Nokia and Ericsson results show road ahead for telecom equipment market

Nokia said it expects to face further ‘challenges’ on the networking side despite posting a profit of €574 million (£511.2m), up 73% from this time last year.

The Finnish giant published its Q217 financial results today, seeing overwhelming gains year over year on its global services and Nokia Technologies arms, the latter focusing on patent licensing, but a 4% downturn in IP networks and applications. Non-IFRS net sales went down slightly to €5.63 billion, from €5.67bn in Q216.

Revenue on Nokia Technologies went up 90% “primarily due to a new license agreement in Q2 2017 and a license agreement that was expanded in Q3 2016,” the company noted.

One of the highlights of Nokia’s quarter was signing a patent license – or settling a litigation dispute, if you prefer – with Apple in May, with the latter resuming carrying Nokia’s digital health products and “exploring future collaboration in digital health initiatives.” This link was noted by Nokia president and CEO Rajeev Suri in a statement, who said: “You could see the benefit of that agreement in Nokia Technologies’ results, and we look forward to continuing to expand our overall business with Apple in the coming months.”

Suri also spoke of ‘headwinds’, in terms of Nokia’s telecom network equipment business, saying he expects a decline ‘in the range of 3-5%’, as opposed to the ‘low-single digit decline’ previously proffered. “We expect our primary addressable market with communication service providers to be slightly more challenging in 2017 than earlier forecast,” he said.

This contrasts with Ericsson, whose CEO Borje Ekholm warned of a ‘high single-digit percentage decline’ for full year 2017 in its radio access network (RAN) equipment business, with reported overall sales decreasing by 8% year over year.

 “We are not satisfied with our underlying performance with continued declining sales and increasing losses in the quarter,” he wrote. “Execution of our focused business strategy is gaining traction. However, in light of current market conditions, we are accelerating the planned actions to reduce costs.”

“Our focused business strategy is designed to take us back to technology and market leadership and improve company performance, also in a tough market,” Ekholm added.

The telecom equipment market has struggled due to waning interest from telcos, as well as the industry continuing to work out the transition from 4G to 5G. However, a note from Dell’Oro Group earlier this month asserted small cells and 5G will help return the RAN market to growth, with cumulative 5G RAN investments beating $6 billion by 2021.

“Even though the IoT impact on the RAN market remains highly uncertain over the forecast period, the demand for enhanced mobile broadband is expected to remain robust resulting in strong 5G macro uptake in the advanced broadband markets with China, Japan, Korea and North America accounting for more than 90% of the 5G market by the end of the forecast period,” said Stefan Pongratz, Dell’Oro Group senior director.

An article from Orthodox Investor in Seeking Alpha reiterated that the networks business is ‘likely to be sluggish in the short to medium term’ and that any concern around a slowdown should not be a cause for alarm.

Picture credit: Nokia

What can the UK learn from China to bolster its 5G market – and ensure its success?

Vendors and operators across the UK are currently looking towards China, which is on track to launch commercial 5G networks by 2020, and is expected to become the world’s largest 5G market by 2025.

A recent report from GSMA Intelligence and the China Academy of Information and Communications Technology (CAICT) revealed that after 5G networks are commercially deployed in 2020, following a two-year phased testing period, the number of 5G connections in China are expected to reach 428 million by 2025. This will account for an astonishing two in five (39%) of the 1.1 billion 5G connections expected across the globe by this point in time.

The promises of 5G

In the first instance, it’s expected that China’s 5G networks will be largely focused on boosting the capacity of the country’s existing 4G networks, in order to support increasing demands for mobile data traffic. In addition, it will enable enhanced mobile broadband services such as Ultra-HD video, augmented reality and virtual reality. The new services and applications made possible by 5G will undoubtedly require mobile devices with greater capabilities than those currently on the market so, it’s reasonable to predict that smartphones will be the primary means of interfacing with 5G, certainly at launch.

However, the promises of 5G go well beyond high data rate, spectral efficiency, ultra-low latency, or massive sensor networks. The fundamental appeal of 5G lies in the fact that the entire infrastructure acts as a cohesive platform for innovative applications and is tuned to flex with demand - providing services tailored to their unique characteristics.

5G is set to go beyond consumer grade applications in the future, with the enterprise space expected to represent the largest revenue opportunity for operators. Indeed, Chinese operators are already collaborating with the broader mobile ecosystem, and different industry vertical players.

The need for open interfaces

While spectrum allocation and new business cases to identify incremental revenue opportunities are key elements to realising the full potential of 5G, so too, will the investment protection in the radio infrastructure be a key consideration for the pace of adoption. A flexible, innovative and open sourced Radio Access Network (RAN) is a key cornerstone for the evolution to 5G.

By providing a software-defined, Cloud-RAN solution based on open interfaces, communications service providers can bring about much lower cost radio infrastructure, using an open software based model upon common hardware.

Historically, the RAN we have today was intended to be open, but is, in reality, controlled by a group of three vendors. As the sector continues to develop, however, people are looking for alternative suppliers that can bring something new to the mix. Key players such as Nokia, Ericsson and Huawei all have the same way of thinking, and the industry needs a contender that can utilise a software model in the radio world to prioritise enterprise and densification.

This has resulted in a lot of pressure on suppliers to open up interfaces that’s effectively been controlling the growth of the industry, and even the radiotechnology itself. Unfortunately, this current vendor control is causing suboptimal use of spectrum prohibiting, innovation in radio, antenna technology, and cell tower placement, and is also resulting in increased cost per user in any business plan for 5G. In an attempt to avoid this, the xRAN group has been formed to ensure operators and regulators have better use of resources to benefit customers when the interface is open. As the radio access network equipment market in its current form continues to decline, Service Providers may be better off looking towards more disruptive players in the xRAN space than the old key players that are struggling with profitability and cost control.

It’s also worth noting that the current 3GPP standardization process, with its challenges in compatibility, is dominated by these large players so it comes as no surprise, that we’ve seen the growth of working groups and bodies outside of 3GPP for faster development of open standards such as XRAN, TIP and ONAP. We have to take care to strive for technical diversity and guard against standards fragmentation in the quest for open standards that will produce an economic opportunity to the “greater” vendor community.

Regardless, China (along with the USA) appears to be leading the way in developing and implementing 5G networks, and looks likely to dominate the market in only a few years after rollout.

Operators and vendors in the UK and the rest of the world should learn from China, and focus their attention on technology services that will maximise efficiency and generate revenue in the 5G era.

To get 5G working though, we need to maximise bandwidth by pushing open interfaces across the network through software defined techniques.  

Samsung and Arqiva launch Europe’s first 5G FWA trial in central London

Following a statement of intent back in February, Samsung and Arqiva have kicked off the first European trial of 5G Fixed Wireless Access (FWA) in central London.

The partners chose the UK for its low broadband penetration and promising spectrum conditions. With 5G FWA being pitched as offering an alternative to fibre broadband, the UK offers a great opportunity for Samsung and Arqiva to demonstrate its possibilities.

Three main components make up the 5G FWA system:

Radio Access Unit – Located on the rooftop of Arqiva’s Fitzrovia office.

Customer Premises Equipment (CPE) – Wirelessly linked to the Radio Access Unit the CPE uses Samsung’s intelligent beam-forming technology with Arqiva’s 28GHz high-frequency mmWave spectrum to provide high-bandwidth connectivity.

Virtualised Core – The final part is another component supplied by Samsung which is responsible for managing user connections and data routing from Arqiva’s network to the internet.

Arqiva’s CEO, Simon Beresford-Wylie, has previously called mobile and fixed speeds ‘depressing’ when compared to other countries and that FTTP (Fiber-to-the-Premises) coverage in the UK was ‘shocking’ at just three percent. Beresford-Wylie previously worked in Samsung’s home country of South Korea – a nation which often tops charts for both mobile and broadband speeds.

“This trial is the first of its kind in Europe, let alone the UK – and we are hugely excited about the high data rates, low latency, and growth potential we’re going to be able to demonstrate,” says Beresford-Wylie. “Though only a proof-of-concept at this stage, we are confident that this trial with Samsung will showcase not only 5G FWA’s potential for delivering ultra-fast broadband but also the value of the 28GHz band in helping achieve this.”

Beresford-Wylie has noted the UK government now appears to understand the need for better connectivity and that investment has increased alongside changes to legislation which help streamline deployments such as revised planning laws to set up small cells.

Virgin Media and BT are planning their FTTP rollouts, but this process will take much longer and be far more costly than 5G FWA. While under less demanding conditions than a full rollout, Arqiva and Samsung delivered a signal 230 meters away from an antenna located on Newman Street to Arqiva’s Fitzrovia offices at speeds of more than 1Gbps which allows for simultaneous streaming of more than 25 UHD 4K TV channels as an illustration.

“One of the most exciting prospects that 5G is expected to bring to the table is the exploration of powerful new use cases outside of traditional smart device mobile connectivity,” comments Paul Kyungwhoon Cheun, Executive Vice President and Head of the Next Generation Communications Business Team at Samsung. “Our trial efforts with Arqiva give us the chance to demonstrate this first hand, and we view this demonstration as a door-opener for new and compelling connected service opportunities in the UK, Europe and worldwide.”

The trial will run for a four-month period, during which time anticipated visitors include representatives from the UK Government, Mobile Network Operators (MNOs), Fixed Network Operators, media companies, analysts and more. There are also plans to extend the trial’s coverage to additional nearby buildings over its duration.

Are you impressed with Samsung and Arqiva’s 5G FWA trial? Share your thoughts in the comments.

Does gamification hold the key to customer engagement for telcos?

The digital revolution has transformed the way people interact with their phone provider. The rise of mobile has enabled customers to manage their accounts whenever, and wherever they are; with little reason for in-store visits or engagement with customer service representatives.

And this trend is set to continue. In May, Ofcom announced its plans to implement a ‘text-to-switch’ service, in which consumers will be able to switch mobile phone provider in one working day, via a simple text. The plans are an attempt to remove the hassles associated with switching; allowing customers to cut out awkward phone calls, making the process both quicker and efficient.

With a decision regarding its implementation set to be made by Autumn 2017, if approved this could present yet another challenge for telcos. After all, the main reason that consumers remain loyal and so often avoid switching their mobile phone provider is the ‘difficulty and hassle’ of the process.

If switching is made simple, the chance of defections is likely to increase. For this reason, telco providers need find new ways to engage and improve the customer experience using different touchpoints and channels in order to differentiate themselves and encourage loyalty.

With today’s consumers never far from their smartphones, and moving fluidly between digital platforms, could gamification be the answer in the quest for greater engagement?

Gamification: in a nutshell

Originating in the computer games industry, gamification engages the basic principles of human psychology. It involves an understanding of what motivates people, how we want to be rewarded – and what will make us play again. Or, alternatively, for telco providers: stay loyal.  At its core, gamification has a human centred design; optimised for feelings, motivation, insecurities and engagement.

Some of the aims of gamification include: driving a level of competition within users that results in increased usage and engagement; tapping into the human need for esteem and self-actualisation to increase the levels of motivation; playing on the human desire for power in an attempt to drive users to log back in and increase their status; and evoking similar reactions to those elicited by gaming by releasing chemicals which invoke feelings of excitement, euphoria and pleasure.

So, how can gamification, as a practice, be used within the customer experience?

Bringing gamification to life

Typically, gamification is based on points and rewards. Points translate into a ‘currency’, which can be exchanged for rewards (goods and services, whether real or virtual). This gives the user something to work towards. Badges are also used to symbolise achievements whilst leaderboards recognise accomplishments and promote friendly competition between users.

In recent years, gamification has evolved from its traditional rewards-based platform, to one fuelled by sophisticated data-driven capabilities which allows businesses to offer personalised, user-centric experiences. This is no surprise when you consider the proliferation of devices, apps and social media channels, which have increased customer expectations of the digital experience.

How can telcos use gamification in the customer experience?

But, believe it or not, gamification isn’t a new concept for telcos; it has always been part of their set-up, only now it’s growing and instead driven by customer behaviour and digital capabilities. Back in 2011, Gartner predicted by 2015, more than 50 percent of organisations that manage innovation processes will gamify those processes.

Since it launched in 2010, mobile service provider giffgaff has incorporated gamification into its unique customer experience. As a community driven provider, in which customers buy SIM cards from other giffgaff members’ pages, a points system was launched to engage customers with its business model; with the ultimate aim to improve customer retention and experience.

The game means that if a customer buys from an existing members page, they are rewarded with points. Additionally, if a customer has a problem and visits the giffgaff forum for help from another member, as opposed to calling the help desk, they earn points, adding to the overall community experience. Accumulated points are then converted into cash with one point equating to one pence, which can then be withdrawn, used to pay for airtime or donated to charity.

There’s still a lot to learn

But whilst telco providers like giffgaff have dabbled with gamification, few have made leaps and bounds and there remains a lot to be learnt if it’s to be used effectively. It’s challenger banks that are currently leading the way, using gamification to differentiate themselves, and it’s not just financial services companies that should look to them for inspiration. All providers could learn a thing or two.

Atom Bank recently acquired software company Grasp, which specialises in games and virtual reality development, to build its digital platforms. Atom claims to “celebrate your individuality in every way”, and allows customers to choose a logo, name and colours to personalise the app experience.

Meanwhile, European bank OTP banka Hrvatska recently announced impressive results from its new gamification platform, with 16.1% more clients signed up for mobile banking services and the number of clients using prepaid Mastercard increasing by 12.8%. There’s clearly a number of different ways to incorporate gamification into the customer experience, it just requires a little creativity.

Looking ahead

Telcos, like all other providers, have to work hard to keep customers loyal. Changing the perception of the mobile phone provider from a service that’s a necessity to something more engaging is therefore essential if they want to maintain their relevance and value in people’s lives. Gamification should be seen as a route to engagement; a part of the customer journey, not something separate.

It’s something that we always look to incorporate when designing programmes for the telcos we work with and the creative applications for it are almost endless.

Gaming creates positive emotion, drives social relationships and fosters feelings of accomplishment. It’s a way for providers to differentiate themselves from competitors and engage with customers on a more personal level than before to ultimately drive retention. As the digital revolution marches on, and prospective new services like ‘text-to-switch’ threaten loyalty, the gamification model is one we can expect to see telco providers – both new and old – capitalise on. 

How Aarhus is using Bluetooth sensors to solve traffic issues

Implementation of Bluetooth technologies for monitoring traffic conditions has experienced success in Denmark’s second-largest city, Aarhus, which has used BlipTrack Bluetooth sensors for several years across its entire road network.

The municipality has also been collecting traffic data based on the movement of driver´s mobile devices.

The sensors have accumulated traffic data that provide insights into current road density, flow and formation of queues and share traffic information with users. This enables traffic engineers to know about any deviations in driving times occurring due to construction projects or any other incidents through real-time reporting. Typical driving times are continuously updated based on various types of days and time of day and one can learn historic traffic information as well as get an analysis of current vs typical driving times, minute-by-minute throughout the day. The city can thus equip itself with countermeasures to deal with traffic anomalies.

Various unfavourable situations have proven to be detectable with direct reference to driving time data, such as errors caused by incorrectly activating traffic light programs, defective surveillance systems, missing or lengthy activation of turn phrases, or just good old fashioned human error.

The data contributes to an improved economy and a better environment through reduced driving times and fuel consumption, and thus reductions in greenhouse gas emissions from vehicles.

Bluetooth has added mesh networking to push building automation and wireless sensor networks and boost its IoT credentials. This new feature makes use of other devices as relays to extend coverage, while still using low power like the older version. The ubiquitous nature of the standard means faster adoption in the market with capable devices as any device featuring Bluetooth 4.0 or later has the ability to support Bluetooth Mesh.

Spiderman pleads guilty to hacking 900,000 broadband routers last year

Spiderman has pleaded guilty to a hack which took 900,000 broadband routers offline last year.

Just to clarify, we’re not talking about Marvel’s iconic web-slinging hero, but rather a hacker authorities referred to as ‘Spiderman’ when he was picked up back in February.

The 29-year old man was arrested by British police at Luton airport on behalf of Germany’s Federal Criminal Police Office who alleged he was responsible for hacking the broadband routers and offering to sell access to a botnet to carry out DDoS attacks to online criminals.

Spiderman was one pseudonym used by the hacker along with the fictional character’s real name, Peter Parker (keep that to yourselves.) The names were used when registering domains used for the hacker’s command & control servers.

The hack is said to have cost Deutsche Telekom over two million euros

German telecoms giant Deutsche Telekom and its customers were the main victims of the hack, despite the hacker not intending to knock them offline. Spiderman intended to quietly add the routers to a botnet to avoid unwanted attention but the flaw he used ended up taking approximately 900,000 broadband routers offline.

Deutsche Telekom’s routers manufactured by Zyxel and Speedport were exploited by a custom-made variant of the now-infamous Mirai malware which took advantage of a vulnerability in the TR-069 and TR-064 protocols used by ISPs to remotely manage hundreds of thousands of internet devices.

The hack is said to have cost Deutsche Telekom over two million euros and caused isolated speculation it was politically-motivated by Russian hackers. Deutsche Telekom CEO, Timotheus Höttges, called for a "NATO for the Internet" and said the attack could’ve had worse consequences.

According to local reports, the man has pleaded guilty in a German court handling the proceedings. He said he took on the commission for a fee of $10,000 (£7,700) from a Liberian telecommunications company because he wanted to marry his fiancee and needed money for a “good start into married life”. The company wanted access to a botnet and did not ask for the routers to be taken offline.

Spiderman is yet to be sentenced but according to a court spokesperson, he could face between six months and ten years imprisonment.

28/07 Update: The regional court in Cologne handed the man a suspended sentence of a year and eight months for attempted commercial computer sabotage. Prosecutors had asked for two years.

What are your thoughts on the proceedings? Let us know in the comments.

Analysing the disruption in the worldwide mobile roaming sector

(c)iStock.com/digitalgenetics

Telecom network operator revenues from international mobile roaming are expected to experience an 11 percent decline in 2017, as service providers introduce ‘Roam Like at Home’ packages in key markets - including Europe, North America and Asia-Pacific.

‘Roam Like at Home’ enables mobile users to utilise their monthly voice, data, and messaging allowance while roaming on other service provider networks, without incurring additional charges.

Implications for mobile service providers

Juniper Research forecasts that the annual revenues, worth an estimated $54 billion in 2016, will decline to $48 billion in 2017 as revenues generated from increased usage in many markets fail to offset those lost by lower roaming charges in the EU countries.

"This decline in global revenues is due to a 33 percent fall in European roaming revenues, following the EU regulation to end roaming surcharges," said Nitin Bhas, head of research at Juniper Research.

While they expect roaming tariffs outside Europe to continue to be unregulated and to be significantly higher, operator focus will need to shift to innovative bundles and tailored pricing to preserve or grow revenues from travelers and immigrant workers.

The research found that mobile network operator revenues will likely begin to recover in 2018, following a significant increase in active roamers and data usage.

Following Britain’s decision to leave the EU, it is possible that UK mobile network operators may try to make up for the loss by increasing domestic service prices, especially since their margins have been falling at the rate of 1-2 percent over the last 5 years.

Alternatively, these mobile network operators could adopt 'Rest of the World' tariffs for mobile roamers in the UK.

Outlook for mobile roaming revenues

Under such a scenario, the average roaming spend per active mobile roamer would double by the end of 2022 due to higher costs, reaching $150 per annum, compared to our current estimates of $75.

The Juniper Research study findings uncovered that while this is a possibility, it is highly unlikely given historical customer backlash to such events and further government regulatory interventions.

Corning acquires SpiderCloud to expand wireless network capabilities

Corning has announced the acquisition of SpiderCloud Wireless, a leading provider of in-building wireless solutions.

SpiderCloud will come under the Corning Optical Communications segment, where its expertise in developing scalable small-cell network platforms will be used to its full potential for delivering unprecedented coverage and capacity for wireless services and optimising network efficiency and improving user experience. This acquisition is set to open unique market access opportunities for Corning that aims to increase its annual sales from $3 billion in 2016 to $5 billion in 2020 through innovation and acquisitions.

Clark S. Kinlin, executive vice president, Corning Optical Communications, said: “Wireless connectivity has become more a necessity than an amenity, and mobile operators and enterprise customers are seeking cost-effective solutions to enhance service for their users inside buildings.

“With the acquisition of SpiderCloud Wireless, we believe our combined product solutions will help drive optical convergence and enable the advantages of fiber-deep architectures within the Enterprise Local Area Network.”

SpiderCloud Wireless CEO Mike Gallagher said: “Together we will continue to focus on expanding SpiderCloud’s customer relationships and augmenting our pioneering portfolio by leveraging the combined strength of two world-class product development teams.”

Analysis by Zacks argued the addition of SpiderCloud to the company's portfolio will help Corning to rapidly penetrate the wireless network equipment market. Zacks foresees significant growth for the company with strategic acquisitions such as SpiderCloud, Gerresheimer's Pharmaceutical Glass Tubing Business, Alliance Fiber Optic Products and STRAN Technologies. Corning’s stock returned 32.2% over the same time frame that the index gained 12.1%.

San Marino first European state to get 5G with testing starting ‘within next year’

(c)iStock.com/alxpin

San Marino will become the first state in Europe to get 5G after its government signed a memorandum of understanding (MOU) with Telecom Italia (TIM).

The republic, which has a population of 33,000 and an area of 61.2 square kilometres, will work with Telecom Italia to update the mobile sites of its network with 4.5G and introduce some of the features of 5G, such as evolved mast towers (MIMO4x4), carrier aggregation, superior modulation, and cloud architecture, as well as introducing “small cells”, small, low power masts with low environmental impact in the principal streets and piazzas of San Marino.

The technology plan seeks to double the number of existing mobile sites and install several dozen “small cells”, linked by optic fibre and distributed throughout San Marino.

The “San Marino 5G” project aims to bring about a new digital transformation by increasing the transmission capacity considerably by around 10 times that of 4G and offering a new mobile infrastructure to the people, businesses and local government offices so that they are able to connect to a large number of objects, much ahead of the 2020 EU deadline.

TIM’s subsidiary, TIM San Marino will also contribute towards smart city initiatives through its offerings in public security, management of public transport fleets, and provision of related information services, remote surveillance solutions in extensive areas of the territory, virtual reality to support tourism, such as the Livein.sm portal, production processes used in the manufacturing industry.

In March, TIM signed an MOU to start the metropolitan trial of 5G mobile network services in Italian city Turin in 2018 aiming to cover the whole city by 2020. It will install more than 100 small cells in the main areas of the city, as well as at both the city’s universities, with 3,000 users being made part of the trial process.

Operators call for EU policy reform ahead of 5G rollout

The CEOs of many large European operators around the continent have signed an open letter calling for ‘genuine’ reform of the EU with regards to spectrum policy ahead of the rollout of 5G networks.

Telecoms ministers are due to meet in Tallinn, Estonia tomorrow (18th July, 2017) for a meeting on the conditions needed for the successful deployment of 5G technology in Europe.

Ahead of the meeting, the CEOs of Deutsche Telekom, GSMA, KPN, Orange, Telecom Italia, Telefónica, Telekom Austria, Telenor Group, Telia Company, and Vodafone Group have signed an open letter from the GSMA which calls for changes in spectrum policy across Europe.

The concerns regard current discussions about the spectrum elements of the proposed European Electronic Communication Code. “We see this as an unprecedented chance to champion genuine spectrum policy reform, that will position Europe as a true global leader,” the signatories wrote in the letter.

Specifically, the signatories emphasise the need for:

  • Clear provisions addressing the predictability of future rights, notably minimum license duration of 25 years coupled with a strong presumption of renewal;

  • An effective and efficient peer-review mechanism to spur the sharing of best practice over award design and procedures;

  • The ability to compete, innovate and differentiate through voluntary spectrum sharing;

  • A fee structure that reflects an efficient and effective use of the spectrum as well as coverage commitments.

The letter said: "Reforming the current spectrum rules is of the utmost importance. Creating the right spectrum policy framework in Europe is critical for the development of a true Digital Single Market.

"Failure to establish a well-functioning and investment-friendly spectrum framework risks stifling innovation, growth and development for decades to come.

"This will not only impact the mobile industry, but also adjacent sectors that increasingly rely on connectivity and digitalisation."

It’s not the first time operators around the continent have called on the EU to reform policy ahead of the 5G rollout. Last month, a cross-industry letter made similar demands to loosen regulation and even accused the EU of taking a ‘timid’ approach to 5G which could lead to a ‘grim’ environment for the next-generation technology.

Do you agree the EU needs to reform policy ahead of the 5G rollout? Share your thoughts in the comments.