6G won't wait. Will traditional MNOs still be the main customers when it arrives?

This post originally appeared in September 2023 on my LinkedIn feed, which is now my main platform for both short posts and longer-form articles. It can be found here, along with the comment stream. Please follow / connect to me on LinkedIn, to receive regular updates (about 1-3 / week)

 One line I heard yesterday at #ConnectedBritain that really struck me came from BT Group Network/Security head Howard Watson during his keynote.

He was hoping #6G arrived later rather than earlier, "For the Brisbane Olympics, not LA", ie 2032.

This is not the first time I've heard an MNO exec expressing a desire to let #5G run longer, before 6G prompts more Capex and infrastructure changes. They want to get payback on existing investments before thinking about the next round.

This is unsurprising. The industry itself now recognises that it overhyped 5G before launch, and completely forgot to mention that it would arrive in phases, with all the "cool stuff" really only arriving in later versions, with the features in 3GPP Releases 16, 17 & 18.

Instead, we started with 4G++ (ie non-standalone 5G, with sometimes higher speeds but not much else) and then the first versions of "proper 5G" with the Release 15 standalone cloud-native core.

5G SA gives somewhat lower latency, and some rudimentary QoS and other features, but it's far from the ubiquitous millisecond / gigabit / slicing nirvana that everyone promised in 2018.

I was skeptical from the beginning - and I'm still a "slice denier". (I think #networkslicing remains a critical strategic error and distraction for the industry). But my view is that the really useful stuff in 5G, such as time-synchronous networking, RedCap and vertical-specific elements such as FRMCS for railways, are still a long way from mainstream.

So I can understand that MNOs look at the proposed 6G timeline of 2030, and think "we're still making heavy work of moving to cloud-native 5G standardalone. How are we going to do successive iterations of R15 SA, R16, R17, R18, R19... and make money, all within 6 years?"

[Note: technically 6G should start with Release 21, but based on past experience we'll see R20, or maybe even R19, marketed as 6G by some MNOs]

There is a possible uncomfortable answer that's starting to get discussed quietly. What if 6G isn't primarily about MNOs, at least at first?

6G will happen in 2030, one way or another. The world's universities and R&D labs aren't going to down tools for two years, while MNOs are still trying to "monetise" 5G. There will be a bunch of technologies and standards that get called IMT2030 / 6G.

There might even be multiple standards, either because of geopolitics leading to regional versions, or because my niggling of IEEE and Wi-Fi Alliance eventually prompts them to submit a candidate 6G technology (#WiFi 9 or 10, I guess).

So the question then becomes - will traditional MNOs be the main buyers of 6G in the 2028-2030 timeframe? Or will it be enterprises, new-entrant and niche MNOs, infracos, neutral-hosts, satcos, governments and others building greenfield wireless networks?

Is the failure of 5G to live up to inflated expectations actually going to be the pivot point for the (slow) demise of the legacy MNO model? Are we watching #pathdependency effects in play?

 

CAPEX in telecoms - beware of headline numbers

This post originally appeared on June 12 on my LinkedIn feed, which is now my main platform for both short posts and longer-form articles. It can be found here, along with the comment stream. Please follow / connect to me on LinkedIn, to receive regular updates (about 1-3 / week)

CAPEX numbers are important in #telecoms. But they're also often collected and analysed in a haphazard fashion, or sometimes twisted and misinterpreted. There are examples that wrongly imply casual links or are carefully selected to drive specific policy choices.

- Telco execs watch CAPEX stats as they're important elements of cashflow & also signify key strategies and technology transitions
- Vendors watch #CAPEX stats to understand demand for new products
- Investors watch CAPEX as inputs to their valuation models, and as a barometer for company/industry health and prospects
- Policymakers watch CAPEX as it gets captured in "investment" statistics, and as an indicator for potential regulatory changes (or as a metric of success of previous policies)

Various ratios are commonplace, for both companies and the industry:
- CAPEX vs. revenues
- CAPEX vs. EBITDA
- CAPEX of telecoms vs. tech/hyperscalers
- CAPEX vs. R&D spending
- Fixed vs. Mobile CAPEX
... and so on

The problem is that "telco CAPEX" is also a very vague and malleable concept. Digging into it reveals many more questions - and problems with the methodologies and conclusions drawn, especially where headline numbers are concerned.

Some of the questions I'm currently looking at include:

- What counts as a "telco"? Are you including towercos, subsea fibre operators, municipalities building networks, MVNOs and many others?
- Are historic CAPEX numbers restated when telcos sell or acquire other businesses, especially tower spin-outs?
- Is it meaningful to compare CAPEX for 10 / 30 / 50 year assets such as #FTTP, which will generate decades of new revenue, with last year's figures?
- How do you separate CAPEX for basic coverage vs. incremental capacity vs. "generational" upgrades to fibre or #5G? A lot of CAPEX occurs even if usage is low
- How do you deal with leasing or other financing models? If CAPEX shifts to OPEX, how is it captured in the stats?
- What happens with "cloudified" networks? Firstly they rely on shared (often 3rd-party) assets, and secondly they are *supposed* to lower costs / investments. But will the lower CAPEX be viewed as a sign of distress, not modernisation?
- Is non-network CAPEX broken out (eg retail sites, central offices, datacentres etc)?
- Is "adjacent capex" included and if so, how?, eg in-building #wireless, #spectrum licenses, software development

I hear many commentators and lobbyists claim "#NetNeutrality led to lower CAPEX!" or "Streaming traffic leads to higher CAPEX!" or "There's an investment gap!". Without detailed data - and an analysis of causality - you have to question the veracity & meaningfulness of such rhetoric.

In summary - CAPEX is indeed important. But in fact it's so important, that headline numbers are often useless or misleading.

Ask for details on segmentation, methodology and definitions - if they aren't available, treat the numbers with deep skepticism.

#FTTX #telcos #regulations #networks #fairshare

Local networks: when telecoms becomes "pericoms"​

Published via my LinkedIn Newsletter - see here to subscribe / see comment thread

"Telecoms" or "telecommunications" is based on the Greek prefix "tele-".

It means "at a distance, or far-off". It is familiar from its use in other terms such as telegraph, television or teleport. And for telecoms, that makes sense - we generally make phone calls to people across medium or long distances, or send then messages. Even our broadband connections generally tend to link to distant datacentres. The WWW is, by definition, worldwide.

The word "communications" actually comes from a Latin root, meaning to impart or share. Which at the time, would obviously have been done mostly through talking to other people directly, but could also have involved writing or other distance-independent methods.

This means that distant #communications, #telecoms, has some interesting properties:

• The 2+ distant ends are often (but not always) on different #networks. Interconnection is therefore often essential.
• Connecting distant points tends to mean there's a good chunk of infrastructure in between them, owned by someone other than the users. They have to pay for it, somehow.
• Because the communications path is distant, it usually makes sense for the control points (switches and so on) to be distant as well. And because there's typically payment involved, the billing and other business functions also need to be sited "somewhere", probably in a #datacentre, which is also distant.
• There are a whole host of opportunities and risks with distant communications, that mean that governments take a keen interest. There are often licenses, regulations and internal public-sector uses - notably emergency services.
• The infrastructure usually crosses the "public domain" - streets, airwaves, rooftops, dedicated tower sites and so on. That brings additional stakeholders and rule-makers into the system.
• Involving third parties tends to suggest some sort of "service" model of delivery, or perhaps government subsidy / provision.
• Competition authorities need to take into account huge investments and limited capacity/scope for multiple networks. That also tends to reduce the number of suppliers to the market.

That is telecommunications - distant communications.

But now consider the opposite - nearby communications.

Examples could include a private 5G network in a factory, a LAN in an office, a WiFi connection in the home, a USB cable, or a Bluetooth headset with a phone. There are plenty of other examples, especially for IoT.

These nearby examples have very different characteristics to telecoms:

• Endpoints are likely to be on the same network, without interconnection
• There's usually nobody else's infrastructure involved, except perhaps a building owner's ducts and cabinets.
• Any control points will generally be close - or perhaps not needed at all, as the devices work peer-to-peer.
• There's relatively little involvement of the "public domain", unless there are risks like radio interference beyond the network boundaries.
• It's not practical for governments to intervene too much in local communications - especially when it occurs on private property, or inside a building or machine.
• There might be a service provider, but equally the whole system could be owned outright by the user, or embedded into another larger system like a robot or vehicle.
• Competition is less of an issue, as is supplier diversity. You can buy 10 USB cables from different suppliers if you want.
• Low-power, shared or unlicensed spectrum is typical for local #wireless networks.

I've been trying to work out a good word for this. Although "#telecommunications" is itself an awkward Greek / Latin hybrid I think the best prefix might be Greek again - "peri" which means "around", "close" or "surrounding" - think of perimeter, peripheral, or the perigee of an orbit.

So I'm coining the term pericommunications, to mean nearby or local connectivity. (If you want to stick to all-Latin, then proxicommunications would work quite well too).

Just because a company is involved in telecoms does not mean it necessarily can expect a role in pericoms as well. (Or indeed, vice versa). It certainly can participate in that market, but there may be fewer synergies than you might imagine.

Some telcos are also established and successful pericos as well. Many home broadband providers have done an excellent job with providing whole-home #WiFi systems with mesh technology, for example. In-building mobile coverage systems in large venues are often led by one telco, with others onboarding as secondary operators.

But other nearby domains are trickier for telcos to address. You don't expect to get your earbuds as an accessory from your mobile operator - or indeed, pay extra for them. Attempts to add-on wearables as an extra SIM on a smartphone account have had limited success.

And the idea of running on-premise enterprise private networks as a "slice" of the main 4G/5G macro RAN has clearly failed to gain traction, for a variety of reasons. The more successful operators are addressing private wireless in much the same way as other integrators and specialist SPs, although they can lean on their internal spectrum team, test engineers and other groups to help.

Some are now "going the extra mile" (sorry for the pun) for pericoms. Vodafone has just announced its prototype 5G mini base-station, the size of a Wi-Fi access point based on a Raspberry Pi and a Lime Microsystems radio chip. It can support a small #5G standalone core and is even #OpenRAN compliant. Other operators have selected new vendors or partners for campus 4G/5G deployments. The 4 UK MNOs have defined a set of shared in-building design guidelines for neutral-host networks.

It can be hard for regulators and policymakers to grasp the differences, however. The same is true for consultants and lobbyists. An awful lot of the suggested upsides of 5G (or other forms of connectivity) have been driven by a tele-mindset rather than a peri-view.

I could make a very strong argument that countries should really have a separate pericoms regulator, or a dedicated unit within the telecoms regulator and ministry. The stakeholders, national interests and economics are completely different.

A similar set of differences can be seen in #edgecomputing: regional datacentres and telco MEC are still "tele". On-premise servers or on-device CPUs and GPUs are peri-computing, with very different requirements and economics. Trying to blur the boundary doesn't work well at present - most people don't even recognise it exists.

Overall, we need to stop assuming that #pericoms is merely a subset of #telecoms. It isn't - it's almost completely different, even if it uses some of the same underlying components and protocols.

(If this viewpoint is novel or interesting and you would like to explore it further and understand what it means for your organisation - or get a presentation or keynote about it at an event - please get in touch with me)

Update: Recent Posts & Themes

(This article was initally posted on my LinkedIn newsletter. If you are not already signed up, please subscribe here)

I have a couple of other deep-dive themes cued up for articles in coming weeks, but I wanted to put out a quick newsletter update covering a few recent themes, posts and events that have been occupying me.

 

The last month has featured a lot of thinking, speaking & client engagements on private 5G, infrastructure-sharing and neutral-host business models, network slicing and capability/API exposure, Wi-Fi 6E & 6GHz, Open RAN and the interaction of cellular & other wireless technologies.

Some recent short-form posts that you may have missed:

• Telecom operators (and their partners & regulators) should be giving as much consideration to *buying* APIs and capabilities as selling them - LINK
• Thoughts on the Ericsson / Vonage acquisition - LINK
• Should we be thinking more about "micro-churn" incidents, where subscribers temporarily switch between operators, using technologies such as eSIM? - LINK
• Want me to speak at, or moderate your 2022 event? Or present at an internal workshop or offsite? - LINK
• RCS messaging is still a purposeless zombie technology, continuing to eat brains after 13 years. Google's involvement hasn't changed much - LINK
• The telecoms industry still hasn't gone beyond telephony, to think more broadly about "voice" services & applications - LINK

I've been to a couple of recent "verticals" events, about networking in ports and for railways. There's a lot of interest in private cellular - but also a huge amount of emphasis on Wi-Fi, including specialised versions with 60GHz or unique forms of QoS intended for industrial or trackside use.

I also presented on a webinar recently on behalf of iBwave, about the scope for Private 4G/5G networks for utilities and energy companies (LINK to view on-demand). Watch out for an upcoming eBook on the same topic. Another webinar on the competiton/convergence between Wi-Fi6 and 5G was for Spirent (LINK) 

 

Scott and Iain at Telecoms.com invited me onto their weekly podcast for a (rather irreverent) chat about the current trends and news from the industry, over a couple of beers. We took aim at 5G, the Metaverse, Open RAN & a lot more. YouTube link embedded above!

In addition, I moderated a panel on Infrastructure Sharing for the 5G Techritory event. I'm not sure if an archived version will be put online, but keep a watch out for it here.

And on a personal note, I also took part in my first improv comedy performance. If you book me to speak at one of your events, I can't promise to wear the same shirt as in the picture, but I will certainly be happy to make things up on the spot spontaneously, or deal with any hecklers ruthlessly!

#5G #WiFi #verticals #PrivateLTE #Private5G #mobile #telecoms #spectrum #voice #messaging #networkslicing #neutralhost #regulation

Telcos: Stop Thinking You're Always the Leading Actor

Hubris: "an extreme and unreasonable feeling of pride and confidence in yourself"

I've followed developments in the telecoms industry for over 25 years. I've seen positives (eg broadband, SMS, LTE) and negatives (UMA, RCS) as well as a shifting landscape of regulation, the rise of the Internet, and multiple generations of network technology and services infrastructure.

Undoubtedly, both fixed and mobile networks have added massively to economies, society and our current way of life. It's understandable that network operators - and their vendors and governments - feel proud of their legacy and want to perpetuate it.

Yet it's possible to take this too far. Even beyond obviously-silly pronouncements such as "5G is as important as electricity", there remains a constant thread among the telecoms industry that it is absolutely central to all future developments, and that the network's finely-engineered QoS mechanisms are the wellspring of technology-derived value, as well as pivotal to future GDP and world happiness.

But while self-belief and aspiration is helpful, arrogance and self-delusion is not.

 

Starring role, or supporting cast?

There is an assumption that the (public, traditional) network is always the leading actor in any movie about Industry 4.0, IoT, smart homes, AI, pandemic recovery & the "new normal", combating climate change, or creating new modes of communications and entertainment like AR/VR.

And yet in reality, the telecom network - especially public 5G - is often going to be a supporting actor. Or perhaps just have a walk-on role, or be relegated to an extra who gets dubbed in a different language.

You can almost imagine a C-list celebrity arriving at a busy party and shouting: "Guys, guys! Listen up! You can get rid of all your old stuff, all your Internet apps, all your legacy Industry 3.0 gear... just use our new [Technology X] instead, and we'll offer it all with a nice monthly per-GB subscription. You can even buy a slice!"

Heads swivel. Eyes roll. People refill their glasses & continue their conversations.

A bit more realism and humility is required. Telecoms isn't always the star of the show, and neither does it write the screenplay for the rest of the infrastructure or solution.

That doesn't mean it lacks value, or has a limited opportunity - but that it has to play nicely alongside others... and accept that the director and producer have other priorities to focus on - and a wide choice of alternatives to cast in the same roles.

Leaving the acting analogy aside, it's also important to understand that the nature of the word "telco" is itself changing. Looking out to 2030, the "telco of the future" isn't like todays - there won't just be 3-4 national MNOs and a handful of converged/fibre/fixed-line operators. There will be a vast diversity of service provider types and private/community networks. I've written before about the "new telcos" and this is a critical aspect for traditional ("legacy"?) operators to understand and even embrace.

This isn't just 5G-related

It's tempting to just see this as a problem with how 5G is being positioned and hyped. But while I discuss that below, it's far from being unique. This attitude has been around for years, and pervades the entire industry. Some examples of this mindset include:

• Telcos consistently assume that "voice" means the same as "telephony", since they only do the latter. Telephony is just one voice application of hundreds - and a 140yr-old clunky and poorly-optimised one at that. This is why telcos don't have a foothold in voice assistants, critical comms, gaming voice, podcasts and so on - and get out-competed by cloud players for UCaaS and cPaaS. (For more: see my upcoming workshop series on the future of Realtime Comms, Voice & Video, starting May 19th)
• 20 years ago, 3G networks were pitched as platforms for telco-created and telco-delivered videoconferencing, games, "value-added services" (ringtones, basically) and much more inside "walled gardens". The killer app was, in fact, plain vanilla Internet access - despite early dataplans trying to restrict the use of VoIP and IM.
• Some 1980s & '90s telcos saw themselves as central to enterprises' telephony systems and pitched "Centrex" services - basically a precursor to today's cloud-based UCaaS. Most businesses decided that running their own PBXs was a better option - it fit with their internal organisation and operations much better.
• Telcos' MEC edge-compute was supposed to take centre-stage against hyperscale cloud providers. Instead, MEC's main use is to host internal NFV or vRAN functions that run the network itself. Or enable some hyperscalers' own edge platforms on a wholesale basis, where they don't have other options. Meanwhile, edge-compute evolves in many other (non-telco) domains much faster, including on-device / gateway, or linked to non-3GPP technologies such as Wi-Fi and fibre.
• RCS was initially supposed to replace all Internet-based messaging apps. Then its believers pivoted to pitch it as a universal B2C tool for mobile customer interactions. In reality, it's (at best) just another slow-moving messaging app with few users and no loyalty, or special features. It turns out to be channel #17 for consumers dealing with companies that don't merit downloading a proper app or which have a lousy website. RBM's best hope is for things like tickets from that 3rd-tier airline you're forced to use to get to an obscure airport, or ordering a new recycling bin from the local council's chatbot. It's competing with the browser, not apps or Internet messaging.
• MNOs' public 5G with network-slicing was supposed to replace all the cumbersome enterprise network gear such as ethernet and Wi-Fi. There are still visions within obscure 3GPP work-groups about "5G LANs" and I still read and hear nonsense from the cellular industry about it replacing Wi-Fi at scale....
• ... or alternatively, the new story is that the 5G core is going to be the centrepiece of all telecoms and networking - it'll control Wi-Fi, fixed broadband, satellite connectivity etc. on operators' terms and policies, of course. (See the Broadband Forum's rather Machiavellian efforts here - led unsurprisingly by behemoths like Verizon & Deutsche Telekom that want the core network as a "control point" all the way to end-devices in the home). Yes, maybe Wi-Fi can easily just slot into 5G's shiny new cloud-native core - but in reality, 99% of Wi-Fi has nothing to do with cellular networks, offload, or non-trusted / non-3GPP access
• As I mentioned recently, the telecom industry tries to take 100% of the (carbon) credit for new technologies reducing energy consumption or emissions.

The ridiculous and judgmental term "OTT" exemplifies this - creating a them-and-us fallacy of "web" companies using "our" pipes. Never mind the fact those technology companies build their own infrastructure, and invest billions in R&D for everything from AI to chip design. Or that all telcos themselves deploy "OTT" apps, websites and Internet-delivered functions.

To use a more sociological phrasing, many network operators still have a "sense of entitlement". They feel that they should be running everything from voice and video communications to networked entertainment, smart homes, or B2B commerce and industrial automation.

This attitude extends into public policy, and discussions on topics like spectrum, where there is a sense of exerting "license privilege". There is often an attempt to exert control before earning it. This is different to (say) Apple's control of its AppStore.

(*Sidenote [And apologies to my clients if this stings!]:if you work in telecoms & talk casually about "OTTs" for anything other than TV streaming, you should be fired, and so should your boss. It's not only wrong, it's flat-out ignorant and damaging. It indicates gross incompetence. It's not quite a "hate crime" but it is a them-and-us divisive term for a distinction that simply does not exist).

Actions have consequences

There are several reasons why this problem is more than just "attitude" or normal marketing-related hyperbole. It directly translates to business successes and failures.

• Many telco technologies don't just benefit from n-squared network effects, but depend on them. They degrade "non-gracefully" if they're not ubiquitous - which means they need to be adopted by other telcos at the same time. Messaging is a good example - at 50% uptake, across 50% of operators that implement a new standard, there's a high % chance that two people on different networks won't be able to communicate, especially internationally. There's no focus on saturating small niches, or communities of interest, then expanding over time.
• Telcos spend so much time envisioning themselves as "platforms" that they fail to realise that pretty much every tech platform evolves from a great (and widely-used/loved) product. Google indexed the web & created a great seach function, before it started selling ads. Apple sold the iPhone for a while before launching the AppStore. It also had a loyal base of iPod users who wanted a music-phone, too. Amazon sold books before it launched AWS. All of them had platforms in mind earlier... but had to create a product before tuning the way the platform needed to behave for customers / developers.
• The telecom industry always assumes that it will be a "net exporter" (or even pure exporter) of capabilities and APIs. It expects it will sell more "exposed functions" than it buys. It assumes a role at the top of the value chain, rather than the middle. This is starting to change now with the recognition of the role of buying public cloud services for virtualisation, but prior to that it just relied on Google Maps for "find the closest store", or credit-checking agencies for new subscriptions. Almost all successful tech businesses these days are more like trading hubs, importing AND exporting functions, APIs and data. The assumption that telcos will always be the OrchestratORS rather than OrchestratED is leading to an unrealistic world-view and poor decisions.
• Conversations with regulators and governments try to amplify the supposed "special" status and reinforce the spurious divide with new telcos or Internet/tech firms. "We don't want to be dumb pipes, so please tax & regulate the clever people, because we can't compete". This might seem smart - and perhaps gets better access to new funds for rural coverage or pandemic recovery - but it also hampers and limits future options, for instance around international mergers and expansion. Domestic champions find it hard to live dual lives as global heroes.

What needs to change?

There needs to be a frank, honest discussion about "Telcos' place in the world", which works out how to transition from a world of a few licensed network operators per country, to one in which the landscape is much more complex and nuanced.

• Position the term "telco" as a broader church & consider the needs/roles of the wider group. MNOs and fixed telcos are important, but not alone here. TowerCo's are telcos. Neutral Hosts are telcos. WISPs are telcos. MVNOs are telcos. Governments can act as telcos. Community networks are telcos. Consider them peers. Insist that GSMA, CTIA, ETNO and others treat all telcos equally and offer membership (and governance) on reasonable terms.
• Don't push back against governments trying to enable new forms of competition and new entrants. Instead, exploit them. Offer reference designs for Open RAN internationally (see Rakuten). Launch Private 5G services in new countries with local spectrum (Verizon is doing this). Run MVNOs in other countries (Turkcell, China Mobile etc).
• Internet, IT and industrial automation (OT) companies need to be seen as equal and equivalent peers too. Amazon, Microsoft, Google, Siemens, Honeywell, IBM, HPE, Tech Mahindra, NTT Data & many others will often own the customer relationship. Sometimes telecoms fits into their frameworks, and sometimes theirs' fits into telcos. Maybe there are roles for gatekeepers, but only where there is enough competition.
• Telecom standards need to become much more "loosely coupled". The traditional insistence that a 5G radio needs a 5G core and IMS/VONR telephony needs to stop. 3GPP standards and interfaces should be mix-and-match. Rather than trying to push complex core networks into fixed broadband architectures, the industry should instead make core-optional lightweight variants of 5G RANs, or expose interfaces that make them controllable by enterprise IT, or a Wi-Fi platform.
• Offer both complete solutions and sub-component services. Don't assume primacy - sell what customers want. Maybe enterprises want their own Private 5G, but would happily use telcos to do the installation and maintenance, or to enable roaming or as a provider of eSIM-aaS
• Use 3rd-party infrastructure and connectivity where it makes sense - for instance on neutral host networks. Attempt to automate onboarding, and remove friction wherever possible. Accept national roaming if it means your customers get better access in remote places, or indoors.
• Work out better metrics to measure the business & communicate these to investors and regulators. See this article on what metrics are especially poor.
• Understand software and app developers' mindsets. They don't want to pay for "premium QoS" on a thousand networks. They want warning of congestion, and how to adjust their apps' demands - when/how to use on-device compute vs. cloud, which codecs and compression, and so on.
• Stop thinking that phone calls (and worse, video calls) are perfect manifestations of communications, with just an upgrade every 10 years from circuit to VoLTE to VoNR. Why doesn't the dialler app get updated once a month with new features, or give the user more controls?
• Look at alternatives to subscription business models. Why not an insurance-style annual premium? Or "dark spectrum" just like "dark fibre"? Or 100 others?
• Invent more stuff. Spend money on R&D rather than sports TV rights. Much of the current angst comes from competing against tech firms that actually create products and services that people want to buy/use.
• Have a much clearer policy and stance on buying/selling technology and services. Make using platforms effectively seem as important as creating platforms. This is starting to happen with cloud and Open RAN, but it's very slow.

It has been interesting to see that the most interesting - and lauded - new telcos have come from different backgrounds, and have different attitudes. Rakuten is a cloud/eCommerce company first and foremost. Dish started as a satellite TV provider. Jio's parent Reliance Industries is a broad conglomerate. Although not a new company, South Korea's SKT is part of the SK Group, which also has a broad set of non-telco assets.

To be fair, one area where telcos are taking a more hybrid position is around physical assets. Some are operators/co-owners of shared networks, some spin-out tower businesses, some sell dark fibre and some buy - or both in different places. Some use public colocation and data-centres, while others are looking at local offices as possible edge compute sites.

Conclusions

This undoubtedly comes across as a bit of a rant (and not for the first time...) but it's coming from a position of frustration. I've seen the same issues play out for years - and at the core is this attitude of entitlement that I mention above.

It's totally counterproductive, even if the inertia - and sense of history - is understandable.

Everyone wants to be the star, especially if they've been the lead actor for decades. But sometimes, the role just involves a couple of scenes. And often, it's just the cameo roles - if played well - that get the headlines after all.

[A quick plug again: my upcoming Future of Video & RTC workshop series is here]

Cross-Posted from my LinkedIn Newsletter Article (here). Please see comments there & Subscriber.

#telecom #5G #telco #cloud #technology #regulation #voice #edgecomputing

The Worst Metrics in Telecoms

 (This post was initially published as an article on my LinkedIn Newsletter - here - please see that version for comments and discussion)

GDP isn't a particularly good measure of the true health of a country's economy. Most economists and politicians know this.

This isn't a plea for non-financial measures such as "national happiness". It's a numerical issue. GDP is hard to measure, with definitions that vary widely by country. Important aspects of the modern world such as "free" online services and family-provided eldercare aren't really counted properly.

However, people won't abandon GDP, because they like comparable data with a long history. They can plot trends, curves, averages... and don't need to revise spreadsheets and models from the ground up with something new. Other metrics are linked to GDP - R&D intensity, NATO military spending commitments and so on - which would needed to be re-based if a different measure was used. The accounting and political headaches would be huge.

A poor metric often has huge inertia and high switching costs.

Telecoms is no different, like many sub-sectors of the economy. There are many old-fashioned metrics that are really not fit for purpose any more - and even some new ones that are badly-conceived. They often lead to poor regulatory decisions, poor optimisation and investment approaches by service providers, flawed incentives and large tranches of self-congratulatory overhype.

Some of the worst telecoms metrics I see regularly include:

• Voice traffic measured in minutes of use (or messages counted individually)
• Cost per bit (or increasingly energy use per bit) for broadband
• $ per MHz per POP (population) for radio spectrum auctions
• ARPU
• CO2 savings "enabled" by telecom services, especially 5G

That's not an exhaustive list by any means. But the point of this article is to make people think twice about commonplace numbers - and ideally think of meaningful metrics rather than easy or convenient ones.

The sections below gives some quick thoughts on why these metrics either won't work in the future - or are simply terrible even now and in the past.

(As an aside, if you ever see numbers - especially forecasts - with too many digits and "spurious accuracy", that an immediate red flag: "The Market for Widgets will be $27.123bn in 2027". It tells you that the source really doesn't understand numbers - and you really shouldn't trust, or base decisions, on someone that mathematically inept)

Minutes and messages

The reason we count phone calls in minutes (rather than, say, conversations or just a monthly access fee) is based on an historical accident. Original human switchboard operators were paid by the hour, so a time-based quantum made the most sense for billing users. And while many phone plans are now either flat-rate, or use per-second rates, many regulations are still framed in the language of "the minute". (Note: some long-distance calls were also based on length of cable used, so "per mile" as well as minute)

This is a ridiculous anachronism. We don't measure or price other audiovisual services this way. You don't pay per-minute for movies or TV, or value podcasts, music or audiobooks on a per-minute basis. Other non-telephony voice communications modes such as push-to-talk, social audio like ClubHouse, or requests to Alexa or Siri aren't time-based.

Ironically, shorter calls are often more valuable to people. There's a fundamental disconnect between price and value.

A one-size-fits-all metric for calls stops telcos and other providers from innovating around context, purpose and new models for voice services. It's hard to charge extra for "enhanced voice" in a dozen different dimensions. They should call on governments to scrap minute-based laws and reporting requirements, and rejig their own internal systems to a model that makes more sense.

Much.

the

same

argument...

.... applies to counting individual messages/SMS as well. It's a meaningless quantum that doesn't align with how people use IMs / DMs / group chats and other similar modalities. It's like counting or charging for documents by the pixel. Threads, sessions or conversations are often more natural units, albeit harder to measure.

Cost per bit

"5G costs less per bit than 4G". "Traffic levels increase faster than revenues!".

Cost-per-bit is an often-used but largely meaningless metric, which drives poor decision-making and incentives, especially in the 5G era of multiple use-cases - and essentially infinite ways to calculate the numbers.

Different bits have very different associated costs. A broad average is very unhelpful for investment decisions. The cost of a “mobile” bit (for an outdoor user in motion, handing off from cell to cell) is very different to an FWA bit delivered to a house’s external fixed antenna, or a wholesale bit used by an MVNO.

Costs can vary massively by spectrum band, to a far greater degree than technology generation - with the cost of the spectrum itself a major component. Convergence and virtualisation means that the same costs (eg core and transport networks) can apply to both fixed and mobile broadband, and 4G/5G/other wireless technologies. Uplink and downlink bits also have different costs - which perhaps should include the cost of the phone and power it uses, not just the network.

The arrival of network slicing (and URLLC) will mean “cost per bit” is an ever-worse metric, as different slices will inherently be more or less "expensive" to create and operate. Same thing with local break-out, delivery of content from a nearby edge-server or numerous other wrinkles.

But in many ways, the "cost" part of cost/bit is perhaps the most easy to analyse, despite the accounting variabilities. Given enough bean-counters and some smarts in the network core/OSS, it would be possible to create some decent numbers at least theoretically.

But the bigger problem is the volume of bits. This is not an independent variable, which flexes up and down just based on user demand and consumption. Faster networks with more instantaneous "headroom" actually create many more bits, as adaptive codecs and other application intelligence means that traffic expands to fill the space available. And pricing strategy can basically dial up or down the number of bits customers used, with minimal impact on costs.

A video application might automatically increase the frame rate, or upgrade from SD to HD, with no user intervention - and very little extra "value". There might be 10x more bits transferred for the same costs (especially if delivered from a local CDN). Application developers might use tools to predict available bandwidth, and change the behaviour of their apps dynamically.

So - if averaged costs are incalculable, and bit-volume is hugely elastic, then cost/bit is meaningless. Ironically, "cost per minute of use" might actually be more relevant here than it is for voice calls. At the very least, cost per bit needs separate calculations for MBB / FWA / URLLC, and by local/national network scale.

(By a similar argument, "energy consumed per bit" is pretty useless too).

Spectrum prices for mobile use

The mobile industry has evolved around several generations of technology, typically provided by MNOs to consumers. Spectrum has typically been auctioned for exclusive use on a national / regional basis, in fixed-sized slices in chunks perhaps 5/10/20MHz wide, with licenses often specifying rules on coverage of population.

For this reason, it's not surprising that a very common metric is "$ per MHz / Pop" - the cost per megahertz, per addressable population in a given area.

Up to a point, this has been pretty reasonable, given that the main use of 2G, 3G and even 4G has been for broad, wide-area coverage for consumers' phones and sometimes homes. It has been useful for investors, telcos, regulators and others to compare the outcomes of auctions.

But for 5G and beyond (actually the 5G era, rather than 5G specifically), this metric is becoming ever less-useful. There are three problems here:

• Growing focus on smaller areas of licenses: county-sized in CBRS in the US, and site-specific in Germany, UK and Japan for instance, especially for enterprise sites and property developments. This makes comparisons much harder, especially if areas are unclear.
• Focus of 5G and private 4G on non-consumer applications and uses. Unless the idea of "population" is expanded to include robots, cars, cows and IoT gadgets, the "pop" part of the metric clearly doesn't work. As the resident population of a port or offshore windfarm zone is zero, then a local spectrum license would effectively have an infinite $ / MHz / Pop.
• Spectrum licenses are increasingly being awarded with extra conditions such as coverage of roads, land-area - or mandates to offer leases or MVNO access. Again, these are not population-driven considerations.

Over the next decade we will see much greater use of mobile spectrum-sharing, new models of pooled ("club") spectrum access, dynamic and database-driven access, indoor-only licenses, secondary-use licenses and leases, and much more.

Taken together, these issues are increasingly rendering $/MHz/Pop a legacy irrelevance in many cases.

ARPU

"Average Revenue Per User" is a longstanding metric used in various parts of telecoms, but especially by MNOs for measuring their success in selling consumers higher-end packages and subcriptions. It has long come under scrutiny for its failings, and various alternatives such as AMPU (M for margin) have emerged, as well as ways to carve out dilutive "user" groups such as low-cost M2M connections. There have also been attempts to distinguish "user" from "SIM" as some people have multiple SIMs, while other SIMs are shared.

At various points in the past it used to "hide" effective loan repayments for subsidised handsets provided "free" in the contract, although that has become less of an issue with newer accounting rules. It also faces complexity in dealing with allocating revenues in converged fixed/mobile plans, family plans, MVNO wholesale contracts and so on.

A similar issue to "cost per bit" is likely to happen to ARPU in the 5G era. Unless revenues and user numbers are broken out more finely, the overall figure is going to be a meaningless amalgam of ordinary post/prepaid smartphone contracts, fixed wireless access, premium "slice" customers and a wide variety of new wholesale deals.

The other issue is that ARPU further locks telcos into the mentality of the "monthly subscription" model. While fixed monthly subs, or "pay as you go top-up" models still dominate in wireless, others are important too, especially in the IoT world. Some devices are sold with connectivity included upfront.

Enterprises buying private cellular networks specifically want to avoid per-month or per-GB "plans" - it's one of the reasons they are looking to create their own dedicated infrastructure. MNOs may need to think in terms of annual fees, systems integration and outsourcing deals, "devices under management" and all sorts of other business models. The same is true if they want to sell "slices" or other blended capabilities - perhaps geared to SLAs or business outcomes.

Lastly - what is a "user" in future? An individual human with a subscription? A family? A home? A group? A device?

ARPU is another metric overdue for obsolescence.

CO2 "enablement" savings

I posted last week about the growing trend of companies and organisations to cite claims that a technology (often 5G or perhaps IoT in general) allows users to "save X tons of CO2 emissions".

You know the sort of thing - "Using augmented reality conferencing on your 5G phone for a meeting avoids the need for a flight & saves 2.3 tons of CO2" or whatever. Even leaving aside the thorny issues of Jevon's Paradox, which means that efficiency tends to expand usage rather than replace it - there's a big problem here:

Double-counting.

There's no attempt at allocating this notional CO2 "saving" between the device(s), the network(s), the app, the cloud platform, the OS & 100 other elements. There's no attempt such as "we estimate that 15% of this is attributable to 5G for x, y, z reasons".

Everyone takes 100% credit. And then tries to imply it offsets their own internal CO2 use.

"Yes, 5G needs more energy to run the network. But it's lower CO2 per bit, and for every ton we generate, we enable 2 tons in savings in the wider economy".

Using that logic, the greenest industry on the planet is industrial sand production, as it's the underlying basis of every silicon chip in every technological solution for climate change.

There's some benefit from CO2 enablement calculations, for sure - and there's more work going into reasonable ways to allocate savings (look in the comments for the post I link to above), but readers should be super-aware of the limitations of "tons of CO2" as a metric in this context.

So what's the answer?

It's fairly easy to poke holes in things. It's harder to find a better solution. Having maintained spreadsheets of company and market performance and trends myself, I know that analysis is often held hostage by what data is readily available. Telcos report minutes-of-use and ARPU, so that's what everyone else uses as a basis. Governments may demand that reporting, or frame rules in those terms (for instance, wholesale voice termination rates have "per minute" caps in some countries).

It's very hard to escape from the inertia of a long and familiar dataset. Nobody want to recreate their tables and try to work out historic comparables. There is huge path dependence at play - small decisions years ago, which have been entrenched in practices in perpetuity, even though the original rationale has long since gone. (You may have noticed me mention path dependence a few times recently. It's a bit of a focus of mine at the moment....)

But there's a circularity here. Certain metrics get entrenched and nobody ever questions them. They then get rehashed by governments and policymakers as the basis for new regulations or measures of market success. Investors and competition authorities use them. People ignore the footnotes and asterisks warning of limitations

The first thing people should do is question the definitions of familiar public or private metrics. What do they really mean? For a ratio, are the assumptions (and definitions) for both denominator and numerator still meaningful? Is there some form of allocation process involved? Are there averages which amalgamate lots of dissimilar categories?

I'd certainly recommend Tim Harford's book "How to Make the World Add Up" (link) as a good backgrounder to questioning how stats are generated and sometimes misused.

But the main thing I'd suggest is asking whether metrics can either hide important nuance - or can set up flawed incentives for management.

There's a long history of poor metrics having unintended consequences. For example, it would be awful (but not inconceivable) to raise ARPUs by cancelling the accounts of low-end users. Or perhaps an IoT-focused vertical service provider gets punished by the markets for "overpaying" for spectrum in an area populated by solar panels rather than people.

Stop and question the numbers. See who uses them / expects them and persuade them to change as well. Point out the fallacies and flawed incentives to policymakers.

If you have any more examples of bad numbers, feel free to add them in the comments. I forecast there will be 27.523 of them, by the end of the year.

The author is an industry analyst and strategy advisor for telecoms companies, governments, investors and enterprises. He often "stress-tests" qualitative and quantitative predictions and views of technology markets. Please get in touch if this type of viewpoint and analysis interests you - and also please follow @disruptivedean on Twitter.

10 Principles for Telecoms Vendor Diversification in the UK & Beyond

This was originally published as one of my newsletter articles on LinkedIn. Click here for discussion and commentary & to subscribe. 

 Introduction

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”.

Background

 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.

#5G #policy #DCMS #wireless #telecoms #regulation #openran #interoperability #wifi #fibre #broadband #IoT #neutralhost #6G