Still no news on CEO, but BT results show promise

We’re still no closer to finding out who will be leading the BT business into the era of 5G, but investors seem happy with the first quarter performance as share price creeps up 3%.

Total revenues for the quarter stood at $5.7 billion, down 2% compared to the same period in 2017, though the consumer business saw growth. The consumer unit, led by former EE CEO Marc Allera, was up 2% with the enterprise business unit and regulation enforced price reductions wiping out the positive steps forward.

“We’ve made a good start to the year,” said CEO Gavin Patterson. “We are making positive progress against our strategy. Our customer experience metrics continue to improve and we have seen the successful launch of new converged products including BT Plus, our first Consumer converged offering and 4G Assure, for business customers. Initiatives to transform our operating model have seen a gross reduction in c.900 roles across the Group and improved cost performance.”

Growth in the consumer business was led by an increased mix of high-end smartphones, growth in the SIM only base and customers now paying for BT Sport. Operational costs were flat across the period, though the team expect sports rights and device costs to increase later in the year. The ‘Best Connected’ strategy, BT’s play to make use of the broad assets available to woo customers, also looks to have gotten off to a promising start, with the team claiming 100,000 customers signed up across the quarter.

In terms of investment, BT’s CAPEX column on the spreadsheets was £839 million, a healthy 14.7% of total revenues. £428 million was invested in the fixed network, while £150 million was allocated to systems and IT and £224 million on what BT describes as ‘customer driven investments’.

Looking at the more negative side of the results, revenue decline in the enterprise business was blamed on lower equipment volumes, migration from fixed voice to IP, and the impact of EU roaming regulation on mobile. In Global Services, BT said its own decision to reduce low margin business was the primary reason for the dip, while decline at Openreach was driven by £90 million of regulated price reductions on our FTTC and Ethernet products and a decline in physical line base.

The bad bits wiped out any growth which the consumer business might have been able to conjure up, but considering the opportunity which is in front of BT, investors have every right to be excited. Convergence is a tricky game to play, but with the assets and customer base available to BT, the opportunity to make money is right in front of the team.

The first steps have been made towards the convergence dream, but announcing the new CEO should come sooner rather than later. Our Gav might be steadying the ship for the moment, but the business cannot operate effectively without a long-term leader for much longer. Despite the opportunities, investors might start getting nervous before too long with a new CEO named.

Ericsson continues its search for silver linings

Swedish networking giant Ericsson reported continued sales declines in Q1 2018 but feels the grand plan is starting to show some positive results.

Reported sales were down 9% year-on-year to SEK 43.4 billion, but only down 2% when the usual handy currency adjustments kick in. While it’s a shame to see yet another quarter of decline, it was more or less expected and Ericsson has previously stated its immediate priority is profitability rather than growth.Helena Norman

To get a bit more insight into the results Telecoms.com spoke to Helena Norrman, SVP and Head of Marketing and Corporate Relations at Ericsson (pictured). In line with the above strategy Norman was keen to highlight Ericsson’s trend of improving gross margin, which jumped to 34% in Q1 2018, up from 16% a year ago.

She explained that the like-for-like jump isn’t quite as dramatic as that, thanks to a bunch of exceptional items and IFRS changes and pointed us towards the slide from Ericsson’s presentation below, which shows that the adjusted gross margin for this quarter was 36% and was 31% a year ago. Either way Gross Margin, which is probably Ericsson’s number one priority right now, seems to be headed in the right direction, for which Norman expressed satisfaction.

Ericsson Q1 2018 gross margin

The reasons for this improvement are fairly well-known. Norman advised that around half of it is down to the streamlining process that has been underway for some time now. The rest of it is down to getting out of bad contracts and, on a more positive note, increased sales of Ericsson Radio System.

Norman, and every other Ericsson exec we’ve spoken to in the past few quarters, are quick to admit there’s still a long way to go. Of course the trend of revenue declines needs to reverse, but the cunning plan is to stop losing money first, which is reasonable, and datapoint trends like improving gross margin are viable causes for muted celebration.

Ericsson has gone through a few years to facing up to its own corporate dysfunction and is trying to build a robust platform from which to rebuild. When we asked Norman if she was feeling optimism she confessed to a degree of “Scandinavian optimism”, which seems to be of the quiet, cautious variety. As in the UK, spring has finally arrived in Sweden and Ericsson may allow itself a cheeky glass of aquavit in the sun this weekend, before rolling its sleeves up once more on Monday.

Here are some other selected slides from the Ericsson Q1 2018 presentation.

Ericsson Q1 2018 sales

Ericsson Q1 2018 regions

Ericsson Q1 2018 networks

Ericsson Q1 2018 digital services

Ericsson Q1 2018 managed services

Ericsson Q1 2018 other

UK outlines plan for 5G testbed dream on a budget

The UK Government’s Department of Digital, Culture, Media and Sport has unveiled Urban Connected Communities Project which promises funding to the winning city to drive 5G technology research and deployment.

Over the next couple of weeks, local or combined authorities with a coverage area in the region of 500,000 people will be able to apply to be part of the programme, though so far it is unclear how many cities would be accepted as part of the initiative, or how much money will actually be spent, Digital Minister Margot James’ statement suggests it will be quite limited.

“This is a huge opportunity for an urban area to become the flagship of our ambitious programme to make Britain fit for the future and a world leader in 5G,” said James. “Trialling 5G at scale across an entire city is a chance to prove the economic benefits predicted from this new technology, test different methods of deployment and boost the connectivity of ordinary people working and living there.”

The money itself will be taken from the £200 million assigned so far to develop 5G technologies as part of over £1bn investment in next-generation digital infrastructure, but the UK track record in actually spending money is woeful. In each budget statement over the last 12 months, a notable chunk of change has been set aside for the development of these technologies, but the amount sitting in the bank account never seems to grow or shrink.

The government is spending money, but in comparison to other nations, it is very limited. Last month, the government gave £23.8 million to six companies and local authorities to develop 5G initiatives. While this seems like good progress, it is essentially one of the only examples where the government has actually spent. Right now, DCMS is proving excellent as congratulating itself for allocating £1 billion for its Digital Strategy, but unless the promise actually hits the economy, what’s the point in it?

In terms of where the money would be allocated, according to research from Demographia, there are only 14 urban regions in the UK which exceed the 500,000 benchmark the government seems to have set above. The areas are as follows:

City Population
London 10,585,000
Manchester 2,705,000
Birmingham 2,565,000
Leeds-Bradford 1,985,000
Glasgow 1,240,000
Southampton-Portsmouth 905,000
Liverpool 885,000
Newcastle upon Tyne 805,000
Nottingham 775,000
Sheffield 720,000
Bristol 670,000
Belfast 620,000
Leicester 555,000
Edinburgh 505,000

Other areas would be considered, though the way in which it phrased reminds us of PR statements where something has been said with the primary objective of appeasing those who have been hurt. This of course a measure of local authority and urban areas, so there might be some other areas which would sneak in, but the UK is not a huge country. There aren’t that many areas which would meet the government criteria.

Other criteria which will be taken into consideration include ‘pinch spots’ of weak connectivity throughout the area as well as areas of high demand such as mainline stations or city centres where heavy usage rather than a lack of signal leads to not-spots.

While we don’t like to be cynical, the copy and paste promises from UK politicians when it comes to investment in digital infrastructure is starting to get frustrating. The practise seems to be offering promises of restoring the UK to the top table of the global economy but thinking it will happen on its own. Right now, we need more concrete commitments as opposed to generic and murky PR statements.

Without spending substantial amounts of money in the short-term, the long-term benefit of the country will never be realised. The UK is doing nothing about the downward spiral right now, but it seems happy about it.

Huawei and Bouygues Telecom Sign 5G Joint Innovation Agreement, with First 5G Network Trial in Bordeaux

[Barcelona, Spain, February 27, 2018] Huawei and Bouygues Telecom announced today a joint innovation program to experiment 5G in France. Bouygues Telecom is part of the first operators worldwide to experiment 5G 3GPP in field with Huawei. Bordeaux will be the first city for a 5G network trial, from single site to multi-site coverage.

With the release of industry’s first 3GPP-based E2E 5G network system solutions developed by Huawei, the deployment of 5G networks is about to begin. Bouygues Telecom intends to provide ultra-high capacities for data services, greatly improving user experience and continuously maintaining a leading position in telecom network.

Today agreement underlines Bouygues Telecom and Huawei collaboration since 2012 to launch 4G network. In 2014, building-on this partnership, Bouygues Telecom and Huawei jointly tested the first 4G commercial network reaching 1.1Gbps in Western Europe using 4 Carrier Aggregation Technology.

Jean-Paul Arzel, VP Networks for Bouygues Telecom, said: “Bouygues Telecom aims to provide ultimate customer experience. It is our mission to quickly and smoothly evaluate 5G technologies. Today agreement with Huawei is largely based on our past common success. We are proud to continue our strategic partnership with the help of Huawei’s 5G network solution”.

Yang Chaobin, President of Huawei 5G Product Line: “We are proud of the innovation agreement signed today with Bouygues Telecom. This first 5G trial in Bordeaux marks a key milestone for the expansion of 5G network in France that will support business growth by opening new opportunities”.

About Huawei

Huawei is a leading global information and communications technology (ICT) solutions provider. Our aim is to enrich life and improve efficiency through a better connected world, acting as a responsible corporate citizen, innovative enabler for the information society, and collaborative contributor to the industry. Driven by customer-centric innovation and open partnerships, Huawei has established an end-to-end ICT solutions portfolio that gives customers competitive advantages in telecom and enterprise networks, devices and cloud computing. Huawei’s 180,000 employees worldwide are committed to creating maximum value for telecom operators, enterprises and consumers. Our innovative ICT solutions, products and services are used in more than 170 countries and regions, serving over one-third of the world’s population. Founded in 1987, Huawei is a private company fully owned by its employees.

For more information, please visit Huawei online at www.huawei.com or follow us on:

http://www.linkedin.com/company/Huawei

http://www.twitter.com/Huawei

http://www.facebook.com/Huawei

http://www.google.com/+Huawei

http://www.youtube.com/Huawei

 

About Bouygues Telecom

As a full-service electronic communications operator, Bouygues Telecom stands out by providing its 17,8 million customers access to the best technology has to offer every day. The quality of its 4G network, its fixed line services and Cloud provide customers with simple solutions, enabling them to fully enjoy their digital lives regardless of their location. Bouygues Telecom is proud of the innovations it has offered to its customers over the last 20 years. Its strategy will remain the same: to offer the best new technology to as many people as possible. #WeLoveTechnology – www.bouyguestelecom.fr

How network virtualisation and densification will shape up at MWC 2018

(c)iStock.com/shulz

With 5G set to be a focal point at MWC 2018, industry chatter is increasingly turning to immediate and longer-term predictions in this space. The question on everyone’s lips?  What needs to happen for the industry to deliver upon its 5G promises? At Arqiva we see two key trends emerging that are likely to lead this conversation. 

Virtualisation of the network

In the mobile sector to date hardware and software have typically been provided via a standards-based integrated vendor offering – affording significant benefits in standardisation and ubiquity of service provision. This approach, however, requires a high level of coordination between industry participants, and results in major releases every few years (i.e. 3G, 4G, 4G+, 5G etc.).

In other sectors innovation occurs more rapidly, without requiring such complex coordination – sub-groups can form and disband but deliver ‘discontinuous’ change.

This process is beginning to emerge in the mobile sector – notably providing the opportunity for hardware and software evolution paths to split. Not only will the separation of these elements bring new entrants into the mobile network provision arena, but it will also allow networks to be loaded onto standard IT hardware, meaning the industry can harness ongoing improvements in computing performance more easily.

Additionally, by removing the constraint of also having to provide hardware, this shift will provide software companies with the freedom to enter the market and thanks to their agile ‘trial, fail, fix fast’ approach new network features could be developed faster than ever before. While standards will still have a role to play in terms of ensuring base-level interoperability, continuous feature development could become more common.

For now, virtualisation of this kind will likely focus on core network elements, but it could quickly expand to the entire network. Indeed, you only have to look at the impact Google had on the mobile operating system market with Android to appreciate how software companies could radically change our approach – and the wider ecosystem.

Densification of the network

Despite the technological change that 5G will bring, the other raw ingredients of a mobile network will remain the same: spectrum, sites, backhaul and technology. However, as 5G evolves, the number of publicly accessible access nodes in the network is set to change dramatically – especially in the UK.

While 4G saw the industry largely add new technology to existing nodes and locations, 5G is likely to require at least a tenfold increase in the nodes themselves. Network densification of this scale will bring numerous technical and coordination challenges – but from an infrastructure perspective specifically, three key things are likely to change:

Firstly, greater asset diversity. Today’s street furniture (i.e. lampposts, CCTV columns) has telecoms equipment installed on it to extend its use. In the future, the primary function of such assets may flip – instead, functioning as dedicated telecoms assets that happen to provide street lighting and other services, for example.

Secondly, ubiquitous access to dark fibre (on an economic basis) to provide MNOs with the ability to deploy the architecture required for 5G. With plenty of infrastructure already in place (i.e. ducts), this is doable – however, the industry will need to move beyond passing assets by, and begin proactively connecting them.

And thirdly, simpler deployment. Through a review of the entire deployment value chain and associated processes, we can achieve uniformity and apply learnings from other industries who deploy at scale at street level already, simplifying the process for the better.

If we get these things right we can deliver the infrastructure required to realise 5G vision and impact, which is critical to our country’s economic development.

Cake served up as alternative to Safari and Chrome

Cake Technologies has raised $5 million to expand its business and tackle a very ambitious goal; stealing market share off internet browsers Chrome and Safari.

Any challenge to the status quo should be more than welcomed but this is a tall ask. Cake is aiming to deliver an internet browser which is developed specifically for mobile devices in an attempt to make a name for itself in the highly lucrative search advertising business. The idea is sound but whether the entrenched position of Google’s Chrome and Apple’s Safari can be dislodged is another matter.

“There’s a lot of room for innovation when it comes to the mobile browser, and Cake has found a sweet spot,” said Sid Krommenhoek, Partner at Peak Ventures, the firm which led the funding round.

“Since the smartphone was introduced in 2007, storage capacity alone has increased more than 60x, yet the mobile browser has hardly changed in a decade. We see a huge opportunity for Cake to disrupt industry heavyweights by providing quicker access to search results in a way that is much more user-friendly.”

As with any good new idea, the functionality is simple and addresses an irritating problem which users have just got used to by now. By suppressing the search index and immediately preloading search results, users are able to search through search results as web pages, instead of tapping back and forth between a list of result links.

Web browsers haven’t really changed over the last couple of years, and the frustration of having to load a webpage before reloading the initial results list is a hindrance most users have just become accustomed to. The only reason for this acceptance is there isn’t an alternative option which is why such a challenge, with an new approach, might have a chance of catching on.

It is a very good idea, but we are struggling to see how Cake will be able to lure users away from the norm; Cake does not have a platform where it will be loaded as the default option. This will be the biggest challenge as far as we can see, primarily because people are inherently lazy.

Google and Apple have created a dominance in the world of mobile internet browsers because they have a mobile operating system. The Chrome and Safari apps are preloaded as default on devices, while most apps are pre-linked to the relevant browser (depending whether the app has been designed for Android or iOS). For Cake to succeed, it would have to convince users to actively download and use an alternative to the default.

There is nothing passive about it and it removes the idea of convenience. Like we said before, most people are lazy, happily taking the path of least resistance especially when that path is a successful and proven option.

That said, this is a very interesting idea put forward by Cake. We can’t really see the firm offering any real challenge to the dominance of Chrome or iOS, but we can foresee changes in the future. Should the experience actually prove to be positive for users, it won’t be long before Google or Apple are developing their own version in-house or will be looking to acquire Cake. Change might be on the horizon, just not in the way Cake probably hopes or wants.

A guide: Finding choice in the software-defined labyrinth

Getting to the heart of how software-defined networks (SDN), and software-defined wide area networks (SD-WAN) can benefit your business and the options they provide will improve your IT networks. But currently, not all companies are getting their heads around the technology.

The reality is that SDN, and related technologies are at the heart of next generation networks. SDN delivers a new network architecture, one where the intelligence of the network is controlled centrally by software, enabling greater automation, agility and flexibility.

SDN does away with the need for separate boxes for individual tasks and also makes it easier to provision new services at the drop of a hat. But at present, there are a lot of options to think about and many are struggling to grasp what each solution means for their business. Others don’t even realise the benefits they will get from such technologies. 

For example, a premium car manufacturer I spoke to kept having to buy bandwidth all the time and didn't know why. It was only later on that they realised that capacity was being gobbled up on social networking that didn't deliver value. They needed the ability to control what was going on in their network and prioritise key traffic and services. The combination of application visibility and control adds real value in this kind of scenario.

Many others are scratching their heads on what route to take. The best course of action may be to think about how your business will operate in the future as well as today.

Embracing the options

Take a look at the landscape that we're currently presented with. SDN, SD-WAN, NFV, VNF are all available but which should you choose and why? And more importantly, is there a right and wrong way to approach the software-defined options?

At present the available network options are numerous but the overall aim is to enable administrators to monitor and control the activities taking place on their network from one central location. Software-defined technologies enable companies to establish new digital business workflows, better manage network capacity and launch customer interaction channels quickly.

The benefits are there but that doesn’t make it any easier for the uninitiated to pick from what seems to be an endless list of solutions. But although the growing number of options are muddying the water slightly, they are also offering choice, which at the moment is a valuable asset for companies in flux.

Seeing sense in software

When it comes to software-defined anything, we’re still in the hype phase. There’s a temptation to lead with the technology but we should in fact reflect each business’s current reality as well as their aspirations for the future. We will see a gradual move away from the private network and static configurations towards a more hybrid, agile software-defined environment where the ability to consume services becomes the norm. 

SD-WAN provides its own robust set of features and benefits such as better visibility and control over the resources on your network, and to utilise available links and services in a dynamic fashion, in line with your business priorities. SDN brings that to the next level by taking us away from vendor-specific implementations and towards a truly open environment where software-delivered applications and services can be deployed on almost any platform rapidly and as required.

I look at it like this. Think about your car sat nav. Using SD-WAN might be similar to using a proprietary standalone device. SDN is slightly different in that it is delivered on a vendor-agnostic platform. So, using the same analogy, it would be like using your mobile phone to direct you on the roads, using whatever app you want on that device. As a result, if you’ve already invested in the hardware, there’s a likelihood that you’ll want to keep hold of it for a few years to justify that investment. But taking a software approach gives you more choice, so you’re less locked in.

An open future

One of the most important things that needs to happen to really unlock that flexibility inherent in this type of setup is that there needs to be more focus on standardisation across different products and services. Currently, there's still a way to go to enable everything to work seamlessly so the customer can have true choice.

In the next three to five years, we’ll see the shift from hardware to software-based services becoming more apparent as service providers work on the same set of open standards. There will be an era of deploying anything, anywhere on any platform.

Where next?

The decision you make today regarding a software-defined infrastructure won’t be a black and white choice. It will differ according to your individual business needs. The challenge is making sure that the SD-WAN or SDN provider you choose is able to offer you the right service and to keep an open environment so that you have a choice over future services and are not “hemmed in” to a particular set of features.