Dave Millett explains what’s wrong with the UK telecoms infrastructure and how it can be improved to enable UK businesses to compete more effectively
2017 had its pluses and minuses for telecoms. You’ll remember reading some of the reports showing how badly the UK is doing in terms of its telecoms infrastructure. On the plus side, we got free roaming in Europe, the launch of the first £1,000 Apple mobile and visions of a new future powered by Artificial Intelligence and the Internet of Things. So, what can we expect in 2018?
After the launching the iPhone X Apple is now looking at a bendy iPhone. The company has fled a US patent application for a phone with “a ﬂexible portion that allows the device to be folded”. Microsoft was recently granted a patent for a tablet device that folded up to become a phone. And Samsung is reportedly working on a folding phone called the Galaxy X, a rumour that has long been circulating.
Whilst a folding phone may help with broken screens, what most people want is a return to a phone that can run on a single charge for a week. Samsung’s research into graphene batteries could provide the answer. The potential is for a battery with up to 45% more capacity that can fully charge in just 12 minutes. Sounds like a return to the old Nokia phones that were relaunched in 2017.
The all-important battery life
Improving battery is one of the factors that will be key to the success of the Internet of Things (IOT) and Artificial Intelligence (AI) as we become an ‘always connected’ society. AI is set to become a regularly heard phrase in 2018. Last year Google unveiled a program called AlphaGo, which can master the complex Chinese game of Go in just three days. Google has a plan to put itself on an ‘AI first’ footing and is looking at embedding AI capability in all Google products and services. Where Google goes others will follow; competing manufacturers will be looking at placing AI chips in their smartphones soon.
Continuing landline switch
In the landline world, SIP and VoIP will continue their relentless advance to replace ISDN. The crossover point has been reached, with more businesses now connected by IP than analogue. Despite the claims of pushy, unscrupulous providers, analogue will be here until 2025 so those businesses yet to switch over still have plenty of time. But watch out for signing new long-term deals.
The reality of UK infrastructure
Twenty-first century communications all sounds very exciting until the hype of new advances meets the reality of the UK’s antiquated and creaking infrastructure. Last year we were ranked 54th in the world for 4G coverage, 31st in the world for average broadband speeds and the worst in Europe for the rollout of Fibre to the Premise (FTTP).
If the UK is to reap the benefits of the new technologies, this has to be addressed. The current plans are wholly uninspiring. It can only be hoped that the Government and the regulators take a tougher, more interventionist approach in 2018, as letting the operators solve the problem clearly has not worked. The targets that have been set are outdated and, even if achieved, will still leave us lagging behind our competitors.
The Government wants everyone to have access to a minimum of 10 Mbps broadband by 2020. Whilst 10 Mbps may have been reasonable when the target was set several years ago, it is no longer ft for purpose considering the growth of the Internet of Things and the steadily increasing range of streaming services. By contrast, the EU Digital Agenda goal is to deliver 30Mbps or more for all by the same date. Japan and South Korea expect to have 5G up and working by 2020, whereas we hope for just some coverage by 2025.
The operators seem to have little desire to solve the problem themselves. In terms of broadband, we are the poor man of Europe. BT claims to have 345,000 premises connected to FTTP, but almost 30% of them are in Cornwall as part of an EU-funded project. BT’s published plans show they will barely have achieved 10% by the end of 2020. On average, the rest of Europe achieved that in 2016!
So, our position as the slow man of Europe is unlikely to change. There are regional variations, with roll-outs from other ‘full fbre’ providers, such as KCOM, Gigaclear, Hyperoptic and B4RN. This has created a postcode lottery for getting decent FTTP broadband.
Digital deserts persist
It is a similar picture with mobile. Who remembers the ‘agreement’ struck between the Government and the mobile operators in 2014 that gave them three years to improve coverage and remove not-spots in return for the Government not enforcing roaming in the UK? The then Culture Secretary Sajid Javid said it was a landmark deal with the four mobile networks to improve mobile coverage across the UK.
Under the agreement all four of the mobile networks collectively agreed to:
a guaranteed £5bn investment programme to improve mobile infrastructure by 2017;
guaranteed voice and text coverage from each operator across 90% of the UK geographic area by 2017, halving the number of areas blighted by patchy coverage from partial ‘not-spots’;
a rise in full coverage from all four mobile operators from 69% of geographic areas to 85% by 2017;
reliable signal strength for voice for each type of mobile service (2G/3G/4G) – currently many consumers frequently lose signal or cannot get signal long enough to make a call; and
make the deal legally binding by accepting amended licence conditions to reﬂect the agreement – it will be enforceable by Ofcom.
So what effect has that had? The answer is not a lot. In fact, in March 2017, the National Infrastructure Commission concluded that the UK is being held back by poor mobile phone connectivity and called for an end to ‘digital deserts’ in places that should have adequate signals, such as rail routes, roads and city centres.
This is a clear sign that the Government needs to get tough and allow everyone to roam free in the UK, just as we can now do in Europe.
Unfortunately, for years the Government and its regulator have consistently bottled every tough decision in the industry. In 2017, Ofcom decided against fully separating Openreach from BT, which would have restricted BT’s inﬂuence on the market. BT still provides the cash and can veto the Openreach Chief Executive; planned penalties for missed appointments were watered down and not made automatic; Openreach remains an organisation that no end user can talk to directly; and we are already seeing signs that BT is beginning to use the ‘they are a separate company’ excuse for not dealing with issues caused by Openreach.
Even when Ofcom introduces a good policy, such as clear calling, it does not enforce it. It is almost two years since it made it mandatory to show prominently the cost of calling 084 and 087 numbers wherever they are promoted. Yet daily there are examples of companies, large and small, blatantly ﬂouting the rules. And when has Ofcom ever fined anyone for doing so? So far, never.
It had to rely on the Advertising Standards Authority to toughen up the rules on broadband speeds rather than set out clear terms itself.
Given some of the financial challenges the networks and operators are having, it is important that the Government and regulators intervene. In a recent report, the Economist predicted that average revenue per user (ARPU) would suffer as result of increased competition. In 2018 it expects ARPU to fall by 2.3% for mobile operators and by 11.5% for fixed line.
Competition in the consumer markets is coming from providers such as WhatsApp and Viber. A recent survey showed that almost a third of people do not use their mobiles for voice and texting is down by almost 40% since 2012. The growth of VOIP and SIP is eating into the profits historically generated by ISDN.
It is a Catch 22. Telecoms needs large amounts of capital to create new infrastructures to generate new revenues. However, quite often the new revenues are lower than those from the old technologies they replace. A survey of operators conducted by Ericsson found that 86% view IoT as key for monetising revenues from 5G.
Add in the extra costs of improving security as cyber threats grow and regulations like GDPR come into force and you can see how the situation could get worse rather than better.
Unfortunately, I think 2018 promises more of the same, unless drastic action is taken: lots of stories and hype around ‘technology taking over our lives’; more reports showing how badly off the UK is compared to the rest of the world when it comes to telecoms; politicians spouting soundbites promising action but doing nothing tangible; and more confusion for businesses on where to spend their technology pounds.
What will improve the situation?
The question, then, is ‘What do we need to improve the situation, to make a real difference?’. This is my list of wishes:
1 Acknowledge the 2014 mobile deal has not led to the required improvement in mobile coverage and end the block on roaming in the UK.
2 Force BT to reduce by half the wholesale cost of all broadband connections that do not meet the minimum Government speed target. Force resellers to reduce their prices by half as well.
3 Raise the Government minimum speed target annually to reﬂect changing demands.
4 Set bold targets to offer the best infrastructure in Europe – critical if we want to attract inward investment post-Brexit.
5 Extend the size of company protected by the Telecoms ombudsman to 50 employees and align other laws, such as no automatic rollovers and transparent penalties.
6 Make all consumer broadband, phone line and mobile advertising carry prominently the latest Ofcom stats on complaints received.
7 Properly fund the rollout of FTTP and 5G with the aim of becoming world leaders by 2020 – not world laggards. You could fund it by scrapping or delaying HS2.
8 Link funding to heavy penalties, including loss of licences for any failure to deliver.
9 The oil and gas industry has benefitted from generous tax breaks for investing in the North Sea. Do the same for infrastructure.
Let’s hope those in power are listening! Changes are needed if we are to get the telecoms infrastructure we need for businesses to be competitive. Bendy phones will be useful and fun but they are not enough on their own.
Dave Millett has over 35 years’ experience in the Telecoms Industry. He has worked in European Director roles for several global companies. He now runs Equinox, an independent brokerage and consultancy firm. He works with many companies, charities and other organisations and has helped them achieve savings of up to 80%. He also regularly advises telecom suppliers on improving their products and propositions.