Geopolitics, war & network diversity

This post was originally published on my LinkedIn Newsletter (here). Please sign up, and join the discussion thread there.

Background

I'm increasingly finding myself drawn into discussions of #geopolitics and how it relates to #telecoms. This goes well beyond normal regulatory and policymaking involvement, as it means that rules - and opportunities and risks - are driven by much larger "big picture" strategic global trends, including the war in Ukraine.

As well as predicting strategic shifts, there are also lessons to be learned from events at a local, tactical level which have wider ramifications. Often, there will be trade-offs against normal telecoms preoccupations with revenue growth, theoretical "efficiency" of spectrum or network use, standardisation, competition and consumer welfare.

This is the first of what will probably be a regular set of articles on this broader theme. Here, I'm focusing on the Ukraine war, in the context some of the other geopolitical factors that I think are important. I'm specifically thinking about what they may mean for the types of network technology that are used, deployed and developed in future. This has implications for #5G, #6G, #satellite networks, #WiFi, #FTTX and much more, including the cloud/edge domains that support much of it. 

 

Ukraine and other geopolitical issues

This article especially drills into how the conflict in Ukraine has manifested in terms of telecoms and connectivity, and attempts to extrapolate to some early recommendations for policymakers more broadly.

I'm acutely consicous of the ongoing devastation and hideous war crimes being perpetrated there - I hope this isn't too early to try to analyse the narrow field of networking dispassionately, while conflict still rages.

For context, as well as Ukraine, other geopolitical issues impacting telecoms include:

• US / West vs. China tensions, from trade wars to broader restrictions on the use of Huawei and other vendors' equipment, as well as sanctions on the export of components.
• Impact of the pandemic on supply chains, plus the greater strategic and political importance of resilient telecom networks and devices in the past two years.
• The politics of post-pandemic recovery, industrial strategy and stimulus funds. Does this go to broadband deployment, themes such as Open RAN, national networks, smart cities/infrastructure, satellite networks... or somewhere else?
• Tensions within the US, and between US and Europe over the role and dominance of "Big Tech". Personal data, monopoly behaviour, censorship or regional sovereignty etc. This mostly doesn't touch networks today, but maybe cloud-native will draw attention.
• Semiconductor supply-chain challenges and the geopolitical fragility of Taiwan's chip-fabrication sector.
• How telecoms (and cloud) fits within Net Zero strategies, either as a consumer of energy, or as an enabler of green solutions.
• Cyber threats from nation-state actors, criminal cartels and terrorist-linked groups - especially aimed at critical infrastructure and health/government/finance systems.

In other words, there's a lot going on. It will impact 5G, 6G development, vendor landscapes, cloud - and also other areas such as spectrum policy and Internet governance.

Network diversity as a focus

I've written and spoken before about the importance of "network diversity" and the dangers of technology monocultures, including over-reliance on particular standards (eg 5G) or particular business models (eg national MNOs) as some sort of universal platform. It is now clear that it is more important than ever.

The analogy I made with agriculture, or ecological biodiversity, is proving to be robust.

(Previous work includes this article from 2020 about private enterprise networks, or my 2017 presentation keynote on future disruptions, at Ofcom's spectrum conference. (The blue/yellow image of wheat fields, repeated here in this post, was chosen long before it became so resonant as the Ukrainian flag). I've also covered the shift towards Open RAN and telecoms supplier diversification – including a long report I submitted to the UK Government's Diversification Task Force last year - see this post and download the report).

A key takeout from my Open RAN report was that demand diversity is as important as creating more supply choices in a given product domain. Having many classes of network operator and owner – for instance national MNOs, enterprise private 4G/5G, towercos, industrial MNOs and neutral hosts – tends to pull through multiple options for supply in terms of both vendor diversity and technology diversity. They have different requirements, different investment criteria and different operational models.

In Ukraine, the "demands" for connectivity are arising from an even more broad set of sources, including improvised communications for refugees, drones and military personnel.

The war in Ukraine & telecoms

There have been numerous articles published which highlight the surprising resilience and importance of Ukrainian telecoms during the war so far. Bringing together and synthesising multiple sources, this has highlighted a number of important issues around network connectivity:

• The original “survivability” concept of IP networks seems to have been demonstrated convincingly. Whether used for ISPs’ Internet access, or internal backhaul and transport for public fixed and mobile networks, the ability for diverse and resilient routing paths seems to have mostly been successful.
• Public national mobile networks - mostly 4G in Ukraine's case - have proven essential in many ways, whether that has been for reporting information about enemy combatants' locations and activities, obtaining advice from government authorities, or dealing with the evacuation as refugees. (I'm not sure if subway stations used as shelters have underground cellular coverage, or if there is WiFi). Authorities also seem to have had success in getting citizens to self-censor, to avoid disclosing sensitive details to their enemies.
• Reportedly the Russian forces haven't generally targeted telecoms infrastructure on a widescale basis. This was partly because they have been using commerical mobile networks themselves. However, because roaming was disabled, Russian military use of their encrypted handsets and SIMs on public 3G/4G networks seems to have failed. Two articles here and here give good insight, and also suggests there may be network surveillance backdoors which Russia may have exploited. There have also been reports of stingrays ("fake" base stations used for interception of calls / identity) being deployed. It also appears that some towns and cities - notably the destroyed city of Mariupol - have been mostly knocked offline, partly because the electrical grid was attacked first.
• Ukraine’s competitive telecoms market has probably helped its resilience. There is a highly fragmented fixed ISP landscape, with very inexpensive connections. There are over a dozen public peering-points across the country. There are three main MNOs, with many users having SIMs from 2+ operators. (This is a good overview article - https://ukraineworld.org/articles/ukraine-explained/key-facts-about-ukraines-telecom-industry). It seems they have enabled some form of national roaming to allow subscribers to attach to each others' networks.
• WiFi hotspots (likely with mobile backhaul) have been used by NGOs evacuating refugees by buses.
• Although it is still only being used at a small scale, the LEO satellite terminals from SpaceX’s StarLink seem to be an important contributor to connectivity – not least as a backup option. Realistically, satellite isn’t appropriate for millions of individual homes – and especially not personal vehicles and smartphones – but is an important part of the overall network-diversity landscape. Various commentators have suggested it is useful as a backup for critical infrastructure connectivity, as well as for mobile units such as special forces.
• Another satellite broadband provider, Viasat, apparently suffered a cyberattack at the start of the war (link here), which knocked various modem users offline (or even "bricked" the devies), reportedly including Ukrainian government organisations. Investigations haven't officially named Russia, but a coincidence seems improbable. This attack also impacted users outside Ukraine.
• Various peer-to-peer apps using Bluetooth or WiFi allow direct connections between phones, even if wide area connections are down (see link)
• There have been some concerning reports about the impact of GPS jammers on the operation of cellular networks, which may use it as a source of “timing synchronisation” to operate properly, especially for TDD radio bands. While this has long been a risk for individual cell-sites from low-power transmitters, the use of deliberate electronic warfare tools could potentially point to broader vulnerabilities in future.
• There has been wide use of commercial drones like the DJI Mavic-3 for surveillance (video and thermal imaging), or modified to deliver improvised weaponry. These use WiFi to connect to controllers on the ground, as well as a proprietary video transmission protocols (called O3+) which apparently has range of up to 15km using unlicensed spectrum. Some of the "Aerorozvidka" units reportedly then use StarLink terminals to connect back to command sites to coordinate artillery attacks (link).

In short, it seems that Ukraine has been well served by having lots of connectivity options - probably including some additional military systems that aren't widely discussed. It has benefited from multiple fixed, cellular and satellite networks, with potential for interconnect, plus inventive "quick fixes" after failures and collaboration between providers. It is exploiting licensed and unlicensed spectrum, with cellular, Wi-Fi and other technologies.

In other words, network diversity is working properly. There appears to be no single point of failure, despite deliberate attacks by invading forces and hackers. Connectivity is far from perfect, but it has held up remarkably well. Perhaps the full range of electronic warfare options hasn't been used - but given the geographical size of Ukraine and the inability of Russia forces to maintain supply-lines to distant units, that is also unsurprising.

Another set of issues that I haven't really examined are around connectivity within sanctions-hit Russia. Maybe it will have to develop more local network equipment manufacturers - if they can get the necessary silicon and other components. It probably will not wish to over-rely on Huawei & ZTE any more than some Western countries have been happy with Nokia and Ericsson as primary options. More problematic may be fixed-Internet routers, servers, WiFi APs and other Western-dominated products. I can't say I'm sympathetic, and I certainly don't want to offer suggestions. Let's see what happens.

Recommendations for policymakers, industry bodies and regulators

So what are the implications of all this? Hopefully, few other countries face a similar invasion by a large and hostile army. But preparedness is wise, especially for countries with unfriendly neighbours and territorial disputes. And even for everywhere else, the risks of cyberattacks, terrorism, natural disasters - or even just software bugs or human error - are still significant.

I should stress that I'm not a cybersecurity or critical infrastructure specialist. But I can read across from other trends I'm seeing in telecoms, and in particular I'm doing a lot of work on "path dependency" where small, innocent-seeming actions end up having long-term strategic impacts and can lock-in technology trajectories.

My initial set of considerations and recommendations:

• As a general principle, divergence in technology should be considered at least as positively than convergence. It maintains optionality, fosters innovation and reduces single-point-of-failure risks.
• National networks and telcos (fixed and mobile) are essential - but cannot do everything. They also need to cooperate during emergencies - a spirit of collaboration which seems to have worked well during the pandemic in many countries.
• Normal ideas about cyber-resilience and security may not extend to the impact of full-scale military electronic warfare units, as well as more "typical" online hacking and malware attacks.
• Having separate "air-gapped" networks available makes sense not just for critical communications (military, utilities etc) but for more general use. It isn't inefficient - it's insurance. There may be implications here for network-sharing in some instances.
• Thought needs to be given to emergency fallbacks and improvised work-arounds, for instance in the event of mass power outages or sabotage. This is particularly important for software/cloud-based networks, which may be less "fixable" in the field. Can a 5G network be "bodged"? (that's "MacGyvred" to my US friends)? As a sidenote - how have electric vehicles fared in Ukraine?
• Unlicensed spectrum and "permissionless communications" is hugely important during emergency situations. Yes, it doesn't have control or lawful intercept. But that's entirely acceptable in extreme circumstances.
• Linkages between technologies, access networks and control/identity planes should generally be via gateways that can be closed, controlled or removed if necessary. If one is attacked, the rest should be firewalled off from it. For the same reason "seamless" should be a red-flag word for cross-tech / cross-network roaming. Seams are important. They offer control and the ability to partition if necessary. "Frictionless" is OK, as long as friction can be re-imposed if needed.
• Governments should be extremely cautious of telcos extending 3GPP control mechanisms – especially the core network and slicing – to fixed broadband infrastructure. Fixed broadband is absolutely critical, and complex software dependencies may trade off fine-grained control vs. resilience - and offer additional threat surfaces.
• Democratising and improving satellite communications looks like an ever more wise move, for all sorts of reasons. It's not a panacea, but it's certainly "air-gapped" as above. 3GPP-based "non-terrestrial" networks, eg based on drones or balloons, also has potential - but will ideally be able to work independently of terrestrial networks if needed.
• I haven't heard much about LPWAN and LoRa-type networks, but I can imagine that being useful in emergency situations too.
• Sanctions, trade wars and supply-chain issues are highly unpredictable in terms of intended and unintended consequences. Technology diversity helps mitigate this, alongside supplier diversity in any one network domain.
• Spectrum policy should enable enough scale economies to ensure good supply of products (and viability of providers), but not *so* much scale that any one option drives out alternatives.
• The role and impact of international bodies like ITU, GSMA and 3GPP needs careful scrutiny. We are likely to see them become even more political in future. If necessary, there may have to be separate "non-authoritarian" and "authoritarian" versions of some standards (and spectrum policies). De-coupling and de-layering technologies' interdependency - especially radio and core networks - could isolate "disagreements" in certain layers, without undermining the whole international collaboration.
• There should be a rudimentary basic minimum level of connectivity that uses "old" products and standards. Maybe we need to keep a small slice of 900MHz spectrum alive for generator-powered GSM cells and a box of cheap phones in bunkers - essentially a future variant of Ham Radio.

So to wrap up, I'm ever more convinced that Network Diversity is essential. Not only does it foster innovation, and limit oligopoly risk, but it also enables more options in tragic circumstances. We should also consider the potential risks of too much sophistication and pursuit of effiency and performance at all costs. What happens when things break (or get deliberately broken)?

In the meantime, I'm hoping for a quick resolution to this awful war. Slava Ukraini!

Sidenote: I am currently researching the areas of “technology lock-in” and “path dependence”. In particular, I have been investigating the various mechanisms by which lock-in occurs and strategies for spotting its incipience, or breaking out of it. Please get in touch with me, if this is an area of interest for you.

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?

TelcoFuturism - the impact of Quantum Technology

The other day, I was invited to the Cambridge Wireless conference on quantum computing and communications (link). Fascinating and brain-melting domain, that has profound implications for many other areas of technology (and telecom). Even though I have a physics degree, I can't claim to be able to keep up with all the maths and concepts that are discussed - but I took away a few real-world implications of what seems to be occurring.

Quantum technology is a pretty broad area, that relates to the weird properties exhibited by individual atoms or photons (light). If you've heard of Schrodinger's Cat, then you'll know how strange some of the concepts can be - especially a "qubit" (quantum bit) that can simultaneously be a 1 or 0, or "entanglement" where pairs of particles remain spookily connected at a distance.

These properties can be used to create computers, communications systems, sensors, clocks and various other applications. In a way, quantum tech is a "foundational" idea similar to semiconductors (which are themselves based on quantum mechanical principles): there will be many, many applications. 

Terminology alert: often people in this sector compare quantum computers versus "classical" alternatives. 

Some quick highlights and comments:

• It's early days. Although there are some existing quantum solutions, they are not "universal" computers, but tailored for particular use-cases. Cooler stuff is 5-10 years away depending on your level of optimism (and stealth)

• There were a lot of telecom people in the room - although that's partly a function of Cambridge Wireless's community (link). 
• Many of the opportunities (& threats) from quantum are "several layers up". For example, we should be able to make more accurate clocks, which means better timestamping, which means more accurate transactions or positioning, which means better ways to create networks... It's pretty hard to extrapolate through all the layers to work out what the "real world" impacts might be, as there are variables & uncertainties & practicalities at each stage. Same thing for quantum improving AI systems.
• There will be a lot of hybrid quantum/classical systems - including being integrated on the same chip.
• Some crypto & PKI systems are going to be compromised by quantum-enabled decryption. It makes mincemeat of some algorithms, but others are much more "quantum-proof". There might be a "Y2Q" problem digging out where the old and vulnerable ones might be, buried inside other systems and software. This might be a "big deal", but there was also debate among experts about whether some of the risks claimed might actually be scaremongering or limited in scope. I think there will be a big ramp-up in "quantum compliance consulting" though - if enough people can understand it.
• Quantum tech also enables totally-secure* networks to be built, using quantum key distribution (QKD). There's a bunch of tests and prototypes working around the world. At the moment these are mostly fibre-based, although some are using free-space optics. (*I'm not a cryptanalyst. Or a quantum wizard. My understanding is that secure here means non-interceptible or perfect interception-detection, but as always with security there are other weak links in the chain when humans are involved).
• We're not getting some sort of magical massmarket "quantum broadband" any time soon, fibre or (definitely) mobile. There might be quantum-related components in networks for timing or security, but the actual physics of shipping-around of bits through air and fibre isn't likely to change.
• One caveat - if I understand correctly (and it's possible I don't) some quantum applications might make it more appropriate either to use dedicated individual fibres, or to use frequency multiplexing (separate colours essentially) rather than networks with other forms of multiplexing. One of my "to do's" is to get my head around what quantum-level transport really means for the way we build IP networks - and whether it's only ultra-secure point-to-point connections that are impacted, rather than general "routed" ones. At the moment it seems the main use is parallel QKD streams to secure the main "media" stream. I've found some stuff on early concepts of quantum routing (link) and quantum-aware SDN (link) but if anyone has a view on the commercial impact of this, I'm all ears. 

• A lot of the current work on quantum computing seems oriented towards creating better ways to do machine learning - essentially the ability to absorb many, many different things "in parallel" rather than sequentially. Beyond AI/ML, many important tasks involve optimisation or pattern-recognition - quantum solutions should help. This has applications across the board, from finance to healthcare to telecoms, although there weren't many suggested use-cases in BSS/OSS or network design at the event. I suspect there could be a variety of interesting options & will think more about this over coming months. (Let me know if you'd like to discuss it)

• There's lots of complexity in getting quantum engineering to work for computing - components often need to be cryogenically cooled, there's all manner of software design and error-correction and control issues, maybe some engineering of microwave systems to link bits together and so on. This is Big Science. It's not going to be in the iPhone 9. (Although some of the sensing and clock stuff seems to be "smaller")

• There's some cool stuff being done around quanutum-based accelerometers, gravity sensors etc. One of the biggest drivers is the desire to create a GPS-type positioning system that doesn't rely on signals from satellites - which can be jammed, blocked or even destroyed. Currently GPS is turning into a bit of a "single point of failure" for the entire planet - especially including cellular networks and devices and financial transactions which need times-stamps.

• Someone else has beaten me to the term QCaaS (link) so I'll have to settle with QDN "Quantum Defined Networking". You heard it here first....
• There are various implied links with IoT (sensors) and blockchain (crypto). I'll keep an eye on those for future work.

Overall, a fascinating topic - and one which the UK government, academia and industry is pumping a ton of cash into. It's perhaps not as sexy as some other futurist obsessions like AI, genetic engineering or blockchain - but it's potentially just as transformative, not least by helping accelerate the progress of all of the others.

For the telecoms industry, there's relatively little to be worried about yet - although getting older network and IT systems' crypto checked over seems important given the timelines to replace legacy equipment. Given the rising desire to exploit PKI and identity in telecoms and IoT as a long-term business, the 10-year horizon for "sci-fi" possibilities is a bit uncomfortable, especially if new breakthroughs are made. And that's before second-guessing how much extra progress has been made by intelligence communities, and how fast Messrs Snowden and Assange get to hear about it. 

We might see quantum tech appearing first in clocks used in networks, or specific optimisation problems solved with early computers from the likes of D-Wave. In my mind there's a few options around NFV/SDN and network-planning that might be a fit, for instance. There's also some cool possible opportunity around super-secure communications and non-GPS navigation. But good news if you're a serious telco quantum doom-monger, don't worry about the prospect of Netflix quantum-entangling videos direct to peoples' TVs and smartphones just yet.

If you're interested in learning more about Disruptive Analysis' work on "TelcoFuturism" please get in touch at information AT disruptive-analysis dot com. My introduction to the concept is here (link) and I've also written about AI/machine learning (link) and Blockchain (link). I gave my first keynote presentation on TelcoFuturism a few months ago (link) and will be progressively ramping this up - get in touch if you need a speaker.

TelcoFuturism: Initial thoughts on Blockchain

An area I'm currently researching, as part of my ongoing analysis of telecoms/futurism intersections is Blockchain. (See here for an intro to what I mean by telcofuturism)

For the uninitiated, Blockchain (abbreviated here to BC) is the technology underpinning Bitcoin and other cryptocurrencies. It's a way to create distributed, secure, unchangeable, peer-to-peer databases for "trust" and transactions/applications which require it. It removes the need for central coordination and storage to prove that you own/bought/sold/transferred things, and stops the "double-spend" problem of digital copying of things like e-money. This is potentially great for finance, where a lot of cumbersome back-office processes could be made hugely more efficient.

When more extensive definitions of "trust" are considered (eg authentication of documents or relationships), it potentially has the ability to dis-intermediate all sorts of other existing businesses and even government functions, beyond just banking and digital money. There are tons of books, conferences and think-pieces about BC, from everyone from FinTech disruptors to governments to major IT and auditing companies. It's definitely a "thing" at the moment.

However, it is debatable whether some of the more far-fetched concepts presented are truly visionary - or sci-fi hype peddled by people who are less-than-objective wishful thinkers. It could become as important and ubiquitous as electricity, semiconductors or the Internet - or else it could just be an interesting platform for diverse applications, but not really a global "game-changer". 

An historian from the year 2100 might point to Blockchain as the most pivotal enabler of the restructuring of global business and society - or else it might be a minor footnote to the much-larger impact of other innovations around AI, CRISPR gene-editing and nanotechnology.

I'm trying to look at Blockchain through the lens of telecoms, networks, communications and cloud platforms. I can't really comment on the full impact on banking or manufacturing or property markets.... but I think I have an idea of the practicalities for telcos to deploy blockchains, and also the realities of networks as they might apply to other use-cases.

I haven't yet reached firm conclusions about the most important use-cases for blockchains in telcos & other communications infrastructure, or the probable timelines, but I'm starting to develop some initial hypotheses. There's some good arguments about BC's use in billing systems, IoT/network registration and control, vertical-market services in finance and healthcare, and perhaps integral network/OSS functions. I can also see it dovetailing with eSIM, cloud/PaaS platforms and numerous other niches in telcos, enterprise comms/UC domains and beyond.

I'm cautiously positive about the technology, rather being than a full-on religious convert and evangelist, as some Blockchain advocates seem to be. I don't buy into the notion that it's going to magically remove all intermediaries from all areas of human interaction, and lead to some anti-capitalist utopia/dystopia (delete according to taste) where middlemen no longer have roles to play.

I see a few major problem areas and "gotchas" emerging, that lie between the vision and possible reality, especially in the medium term:

• Often, blockchain is suggested as the "missing piece of the puzzle", after which a new low-friction process, or entire new industry can be born. Yet in many cases, it isn't transaction cost, or cumbersome trust arrangements that are the "gating factor" stopping deployment adoption today. There are other practicalities involved too - perhaps regulation, business model, customer preferences and loyalties, or 100 other factors. For instance, the idea that everything to do with IoT just needs a sprinkling of Blockchain pixie-dust, for trillions of dollars of value to be released, on interoperable open-source style platforms, is pure hyperbole. It might be desirable - even necessary - but it's certainly not sufficient for many things to take off.
• A fair amount of envisaged blockchain use-cases require perfect, ubiquitous connectivity. That might be OK for banks and fintech companies using multiple data-centres and redundant fibre links, but it doesn't work well for mobile/wireless which is not going to be ubiquitous any time soon (if ever). Unless the applications have some way of dealing with "offline mode", or patchy/intermittent connections, that's a major obstacle.
• Some blockchain architectures have significant time-lags involved, due to processing for verification and permanent storage/encryption ("mining" etc.) That's fine for things which operate on a scale of minutes/hours/days - say transfers of property deeds - but not ideal for network operations that involve subs-second decisions. As we move towards 5G and "millisecond latency" critical applications, this becomes even more imperative.
• Blockchain applications will need to "play nicely" with all sorts of other technology trends, such as distributed clouds, telecoms NFV/SDN architectures, third-party PaaS, integration with legacy systems, security gateways, policy-managed networks (can they spot, block or prioritise BC data flows?), AI and machine learning creating unpredictable or novel transactions/interactions and plenty more.
• Many suggested blockchain use-cases ignore what might be termed "immovable obstacles". It's all very well having a BC-based wireless mesh network, but if it's ignored by the companies owning big chunks of licenced spectrum, and creating non-BC back-office functions, it's a bit of a waste of time. The same thing applies to regulations, taxation and assorted other slow-moving areas of bureaucracy. It's all very well suggesting that your house can act as an autonomous business, renting out the WiFi to passers-by all by itself when you're out, and using the payments to pay the utility bill - but that my well cause consternation among people who tax and regulate such things. Other ideas - such as micropayments for IoT sensors selling weather data by themselves - sound great until people realise that the billing systems only support 2 decimal places, or ask the user to click "OK" or answer a captcha. There are many, many devils in the detail.
• A lot of the rhetoric seems to suggest that everyone wants a completely peer-to-peer, decentralised, no-intermediary, no-brand economy. However the evidence seems to suggest that humans actually quite like intermediaries for many things and are prepared to pay for them - Apple running an appstore, curators for a museum, editors and brand for a news service and so on. Add in the clear need for designers as the new uber-class of intermediaries, and the over-riding importance of UX in any situation, and the "fully automated world" seems even less plausible.

None of this means that blockchain based services are a bad idea, or irrelevant to telcos and network/software vendors. There are, undoubtedly, many important and possibly huge opportunities in blockchain-based telcofuturism.

But at the same time there is a lot of hype. Outside of financial services, we're still mostly at the napkin-diagram/Powerpoint/very-early prototype stage of telecom/BC use-cases. I'm hoping to get some more clarity over the next few weeks - and will try to assemble a realistic timeline that blends vision and pragmatism for comms and network applications.

Please get in touch with me if you'd like to discuss Telecoms + Blockchain combinations. I can be reached via information AT disruptive-analysis DOT com, or via Twitter or LinkedIn.

NEW: eSIM Status and Forecast report published

Beyond M2M: eSIM Status & Forecasts

Overcoming practical & economic issues for mid-term consumer-market eSIM adoption

Disruptive Analysis has published a 36-page report on the emerging technology of eSIM and SIM remote-provisioning. The focus is on the use-cases, practicalities, drivers and obstacles for bringing eSIM-based devices to market, alongside suitable mobile data plans or subscriptions.

The report addresses both the motivations (lower costs, higher revenues, better experience) and problems (business-case, user journey, regulation, transition) that will be experienced by operators (MNOs) and device vendors (OEMs).

Forecasts are given for annual shipments of eSIM-enabled devices (phones, wearables, M2M, tablets), and for the installed base that will be a target for after-market eSIM provisioning.

Key findings:

• There are numerous use-cases for “remote provisioning” of SIMs with mobile operator “profiles”, especially where the SIM hardware is built-into devices
• eSIM adoption will have a slow start. 2016-17 consumer deployment will mostly be early concepts, allowing MNOs and OEMs to gain practical eSIM experience and refine implementation and processes. eSIM phones will emerge very gradually.
• Adoption should ramp up in 2019-2021 as cost, industry value-chain and user-experience problems are progressively solved.
• Apple and Samsung are unlikely to use eSIM to become MVNOs / carriers. Neither will they aggressively push eSIM into their flagship products.
• For many M2M/IoT devices, the eSIM decision is secondary to justifying the extra cost, space and power needs of the cellular radio itself. 
• eSIM is "necessary but not sufficient" to drive adoption of cellular M2M. It is unlikely to change the competitive dynamics vs. LPWAN technologies like SigFox or LoRa.
• There remain unanswered questions about regulation, customer-support and business model for eSIM. Although some projected cost-savings are attractive for operators, it is unclear that it will help OEMs generate extra revenues/loyalty. 
• There will other approaches to remote provisioning beyond GSMA's vision of eSIM. Some OEMs may adopt proprietary versions, while standards-body ETSI is intending to develop specifications which go beyond just mobile use of chip-cards 
• By 2021, 630m mobile & IoT devices will ship with embedded SIMs annually, driven mostly by smartphones, although vehicles and tablets show growth earlier.
• By end-2021, the installed base of eSIM-enabled devices will exceed 1 billion 
• While significant, this only represents around 10% of total cellular connections

In a nutshell: eSIM is an important evolution for some use-cases, but it is neither an outright "game-changer" nor a major risk to traditional cellular business models.


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Report Contents

Executive Summary

Introduction & Outline

   The Potential

   What is eSIM / eUICC?

   New uses for eSIM & other programmable-SIM technologies

   A device-centric view of SIM provisioning             

   A growing variety of “SIM evolution” options

The Practicalities             

   Economics and demand

   SIM/eSIM irrelevant if radio module costs too high          

   Operational issues          

   User experience              

   Retail and channel management              

   Maintenance and lifecycle-management               

   Security               

   Transition issues: the need for hybrid SIM + eSIM devices             

   Regulatory considerations           

   Ecological considerations: fit with other telecoms trends

The Phones        

   Low-end vs. high-end phones

   Apple-specific considerations

   Conclusions and Forecasts          

   Forecasts            

About Disruptive Analysis            

Figure 1: Understanding the definition & semantics of “eSIM”     

Figure 2: Advantages of “programmability” vs. “embeddability” varies by device 

Figure 3: SIM evolution – multiple variants are emerging, not just GSMA eSIM     

Figure 4: SIM evolution – costs and key stakeholders       

Figure 5: Few handsets’ gross margins can sustain extra BoM cost from eSIM       

Table 6: Forecast eSIM shipments, by device category, 2016-2021             

Figure 7: eSIM shipments, by device category, 2016-2021             

Figure 8: eSIM device shipments, hybrid SIM/eSIM vs. eSIM-only

Table 9: eSIM active installed base, by device category, 2016-2021           

Figure 10: eSIM installed base, by device category, 2016-2021     

Figure 11: Overall SIM & eSIM active installed base, end-2021     

 
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eSIM Report, 1-3 users

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