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Telecoms in 2017: what needs to be done?

Dave Millett looks at what the UK needs to do to improve its telecoms infrastructure in 2017.

Dave Millett of Equinox
Dave Millett of Equinox

Just what will 2017 mean for telecoms in the UK? What became apparent in 2016, and will become even more significant in 2017 as Brexit negotiations start, is how far the UK is lagging behind the world in its telecoms infrastructure. Report after report highlighted the deficiencies and their increasing impact.

The UK is ranked 54th in the world for 4G coverage, bottom in Europe for availability of fibre broadband to the premise, and half of businesses have no access to cheap fibre broadband. The country with the fifth largest economy in the world actually has one of the worst technology infrastructures amongst developed nations. The situation is so bad some people have resorted to building their own broadband, including a farmer in Lancashire (

Brexit negotiations will start in earnest in 2017 and it’s claimed the aim is to ensure that the UK will again become a global trading nation attracting businesses from over the world to invest and locate here. However, our backwards infrastructure could become a major barrier.

A number of technology trends are magnifying the significance of our poor infrastructure and will place even greater demands on it. In the UK, mobile data traffic soared by 64% in 2016, while residential and small business fixed broadband traffic grew by 40%.

So what is the Government doing about it? In 2017, will the UK start to address the shortcomings in our telecoms infrastructure or will we get left even further behind?

Firstly, at a consumer level, even though iPhone sales were down 12% on value in the third quarter of 2016, almost 75% of the UK population now own a smartphone. Average data usage is expected to grow five-fold by 2020. In part, this is due to new uses for devices such as augmented reality (AR). Last summer, a large percentage of the population became obsessed with collecting Pokemon characters, and in 2017 business applications using AR will start to appear. These could be floorplans appearing as you stand outside houses for sale or insurance quotes that can be accessed by viewing your car through your phone.

Secondly, in 2017 we will increasingly hear about the Internet of Things (IoT), and this will be used for far more than the control of heating through a smartphone. Research firm Gartner predicts that by 2020 there will be twice as many connected devices (25 billion connections) as mobile devices. All of these will use bandwidth. Yet, barely 65% of the UK land mass has access to 4G and many parts of the country, especially in rural areas, struggle to get 2G.

Thirdly, from a business perspective, cloud computing will continue to grow. Research from the Cloud Industry Forum (CIF) shows that the overall Cloud adoption rate in the UK now stands at 84%, with almost four in five cloud users (78%) having adopted two or more Cloud services. This in part reflects the fact that many more software applications are available in a Cloud format, from basic Microsoft applications and simple storage, such as Dropbox, to CRM solutions, such as Salesforce, and much larger Citrix and ERP solutions. All of which increase the demand on broadband capacity.

Unfortunately, a significant proportion of businesses in major cities and business parks still have no access to fibre broadband. They are forced to pay for expensive dedicated circuits, which can cost ten or 20 times as much. Although BT has said they will start Fibre to the Premise (FTTP) pilots around business parks, fewer than 2% of premises in the UK have access to the technology. This compares to almost 40% in the leading countries in Europe.

Finally, the move towards the Cloud for phone systems continues to grow apace. The latest figures from Cavell Group show that the Hosted Telephony market grew by 11% last year. And, with the end of ISDNs announced for 2025, the SIP market has also shown strong growth, at almost 10%.

The premise-based phone market continues to decline, with Toshiba pulling out of the UK in 2016 and Avaya beset by rumours of Chapter 11 bankruptcy. All of this will create even more demand for broadband connectivity.

Who’s to blame?

So how did we get to this poor state of affairs and who is to blame?

The Government creates the environment in which telecoms operates. It has failed to set targets or get tough with the big players. With 3G and 4G licence auctions, it focused on raising revenue rather than targeting coverage. It backed down from forcing mobile operators to share networks to reduce not-spots.

The Government has continually backed BT and given it all the contracts to roll out rural broadband. In turn, BT has continued to favour residential customers, as they are a greater source of revenue and enable it to protect its leased line business. The fact that almost half of businesses in the country don’t have access to cheap fibre broadband can be attributed to BT, which lacks any incentive to ditch its copper network and focus on fibre to the premise.

Ofcom has continuously bottled it in making the decision that the industry has long been calling for, viz. to separate Openreach from BT. It is edging towards it with a separation proposed in late 2016. But the money for infrastructure will still come from BT, and whoever controls the purse strings usually controls policy. Had Ofcom taken a more radical approach a year ago we could be well on the way to having an infrastructure designed to meet the country’s needs rather than BT’s own.

Furthermore, the Advertising Standards Authority should take a look at the way it allows the telecoms industry to continuously mislead the public. This includes allowing broadband companies to publicise the speed that just 10% of their customers get on their networks, and the mobile companies to claim coverage based on premises served, ignoring the fact that the technology was designed to be used on the move. Only 8% of A and B roads have complete 4G coverage, with 47% having no 4G coverage at all. Even on the motorway network, OpenSignal’s report shows that users fail to get either 3G or 4G availability almost 25% of the time. Then, there are companies that advertise how great their customer service is when they are one of the most complained about to Ofcom.

Next steps

So, what is being done and is it enough?

In the Chancellor of the Exchequer’s Autumn Statement, the government committed to invest more than £1bn over the next four years on the roll-out of new fibre networks and 5G. This will be delivered through:

A new £400m Digital Infrastructure Investment Fund – which is expected to be matched by private investment – to invest in new fibre networks;

A new 100% business rates relief for new full-fibre infrastructure for a five year period;

Funding to local areas to support investment in national fbre networks to meet business and public sector demands. A consultation with industry on delivery methods is expected shortly; and

Funding for a coordinated programme of integrated fibre and 5G trials. The recent Adonis report on 5G in the UK said we should aim to have it in place by 2025.

All of this sounds good. But look at the success, or lack of it, of previous programmes and plans. New plans seem to be typically unambitious, with a target for 95% of UK premises to be able to buy superfast broadband, defined as 24Mbps. Other countries define it 4 or 10 times that. Japan is aiming to have 5G operational in time for the 2020 Olympics, and South Korea, which has a GDP half that of the UK’s, is planning to invest more than twice the amount we are in its 5G infrastructure.

In summary, the UK is in the slow lane when it comes to technology and the short-term prospects are not encouraging. As tech and digital industries become increasingly important to the economy and all organisations rely more and more on the Cloud, our infrastructure could hinder our growth potential and the ability to attract new inward investment. The Government has made a small start but needs to do more, more quickly to incentivise the industry to make the necessary investments. And if the carrot doesn’t work, it should not be frightened to wield the stick.

Dave Millett has over 35 years’ experience in the telecoms industry. He has worked in European Director roles for several global companies and now runs Equinox, a leading 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.

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