Post-Brexit, UK mobile players need to find a role in a global industry
No room for parochialism in the wireless world – the successes of the week, including Nokia going open source, are all about global cooperation
For a commentator based in the UK, it’s hard to look back at the week in wireless even-handedly after the decision to leave the European Union.
It’s too early to assess the impact for the local mobile industry but clearly this will be significant. Vodafone is a UK-based global company which does much of its 5G work in Spain and Germany. O2 is owned by a Spanish group (for now at least). BT is a key influencer of EU-wide 5G programs and regulatory decision making. The extent to which the UK will have a voice in Europe’s future in 5G and the digital single market is now one of the many uncertainties with which companies across Europe will have to deal.
With the pound in meltdown, many operators’ first thoughts may be that the price war that makes the UK such a tough market will only get worse if consumer spending falls, and they should direct their energies elsewhere. Of course, Telefonica has been trying to flee for a while now, but was foiled by antritrust fears – an EU decision on which Brexit campaigners seized, but likely have been the same if the only authority had been the UK one. Currently, the Spanish firm is said to be considering an IPO as an alternative to selling O2 UK, though it will need to wait for some recovery in the markets.
In the end, regardless of UK provincial politics, the mobile industry is a global one, and the big advances will no longer be made by single companies or countries – though local loyalties do persist (just look at Ericsson’s league table of networked cities, which Stockholm has topped yet again). But while regional blocs argue about grabbing leadership of the 5G process, in general the transformation of networks, with virtualization and 5G, is showing encouraging levels of global cooperation and pooling of resources as well as the inevitable IPR wars.
The week had some good examples of this. One reason for a less parochial approach must be the increasing influence of open source processes as a complement, or even alternative, to formal standards organizations. This is particularly seen in virtualization and SDN (software defined networking), where trends pioneered in the enterprise are moving into the telecoms field, with many open source habits in tow. Nokia, for instance, is making its AirFrame data center hardware platform available for an open source lab – supporting the OPNFV Open Platform Network Functions Virtualization Lab. This would have been inconceivable in the run-up to 4G – a vendor whose whole success relied on proprietary, carefully guarded technologies, allowing one of its crown jewels to be used by a collaborative open source community.
Nokia is working increasingly closely with Intel in the NFV and carrier cloud areas, where its chief growth opportunities lie, and recently scored a landmark deal with China Mobile to accelerate that firm’s cloud transformation – a good example of a three-continent alliance to deliver technology which could underpin global platforms as decisively as anything 3GPP may decide.
And for any who switched off from the UK’s exit traumas on the basis that Europe is yesterday’s continent anyway, the really important wireless events of the week happened in India and the US. Both concerned spectrum, though in very different contexts. The FCC made decisive resolutions to open up millimeter wave spectrum for 5G, showing a new appetite for leadership, which will impact on decisions round the world and help enable new business models in the US. In India, the government accepted proposals to hold the country’s biggest ever auction, spanning seven bands including the coveted 700 MHz for wide area LTE. In terms of near term impact, and contribution to the total store of spectrum in the country, this is even more important than the FCC’s moves, but the economic impact may be disappointing.
The Indian government, despite its ambitious Digital India plans, seems unable to resist the lure of windfalls from auction fees, and – with echoes of the disastrous European
3G spectrum bubble at the turn of the century – is setting enormous reserve fees on the 700 MHz band. This will limit the ability of entrenched MNOs, let alone new entrants, to buy sufficient spectrum to launch high value, high bandwidth services, and is likely to increase the problems of operator debt, fragmented spectrum holdings and ultra-low ARPUs.
Much of the creativity in new services and business models is now coming from MVNOs rather than the established operators. With none of the infrastructure concerns of the MNOs, the virtual providers can experiment more freely, as seen the world over – US WiFi-first provider FreedomPop’s expansion and success in Europe is a good example. India recently introduced new rules to open up to MVNOs – it must be hoped that this will inject new life into the world’s second largest mobile market.