When I was a Lad…..

40 Years of Telecoms – Remembering When the UK was at the Forefront

As someone who has nearly completed 40 years in the telecom industry, it seems appropriate to look back. Let’s see how the pace of change has increased and then ponder what changes are likely to happen in the future.

No mobiles!

sony walkmanBack in the late 1970s none of the elements that we all take for granted, in our personal and work lives, existed.   There were no mobiles. The only computers were mainframes the size of a small aircraft hanger. It was still 10 years to go before Tim Berners-Lee would conceive of the internet.  Even basic features such as voicemail did not exist; you relied on colleagues to answer the phone and scribble a message.   The advantage was no one bothered you on holiday and all you could do on the way to work was read a newspaper.   The Walkman was only launched in Japan in the middle of 1979.  It took a bit longer to reach the UK.

So how have we got to where we are today and what happens next?

Remember Cellnet?

history of telecoms and mobilesIn 1985 Cellnet and Vodafone, two rival operators launched Britain’s first cellular telephone service in 1985.  Cellnet was partly owned by BT who, rather short sightedly, sold it and then spent £12.5 billion in 2015 to buy it’s way back into the market.   The UK was actually ahead of France and Germany in launching the technology as it often was in those days.  Unfortunately now, when it is more core to our lives, we have fallen behind.

WWW

Four years later it was a Brit, Tim Berners Lee whilst working at CERN wrote down his ideas for the web and followed that up in the following by specifying HTML (the hypertext language) and HTTP (the protocol).

 

GSM

The following year in 1991 a British Company – Orbitel (then a joint venture between Racal and Plessey) created the first GSM phone.  Unfortunately they did not capitalise on it and Orbitel ultimately ended up being part of Ericsson.

The first-ever text

It was another Brit in 1992 that sent the first ever text message.  Neil Papworth, at the age of 22, sent it to Vodafone director Richard Jarvis.  Pre emojis it simply said Merry Christmas.  That same year saw dial-up Internet access first introduced in the UK by Pipex.

VoIP

That was probably the last year that the UK was ahead of the rest of the world.  In 1995 it was an Israeli company VoaclTec that developed VoIP although it would be a technology that needed better broadband before it could really take off.   It would be five years before ADSL broadband was commercially launched in the UK.  And it would be a further seven years in 2007 that VoIP became prevalent enough for Ofcom feel the need to publish “Regulation of VoIP Services” – which is still available online to read.

3G & Skype

In the meantime, Japan launched the world’s first commercial 3G network in Japan on 1 October 2001.  The technology would not be available in the UK until 2003 and still hasn’t reached some parts today.  In between Nokia had launched the first ever camera phone in Europe.   That year also say the launch of Skype and the saw the start of decline in international call revenues for operators.

4G & the iPhone

By 2007 the world of mobiles was revolutionised by the IPhone, with Blackberry’s then Chief Executive saying touchscreen phones would never catch on.    The device was undoubtedly helped by the arrival of 4G which was first launched in late 2009 in Stockholm and Oslo.  As a sign of the ever increasing gap the UK had to wait almost 3 years before EE launched it to 11 cities in October 2012.

Fibre

By 2008 Virgin had launched one of the first fibre broadband services and a year later BT announced they would connect 2.5 million homes to fibre to the premise by 2012.  They achieved 10% of that number by 2015.

Government broadband promises

Governments began making broadband promises – most of which totally underestimated the growth of the digital age and the inadequacy of plans.  This started with Labour government in 2009 promising that all UK homes would receive 2 Mbps broadband by 2012.  Two years later the coalition Government changed that to 90 percent of UK premises receiving 24mbps by 2015.  This was then pushed back to 2017.

The last few years have seen the growth of VoIP and SIP based services.  15% of business connections are now VoIP and SIP has overtaken ISDN as a means of connecting PBXs.  Whatapps has over 1 billion users worldwide and the numbers of text messages has fallen by half since is peak.

And finally… 2018

In February 2018, BT  confirmed that it will be spending at least £3 billion to roll out FTTP broadband in the UK by 2020.   Their target means that would still leave us only reaching the point the rest of Europe currently averages

The Government has said we should be fully FTTP by 2033 when countries such as South Korea and Japan who are leading the new technical advances are already in the high 80% level.   We are just starting the first trial of 5G n one city when Japan plans to launch it commercially in 2020 and South Korea the three mobile operators have combined to build a single 5G network which is planned for launch in March 2019.  Consequently Samsung will be able to steal a lead on bringing 5G devices to the market.  Could you see Vodafone, BT,

So, what have the last 40 years taught us.  Firstly the despite having invented many of the technologies the UK has failed to exploit them.  Secondly various Governments of all political colours have made promises to improve our infrastructure and consistently failed and now announce future plans with dates that are so far ahead at least two elections will be fought beforehand.   Without doubt we will become more and more dependent on our handheld devices but we may be able to use them for less things and in fewer places than other countries

What will a No-Deal Brexit mean?

what will a no-deal brexit mean?No-deal Brexit: Good or Bad?

As the possibility of a no-deal Brexit deal increases what would be the impact on our telecoms if it were to happen.   Is it another instance of doom and gloom or are there any upsides.

These are our thoughts on the matter…

Roaming

In 2017 the EU abolished all the charges previously levied by the mobile operators for roaming calls and data within the EU area.  Should the UK leave the EU on a no deal basis, this could no longer be the case.   Other countries outside the EU such have Norway have signed up to the deal but they have agreed economic arrangements as well.   If the UK is operating on World Trade Organisation arrangements then there is nothing in there that covers roaming.  I am sure the mobile operators will be pleased as it was a major revenue source for them.

Like all these bilateral arrangements it is a case as to whether the EU wants to cut its nose off to spite it face as all EU citizens could roam for free in the UK.

The impact may be longer term as UK can negotiate its own trade agreements it could similar seeks to do deals with countries it wants to encourage more trade with.  So it could be free to roam between the UK and commonwealth countries for instance.   It is to be hoped that this will be an element of any new trade agreements that are set up.   Certainly, it has been discussed in the initial conversations between the UK and USA.

So there are potential implications for tourism, business people working in Europe and those with overseas home.   Should it come to fruition people should check their contracts – and add roaming plans if required.

Competition

At the moment some of the biggest decisions affecting the UK market are taken by the EU.  For example, the final say on the O2 and 3 merger deal fell to European competition commissioner Margrethe Vestager.    In future any such mergers will down to the UK and as such will reflect more the views of the UK Government.  The EU has generally been anti merger and the UK Government has been less so.   It enhances the role of Ofcom, who has constantly bottled the decision to split Openreach away from BT.   The EU has made decisions and threatened fines against anti competitive behaviours by companies such as Microsoft and Google.  Historically the UK Government has been less interventionist.

It potentially leaves companies more open to overseas acquisition.  Would BT be a tempting target for someone given their share price being 40% of what it was 3 years?   Deutsche Telecom already own a stake in them.   As general rule greater consolidation leads to less choice for customers and the potential for lower service levels and higher prices.

Trade

Like many other manufacturing industries, as a country we import far more telecoms equipment than we export.  Not many mobile phones or phone systems are made here, even most of the infrastructure is imported.   A lot is made in China, Asia and the USA.  These countries are the forefront of targets for our own trade deals.   As the fifth largest economy, the UK is attractive to the handset makers and deals could lead to lower import charges and therefore prices.

The first few weeks after the Brexit referendum saw a large drop in value of the pound, which resulted in the cost of telecoms and technology equipment going up quite quickly.  Dell announced a price rise within weeks.  Should we go on WTO rules after a no-deal Brexit, then the uncertainty could drive the pound lower, at least in the short term.   If that seems the likely option and your business is considering replacing your phone system and data infrastructure it may pay to order early.

Regulation and Infrastructure

As an industry telecoms has not integrated very much across Europe.  Each country issues it own licences and phone numbers.   There are no minimum standards for 4G coverage or broadband speeds.  Although the EU has stated it believes the minimum target speed should be 30 mbps which is higher than the UK.

The EU has set targets for 5G rollouts. Each country should have one city operational by 2020.  The UK has continuously lagged behind most of Europe on 4G coverage and FTTP availability.  The recent announcements have targets that will not improve that, but currently being in or out of the EU won’t affect that situation.  It is more a question of local priorities.

The EU customs union allow member states to charge higher international termination rates to non-EU members so the UK would be free to break from that and make the cost of calling here from abroad lower and therefore more attractive to businesses to have overseas offices here.

Like so many other things there is a lot to resolve and we have less than 6 months to go if we are to leave on a no deal basis.   But it will make the telecoms market very interesting and it means businesses should be asking key questions when signing long term contracts that extend beyond that period.

What are your thoughts on a no-deal Brexit? We’d love to read them.