative.

Firstly, in the areas where there is only one telco present, BT would allow one of its rivals to use its infrastructure, but only if the competitor opens one of its own masts to BT. This creates the collaborative framework legislators and regulators are keen to see but protects BT’s competitive edge, and prior investments, and allows it to enhance its own coverage footprint. Yes, it does help a rival, but the pros outweigh (or at least equal) the cons, and it doesn’t allow competitors to bypass the process BT/EE would have painfully gone through in the past.

This would be the idea for areas where there is a telco present, but for the genuine not spots, where none of the MNOs can provide service, a more straightforward infrastructure sharing agreement can be created. All four would contribute to a pot and all would be free to put whatever radio equipment on the mast.

This does not necessarily encourage competition, but these not spots offer very little commercial potential to anyone. Extending coverage to these areas is not about providing a service to customers but meeting the coverage expectations of the Government. Sheep don’t pay phone bills after all, but occasionally a rambler might want to Instagram said sheep.

While this might not sound like the ‘we’re all in this together’ rhetoric which has been banded around, realistically this very few people would think contrary to this position. These are commercial businesses which are in place to compete with rivals and make money. BT might be spinning their argument to suggest such collaborative schemes would slow down infrastructure rollout, but 99% of decisions in big business always come down to money.

Why would BT want to help its competitors compete in a market which is incredibly difficult to find profits in the first place?

Microsoft suggests FCC is telling Porky Pai’s

New Microsoft research suggests the digital divide in the US is much more prominent than any of the politicians, who are supposedly fixing the problem, would let you believe.

The digital divide is one of the most active political ping-pong balls in recent years, with US politicians seemingly using the desirability of bufferless cat videos to gain support in some of the country’s poorest communities. If you believe what the FCC has been telling the media, this disparity has been getting smaller, though it is still large.

The Microsoft research suggests very little or no progress is being made and the FCC is misleading US citizens.

Looking at the statistics, the FCC claims the digital divide currently stands at 22 million across the US. The threshold seems to be what many would consider basic broadband speeds. With so much of the world become digitized it is critical every person is not only granted access to new opportunities, but also allowed to continue using basic services (such as banking) which are increasingly moving into the digital world.

Looking at the Microsoft research, the team is suggesting around half of US citizens, 162 million, are not using the internet at broadband speeds. The difference between the two numbers is quite staggering, and while it does question to competence at the FCC, the answer might be a bit simpler; it’s all a game of politics.

When looking at the figures it is important to understand the FCC estimates on the digital divide are based on those individuals who can theoretically access the internet. There might be various other reasons why they do not, price for example, but these factors do not seem to be considered. Why you might ask? We suspect it is not politically convenient.

If you look at the last US election campaign trail, the idea of the digital divide was a hot topic. Both President Trump and the Democrat candidate Hillary Clinton suggested tackling the issue would be a high priority for their administrations, buying favour in communities which could (and eventually did) turn the tide in the election.

The FCC is a body which is funded via the pockets of the tax payer, therefore it does have to demonstrate it is fulfilling the objectives set out before it. Holding telcos accountable to theoretically offering broadband access is a much simpler job than ensuring these business price it at a cost which would be deemed accessible.

The Microsoft research is based on those who are using the internet at speeds which would be deemed relevant to broadband. Slow broadband could be deemed as bad a no broadband in some cases, with websites timing out or taking so long to load little could be achieved. With this in mind, stories about kids making use of McDonalds wifi to do homework start to make sense.

As you can see from the graph below, wired technologies do generally take a lot longer to reach 100%, especially in a country which is as vast and varied as the US, though broadband has been sluggish in recent years.

Broadband Adoption

But before you start to congratulate Microsoft too much, you must take into account its position is also political, or perhaps PR-drowned is more accurate. One of Microsoft’s more prominent CSR (Corporate Social Responsibility) initiatives is closing the digital divide. If the problem is much worse than people originally imagined, the corporation coming in to help looks much more glorious.

On both side of the coin you have to take the claims with a pinch of salt. The FCC will continue to make bold statements on progress to ensure favourable light is shed on the Trump administration at a time where the White House will be starting to consider the next election, while Microsoft has a lot to gain commercially through the Airband Initiative, a five-year commitment to bring broadband access to two million unserved US citizens living in rural communities.

Microsoft is not wrong, and we suspect the way it is judging the digital divide is more accurate (usage vs. theoretical accessibility), but it always worth remembering there is always something to gain.

O2 commits to plugging 339 farmer Johns into the digital economy

O2 has announced it will start pumping enhanced 4G into some of most notorious not-spots throughout the UK, with 339 communities set to receive the connectivity boost.

While the digital divide is clearly still present across the UK, it does seem O2 is attempting to make use of 4G spectrum acquired in the last auction to counter the imbalance. The last 12 months has certainly seen O2 up its game on the connectivity front, Ofcom confirmed O2 had delivered against its commitment to provide 98% indoor 4G coverage and 90% geographical coverage across the UK earlier this year, and this appears to be a continuation of the positive work. O2 has stated in intends to improve the 4G experience for an additional 339 communities of more than 100 people across the UK by the end of the year.

“We know mobile has the power to make a real, positive difference to people’s lives and businesses in rural communities across Britain,” said O2 UK COO Derek McManus. “That’s why we’re proud to be investing in 4G connectivity for more than 330 rural areas by the end of this year. Technology never stands still, which is why we are always looking for the right partners and investing in our future network. Whether trialling 5G to support a future-proof, mobile Britain, or ensuring the remotest parts of rural Britain can connect to 4G, for O2, this is about continuing to invest in all areas – not one at the cost of the other.”

“4G coverage is improving all the time, but there’s more to do, particularly in rural areas,” said Digital Minister Margot James. “We’ve already reformed planning laws to make it easier and cheaper to install and upgrade digital infrastructure, and it’s great to see O2 and the rest of industry responding to ensure more people in rural Britain can share the brilliant benefits of 4G connectivity.”

Thanks partly to an enhanced mobile experience, O2 has pointed to a report from Development Economics which suggests tourism, transport and manufacturing segments could receive a financial boost with improved connectivity. Perhaps this is one of the most notorious statistics associated with the digital divide, but Development Economics predicts connectivity parity could add as much as £141 million a year to the 14,000 rural businesses who are missing out on the full digital experience.

Although this is a positive step forward, let’s not forget O2 has a lot of catching up to do, it certainly isn’t uncommon to see the brand slumping at the bottom of the mobile performance rankings. Opensignal’s most recent report assessing the performance of the four UK MNOs had O2 sat in last place for all categories aside from latency (3G and 4G) and availability, where it was second behind EE. Back in August, Rootmetrics also had O2 at the bottom of the pile for almost every category.

The performance of the network is certainly a dent in the O2 pride, but it has still managed to claim top-spot in the market share leagues. Although MNOs should stride towards creating the best possible experience for customers, O2’s top and bottom standings demonstrate buying decisions are more than performance orientated. The big differentiator between O2 and rest of the UK MNOs is its loyalty programme, Priority, which does appear to be paying dividends, while Giffgaff is still proving a successful venture to attract a new SIM-only audience. Such is the success of Giffgaff over the last few years, Three has creating its own version in Smartie, while Vodafone has launched Voxi.

That said, building the customer experience in rural areas of the UK will only add to the success of the telco, creating a more interesting proposition for customers which might have ignored the brand in the past. O2 has been swimming against the tide when it comes to convergence trends, choosing to focus exclusively on mobile, a decision which is increasingly looking justified.

Government research suggests digital divide plans might actually be working

When you compare the digital divide to other countries around the world, it looks like nothing more than a minor crack in the UK. That said, it is still there and new research suggests it is getting smaller.

Before you give the mish-mash-of-no-one-wants-jobs Department for Digital, Culture, Media and Sport too much credit, you have to bear in mind this is research which has been funded and influenced by the department itself. That said, government initiatives do seem to have spurred on the lethargic Openreach/BT into action in the countryside taking the number of households which are able to access superfast broadband across the UK to 95.39%.

“Our rollout of superfast broadband across the UK has been the most challenging infrastructure project in a generation but is one of our greatest successes,” said Minister for Digital, Margot James. “We are reaching thousands more homes and businesses every week, that can now reap the clear and tangible benefits that superfast broadband provides. We are helping to ensure the downfall of the digital divide.”

In terms of closing the digital divide, it is worth reminding ourselves every now and then what this actually means. It is more than simply cat videos streaming faster than a laser pointer on the carpet, but accessibility to education and employment opportunities. With businesses increasingly reliant on the internet for everyday processes such as cloud-based services and infrastructure, connectivity decides whether a company opens up an office in one place or another, or the competitiveness of a regional. Functional companies create jobs, which dominos success throughout the local economy.

The initiative was first launched 2010/11 in response to concerns commercial deployment of superfast broadband would fail to reach areas which were not deemed commercially attractive. Backed by £530 million of subsidies (and an additional £250 in 2015), telcos were enticed to rollout out relevant infrastructure, though early years were plagued with claims BT was rebuilding its monopoly with public funds as it won the majority of early contracts. While the criticism of BT’s dominance continues to be an issue for some, it is worth noting £500 million in subsidies has been returned to the public purse due to uptake being higher than expected.

In terms of the impact on local firms, the report estimates postcodes benefitting from subsidised coverage saw employment rise by 0.8% and turnover grow by 1.2% in response to improved infrastructure. This has resulted in an additional 49,000 jobs for local economies, plus an additional £9 billion in annual revenues. When looking at productivity gains, better connectivity essentially means each employee makes an additional £1,390 per year on average for the firm.

Government Table One

As you can see from the tables above, the ‘other’ regions are still growing at a faster rate, though you have to question how big the digital divide would be today without the telcos being ‘encouraged’ to invest in rural areas with government subsidies. Growth is a positive, as it would be a fair assumption the statistics would be in decline without improved connectivity.

Education and health and social work were the sectors which really benefited here (worker turnover increased 4.7% and 3.7% respectively), though subsidised coverage raised turnover per worker in the manufacturing sector by around 0.8%. With improved connectivity now in place in the manufacturing space the opportunity to demonstrate further benefits through IoT and smart-factory environments is much more apparent. The manufacturing segment might be a slow-burner with the next wave of technological advancements proving to be the gamechanger.

With a benefit to cost ratio of £1.96 per £1 of gross public sector spending, it is difficult to argue with the success here. Yes, the numbers could be better, though as the report states the net benefits of the programme does not include any value associated with the future use of the infrastructure, you could conclude the value has been considerably underplayed. Governments do not often earn plaudits, but this does genuinely seem like an initiative which has been well managed, delivering on the stated promises.

Work is not complete on closing the digital divide, the South West for instance is still underserved for example, though it is difficult to argue that the government hasn’t done a bad job overall.