2017 was an eventful year for telecoms. Here in your first issue of the year, independent expert in the field – with over 35 years of experiece in the industry – Dave Millett takes a look at what 2018 might hold for the world of telecoms

2017 was eventful for telecoms. We had the excitement of free roaming in Europe and Apple introducing its first £1000 mobile. Less positively there were also a number of reports on the poor state of UK telecoms infrastructure. Let me look into my crystal ball to see if 2018 will provide the telecoms we need both for our daily lives, for business and to support new technologies including AI and the Internet of Things.

What’s happening with landlines?
SIP and VoIP will continue their relentless advance to replace ISDN. The crossover point has been reached; more businesses are connected by IP rather than analogue. There may be pressure to switch over but analogue will be here until 2025, so businesses that haven’t yet switched still have time. Just think carefully when signing any long-term deal.

What’s happening with mobiles?

Microsoft was recently granted a patent for a tablet device that folded up to become a phone. Apple continues to innovate and is developing a bendy iPhone. Its US patent application talks about “a flexible portion that allows the device to be folded.” Samsung is reportedly working on its own folding phone, to be called the Galaxy X.
Although a folding phone is clever, what most of us want is a phone that we only have to charge on a weekly basis. Research from Samsung into graphene batteries may provide this for us. A graphene battery could charge fully in 12 minutes and have up to 45 per cent more capacity.

Improving battery life is key to the success of the Internet of Things (IOT) and Artificial Intelligence (AI) as we become an increasingly connected society. In Autumn 2017 Google unveiled a program called AlphaGo, which can master the complex Chinese game of Go in just three days. Google has a plan to put itself on an “AI first” footing. It is looking at embedding AI capability in all Google products and services. Where Google goes, others will follow; and the competing manufacturers will be looking at placing AI chips in their smartphones soon.

UK telecoms infrastructure

What will happen when these exciting new developments meet the reality of the UK’s creaking infrastructure? In 2017 we ranked 31st in the world for average broadband speeds, 54th in the world for 4G coverage, and were the worst in Europe for the rollout of Fibre to the Premise (FTTP).

The current telecoms infrastructure plans are wholly uninspiring. Leaving the operators solve the problem clearly has not worked so we have to hope that the Government and the regulators will take a tougher, more interventionist approach in 2018. The targets are outdated and, even if achieved, will still leave us lagging in the slow lane. The Government wants everyone to have access to a minimum of 10 mbps broadband by 2020. Although 10 Mbps may have been reasonable when the target was set years ago it is no longer fit for purpose. It is not suitable for the growth of the Internet of Things and the steadily increasing range of streaming services. By contrast the EU Digital Agenda goals intends to deliver 30Mbps or more for all by the same date. Japan and South Korea expect to have 5G up and working by 2020, whereas we hope for some coverage by 2025.

The operators seem to have little desire to solve the problem themselves. In terms of broadband we are the poor man of Europe. BT claims to have 345,000 premises connected to FTTP, but almost 30% of them are in Cornwall as part of an EU funded project.
BT’s published plans show they will barely have achieved 10% by the of 2020. On average, the rest of Europe achieved that in 2016!
So, our relative position as the slow man of Europe is unlikely to change. There are regional variations thanks to other providers who are rolling out services such as KCOM, Gigaclear, Hyperoptic, B4RN and other “full fibre” providers. This has created a postcode lottery for getting decent FTTP broadband.

The picture with mobile is similar. In 2014 the Government struck an “agreement” with the mobile operators. This gave them three years to improve coverage and remove not-spots in return for the Government not enforcing roaming in the UK.
Under the agreement all four of the mobile networks collectively agreed to:

A guaranteed £5bn investment programme to improve mobile infrastructure by 2017

Guaranteed voice and text coverage from each operator across 90 per cent of the UK geographic area by 2017, halving the areas currently blighted by patchy coverage as a result of partial ‘not-spots.’

Full coverage from all four mobile operators will increase from 69 per cent to 85 per cent of geographic areas by 2017.
Provide reliable signal strength for voice for each type of mobile service (whether 2G/3G/4G) – currently many consumers frequently lose signal or cannot get signal long enough to make a call.

Make the deal legally binding by accepting amended licence conditions to reflect the agreement – it will be enforceable by Ofcom.

So what effect has that had? Not a lot! In March 2017, the National Infrastructure Commission concluded the UK is being held back by poor mobile phone connectivity. It called for an end to “digital deserts” such as rail routes, roads and city centres.

It is a sign that the Government needs to get tough and allow everyone to roam free in the UK – just the same as we can now do in Europe. Unfortunately, the government and its regulator have consistently bottled every tough decision in the industry for years.
Even when Ofcom introduces a good policy such as clear calling, it does not enforce it. It is almost two years since it made it mandatory to show prominently the costs of calling 084 and 087 numbers, wherever they were promoted. Yet daily there are examples of companies blatantly flouting the rules. So far Ofcom has not fined ever one for doing so.

It had to rely of the Advertising Standards Authority to toughen up the rules on broadband speeds rather than set out clear terms itself.
Given some of the financial challenges the networks and operators are having, it is important that the government and regulators intervene. A recent report by the Economist said it expected average revenue per user (ARPU) to suffer as result of increased competition. In 2018 they expect ARPU across our 60 markets to fall by 2.3 per cent for mobile operators, and by 11.5 per cent for fixed line. The competition in the consumer markets is coming from providers such as WhatsApp and Viber. A survey recently showed that almost a third of people do not use their mobiles for Voice and the levels of Texts is down by almost 40 per cent since 2012. The growth of VOIP and SIP is eating into the profits historically generated by ISDN.

That is the catch 22 situation; telecoms needs large amounts of capital to create new infrastructures to generate new revenues. However, often the new revenues are lower than from the old technologies they replace. A survey of operators, conducted by Ericsson, found that 86 per cent were viewing IOT as key for monetarising revenues from 5G.

Add in the extra costs of improving security as cyber threats grow and regulations, such as GPDR, then there is the potential that the situation will get worse, not better.

Unfortunately, I think 2018 promises to be more of the same, unless drastic action is taken.

How can we make some real improvements? My wish list is as follows:

  • The Government minimum speed target should be raised annually to reflect changing demands
  • Acknowledge the 2014 mobile deal has not led to the required improvement in mobile coverage and end the block on roaming in the UK.
  • Make BT halve the wholesale cost of all broadband connections that do not meet the minimum Government speed target. With the resellers being forced to reduce their prices by half as well
  • Set bold targets to offer the best infrastructure in Europe – critical if we want to attract inward investment post Brexit.
  • Extend the size of company protected by the Telecoms ombudsman to 50 employees, and the align other laws, such as no automatic rollovers and transparent penalties
  • Make all consumer broadband, phone line and mobile advertising prominently carry the latest Ofcom stats on complaints received.
  • Properly fund the rollout of FTTP and 5G with the target of becoming world leaders by 2020 – not world laggards. You could fund it by scraping or delaying HS2.
  • Link the funding to heavy penalties, including loss of licences for any failure to deliver.
  • In the same way the oil and gas industry has benefitted from generous tax breaks for investing in the North Sea – do the same for infrastructure.

To put it another way; to get the telecoms we need for 21st century life and 21st century business we have to be doing something. That way we’ll not just have bendy phones we’ll have world-class infrastructure.

Dave Millett has over 35 years’ experience in the Telecoms Industry. He has worked in European Director roles for several global companies and now runs Equinox, a leading independent brokerage and consultancy firm. He regularly advises telecom suppliers on improving their products and propositions. For any further information, please visit www.equinoxcomms.co.uk

 

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