Convergence across verticals means new revenue opportunities for the wireless industry

This piece originally appeared on RCR Wireless as part of the publication’s “Analyst Angle” section. You can view the piece here.

Simon Fletcher chairing the 8th Future of Wireless International Conference

Simon Fletcher chairing the 8th Future of Wireless International Conference

Last month’s Cambridge Wireless Future of Wireless International Conference (FWIC) provided a great opportunity to bring together representatives from many vertical industries with wireless technology providers. As ever the attendees were highly engaged, with plenty of challenging questions and thought provoking panel and open forum discussions.

Perhaps the most interesting insight from the conference was the way in which it was clear that there is a convergence of challenges across multiple vertical sectors. A lot of speakers were articulating similar challenges — in areas as diverse as healthcare and automotive — and this is vital for the future of wireless. Convergence opens up opportunities for greater standardisation and the creation of platforms that have applications in multiple sectors, increasing efficiencies and revenue opportunities for vendors and service providers.

For example, the continuing need to improve remote and in-building coverage was mentioned by several speakers — particularly those from the automotive industry. The poor coverage on the UK road network was highlighted as a significant barrier to future innovation and revenues. The relatively poor coverage of the UK is a well-known issue for the wireless industry. But now transport industry players are highlighting the issue as a significant deficiency that needs to be addressed, and government departments that take an interest in transport systems are also applying pressure to improve coverage.

The topic of regulation remained ever-present in a number of the industry sector sessions. Several speakers noted that regulatory frameworks could put up significant resistance to wireless enabled change, which will create opportunities for disruptive start-ups in a number of sectors.

A final major point of convergence was also the impact that “OTT” players are having in the vast majority of vertical sectors, often already being an ‘incumbent’ themselves. The OTT has driven the data demand on networks and, whilst financial results indicate that the mobile operators have struggled to keep up with this demand, the OTT is now part and parcel of the wireless industry package. Having seen how the presence of the OTT, with their global reach over the mobile internet, challenges existing business models, some vertical players may be looking to defensive approaches that can resist change. To take a defensive stance is unlikely to keep the competition at bay and will certainly not create a competitive advantage. A number of panels observed that their challenges are more cultural or regulatory — rather than technological. However such a perspective overlooks significant opportunities for vertical markets to partition technologies into manageable platforms, where the pace of change in each area can be better understood.

Aside from these challenges, there were also encouraging signs of progress within a number of the vertical sectors themselves.

In the health sector, after many years of failed large IT projects implemented from the top down, there is a growing trend of putting wireless devices in the hands of frontline doctors and nurses. This is having a transformational effect on technology in healthcare from the bottom up.

Smart city technology trials have been ongoing for a number of years. The smart city panel explored the tipping points at which scale up to common platforms may occur. The recently started Innovate-UK funded work in Manchester and the news that Singapore is establishing collaborations with countries like the UK, start to show promising signs of the possibility of common platforms emerging.

The fintech session also served as a good illustration of how the large incumbent banks are establishing incubators to increase awareness of innovation and determine how these developments could be adopted in their mainstream business.

Overall it was interesting to see that there seems to be broad recognition — both within the wireless industry and the verticals themselves — that new business models are required in a number of vertical sectors if significant new revenue growth is to be realised. What will be interesting is to see how that plays out, whether it will be directed by ‘top-down’ or ‘bottom-up’ approaches, or if large incumbents and smaller disruptors will ‘join forces’ in certain sectors to nurture these new approaches.

Under pressure: tackling railway connectivity in 2016 (downloadable guide)

Railway connectivityWireless connectivity on trains is set to become a key area of focus for the wireless industry over the coming years. On-board connectivity remains a significant technical challenge; providing connectivity to people within a fast-moving object that often encounters mobile blackspots is inherently difficult. However, pressure is rising from governments and passengers to improve the current levels of wireless service available on trains.

Currently, enhanced on-board wireless solutions face two major barriers. The first is how to enable cellular connectivity. The second is how to secure sufficient capacity for on-train usage and the necessary backhaul where on-train Wi-Fi is installed. While the technologies are available today to solve these challenges, the business case for moving connectivity along remains largely elusive.

rail-connectivityNow though we are seeing some interesting moves in the market that may help to break the commercial deadlock we have seen in recent years. In particular governments around the world are now attempting to ease some of the pressure by investing in connectivity for trains. The UK government is investing £50m to ensure passengers benefit from free Wi-Fi by 2017. The state government of Victoria, Australia, has committed $40m to tackle mobile coverage blackspots across the region’s Geelong, Ballarat, Bendigo, Seymour and Traralgon lines.

Although these developments are welcome, ultimately the ‘right’ solution needs to work for train operators, mobile network operators and rail passengers alike. All industry stakeholders now need to work together to produce business cases that can benefit every party involved.

At this time of shifting market dynamics Real Wireless has put together a short guide assessing the current situation with regards to wireless on trains along with our independent expert recommendations for ensuring connectivity remains on track.

Mobile coverage in rural areas – a step in the wrong direction? UK currently has around 54,403 mobile phone masts dotted around the country — many of which are on land leased to the major telecoms companies by local landowners.

4,000 leases are due to expire this year, and this could lead to serious consequences for  telecoms companies and consumers alike. In the absence of any regulation, lease renewal negotiations could lead to significant demands from landlords for rent increases in a large number of cases. Telecoms companies will then need to either pass on this cost to the consumer, through more expensive tariffs, or remove macrocells completely and create coverage or capacity gaps. The Telegraph recently wrote an article on this topic.

Macrocells are still vital to mobile coverage

Despite advances in small cell technology and Wi-Fi calling, macrocells remain the backbone of the mobile network, delivering the majority of the UK’s coverage and capacity.

There’s no alternative to macrocells, either, that doesn’t involve some form of relationship with a property or asset owner. In-building connectivity solutions like small cells and DAS do improve coverage and capacity in homes, offices and public buildings, but they will never replace macrocells entirely and do not provide wide area coverage in towns and around the countryside.

Operators need to protect their investment

Vital infrastructure is often expensive to provide and macrocells are no different. Operators naturally want to keep hold of their existing assets, given they’ve invested heavily in constructing macrocells in the first place.

Operators and landowners both know the difficulties with finding alternative sites for macrocells and obtaining planning permission and the time and cost associated with doing this would be significant — whilst the operators could resort to invoking code powers this is not a step that would be taken likely but it cannot be discounted completely as an idle threat.

How rent rises will affect mobile provision

The first impact of rent rises is likely to be felt by users in those locations where high costs force MNOs to remove macrocells, resulting in coverage or capacity gaps. Site closures aren’t going to happen overnight, though. MNOs will fight to keep their sites at rental levels that are either at or below the current level. But if landowners insist on increasing site rent by excessive amounts then users will no doubt have to bear the brunt of the costs through higher tariffs. Most likely the operators will pass some costs onto the users and absorb the majority but this will lead to less investment in new infrastructure in their networks and invariably lead to a negative impact on the digital economy generally.

Can the government intervene ?

The story of land rentals is an old chestnut in the mobile industry. The cycle of site acquisition, rental renewals and notices to quit will carry on as long the mobile industry exists — unless the government  is prepared to intervene to help regulate the rental levels that MNO’s pay for this essential infrastructure. At the same time, MNO’s need to realise that landlords and building owners should not have their genuine development plans for their land or property undermined by MNO macrocells that may have been on there for many years.

The reliance the British public currently places on their mobile communications and, within a few years, the reliance that the Police and other emergency services will have on their vital communications being carried by mobile networks suggests that this particular debate should be opened up and that representatives from the various parties (MNO’s Property owners and Government) can create a solid and sustainable basis that will help maintain mobile communications services throughout the UK.

The evolution of regulation for telecoms by 2020

Cell-TowerTelecoms regulation needs to evolve to cope with a rapidly changing industry — the traditional mechanisms are no longer working.

With mergers and new entrants complicating the marketplace, regulators must find a way to balance competition with encouraging investment and innovation while still ensuring consumers get the best service.

Greater knowledge and understanding of mergers will need to be developed, something that the current consolidation trend force. This will need to be knowledge that can be put in to practice, implementing it on a basis that does not distort competition, yields benefits to consumers, and still incentivises investment and innovation.

As a result many of these changes need to happen before 2020 to support the balance between traditional telecoms operators and OTT (over-the-top) players. At present there is a lack of symmetry on many issues such as switching, privacy and data protection, identification and safety which regulation will need to resolve.

By 2020 increased broadband rollout and superfast speeds coupled with new market entrants will have changed the fixed market — meaning that regulators will need to pay close attention to new issues as pricing, bundles, competition and barriers to entry.

Regulation in 2020 will also need to not be restricted to the management of present market conditions. It needs to play a role in supporting and encouraging the development of new fixed and mobile technologies — including 5G, G.FAST, TWDM-PON — in order to guarantee and improve the long term health of the industry. It will also need to be designed to support innovations in telecoms, particularly those that enable operators to begin investing in infrastructure that can support ultrafast dense networks.

This role will also need to extend to ensuring that less-profitable ventures, such as the extension of fibre in to rural areas, are not overlooked at the expense of new technologies and super-fast city networks.

Crucially, this is not just a challenge that the regulators themselves need to tackle. Governments also need to evolve mobile spectrum policy, enabling quicker access to spectrum for operators and balancing the needs of new entrants and incumbents. This needs to extend beyond national border, particularly in Europe where the EU needs to be implementing uniform regulation across member states to limit distortions in competition.

The need for governments to play a part in the evolution of telecoms regulation in coming years highlights how rapid the requirements of this challenge need to be met. We may be discussing the regulation of 2020, but steps need to start being taken in 2016 if we’re to be fully prepared — particularly as regulators’ remit will need to expand.

Originally published on TechUK as a guest blog during Telecoms2020 week.

EU roaming charges are being abolished — and the consequences for network providers are worrying

Percentage of population in rural environments in selected countries (data from Geohive)

Fig. 1 Percentage of population in rural environments in selected countries (data from Geohive)

Earlier this month, the European Commission announced that roaming charges and poor mobile internet connections for EU customers are set to become a thing of the past.

From 2017, consumers will be able to travel within the EU and pay the same price as they get at home for voice, texts and data. That means no more nasty shocks when the phone bill comes in after travelling abroad.

While the change is great news for consumers, it does pose a number of challenges for network providers.

Can a uniform law be effective in such a varied marketplace?
The EU may be a common marketplace for goods and services, but we know from our modeling work at Real Wireless that the cost for providing network services in different EU countries varies greatly from one country to the next.

Indeed the cost varies even within countries themselves because of differences in population density, availability of real estate for base stations, availability of backhaul services, and many other factors.

One measure value that a regulator may ascribe to a quantity of spectrum is calculated by comparing the value of this section of spectrum, against the costs incurred by rolling out the additional infrastructure required to support the services that use it.

Operators will either pay spectrum fees set by regulators or bid for spectrum. But in either case, they would not rationally pay more for spectrum than the value of the potential profitability of the business the spectrum would support.

Typically it costs a lot more to support services in less populace areas. For example rural areas often cost more than cities. In cities, the infrastructure typically enjoys much higher levels of utilisation, which brings in more income from users. Conversely, some rural areas face high fixed costs to roll out infrastructure, but then see much lower levels of utilisation as a result of the lower subscriber density in the area.

Figure 1 demonstrates just how variable population distributions are within some major European countries.

Most governments find it desirable that a large percentage of their population can access mobile communications services — and they often provide economic benefits to encourage rollout to the more remote, ‘last to be served’ population areas. Government regulators will also typically stipulate conditions for rollout, encouraging more people to be served. Both the fees and rollout conditions are set on a national basis, which has an impact on the cost of providing the minimum infrastructure required.

This new EU legislation will seek to establish a common price to be paid for service irrespective of where that service is being consumed. We therefore have the potential for highly asymmetric costs and services that could cause market distortion.

After all, there’s nothing to prevent users taking SIMs from a country where services can be provided at low cost and using them in a country with a high rollout cost (whether the result of topography, nationally imposed rollout conditions, or low population density). Excess demand for these SIMs would tend to push costs higher than otherwise expected.

The issues this new legislation presents are not only compounded by the asymmetrical nature of spectrum — particularly in terms of supply, availability and regulation — but also by the inability of network operators to differentiate their pricing whilst roaming, despite the reality being that each will still face different costs for terminating calls. The market will ultimately end up distorted as a result of separating the cost of goods from the cost of provision.

Who is going to take responsibility for service quality?
Cost aside, the question remains of who is going to be responsible for ensuring that quality of service remains consistently high across the entire continent. Unless the EU makes responsibility clear through law, Europe is faced with a messy blurring of responsibilities between the EU and its nation states.

The next two years before the changes become reality will prove to be vital in terms of planning and clarifying how the new market will work. Mobile operators will need to approach the European Commission directly to ensure the law provides clarity on these issues, in order to ensure that they are in a position to manage the responsibilities they will face come 2017.

Real Wireless joins Future Communications & Positioning System Advisory Group 

Guangzhou_South_Railway_Station_3F_East_ConcourseYesterday, Real Wireless attended the Intelligent Rail Infrastructure seminar from the IET. The event examined the physical and technical challenges associated with modernising our railway assets – a challenge that we have long considered in our work.

The reasons why this is a topic that interests us is that wireless offers the potential to revolutionise a global mode of transport. This is not just for passengers, where some individuals lose hundreds of hours each year outside of data connectivity, but also throughout the industry’s large and multinational ecosystem. With the advent of M2M communications, its potential to create a truly intelligent national transport network is highly desirable.

It’s to this end that Real Wireless is pleased to announce it has joined the cross rail-industry Future Communications & Positioning System Advisory Group (FC&PS AG), a sub-group of the Vehicle/Train Control and Communications System Interface Committee.

Members of the group include Network Rail, the Department for Transport, the Association of Train Operating Companies (ATOC), the ORR, train operators, RSSB and representatives from the wider communications industry.

The group’s aim is to provide advice and direction to the industry on communications and positioning technologies as enablers to the Rail Technical Strategy Vision 2012.

The FC&PS AG say they welcome our membership to the group,and look forward to our input in the fast moving area of digital wireless technology, particularly given our extensive experience of working in other industries than rail alone.

As a member, Real Wireless will therefore be providing expert input on both future wireless communications technologies, and the feasibility and practicalities of implementation to support the growth of rail communications in Britain.

This is an area we already have significant experience in, thanks to projects such as our landmark business case analysis that found passenger-facing services (ie: customer Wi-Fi) could not ever give ROI itself: it only can deliver this if it is one of a variety of operational benefits.

We look forward to participating at our first meeting in London on 19th May, providing insight and experience and supporting the growth of communications for the rail industry.

For an overview of the opportunities wireless offers for the transport network, download our free guide The business opportunities for wireless in transport. 

If you’d like to learn more about the RSSB, please find them at, on Twitter @RSSB_rail, and LinkedIn RSSB.

Real Wireless joins UK Spectrum Policy Forum as funding partner

Wireless experts’ contribution reflects the importance of spectrum policy to the UK economy and telecoms industry 

Real Wireless has joined the UK Spectrum Policy Forum as a funding partner. Acting as a sounding board for the Government and Ofcom, The Forum is at the centre of UK Spectrum Policy and closely aligned with the work Real Wireless carries out for many of its clients.

Professor Simon Saunders, Real Wireless co-founder and Director of Technology, has been working with the Forum since its inception last year, where he examines spectrum applications and demand as chair of Cluster 1.

Launched in September 2013 by Ed Vaizey, Minister for Culture, Communications and Creative Industries, the UK Spectrum Policy Forum is chaired by Professor Jim Norton. With the involvement of a full range of spectrum-using companies and organisations, the UK Spectrum Policy Forum is the industry sounding board to the Government and Ofcom on future spectrum management and regulatory policy, with a view to maximising the benefits of spectrum in the UK.

“Spectrum is a scarce resource but it’s also one that is valued at £52 Billion per year to the UK economy. Therefore it’s an area that needs to be properly managed and supported,” said Prof. Saunders. “The work of the Spectrum Policy Forum is essential if the UK is to get the most of this valuable asset and it’s an initiative that Real Wireless is perfectly placed to support.”

“Simon’s work with us over the last nine months has been invaluable and we’re delighted that Real Wireless has now become a funding partner of the Forum through Steering Board membership,” said Professor Jim Norton, Chair of the UK Spectrum Policy Forum. “Real Wireless has an incredible wealth of expertise and experience in spectrum policy and management and this makes them an excellent partner.”