Vodafone offers free broadband and Microsoft 365 to SMBs

Vodafone is offering SMBs free broadband and Microsoft 365 services for six months in a bid to support their post-pandemic recovery.

Many small businesses have suffered from a collapse in demand during lockdown, while those that have been able to continue remotely have become dependent on fixed line and mobile connectivity.

Microsoft 365 Business Standard combines familiar productivity apps like Word, Excel and PowerPoint with cloud-based infrastructure and collaboration tools like Microsoft Teams.

Vodafone SMB offer

As the government encourages more businesses to get back up and running, Vodafone says the offer will aid remote working and remove at least one cost to worry about in the short-term. The deal is valid for three months and is open to new and existing customers who take out a 24-month contract.

“Our role in these challenging times is to keep the UK connected and help businesses return to work. Small businesses have been hit particularly hard by this crisis,” said Nick Jeffery, Vodafone UK CEO. “By reducing their costs and providing them with our brilliant technology and expertise, we hope to help them get back on their feet and return to growth. A little financial help now, will go a long way in the future.”

Vodafone implemented a support package for citizens, governments and citizens at the start of the pandemic. Measures included zero-rated access to essential services, ensuring networks had sufficient capacity to cope with additional demand, and promising to pay suppliers within 15 days to aid cashflow situations.

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Three hires Chief Network Officer to advance 5G rollout

Three’s senior management restructure has continued with the appointment of Carlo Melis as Chief Network Officer.

He joins from Italian operator Wind Tre, which is also owned by Three’s parent company CK Hutchison. Melis spent 14 years at Wind before it merged with Three Italia in 2016 and was responsible for the network integration between the two companies.

While his immediate focus will be on maintaining the resiliency of Three UK’s network during the coronavirus crisis, his primary role will be to continue the upgrade of the operator’s 4G infrastructure and the rollout of its 5G service.

Three 5G rollout

“Three has been on an incredible journey, completely overhauling its network and IT infrastructure and laying the foundations for a 5G network that will dramatically transform the experience for its customers, at the same time as delivering major 4G improvements,” said Melis. “I’m looking forward to joining Three, bringing my expertise to build on the great progress already achieved and to deliver a network that will stand the business in good stead long into the future.”

“We are delighted to have Carlo join our team. His extensive experience in network strategy and architecture will be vital to delivering the maximum customer benefit from our multibillion investment in technology,” added Susan Buttsworth, Three COO.

Three has made several moves to shore up its leadership team in recent months. Buttsworth herself is also a relatively recent addition to the Three management team having moved over from CK Hutchison Innovations Opportunities Development, while Elaine Carey was appointed as Chief Commercial Officer in March 2020, joining from Three Ireland.

The biggest change however was the departure of Dave Dyson as CEO. He was replaced by Three Ireland CEO Robert Finnegan, who is now responsible for both countries, as CK Hutchison seeks closer ties between the two.

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US ‘must act now’ to establish 6G leadership

An American telecoms industry association has called for immediate collaboration between government, academic institutions and industry do that the US can be a leader in 6G communications.

5G might still be in its infancy but the race to be a leader in the even more nascent field of 6G has already begun. 

China has already started its research and development activities, while the €251 million 6Genesis programme is already well underway in Northern Finland.

The race to 6G

The Alliance for Telecommunications Industry Solutions (ATIS) says that if the US wants to keep up and build on the momentum of 5G, then its own research efforts have to begin soon.

“While innovation can be triggered in reaction to current market needs, technology leadership at a national level requires an early commitment and development that addresses U.S. needs as well as a common vision and set of objectives,” said Susan Miller, president and CEO of ATIS.

The technologies that will eventually comprise 6G are some way off being defined, but the general consensus is that the standard will build on the capacity and latency improvements of 5G.

Leaders of the 6Genesis project told TechRadar Pro in 2018 that 6G would make greater use of Artificial Intelligence (AI), accelerate the architectural shifts that have taken place in the transition from 4G and deliver speeds of 1Tbps.

“Industry and government have started collaboration to create the 6G future, but this work must be amplified now to position the U.S. as the leader in telehealth, smart agriculture, distance learning, digitized commerce and artificial intelligence,” added Mike Nawrocki, head of technology and solutions at ATIS.

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Half of Xiaomi revenue now comes from outside China

Smartphone manufacturer Xiaomi overcame the challenge of the coronavirus crisis to increase revenues by 13.6 per cent in Q1.

While lockdown measures in China had affected both demand and supply during the quarter, the easing of restrictions aided a recovery and production levels have now returned to pre-pandemic levels.

Income rose to 49.7 billion Yuan (£5.7bn) during the period, with higher average selling prices (ASP) of devices like the Mi 10 range and its 5G handsets a key contributary factor.

Xiaomi Q1 revenues

However it was the performance of Xiaomi devices beyond Chinese borders that was the headlining factor. Overseas revenue rose by 47.8 per cent to 24.8 billion Yuan, exceeding domestic revenues for the first time in company history.

Like a number of other Chinese vendors, Xiaomi has benefited from the growth of the market in its homeland, offering feature-packed devices to consumers with minimal brand loyalty. Xiaomi is now the world’s fourth largest smartphone market.

However as the domestic market saturates, these companies have looked beyond their borders for sources of growth. The biggest, Huawei, had enjoyed success before the impact of US sanctions began to be felt, while Xiaomi has tapped into demand in developing markets like India and Latin America.

There has been traction in Western Europe too, with Xiaomi now in the top four across Europe and in Italy, Germany and France. In Spain, it is now the market leader according to Canalys.

The results are cause for optimism but this is tempered by ongoing uncertainty surrounding Covid-19. Although China is slowly returning to normal, the situation differs from country-to-country elsewhere.

In markets where restrictions have eased, Xiaomi says demand has rebounded in a similar fashion to China. In the third week of May, when some European nations eased lockdown, Xiaomi said activations returned to 90 per cent of the usual average level.

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Liberty Charge will use Virgin Media’s network to power electric vehicles

A joint-venture between Virgin Media’s parent company Liberty Global and Zook Capital will see on-street electric vehicle charging points rolled out across the UK.

Liberty Charge will use Virgin Media’s cable network as the foundation of the rollout, making use of its infrastructure, deployment experience, and existing relationships with local authorities. Under-the-pavement power will be used to power the units in residential areas.

Zouk Capital manages the Charging Infrastructure Investment Fund (CIIF), a government-backed initiative, and the partners claim the venture will help achieve the UK’s national sustainability goals by driving demand for electric cars.

Liberty Charge electric vehicles

It is claimed that 40 per cent of urban vehicle owners don’t have access to a drive way that could host a charging point, a major barrier to ownership that could be rectified.

“CIIF’s central objective is to scale open-access, public EV charging networks for the UK consumer and this is exactly what Liberty Charge will achieve for the thousands of car owners, who do not have access to off street parking,” said Massimo Resta, partner at Zouk Capital.

“Liberty Global’s infrastructure deployment capabilities and Virgin Media’s extensive connectivity network make it perfectly positioned to rapidly deploy on-street residential charging in UK towns and cities, and we are excited to be partnering with them on this opportunity.”

“This investment from Zouk re-enforces our belief that there is significant value in leveraging Virgin Media’s wide ranging infrastructure and connectivity capabilities into new and fast growing sectors such as eMobility and Energy,” added Jason Simpson, head of global energy and utilities at Liberty Global.

Earlier this month Liberty Global agreed to merge Virgin Media with Telefonica’s O2 in the UK, paving the way for the creation major UK communications player capable of rivalling BT. The addition of the electric vehicle charging network would provide Liberty with a further revenue stream.

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Nokia claims 5G world speed record

Nokia says it has broken the world 5G speed record for an over-the-air 5G transmission, reaching 4.7Gbps on a US operator’s network in Dallas, Texas.

The Finnish networking giant was able to achieve the speeds by pairing 800MHz of commercial millimetre-Wave (mmWave) spectrum in the 28GHz and 39GHz bands with 40MHz of LTE bandwidth using its dual connectivity capabilities.

Dual connectivity allows operators to transmit data simultaneously across 5G and 4G networks, achieving higher transmission rates than using either technology independently.

Nokia 5G speed record

Whereas nearly all European 5G networks launched to date are powered by mid-range bands like 3.4GHz, several US carriers are offering 5G broadband services using mmWave spectrum. Although mmWave has limited range, it offers a high level of performance over a small radius.

Nokia says the tests demonstrate the ability of 5G to deliver ultrafast mobile broadband to consumers and is further evidence of the opportunities for operators to offer new applications that harness the greater speeds, enhanced capacity and ultra-low latency.

“This is an important and significant milestone in the development of 5G services in the US, particularly at a time when connectivity and capacity is so crucial,” said Tommi Uitto, President of Mobile Networks at Nokia.

“It demonstrates the confidence operators have in our global end-to-end portfolio and the progress we have made to deliver the best possible 5G experiences to customers. We already supply our mmWave radios to all of the major US carriers and we look forward to continuing to work closely with them moving forward.”

Nokia will hope the accolade will give its 5G efforts a boost as it competes with the likes of Cisco, Ericsson and Nokia for market share. 

The company is positioning itself as a one-stop-shop for 5G, capable of providing kit for the radio, transport and core layers of next generation networks. It is especially pushing its ‘AirScale’ platform (and features like dual connectivity) as a way for operators to maximise their spectrum assets.

Nokia says procuring equipment, software and services from a single vendor can reduce total cost of ownership by more than 20 per cent and reduce time to market by at least 30 per cent when compared to a multi-vendor strategy.

However, the high cost of developing 5G technology and intense competition in the sector has resulted in the firm cutting its financial outlooks and pausing dividends in recent times. This has led to speculation that Nokia was exploring a merger or possible sale of assets, while reports have suggested the company was preparing to guard itself against any hostile takeover attempt.

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Key Huawei chip supplier stops taking orders after new US sanctions

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, has reportedly stopped taking orders from Huawei following the latest round of sanctions by the US government.

Huawei has been on the US ‘non-entity’ list since 2019, a status which bans it from doing business with American tech firms on national security grounds.

This has limited its access to key technologies such as Google applications and US-manufactured components.

Huawei chips

TSMC has become an increasingly important supplier over the past year, producing Huawei’s custom processors and providing it with key components such as networking chips. The Chinese mobile giant is now TSMC’s second largest customer, after Apple, accounting for anything up to a fifth of its revenue.

However Washington is intent on increasing the pressure on Huawei and has closed what it believes to be a “technical loophole” that allows chipmakers to ensure their components are not classified as ‘US-made’ despite including American technologies.

All chipmakers wanting to supply Huawei will have to apply for a licence,  handing the US government greater control over the company’s supply chain.

Nikkei says TSMC is no longer taking new orders from Huawei but will honour existing commitments, in line with the latest US regulations. It is said that the Chinese mobile giant hs been preparing for every eventuality over the past year and has been stockpiling networking chips.

However in a statement earlier this week it suggested the latest US measures were targeted, malicious, and threatened the future of its business. A possible option could be to co-develop chip designs with another party but this would not be an immediate solution.

“The US is leveraging its own technological strengths to crush companies outside its own borders,” said rotating chairman Guo Peng. “This will only serve to undermine the trust international companies place in US technology and supply chains. Ultimately, this will harm US interests.”  

TechRadar Pro has contacted TSMC for comment.

Via Nikkei

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Microsoft strengthens 5G cloud offering with Metaswitch Networks purchase

Microsoft has strengthened the 5G credentials of its Azure public cloud platform through the acquisition of Metaswitch Networks.

Metaswitch Networks is a specialist in virtualised network software and voice, data and communications services for operators. Its technology and expertise will be used to expand Microsoft Azure’s telecoms portfolio as demand for cloud-based 5G core services increases.

5G promises ultrafast speeds, enhanced capacity and ultra-low latency that will enable a whole host of new business, consumer and government applications. This is a significant opportunity for mobile operators to increase and diversify revenue streams.

Microsoft 5G

However 5G requires operators to rearchitect networks away from centralised, legacy core infrastructure and towards the cloud. By virtualising network functions, operators can rollout new services more rapidly, dynamically allocate resources to where they are most needed, and bring processing capabilities closer to the point of collection.

The cloud also helps operators reduce their operating costs and lower capital expenditure. In addition to the potential new revenue streams on offer, 5G will also lower the cost-per-bit of transmission.

Microsoft says the acquisition of Metaswitch Networks, along with the earlier purchase of Affirmed Networks, will help it better serve operator customers and partner with telecoms equipment manufacturers.

“The convergence of cloud and communication networks presents a unique opportunity for Microsoft to serve operators globally via continued investment in Azure, adding additional depth to our hyperscale cloud infrastructure with the specialized software required to run virtualized communication functions, applications and networks,” explained Yoused Kahalidi, head of Azure Networking at Microsoft.

“As the industry moves to 5G, operators will have opportunities to advance the virtualization of their core networks and move forward on a path to an increasingly cloud-native future. Microsoft will continue to meet customers where they are, working together with the industry as operators and network equipment providers evolve their own operations.”

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UK mobile users want refunds for unused data in lockdown

Lockdown measures in the UK have caused a reduction in mobile data consumption that has left customers with a combined 165 million GB in unused allowances, according to research from uSwitch.

The coronavirus pandemic has elevated the importance of mobile and broadband services in society, with people relying on connectivity for work, communications and entertainment.

However restrictions on movement mean the majority of this data traffic is being handled by home Wi-Fi rather than mobile networks.

Excess data

The result is a temporary reversal in average mobile data volumes, which have historically been on an upward trajectory. uSwitch says the average mobile phone user is consuming 500MB less under lockdown, contributing to a 21 per cent decline in the average to 1.9GB a month.

“We have mobile deals set up to accommodate browsing on the go - but since so many of us are homebound and relying on Wi-Fi to stay connected, we’re simply not burning through our data allowances in the same way,” said Ru Bhihka, mobiles expert at uSwitch.

Two fifths of mobile customers would like their unused allowance rolled over to the following month – a service offered by some operators like Sky – while 22 per cent said they would like a refund. Eight per cent would like the equivalent cost donated to charity, while 11 per cent would prefer their excess to be given to essential workers.

Consumption among essential workers has risen by 100MB during the pandemic, with mobile operators taking steps to ensure that everyone remains connected. Special tariffs for key workers, alongside the zero-rating of access to essential health resources are being offered, while there has also been a pledge not to disconnect anyone during the crisis.

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UK mobile users want refunds for unused data in lockdown

Lockdown measures in the UK have caused a reduction in mobile data consumption that has left customers with a combined 165 million GB in unused allowances, according to research from uSwitch.

The coronavirus pandemic has elevated the importance of mobile and broadband services in society, with people relying on connectivity for work, communications and entertainment.

However restrictions on movement mean the majority of this data traffic is being handled by home Wi-Fi rather than mobile networks.

Excess data

The result is a temporary reversal in average mobile data volumes, which have historically been on an upward trajectory. uSwitch says the average mobile phone user is consuming 500MB less under lockdown, contributing to a 21 per cent decline in the average to 1.9GB a month.

“We have mobile deals set up to accommodate browsing on the go - but since so many of us are homebound and relying on Wi-Fi to stay connected, we’re simply not burning through our data allowances in the same way,” said Ru Bhihka, mobiles expert at uSwitch.

Two fifths of mobile customers would like their unused allowance rolled over to the following month – a service offered by some operators like Sky – while 22 per cent said they would like a refund. Eight per cent would like the equivalent cost donated to charity, while 11 per cent would prefer their excess to be given to essential workers.

Consumption among essential workers has risen by 100MB during the pandemic, with mobile operators taking steps to ensure that everyone remains connected. Special tariffs for key workers, alongside the zero-rating of access to essential health resources are being offered, while there has also been a pledge not to disconnect anyone during the crisis.

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O2 and Virgin Media join forces in billion pound merger

O2 and Virgin Media have announced a billion-pound mega merger to form a single UK communications giant capable of offering converged services that combine fixed and mobile connectivity.

As rumoured earlier this week, parent companies Telefonica and Liberty Global have agreed to combine O2’s 4G and 5G infrastructure with Virgin Media’s ultrafast cable network into a joint-venture worth in excess of £31 billion.

O2 currently has 34.5 million users on its network, a figure which includes mobile virtual network operators (MVNOs) such as Tesco Mobile, while Virgin Media has more than 5 million subscribers. The combined customer base immediately propels the merged entity into the realms of Europe’s largest telecoms firms.

O2 Virgin Media 5G

The potential for converged services is significant, with Telefonica and Liberty Global promising to invest £10 billion over the next five years, while consolidation will also result in £6.2 billion in savings.

It is unclear whether one or both brands will be used by the combined entity, but it will be better placed to compete with BT, which has prioritised convergence in recent years with the acquisition of EE and investments in 5G and fibre infrastructure.

Although Virgin Media has a Mobile Virtual Network Operator (MVNO) it has never had a mobile network. Similarly, O2 lacks a fixed network. Convergence will allow for the development of new consumer and businesses services that take advantage of multiple communications technologies.

“We are creating a strong competitor with significant scale and financial strength to invest in UK digital infrastructure and give millions of consumer, business and public sector customers more choice and value,” said Jose Maria Alvarez-Pallete, Telefonica CEO. “ This is a proud and exciting moment for our organisations, as we create a leading integrated communications provider in the UK.”

“With Virgin Media and O2 together, the future of convergence is here today,” added Mike Fries, Liberty Global CEO. “We’ve seen the benefit of [Fixed Mobile Convergence] first-hand in Belgium and the Netherlands. When the power of 5G meets 1 gig broadband, U.K. consumers and businesses will never look back. We’re committed to this market and are right behind the Government’s digital and connectivity goals.”

Telefonica came close to selling O2 to Three’s parent company CK Hutchison in 2015. A £10.25 billion deal to merge the two operators was agreed but the European Commission blocked the move due to competition concerns. The combination of O2 and Three would have resulted in the creation of the UK’s largest mobile operator and reduced the number of players from four to three. This was unpalatable for the EC which feared innovation would decrease and prices would rise.

O2 has performed well for Telefonica in the intervening years, with Telefonica looking towards an IPO before the merger proposal came through. Virgin Media was first linked with a takeover of O2 in the immediate wake of the collapsed merger attempt.

The deal is set to be closed next year, subject to regulatory clearance from competitions authorities. Given O2 and Virgin Media have complementary networks, they will hope the transaction is viewed upon favourably.  

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US firms can now work with Huawei on 5G standards

The US government plans to give engineers from US companies permission to participate in standards discussions that involve Huawei.

American companies are currently banned from doing business with Huawei following a decision by the US Department of Commerce to blacklist the Chinese mobile giant last year on national security grounds.

Despite legal challenges, the ban remains in place, although some US firms have been given licences to do business with Huawei.

Huawei 5G

Confusion about what activities are permitted under the restrictions has limited the influence of US technology firms at meetings that will define global telecommunication standards such as 5G. Some companies have barred engineers from participating in informal conversations that involve Huawei, while others remain silent during formal discussions.

The concern is that this is giving Huawei a bigger say in how standards will be defined, putting the US at a disadvantage.

Sources have told Reuters that the Department of Commerce is drafting a new rule that would explicitly give permission for US companies to speak freely in standards meetings where Huawei is also present. The implementation of the rule depends on approval from other agencies who might still object.  

The US ban forms part of a wider assault on Huawei by the US government in recent years. Although Huawei has effectively been frozen out of the US market to date, it does supply a number of smaller, rural operators who rely on the firm’s relatively inexpensive gear.

Washington has approved a funding package for these carriers to strip out this equipment and replace it with alternatives from the likes of Ericsson and Nokia, while it has also banned Huawei from dealing with US companies.

These actions are justified on national security grounds, however the US has never produced any evidence to support its claims and Huawei has persistently denied any allegations of wrongdoing.

Here are the best deals for Huawei mobile phones in May 2020

Via Reuters

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BT cuts dividend to focus on fibre, 5G and business transformation

BT is suspending all dividends until 2022 as it redirects resources towards network construction, a five-year transformation programme, and to ensure minimum disruption from the ongoing coronavirus crisis.

CEO Philip Jansen said the company’s performance during the 2019-20 financial year had met expectations. Revenues fell by 2 per cent to £22.9 billion, while pre-tax profits were down slightly at £2.4 billion.

However he said the combination of market uncertainty coupled with the need to invest in 5G and fibre meant it had taken the difficult decision to suspend dividends.

BT 5G fibre investments

Although mobile and broadband services have grown in importance during the pandemic, the industry has seen some business and mobile revenues fall and has found it difficult to monetise the growth in home broadband traffic.

“Of course, Covid-19 is affecting our business, but the full impact will only become clearer as the economic consequences unfold over the next 12 months,” Jansen said, adding that BT would not be providing any guidance.

“In order to deal with the potential consequences of Covid-19, allow us to invest in FTTP and 5G, and to fund the major 5-year modernisation programme, we have also taken the difficult decision to suspend the dividend until 2022 and re-base thereafter.”

It had been speculated that BT could cut its dividend last year in order to increase its network investments. The suggestion was that investors would accept the decision if they could be convinced of the long term gains. In the event, BT increased network expenditure whilst maintaining the dividend.

EE’s 5G service is now available in 80 towns and cities across the UK, while its fibre to the premise (FTTP) network now extends to 2.6 million properties. The plan is to double this 5G footprint by and expand the fibre network to 4.5 million by March 2021. A long term goal is to cover 20 million premises by the end of the decade, subject to a favourable regulatory environment and necessary support.

Part of the reason the dividend was kept was because a restructuring programme had saved more than £1 billion through redundancies and office closures. ‘Phase 1’ of this programme has now been completed and Jansen is now plotting a further ‘transformation’ that will result in annual savings of £2 billion a year by March 2025.  

“BT is delivering, but is also changing. BT needs to be leaner, simpler and more agile,” he said. “Today we are announcing a radical modernisation and simplification programme that will use technology to create a better BT for the future. This 5-year initiative will re-engineer old and out of date processes, rationalise products, reduce re-work and switch off many legacy services.”

It is unclear how many jobs will be at risk from the changes but BT has pledged that no employee will lose their job as a result of Covid-19. The company has not furloughed any staff, while frontline workers have been given a 1.5 per cent salary increase. Jansen himself is donating his salary to charity for six months.

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Leading tech firms call for governments to support OpenRAN 5G development

Thirty-one of the world’s leading technology companies have signed up as founding members of a new organisation that will lobby governments to adopt polices that promote the development of open and interoperable radio access network (RAN) innovations.

Traditional methods of procurement have seen operators deploy integrated cell sites comprising radio, hardware, and software from a single supplier. This approach makes it difficult to mix and match innovations and poses a significant barrier to entry for other vendors.

However the 5G era has increased the appetite for a more flexible model, with operators rearchitecting their networks with cloud and software-defined networking (SDN) so they can be more agile in terms of operations and in rolling out new services.

OpenRAN 5G

The OpenRAN Group Project, formed in 2017 under the Telecom Infra Project (TIP) umbrella, develops radio standards and technologies based on vendor-neutral hardware and software-defined innovations that are open and interoperable.

This could, in theory, reduce the dominance of the big three vendors and make the market more competitive and innovative while  reducing the cost of deployment. Supporters of OpenRAN also argue that because operators will have a greater choice of suppliers, they will be able to resolve network issues or redirect resources more rapidly because they won’t be tied to a particular vendor.

The formation of the Open RAN Policy Coalition is an acknowledgement that more needs to be done for OpenRAN to catch up with existing players in terms of performance, cost and industrialisation. The organisation will urge governments to provide funding and incentives for research and development and testing, arguing that better connectivity will benefit consumers and businesses.

“As evidenced by the current global pandemic, vendor choice and flexibility in next-generation network deployments are necessary from a security and performance standpoint,” said Diane Rinaldo, Executive Director, Open RAN Policy Coalition.  “By promoting policies that standardize and develop open interfaces, we can ensure interoperability and security across different players and potentially lower the barrier to entry for new innovators.”

Founding members include tech companies at all stages of the networking ecosystem, including AT&T, Amazon Web Services, Cisco, Dell, Facebook, Google, IBM, Intel, Juniper Networks, Microsoft, Oracle, Qualcomm, Rakuten, Samsung, Telefonica, Verizon and VMware.

Vodafone has held trials of OpenRAN in the UK and says the technology should be included in government’s industrial strategies.

“The lack of supplier diversity for network equipment lies at the heart of the concerns over the resilience and security of critical national infrastructure,” said John Wibergh, Vodafone Group CTO.

“Vodafone is focused on expanding our supply chain options through engaging with open RAN vendors and encouraging newer network providers, to ensure the optimal balance across suppliers. Our industry leading trials of open RAN have underlined that this is the most promising route to advance niche suppliers, to supplement the large vendors, especially for radio equipment and software.”

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Coronavirus crisis will see short term pain but long term gain for mobile operators

The past few weeks have seen every conceivable element of everyday life disrupted by the coronavirus and the measures enacted to contain its spread. The challenges to public health, the economy, and to society have been unprecedented.

Schools, shops and offices have shut down, with thousands of jobs lost or furloughed. Friends and family are unable to visit each other, while the home has become the centre of education, entertainment and work.

The situation has elevated the role of communications infrastructure significantly. Mobile and broadband networks have been essential for communicating with colleagues and loved ones, accessing business applications or education resources, and for entertainment purposes that lessen the constraints of restricted movement.

Telecom challenges

There had been fears that these networks would struggle under the weight of additional data traffic but any predicted meltdown has failed to materialise. Most networks have been built to withstand peak demands, while major streaming services have reduced transmission quality at the request of the EU. The signs are that the dramatic growth on traffic has now plateaued.

Connectivity has never been as important to the functioning of society, so it comes as a surprise that mobile operators and internet service providers (ISPs) are not reaping the benefits on their balance sheets or the stock market. Part of the reason is that communications providers have high fixed costs and must continue to invest in infrastructure without a way of monetising this explosion in demand – at least not immediately. A decline in share prices reflects that.

A report from Analysys Mason suggests that telecoms revenue in developed markets will fall by 3.4 per cent this year, a reversal from the firm’s original growth forecast of 0.7 per cent prior to the crisis. Analysts anticipate there will be a return to growth of 0.8 per cent in 2021, but this will still be down on 2019 levels. Overall, the economic impact will be more than $40 billion in both 2020 and 2021.

The chief reason for this downturn is the slowing economy. The estimates are based on an assumption that global GDP will fall by 6 percent in 2020, a figure which has inevitable repercussions for business spend on communications services. Increased demand for remote working connectivity will not offset the impact of business closures, higher unemployment levels, and temporary office and retail shutdowns. Mobile operators will be disproportionately affected by reduced business travel, with revenues expected to fall by 12 per cent in 2020.

The good news is that the consumer market, which accounts for 68 per cent of all telecoms income is fairly resilient. Both broadband and mobile will be viewed as essential for work and home entertainment and it is unlikely that economic pressure will see consumers dispense with these vital services.

5G and roaming

The mobile sector has traditionally been solid during past economic downturns, but the key difference on this occasion is that the population’s mobility is restricted by government guidelines. People are using mobile networks less because they are confined to their homes and using their home Wi-Fi networks. Mobile data might be increasing in some countries but will account for a lower proportion of all data traffic as customers use their fixed connection as their primary source of connectivity.

A more medium-term threat is that operators find it difficult to sell larger data allowances when there is no need for the,. A slowdown in smartphone sales will also make it difficult to shift 5G data plans, viewed as a key source of growth for the industry. Just 61.8 million devices were shifted in February 2020, down from 99.2 million last year. This 38 per cent decline is the biggest fall off in smartphone market history.

Although the market will recover through delayed purchases and as supply chain disruption eases, a global recession might encourage consumers to opt for cheaper devices or decided against an upgrade that would also renew their contract. On top of all this, travel restrictions will see mobile operators lose as much as $25 billion lost roaming revenue according to Juniper Research.

The rollout of and 5G could also suffer from restrictions on movement and supply chain issues. It may be more of a challenge to obtain equipment and to send out engineers, while a number of European countries have delayed the auction of 5G spectrum. Ericsson has already told investors that it fears coronavirus could delay the pace of rollout.

Resilient sector

The above evidence might paint a picture of doom and gloom but the reality is that the communications industry is fairly resilient and will rebound quickly once the crisis is over. Telcos are in a strong cashflow position to weather the storm and will benefit from delayed purchases and increased spend. This in turn will see additional investments in infrastructure, with both the private and public sectors eyeing opportunities.

“Telecoms should stay healthier than almost any industry in this crisis,” said Rupert Wood, resrarch director and Analysys Mason. “Telecoms should show some of the strongest post-crisis investment, in part because cashflow is more resilient in the telecoms sector than it is most others, and because some governments will emphasise 5G and fibre in stimulus packages.”

There may also be indirect benefits from an enhanced reputation. Operators have offered additional data allowances, offered free access to education and health resources, and pledged not to leave anyone disconnected. Coupled with the relative reliability of broadband and mobile services, and their ability to absorb additional demand, will inspire confidence among a public eager to complain about outages and poor customer service.

Long-term gains

Changing user behaviours could be an unexpected boost. O2 is reporting a 25 per cent increase in the volume of phone calls and a 30 per cent increase in duration – bucking the trend of declining traditional revenues.

Whereas making calls on the move was once considered the raison d'être of the mobile phone when it first arrived in the 1980s, priorities of mobile users have shifted significantly since the first iPhone and first Android devices launched a decade ago.

The popularity of over the top (OTT) applications like Facebook Messenger and WhatsApp, coupled with the preference of younger demographics to use instant messaging, has led to a recent downward trend in terms of voice traffic.

O2 has said younger demographics are making more calls than before and are now less anxious about speaking on the phone. Whether this translates to a long-term revival of voice remains to be seen. Consumers might return to their old ways when they can see their friends once again, or they might decide to opt for Zoom or another application.

Perhaps more promising is the greater technical literacy among older generations. A quarter of over-55s say they are considering buying a new or their first smartphone due to the pandemic, such is the desire to keep in contact.

A good proportion of the revenue lost during the coronavirus crisis may be gone forever, never to find its way into the coffers of operators. Falling revenues are hardly ever a good thing but there is no need for the sector to be alarmed. As the past few weeks have shown, connectivity is king.

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