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Monday, January 07, 2019

Private cellular networks - why Ofcom's UK spectrum proposals are so innovative

On December 18th 2018, Ofcom announced two consultations about new 5G-oriented spectrum releases (link), and potential new models for spectrum-sharing, rural mobile coverage and related innovation (link). 

I've already commented briefly on Twitter (link) and LinkedIn (link), but it's worth going a bit deeper in a full post on this - particularly on the aspects relating to private networks and spectrum-sharing.

NOTE: this is a long post. Get a coffee now. Or listen to my audio commentary (Part 1 on the background to private mobile networks is here and Part 2 on the Ofcom proposals is here)

My view is that 2019 is a key breakout year for new mobile network ownership and business models - whether that's fully-private enterprise networks, various types of neutral-host, or a revitalised version of MVNO-type wholesale perhaps enriched by network-slicing. 

This trend touches everything from IoT to 5G verticals, to enterprise voice/comms & UCaaS. I'll be covering it in depth. I also discussed it when I presented to Ofcom's technology team in November (see slides halfway down this page), and it's good to see my thinking seems to align fairly closely with theirs.

This was the future, long ago

Localised or private cellular networks - sometimes called Micro-MNOs - are not a new concept.

Twelve years ago, in 2006, the UK telecoms regulator Ofcom made an unusual decision - to auction off a couple of small slices* of 2G mobile spectrum, for use on a low-power, localised basis for a number of innovative service providers or private companies' use. (Link). A few launches occurred, and the Dutch regulator later did something similar, but it didn't really herald a sudden flourishing of private mobile networks. 

*(The slices were known as the DECT Guard Bands, which separated GSM mobile bands from those used for older cordless phones, widely used in homes and businesses)

Numerous practical glitches were blamed, including the costs / complexities involved in deploying small-cells, the need for roaming or MVNO deals for wide-area coverage, and the fact that the spectrum was mostly suitable for voice calls, at a time when the world was moving to mobile data and smartphones. 

Unfortunately, there was also no real international momentum or consensus on the concept, despite Ofcom's hope to set a trend - although it did catalyse a good UK-based cottage industry of small-cell and niche core-network vendors.

Going mainstream: private / virtualised networks for enterprise & verticals

At the start of 2019, the world looks very different. There is a broad consensus that new models of mobile network are needed - whether that is fully-owned private cellular, more-sophisticated MVNOs with their own core networks, or future visions of 5G with privately-run "network slices". 

There's a focus on neutral-host networks for in-building coverage, proponents of wholesale national "open" networks, and a growing number of large non-telecoms enterprises wanting more control and ownership.

It is unrealistic to expect the main national MNOs to be able to pay for, deploy, customise, integrate and operate networks for every industry vertical, indoor location or remote area. They have constraints on capital, personnel, management resource, specialised knowledge and appetite for risk. Other types of network operator or service provider are needed as well.

In a nutshell, there is a wide recognition that "telecoms is too important to just leave up to the telcos".

I've been talking about this for several years now - the rise of unlicensed cellular technologies such as MulteFire or Huawei's eLTE, the growing focus on locally-licensed or shared spectrum for IoT or industry use, and the specific demands of rural, indoor or industrial network coverage and business models.

(As well as non-MNO deployed and owned 4G/5G networks, we will also see a broad range of other ways to deliver private capabilities, including various evolutions of MVNO, mobile SD-WAN and future network-slicing and private cores. But this particular consultation is more about the radio-centric innovations).

Where is the action?

But while there has been a lot of discussion in the UK (including my own presentations to Ofcom, the Spectrum Policy Forum and others), the main sources of action on private (licensed) cellular have been elsewhere. 

In particular, the US push on its CBRS 3-tier model of network sharing - expected to yield the first local service launches in 2019 - and German and Dutch approaches to local-licensed spectrum for industry, have been notable. Unlicensed cellular adoption is (fairly quietly) emerging in Japan and China as well.

Plenty of other trials and regulatory maneouvring has occurred elsewhere too, with encouragaing signs by bodies like ITU, BEREC and assorted national authorities that private/local sharing is becoming important. 

In the UK, various bodies including Ofcom, National Infrastructure Commission, DCMS (the ministry in charge), TechUK/Spectrum Policy Forum (link) and others have referenced the potential for shared/private spectrum - and even invited me to talk about it - but until now, not much concrete has happened.

What use-cases are important here?

From my perspective, the main focus in actual deployment of private LTE has been for industrial IoT and especially the ability for large enterprises to run their own networks for factories, robots, mining facilities, (air)ports or process plants. Some of these also want human communications as well, such as replacing TETRA mobile radio / walkie-talkie units with more sophisticated cellular smartphone-type devices, or links to UCaaS systems.

These are all seen as future 5G opportunities by vendors too. They are also often problematic for many MNOs to cover directly - few are really good at dealing the specialised demands of industrial equipment and installations, and the liability, systems-integration and customisation work required.

Together with big companies like GE and Bosch and BMW, there has been some lobbying action as well. CBRS has had a broader appeal, with numerous other categories showing interest too, from sports stadium owners, to cable operators looking for out-of-home coverage for quadplay, or fixed-wireless extensions.

But I'd say that rural coverage, and more generic in-building use-cases, have had less emphasis by regulators or proponents of Micro-MNO spectrum licensing. That's partly because rural uses are often hard to generate business cases and have fragmentary stakeholders by definition, while in-building represents an awkward mix of rights, responsibilities and willingness-to-pay.  

Yet it is these areas - especially rural - that Ofcom is heavily focused on, partly in response to some UK Government policy priorities, notably around rural broadband coverage.

What has been announced?

There are two separate announcements / consultations:
  • An immediate, specific proposal for 700MHz and 3.6-3.8GHz auctions to have additional coverage conditions added to "normal" national mobile licenses, especially for rural areas. This includes provisions for cheaper license fees for operators that agree to build new infrastructure in under-served rural areas, and cover extra homes in "not-spots" today.
  • A more general consultation on innovation, which focuses on various interesting sharing models for three bands: the 1800MHz DECT guard bands (as discussed above), the 3.8-4.2GHz range and also 10MHz around 2.3GHz.

The first proposal is essentially just a variation of "normal 3.5GHz-band national 5G licenses", similar to the earlier 3.4-3.6GHz tranche which has already been released in the UK. Some were hoping that this would have some sort of sharing option, for instance for neutral-host networks in rural or industrial sectors, but that has been sidelined. 

Unlike Germany, which has just 3 MNOs and a powerful industrial lobby wanting private spectrum, the UK has to squeeze 4 MNOs' 5G needs into this band, with a big chunk already belonging to 3/UK Broadband. So, it has stuck with fairly normal national licenses. Instead, there's some tweaks to incentivise MNOs to build out better rural coverage. This helps address some of the UK government's and voters' loudly voiced complaints, but doesn't really affect this post's core theme of private/novel network types.

It is the second consultation that is the most radical - and the one which could potentially reshape the mobile industry in the UK. There are two central elements to its proposals:
  • Local-licensed spectrum in three "shared" bands, with Ofcom managing authorisations itself, with a fixed pricing structure that is just based on cost of administration, rather than raising large sums for the Treasury. There are proposals for low-power and mid-power deployments, suitable respectively for individual buildings or sparsely-populated rural areas.
  • Secondary re-use of existing national licensed bands. In essence, this means that any existing mobile band could be subject to 3rd-party localised, short-term licensing in areas where there is no existing coverage. This is likely to be hugely controversial, but makes inherent sense - essentially it's a form of "use it or lose it" rule for MNOs. 

Local licensing in shared bands
The local licensing idea has numerous potential applications, from industrial sites to neutral-hosts to fixed-wireless access in rural districts. It updates the 1.8GHz 2006 low-power wireless licenses to the new approach, and adds in the new bands in 2.3GHz and 3.8-4.2GHz. 

While I'm sure that some objections will be raised - for example, perhaps around the low-cost aspects of these new licenses - I struggle to find many grounds for substantive disagreement. It is, essentially, a decent pitch for a halfway-house between national licenses and complete WiFi-style unlicensed access. Like CBRS in the US (which is much more complex in many ways) it could drive a lot of innovative network deployments, but at smaller scale, as CBRS is aimed at county-sized areas rather than local areas as small as 50m diameter. 

There are numerous innovations here - and considerable pragmatism too, and plenty of homework that's been done already. The medium-power band, and the rural restrictions for outdoor use, are both definitely interesting angles - and well-designed to ensure that this doesn't allow full national/mobile competition "on the cheap" by aggressive new entrants. The "what if?" consultation sections on "possible unintended consequences" and ways to mitigate  them are especially smart - frankly all governmental policy documents should do something similar.

Ofcom also discusses options for database-driven dynamic spectrum approaches (similar to CBRS, white spaces and others) but thinks that would take too long to develop. It essentially wants a quasi-static authorisation mechanism, but with short enough terms - 3 years - that it can transition to some DSA-type option when it's robust and flexible enough. 

(As an aside, I wonder if the ultimate version is some sort of decentralised blockchain-ish decentralised-database platform for dynamic spectrum, which in theory sounds good, but has not been tried in practice yet. And no, it shouldn't be based on SpectrumCoin cryptocurrency tokens).

Secondary licensing of existing bands

This is the really controversial one.

It basically tells the MNOs that their existing - or future - national licenses don't allow them to "bank" spectrum in places where it's not going to be actively used. If there's no coverage now, or credible mid-term plans for build-out in the future, then (as long as it won't create interference) then other parties can apply to use it instead, as long as Ofcom agrees that there's no risk of interference. 

Unlike the shared-band approach (except for 1800MHz), this means that devices will be available immediately, as they would operate in the same bands that already exist. It would also potentially apply for the new 5G bands, especially 3.4-3.8GHz. 

There's a proposed outline mechanism from Ofcom to verify that suggested parallel licenses should be able to go ahead, and again a fairly low-cost pricing mechanism.

Clearly, this is just a broad outline, and there are a lot of details to consider before this could become a reality. But the general principle is almost "use it or lose it", although more accurately it's "use it, or don't complain if someone else uses it until you're ready".

There are a few possible options that have been suggested in the past for this type of thing - leasing or sub-licencing of spectrum by MNOs, or some form of spectrum trading, for instance. In some countries / places this has worked OK, for example for mines in the Australian Outback running private cellular, that have been able to do a deal with one of the national MNOs. But it's complex to administer, and often the MNOs don't really have incentives or mechanisms to do this at scale. They're not interested in doing site-surveys, or drawing up unique contracts for £1000 a year for a couple of farmhouses or a wind-turbine on a hilltop. Plus, there are complexities about liability with leasing (it's still the original licensee's name on the license).

While there will be costs for Ofcom to manage this process, it thinks they should be reasonable - it's pricing the licenses at £950 for a 3 year period. 

All this is pretty radical. And I expect MNOs and industry bodies to raise blue-murder about this in the consultation. Firstly, they will complain about possible interference, which is valid enough, but can be ruled out in some locations. They'll talk about the internal costs of the acceptance process. And above all, they may talk about "cherry-picking" and perceived competitive distortions.

The most interesting aspect for me is how this changes the calculus for building networks indoors, in offices, factories or public buildings. This could limit the practice of MNOs sometimes insisting that enterprises pay for their own indoor systems, for delivery of the MNOs' network coverage and capacity. It could incentivise operators to focus on indoor coverage, if they want to offer managed services for IoT, for example.

There's a lot of other implications, opportunities and challenges I don't have time to address in this post, but will pick up on, over the next weeks and months. There are technical, regulatory, commercial, practical and political dimensions.

I'm really curious to read the responses to this consultation, and see what comes out of the next round of statements from Ofcom. I'm probably going to submit something myself, as I can see a bunch of questions and complexities. Let me know if you'd like me to brainstorm any of this with you.

Spectrum is not enough

One thing is definitely critical for both proposals. The availability of local-licensed spectrum is not enough for innovators and enterprises to build networks. There are many other "moving parts" as well - affordable radio infrastructure such as small-cells, inexpensive (likely cloud-based) core and transport networks, numbering resources, SIMs, billing/operations software, voice and messaging integration, and so on. The consultations cover numbering concerns and MNC (mobile network codes), at least up to a point.

In some cases, roaming deals with national networks will be needed - and may be hard to negotiate, unless regulatory pressure is applied. As I've been discussing recently (including in this report for STL - link) this ties in with a wider requirement for revisiting wholesale mobile business models and regulation.


This is all very exciting, and underscores a central forecast of mine, that mobile network business / ownership models will change a lot in the next few years. We'll see new network owners, wholesalers and tenants - even as normal MNOs consolidate and merge with fixed-lie players.

I'd like to think I've played a small part in this myself. I've advised clients, presented and run many workshops on the topic, including my own public events in May and November 2017 (link), and numerous speeches to regulators, industry groups and policymakers. Industry, rural and in-building users need both more coverage and sometimes more control / ownership of cellular networks in licensed bands. 

There will need to be customisation, systems integration and a wide variety of "special cases" for future cellular. The MNOs are not always willing or able to deliver that, so alternatives are needed. (Most will admit, privately at least, that they cannot cover all verticals and all use-cases for 4G/5G). WiFi works fine for many applications, but in some cases private cellular is more suitable.

We're seeing a variety of new network-sharing and private-spectrum models emerge around the world, and a general view that they are (in some fashion) needed. What's unclear is what is the best approach (or approaches). CBRS, German industrial networks, Dutch localised licenses, or something else. I'd say that Ofcom's various ideas are very powerful - and in the case of the secondary re-use proposal, highly disruptive.

Edit & footnote: rather than "secondary re-use", perhaps a better name for this proposal is "Cellular White-Space", given that it is, in essence, the mobile-spectrum equivalent of the TVWS model.

If you'd like to discuss this with me - or engage me for a presentation or input on strategy or regulatory submissions - please reach out and connect. I'm available via information AT disruptive-analysis DOT com

Also, please subscribe to this blog, follow me on Twitter and LinkedIn - and (new for 2019!) look out for new audio/podcast and YouTube content. 

There are two audio segments that relate to this blog post:
Part 1 covers the general background to private cellular (here)
Part 2 covers the specific Ofcom proposals (here)

Tuesday, November 27, 2018

Does the network need a "black box" as well as user data-retention?

What is the network equivalent of an aircraft's black-box? Is there an argument for governments pushing for more regulation on telco-side data-retention?

As far as I know, telcos are not under any obligation to maintain full logs of the state/operation of their network elements, either hardware or software – or make them available for authorities to inspect. As networks become more virtualised and complex, with NFV, orchestration, AI-led automation of network policies, slicing and so on, what happens if something goes seriously wrong? 

The industry is hoping that 5G and other networks will be used in safety-critical verticals, with "ultra-reliable" requirements, but that brings risks and responsibilities too.
That could mean authorities may need to do a diagnostic “post-mortem” if a network fails - or perhaps as a way to spot if the network is doing something it shouldn’t, such as discrimination in wholesale, or net neutrality violations.

Aviation has rigorous rules about flight data recorders (“black boxes”), and has an admirable record of learning lessons from catastrophe, and changing inspection and certification regimes, if needed. Air travel is a one-way ratchet, becoming ever-safer, because of this.

So, if a commercial 5G or FTTX network is being used for ultra-reliable uses (such as managing a power grid’s control, or a telemedicine app, or perhaps connected vehicles), is there a basis for countries having a “Network Accident Investigation Board” and better international cooperation? And would this not also imply a better way to store crucial background data is required? If a plane crashes, investigators can examine the physical wreckage, but this problem is much harder for software-controlled networks with no moving parts.

This is also an issue if a network gets compromised by hacking or a bug - who is responsible, how can it be fixed, and what prevents re-occurrence? And something similar applies for keeping records that may prove/disprove competition problems, eg did a virtualised network resource do something illegal, perhaps on a temporary basis? How could a complaint be investigated, or a prosecution brought?

The problems get multiplied massively if AI is involved, as any issues with underlying machine-learning algorithms are potentially a single point of failure, if that system is used widely (eg for coordinating 100’s or 1000’s of network-slices in an automated fashion).

Do regulators have the legal rights, obligation or ability to forensically analyse what’s gone wrong in such situations? Or the various cybersecurity agencies, or police forces?

One option might be to encrypt network configuration and operational logs, and keep them “in escrow” using blockchain to ensure anti-tamper properties, so that they could only be examined after a warrant or other legal instrument ordered decryption. There are likely numerous other technical approaches to consider as well.

In either case, as public networks become part of critical systems, this topic will only rise in importance. Policymakers should start thinking about it now - and the telecoms industry should face up to its responsibilities here, rather than push back without thinking. Do Boeing or Airbus complain about the need for data recorders?

Monday, October 29, 2018

Quick thoughts on 5G

I've been doing a lot of work - and events - on 5G recently. 
I've noticed a few recent shifts in perception and focus amongst vendors, regulators and operators. Some quick take-outs (a few more than appear on my similar LinkedIn post, as I'm not limited to 1300 characters!)
  • 5G smartphones launch in 2019, but will be low-volume until 2020/21. Expect the first 5G iPhone towards the end of 2020
  • Fixed-wireless use cases for 5G are high on the agenda in some markets (eg US, S Korea, Turkey, Germany), but seemingly almost absent in others.
  • Commercial, large-scale, automated network slicing only becomes real from around 2023 onwards. A few "hand-carved" slices will be sooner, for example for internal use by MNOs' own business units, or perhaps public safety
  • URLLC (ultra-reliable low latency) use-cases seem to have shifted from sci-fi fantasies around automated vehicles and surgical robots, to industrial IoT and factory automation... 
  • ... but industrial use will often be controlled by industry itself, via one of several forms of private network, either using shared spectrum, private cores or private slices / enterprise MVNOs. MNOs' role may be minor
  • Some claim that NB-IoT is the 5G version for "massive IoT", despite it being developed as a 4G variant. This is revisionist nonsense; if it was true then DT, VF and others would have been putting out PR 2+ years ago, claiming to be first to launch 5G
  • 3.5GHz should be OK-ish outdoors but will struggle with outdoor-to-indoor coverage. mmWave will be worse. Beware of demos showing good indoor performance - ask about uplink from inside-out, or whether signals penetrate double-glazing, or at oblique angles to walls/windows. In any case, #WiFi will continue to dominate in the home.
  • There will be some small-cells and neutral-host deployments for 3.5GHz (and similar bands) in enterprises and other large buildings, but this will take a long time to become widespread. 
  • Existing in-building DAS systems will need some serious upgrades to support higher 5G frequency bands - most of today's top out at 2.6GHz and can't handle MIMO very well.
  • Despite it not being an "official" 5G candidate band, 28GHz seems to be the most popular option, at least for test networks. This is partly because of chipset support, notably Qualcomm's X50. The European-proposed 26GHz hasn't seen much action yet
  • Two of the largest 5G "verticals" associations, for Automotive (5GAA) and Industrial (5GACIA) seem to be heavily driven by German companies - and the German regulator looks like it's going to award 100MHz of spectrum to verticals directly (not 100% certain but getting clearer). In other countries apart from the US (CBRS) and China (Huawei's enterprise LTE), there doesn't seem to be as much action from large firms knocking on the regulator/governments doors.
  • The 5G New Core is getting a lot of discussion and attention... but given that some of the existing NFV deployments have been slow, and the cost-savings somewhat illusory, I don't expect much near-term action on this.
  • Some of the visions for 5G seem to lean heavily on automation and AI back-office for optimising radio, core, user-plane etc. Yet those are also still at an early stage - and few telcos have many skilled engineers -  so could act as a brake. There are also some emerging questions on security of network AI, and whether the algorithms might be single points of failure, especially when used for networks used for critical national infrastructure. 
  • Connected-car companies are interested in 5G, but not as enthusiastic as some might imagine. One told me "it's a nice-to-have" - especially as vehicles will need to be able to work offline, and have prodigous on-board compute capabilities.
  • I'm more positive about some of the discussion around Cloud RAN for 5G. In many ways, it's going to be necessary, given the complexity of NR. That said, there's some serious practical challenges about the radio, such as the size/weight/cost of the massive-MIMO antennas.
  • There's lots of talk about network-slicing for 5G, but nobody has really thought about whether today's MNO wholesale departments are up to the task of selling "slice as a service". Speaking to some of today's MVNOs, it seems like they will have to do a lot of homework before they can become effective slicemongers.
That's a quick list of things off the top of my head. Plenty more observations and comments to come, or on my Twitter feed from various events I've attended.

If you'd like me to give an unvarnished presentation at an event, on "5G opportunities, realities & myths", please get in touch via:  information AT disruptive-analysis DOT com
And if you're interested in my last point, on 5G+MVNOs+Slicing+Wholesale, please look at my upcoming workshop doing a deep-dive on this (link)

Wednesday, October 24, 2018

Book now! MVNOs + 5G + Network-Slicing: Small-group Seminar & Workshop, London, 4th December

NEW: 5G, MVNOs, Mobile Wholesale & Network-Slicing Workshop

On December 4th 2018, Dean Bubley will run a small-group workshop in London, covering one of the most interesting topics in telecoms technology and mobile business models: 

What does 5G, NFV & Network-Slicing mean for MVNOs & other wholesale models? 

The day will have a maximum of 25 attendees to ensure a high level of discussion and interaction. 

Expect a diverse mix of telcos, MVNO/E/As, network vendors, software developers, regulators and other interested parties such as enterprises, IoT specialists, investors and consultants. It is suitable for C-level executives, strategists, product management, marketing functions, CTO office, analysts and regulatory affairs specialists.

The event is being run together with partners Mobilise Consulting (link)

The workshop will run under Chatham House rules (link), to allow candid & confidential discussion, without external attribution of comments to individuals or their employers.

It will cover:
  • Technology, including 5G New Radio, New Core, network-slicing and NFV/cloud
  • Business models, spanning consumer, enterprise & IoT markets
  • Regulatory and economic aspects of both 5G and MVNO domains

We'll be highlighting our current thinking - and outstanding questions - on topics such as: 

  • When should MVNOs expect 5G networks to launch & become important? What  changes, compared to 4G?
  • What needs to be done NOW to align with future 5G/NFV wholesale models?
  • Can existing "full" MVNOs with 4G cores upgrade and integrate easily?
  • What's happening with 5G smartphones & IoT devices? What new / different relationships are needed with OEMs?
  • Is “network slicing” really an evolution of today’s wholesale and MVNO model? 
  • What 5G use-cases hold the most promise for wholesale: fixed access, mobile broadband, massive IoT or low-latency / ultra-reliable?
  • Are 5G standards bodies, regulators & vendors giving enough (any?) thought to the needs of MVNOs? 
  • Will we move from a 2-tier MNO/MVNO model, to a 3-tier Infrastructure / Network Service / Tenant model? How would that change the role of today’s full MVNOs and MVNE/As?
  • Will 5G mean more enterprise, IoT and vertical MVNOs? 
  • What are the impacts of changing 5G spectrum & wholesale regulations? What new areas that policymakers should consider?
  • Will we see hybrid MNO/MVNO/WiFi operators? 
  • What are the main consumer 5G use cases for MVNXs? Will it enable more video streaming, AR/VR, gaming or other applications? Or just more data?
  • Will the new 5G core network architecture make a difference?
  • What changes to service provision, billing and QoS will impact MVNOs with 5G?
  • Where do neutral-host networks (eg for in-building or rural coverage) & private 5G networks fit in to the story?
  • Along with 5G, what does NFV, SDN, cloud-native, eSIM and edge-computing mean for MVNOs?
  • Will we see new charging/rating models with 5G or will it be much the same as 4G?
  • Will it be possible to be a 5G-only MVNO?
It is probably too early to give definitive answers to all these questions - but the workshop will cover all these areas, and certainly outline the gaps in today's knowledge, wholesale enablers and regulation. 
The workshop will take place at the Westbury Hotel in Mayfair, central London [link]. It will run from 9am-5pm, with plenty of time for networking and interactive discussion. Come prepared to think and talk, as well as listen – this is a “lean-forward” day. Coffee and a nice lunch are included. A full agenda will be circulated nearer the time. 

The workshop facilitators will be Dean Bubley of Disruptive Analysis, plus Hamish White & Amr Houssein of Mobilise.

Booking & Payment

There are PayPal Buy Now buttons below, which can accept card payments as well as PayPal transfers. Alternatively, contact information at disruptive-analysis dot com if you want to be invoiced directly, and use purchase-order & bank-transfer. Payment can also be made in EUR or USD.

Pricing for attendance:

  • Early bird £499+VAT booked before Nov 1 (now expired)
  • £699+VAT after Nov 1
  • 15% discount for 2 attendees booked at the same time (max 2 from any one company)
  • (UK VAT @20% must be charged to attendees from any country, as the service is delivered in the UK. There are two separate payment options below, as PayPal only automatically adds VAT for UK accounts

UK Payments:

Non-UK Payments:

Friday, September 28, 2018

I got it slightly wrong - NFC mobile payments are not a complete dud

I have long been a critic of NFC-based mobile payments from smartphones. It was originally touted as a mobile operator service, debiting value (or adding to your monthly bill) with a tap. I was deeply skeptical.

Almost 10 years ago, I wrote that for it to work, "I ought to be able to check my balance from the phone screen, look at recent transactions and so on. At present, the UI/app side of NFC appears woefully weak to me". (link)

Six years ago, I was more emphastic still: "the tap-to-pay thing is a nonsense, a solution looking for a problem. The involvement of a telco adds zero value and lots of friction". (link)

I have to admit to being partly wrong. Yes, I know, it's rare for me to issue a mea culpa, but here, I have to hold my hands up!

I do actually see (some) people paying for things with their smartphones, as well as using them for stored tickets / travelcards. I also know that in China, South Korea and some other places, QR codes are popular, but that's a different technology. But for the most part, I was right about MNOs being an obstacle rather than a catalyst.

A few things have changed:
  • Linking NFC chips to native-OS capabilities like Apple and Android Pay, allowing the creation of good apps & UIs.
  • Integration with on-device biometrics, notably fingerprint- and facial-recognition
  • People commonly carrying charger cables or USB power banks, so there's less fear that running out of power = running out of money.
  • Very wide adoption of contactless plastic-card payments. In many UK and other European countries, a huge bulk of low-value retail and services-sector payments have moved to this model. This has allowed the broader concept of tap-to-pay to be normalised with plastic, and then a (currently small) % switch further to phones. It has also catalysed merchants to move to tap-to-pay terminals.
  • Most telcos bowing out of the payments value-chain, replaced by banks (old & new fintech ones), plus Apple, Google & Samsung. This has taken out cost, friction - and put the user back in control with familiar, mostly-trusted payment brands.
But it's still definitely not a "revolution". It's one of those secondary things that some people have adopted, without becoming universal. It's a bit like wearing a FitBit - people don't look at you weirdly any more, but they mostly don't intend getting one themselves. (If you pay with a watch, though, you're definitely still weird). 

NOTE: I realise that "normal" is a very geo-specific culture judgement. Within a country or even city, you may find greater levels of acceptance or scorn depending where you shop or drink coffee / beer. 

NFC phone-payment is now somewhere on the geek spectrum in between using a voice assistant (fairly normal), and wearing an AR/VR headset in public (not). There are some fairly clear demographics about who does/doesn't use NFC, as well.

This morning, for an entirely unscientific experiment, I counted 9 out of 100 people exiting my local tube station in central London using a phone rather than a card. Among card users, I couldn't tell how many used a proprietary TFL Oyster card vs. a normal credit/debit card that is now accepted at Oyster terminals. 

On closer inspection however, some of those people had phone-cases which also held some plastic cards as a physical wallet (like these - link), so given not all had been thumb-ing the screens, the actual number of proper NFC users was probably 5-7%. And that is among commuters who mostly travel every day, at 9am, so we can perhaps expect routines to be optimised. I might try another time to see how daytime "casual" usage differs.

Without having done a similar count at shops and restuarants, but having been generally observant over recent months, I'd guess that about the same percentage applies for retail transactions. Common-ish, but certainly atypical.

(As a sidenote - I'm writing this in a very nice cafe in London, which is having to apologise to customers that its card/NFC reader isn't working at all. Cash is still a critical backup).

Personally, I don't use my phone for retail payments. I use my contactless bank or credit cards, and I have a proper pre-pay Oyster. I prefer to keep my various payment and online relationships completely separate - Apple doesn't even have my credit card details.

I'm curious what the situation is elsewhere, and I'll keep an eye out when I'm travelling. My expectation is that phones will become somewhat more common for payments over time, but there's not going to be a sudden flip, as there was with contactless cards. I think geographic differences will persist too - I'd be surprised if Germany was a fast adopter of phone-based NFC, while China could well move much mor decisively. 

There might even be one or two places with telcos in the NFC-payments loop, as they are in some developing markets for messaging-based payments - but I don't see that in markets with existing high % of banking and card adoption.

Bottom line: I was definitely a bit too negative 10 years ago about the long-term future of NFC. But the transition remains slow, patchy, and dependent on the UX skills of the smartphone manufacturers. Also, few saw the behavioural acceptance of consumers being driven by tap-to-pay plastic cards as a first (and for many, last) step.