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The UK is currently a hive of activity for government and regulatory involvement in telecoms. I can’t remember a time when so much emphasis has been put on my domain – from election commitments on gigabit broadband, to concerns over “high risk vendors” (HRVs) – notably Huawei.
This week has seen further progress through Parliament of the Telecom Security Bill (link) which makes telcos face legislation on cybersecurity and HRVs. There has also been the linked publication of the 5G Supply Chain Diversification Strategy (link), which ties the removal of Huawei gear with the government’s intentions to expand operators’ choice of other vendors.
I’m going to be spending considerably more time on the policy aspects of telecoms in coming months – not just my normal areas like spectrum, but more broadly the intersection with geopolitics, technology evolution and industrial strategy, competition and trade.
This article focuses on the diversification aspects - my thoughts on the published strategy, plus what I’d like to see in recommendations from the Task Force and policies from government in 2021. It’s a follow-on from my recent post on interoperability. Note: I’m not revisiting the HRV or Huawei issue here.
I should stress that this isn’t just parochial and UK-specific - it has wider ramifications on the global telecom market, and links up with activities in Brussels, Washington and elsewhere, such as the US Open RAN Policy Coalition, and the EU’s cybersecurity “toolbox” and upcoming European Cybersecurity Strategy review.
Disclosure – my advisory clients span a broad range of UK and international organisations, from startups to large vendors, service providers of numerous types, investors and branches of government. I work with companies and organisations that enable closed macro & small-cell networks, Open RAN, Wi-Fi, satellite connectivity and more. As people who know me will attest, my opinions are my own – and attempts to influence them will often backfire, even if made by paying clients. In fact, people pay me because I regularly say things they don’t want to hear. I like saying “no”.
Even before the pandemic there was huge UK government engagement – and manifesto commitments - on “full fibre”, 5G mobile networks, sponsored testbeds & trials, and even satellite communications with the investment in OneWeb.
A lot of my own focus in recent years has been triggered by the Future Telecom Infrastructure Review in 2018, which kicked off the current regulatory enthusiasm for localised spectrum, enterprise/private cellular and neutral host networks – although other commentators had also advocated this for some time previously (*coughs modestly*).
In the last 6-12 months, there has been a specific focus on “supply chain diversification”, and a desire by policymakers to increase the number of equipment/software vendors in the market for network infrastructure. This isn’t new – the Government published its initial Telecom Supply Chain Review in mid-2019 – but it has lately taken on greater urgency.
The largest catalyst has been the recent action taken on Huawei and what that means for supply of equipment in the UK as a result, particularly for national 5G RAN build-outs by the four main UK MNOs BT, Vodafone, Telefonica O2 and 3UK.
The net result of this has been the establishment of the UK Telecoms Diversification Task Force as an advisory group (link), aligned with an internal project to develop a strategy and policy for broadening the vendor base, being run by DCMS (Department of Digital, Culture Media & Sport).
The new strategy document highlights what it sees as a duopoly of Nokia and Ericsson, especially for macro RAN gear, and suggests that if that continues it implies a risk to future resilience of the supply-chain. During the various Science & Technology committee hearings this year, there has been input from vendors, operators, security officials, task force members and others.
The discussion has largely been 5G-dominated, although the strategy document also mentions fixed-infrastructure diversification (subject to ongoing consultation and review). Many of the parliamentarians seem to think 5G is something special, and have bought into the “unicorn” visions of GDP uplift and “ubiquity”. (My regular readers know that 5G is “just another G” – an important upgrade, but not something which will change the world).
The strategy proposes three areas of action:
- “Supporting incumbent suppliers” (Nokia and Ericsson) as major vendors, but suggests various approaches towards nudging them to greater levels of openness.
- “Attracting new suppliers into the UK market” – this essentially means working out ways to get Samsung, NEC & Fujitsu more involved, as well as others. The parliamentary debate’s speakers also name-checked Mavenir, Parallel Wireless, Rakuten’s platform business and others.
- “Accelerating open-interface solutions and deployment” – which refers more to the realm of industrial policy around Open RAN, and components such as semiconductors.
As you might imagine, I’ve got some fairly trenchant opinions on much of this.
Is the market that concentrated?
Clearly, the UK MNOs are today almost entirely dependent on Huawei, Nokia and Ericsson for their macro RAN deployments, although Samsung has previously been present in the 3UK’s 4G network, and Vodafone has recently started deploying gear from Mavenir in its Open RAN deployment.
However, some countries such as the US and Japan have maintained a greater diversity in macro RAN supply, despite a lack of Huawei gear - although there are some differences compared to the UK. Continued support of older 2G/3G services currently relying on combined “single RAN” infrastructures is a valid concern – and the Diversification report suggests it might be possible to sunset or improve interoperability there. The Samsung presentation and letter to the committee also had some suggestions about this (link).
I think there’s perhaps also a link to the historical “3GPP monoculture” in UK/Europe. Other regions had a mix of GSM, CDMA and local alternatives, which fostered greater supply fragmentation originally, which endured over time as the "single RAN" approach wasn't as much of an obvious win (or lock-in).
It is worth noting that there is already good diversity for private cellular networks and specific mobile products such as 4G/5G cores, indoor wireless and other niches such as fixed-wireless access. Many alternative suppliers are gaining traction first in rural and other “secondary” areas, rather than dense urban macro locations.
One aspect the government hasn’t appeared to consider is how much of the anticipated 5G “upside” (whether you believe the $billions GDP numbers or not) is conveniently located in these very contexts which have greater levels of supply diversity. Many of the expected new 5G applications are indoors (in factories, hospitals etc), or in sectors such as agriculture.
Another set of “advanced connectivity” applications have alternative technology options, especially over the 3-5 years it will take 5G to mature. WiFi 6/6E/7, LoRa, 60GHz FWA, new satellite constellations and proprietary platforms like Amazon Sidewalk all offer alternatives to 5G. Yet I still hear people talking about 5G for low-latency AR/VR in peoples’ homes when it’s obvious that 90%+ of that will use Wi-Fi, for multiple reasons.
Reading the report and listening to the debates, there seems to be a certain amount of hindsight here, with regrets that previous governments hadn’t thought through possible consolidation from three big cellular vendors to two, irrespective of which was taken out of the equation or how. Some speakers went back further, to the days of Nortel and Marconi, mourning the loss of greater diversity and national sovereign capability.
There’s also an implied sense of worry that one of the existing incumbents might make a mis-step. It’s notable that the “supporting incumbents” line was absent in January discussions, but was perhaps catalysed by Nokia’s 5G woes earlier in this year. The US Attorney General floating the possibility of a US company acquiring either Nokia or Ericsson, probably raised the stakes even further, even if that suggestion was rapidly shot down at the time.
Other concurrent drivers have related to Brexit, trade deals with Japan (and presumably EU, US and S Korea in future) and the enthusiasm of the current administration for more “industrial policy”. There is interest in state-aid for many areas of technology, ranging from hydrogen-powered aircraft (“Jet Zero”) to biotech to quantum computing, with the aim of improving the UK’s export and trading prospects in new and emerging areas. Telecoms technology needs to be seen in the context of a very expansive vision from artificial meat to nuclear fusion. (Wearing my futurist hat, I heartily approve of this).
Open RAN & disaggregation
Perhaps the least-cohesive part of the strategy document (and some initial actions like the testing and interoperability lab announcements) is the focus on Open RAN as the main saviour of supply-chain diversification. It got a huge amount of airtime in the DCMS report, as well as in politicians’ speeches.
In my view, Open RAN is similar to 5G more generally – important, but getting rather over-hyped. It’s going to be very important in future, but it's not the only game in town. Perhaps it will form the centrepiece of 6G, but for 5G macro – which is being deployed now – it’s going to be secondary, even if some of the Huawei rip/replace by 2027 uses it.
There seems to be quite a lot of disagreement between the MNOs as well – Vodafone is clearly a fan, while BT and 3UK seem more sceptical, with O2 somewhere in the middle.
I’m far from convinced that some of the detailed aspects in the document and annex – going as far as discussing eCPRI interfaces and 7.2 O-RAN splits – are the pivot-points for the overall diversification or resilience story. We don’t have TIP specs for OpenRAN 5G Massive MIMO yet, and may not get there for quite a while.
We’ll see a growing amount of vendor orientation on cloud and open RAN approaches anyway – Samsung, NEC and even Nokia are pursuing it. Ericsson and Huawei are being more diffident, but also seem to recognise that virtualisation is important, even if they’re not breaking open all bits of the RAN. Ericsson's recent Cloud RAN announcement could reasonably be described as "tentative" (link).
While there’s a lot of action and excitement with Rakuten, Dish and other greenfield networks, that doesn’t mean that operators in the UK or elsewhere would necessarily follow suit, even if they could do it tomorrow. It would be nice for the option to be there – but I’m a little concerned that the document asserts that interoperability should always be a default rather than a viable option. (If you haven’t seen my post on interop, have a scan through it here). Different operators have different views - and different legacy infrastructure.
Think of an analogy: should the government also suggest that Airbus planes should interoperate with Boeing avionics? Or, for that matter, how many of the advocates would accept Linux as the “default” OS for their laptops, rather than being able to choose Windows or MacOS if they prefer?
I expect we'll see a growing amount of Open RAN in rural and then perhaps suburban areas - but it's going to be a long time before it's common in existing MNOs' urban cores and high-density macro domains. It's an interesting platform for neutral host networks too, as the NEC trial points out. It is part of the overall “choice architecture” for future networks, but arguably the most interesting domains for advanced connectivity will get more choice / vendor competition from non-5G technology options. The normal 5G macro RAN is more about capacity for smartphone broadband, rather than clever new applications.
What we should aim to see from future UK Diversification recommendations & policy
What comes next is the Diversification Task Force recommendations, which are expected early in 2021. This will feed into the policies and actions taken by the rest of government – potentially DCMS, although some have suggested aspects should reside with Ofcom, the security agencies or other departments.
As some external input, I thought I’d lay out some my own preferences, principles and what I’d like to see. (I may also submit more formal comments into the consultation process).
- Clarity of purpose(s): There is a tendency in the report and parliamentary debate to conflate security, supply resilience, competition, innovation, export opportunity and other drivers for telecoms (de)regulation. All are valid concerns and thus represent areas for government to become involved – but any individual recommendations or rules should break out the underlying purpose(s) clearly. Obviously, few politicians or media commentators are experts in telecoms networks arcana – so communications across Westminster and beyond needs to be crisp, and misconceptions and misrepresentations pointed out swiftly. Soundbites and spin always get attention – but must be rooted in technical reality rather than convenience and media-friendliness.
- Technology neutrality: While there are specific concerns about 5G RAN as it’s a major current focus of investment – and because the intelligence/core functions are increasingly distributed – it’s far from the only important telecom technology, or the only one with a concentrated supplier base. 4G mobile, fibre and fixed-line broadband infrastructure, satellite and assorted other wireless technologies should also be considered as part of diversification. There’s no major UK Wi-Fi player, for instance, which ideally would be rectified. At a component level, we should rightly be considering semiconductors, but also many areas of cloud and software elements involved in ever-more-virtualised telecom networks as well.
- Business model neutrality: This links to my recent post on interoperability. Governments shouldn’t mandate either proprietary or interoperable interfaces, or vertically-integrated or disaggregated solutions – as long as there’s enough competition. Openness is good – but both highest-performance and lowest-cost options may involve “black boxes”. Open RAN (which in any case needs more careful definitions and comes in multiple variants) has huge promise, but shouldn’t be a political football either. We should be encouraging market forces to operate effectively, in the demand side of telecoms networks. Choice is imperative. (You could say the same about net neutrality: if customers have a choice of 10+ ISPs, it doesn't really matter if one of them sells "Ain'ternet" as long as it's accurately marketed & distinguished from the real thing).
- Realistic time horizons & paths: Regular readers of my posts may have noticed increasing mentions of “path dependence”. Timelines matter. If there’s an awkward 4-year gap between promise and reality for a given technology, for instance because of lengthy testing and commercialisation, that needs to be recognised upfront. We can’t leap straight to 6G, terabit FTTx or massive LEO satellite constellations, even if the UK might have an edge in specific components. The new rules need to reflect realistic time horizons – including buffers for delays. That’s especially relevant for things like Massive-MIMO 5G radios.
- Removing obstacles: The UK’s telcos will continue to need large and medium sized international vendors for the foreseeable future. Ericsson and Nokia will obviously remain central, and we should be looking to encourage Samsung, NEC and Fujitsu in 5G – as well as the continued roles for Mavenir, AirSpan, Parallel Wireless, Commscope, Cisco, Juniper, Microsoft and so on. We need to address why, for instance, Samsung is largely absent from UK MNOs’ networks, despite its profile in Korea and the US. If it is about the need for continued support of 2G/3G and other legacy systems (for instance to support eCall), then we should be considering creative solutions for this. I could even imagine a government-sponsored 2G shared network to support M2M and emergency calls, leaving MNOs to focus on 4G/5G differentiation (and reclaiming spectrum).
- Global vision: While I can understand why government likes the idea of home-grown UK telecom startups thriving, this vision needs to be tempered with reality. It isn’t realistic to expect UK firms to tackle all aspects of network infrastructure at the scale and expertise needed by major telcos. This doesn’t just mean “heavy iron” macro 5G networks, but also future elements such as fibre transport or hyperscale cloud for next-generation platforms. There won’t be a UK (or European) equivalent to AWS or Azure any time soon, nor a Qualcomm equivalent. If domestic self-sufficiency and ownership was a desire, there would have been obvious questions about recent sales of ip.access and Metaswitch. The diversification review should address areas where the UK should expect to collaborate internationally – as well as its contribution to new standards, for instance on 6G development.
- Supporting cast: For all the various reasons mentioned above – security, supply resilience, export opportunity and so forth – the “leading actors” of MNOs, semiconductor designers and network hardware/software vendors will need other sets of market players to evolve in tandem. Government is right to be creating testing labs, but should also look at training centres for engineers and installers, university courses, systems integrators, infrastructure financiers, insurance providers and many others. It doesn’t have to (and probably shouldn’t) fund all of these, but it can perhaps advocate for their growth, and help remove barriers if they exist. How many indoor mmWave 5G URLLC vertical specialist engineers - or OpenRAN Massive MIMO maintenance teams - are there in the UK? How can we multiply that by 100x?
- Flexibility to respond to emergent events: Linked to path-dependence is the concept of protecting “optionality”. I can come up with a range of scenarios under which the world might evolve in surprising directions, both technologically and geopolitically. China might reach a different set of compromises with Joe Biden on network vendors, components and trade. Brexit and new UK trade deals may impact supply chains and telecoms demand in unexpected ways – positive or negative. New cybersecurity vulnerabilities might come to light – or new safeguards developed. Any new policies on diversification should aim to enable new vendors and standards, rather than add constraints such as mandating specific interfaces.
- Industry verticals & new applications: The UK authorities, like others around the world, seem focused on Industry 4.0, automation, IoT and the potential benefits of greater network-intensity in many sectors. This filters through to the idea of private networks, cloud/edge computing and other adjacent domains. It may also feature high on the telecoms diversification agenda. My view is that this should revolve around a general principle of “advanced connectivity”, rather than specifically relating to 5G and its supply chain. Wi-Fi, fibre, LoRa, Bluetooth and even proprietary network solutions have equally-important roles to play, and as before, neutrality of policy is desirable. The government should consider technology substitution between options, as well as vendor choice within one technology.
- Awareness of energy & CO2 implications: One of the trade-offs of “abstraction layers” and simplicity/flexibility can sometimes be increased power consumption. “Software-defined X” or “Adaptive Y” can involve lower efficiency than something optimised or hardware-based. The UK should be thinking about a future of networks where everything has a CO2 budget – perhaps with cascading carbon taxes built in. Rather than least-cost routing, we might find networks built around lowest-energy optimisation. I didn't see anything about energy or CO2 in the strategy document.
Overall, as a UK-telecom industry analyst and advisor, I see this as both worthwhile and exciting – and I’m keen to participate in one way or another when possible. I’m certainly intending to check up on how the ongoing pronouncements fit with the principles I’ve outlined here. (I'll also be pondering the international ramifications and linkages).
I think the existing Diversification Strategy makes some good points and has clearly taken inputs from numerous well-placed and knowledgeable sources. However, it’s a bit too focused on 5G, Open RAN and macro networks, rather than the broader realm of “Advanced Connectivity”. I'd like to see more technology neutrality and optionality across the board.
It also blends together multiple issues – cybersecurity, resilience, UK industrial policy, competition, technical philosophy and so on – when they sometimes only have tenuous or debatable links. Interoperability is used as a “glue” to stick together the separate parts. I’d rather see broad top-level goals such as “security” and “optionality” and separate self-consistent analysis for each purpose.
As always, I'll aim to respond to the comments and discussion as much as possible. And please get in touch via email or LinkedIn, if you'd like a deeper dive on any of these areas.
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