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
